UPM Annual Report 2023

GOVERNANCE

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

ACCOUNTS FOR 2023

Massimo Reynaudo, the Company’s Execu tive Vice President of UPM Communication Papers at that time, as the new President and CEO as of 1 January 2024. The main terms of Service agreement of the current President and CEO are availa ble on the corporate website at www.upm. com/governance in the Executive manage ment section. The President and CEO’s duty is to manage and oversee the Company’s day to-day business operations in accordance with the instructions and orders given by the Board of Directors. In the oper ative management of the Company, the President and CEO is assisted by the Group Executive Team, consisting of the executives leading business areas and global functions, the Business Area Boards and the Strategy Team. The President and CEO makes decisions on matters that are relevant to the Company’s daily business operations. The President and CEO chairs the Group Executive Team. The com position of these management bodies is presented in the table on the right. Management responsibilities Members of the Group Executive Team have primary responsibility for the business areas and global functions that they lead. These areas of responsibility are shown in the illustration on the right.

succession needs of the Board as a whole. This included whether the Board reflects an appropriate balance of sound judgement and a diverse range of business expertise, skills, experience, independence, availa bility of service to the Company and other desired qualities. After careful research and selection, the Nomination and Governance Committee has proposed that Melanie Maas-Brunner be elected as a new member of the Board at the AGM 2024. Of the incumbent directors, Emma FitzGerald will not be standing for re-election. The Nomination and Govern ance Committee’s proposal on the compo sition of the Board in 2024, along with the Board’s assessment of the independence of the Director nominees, is available on the corporate website at www.upm.com/ agm2024. Executive management Jussi Pesonen was the President and Chief Executive Officer of UPM-Kymmene Corpo ration for twenty years from 2004 to 2023. According to his service agreement, Jussi Pe sonen was entitled to retire at the age of 60 in 2020. At the request of the Company’s Board of Directors, he continued as the President and CEO until the end of 2023, after which he continues at the Company as an advisor to the Company and its management until he retires from UPM on 30 April 2024. In October 2023, the Board resolved to appoint UPM’s innovation mindset and R&D. It’s interesting to see what we can do with wood in the hands of innovative people, and how innovations can offer solutions for mitigating climate change without forgetting the strong focus on fostering biodiversity.” She expects UPM’s solutions to have a big impact. “The direction is clear with such a strong visionary purpose. But changing the world and the way we do things is never easy.” Pia Aaltonen-Forsell believes strongly in the coaching leadership style. “I encourage my own leaders to mentor their teams and grow new leaders. The most important job of a leader is to see far into the future and to develop the business with a long-term perspective.”

Nomination and Governance Committee

COMPOSITION OF MANAGEMENT BODIES

Read more on our management system in the Corporate Governance Statement 2023 and at www.upm.com/governance. Members of the Group Executive Team, including information on the executives' biographical details, professional and educational backgrounds, other significant commitments and shareholdings in the Company, are presented on pages 116 – 117.

The Nomination and Governance Com mittee is responsible for the composition, diversity and remuneration of the Board of Directors, and corporate governance. The Committee also reviews the succession plans for the President and CEO at least annually and reports to the Board on succes sion planning. In 2023, the Committee held five meetings and focused on succession planning and the candidacy process for the President and CEO, preparing a proposal for the Board to appoint the successor to the Company’s long-standing President and CEO, Jussi Pesonen, who announced in October 2022 that he will retire from UPM during 2024. The schedule gave the Committee and the Board sufficient time to implement the succession planning process. In addition to undertaking the assigned matters and regular reports and in addition to succession planning for the President and CEO, in 2023 the Nomination and Govern ance Committee also focused on searching for a director and succession planning for the Board, conducted a performance evalu ation of the Board facilitated by the external evaluator, reviewed and proposed certain rotations to the composition of the commit tees, and reviewed the Remuneration Policy. The Nomination and Governance Com mittee conducted its annual review of the structure, size, composition, diversity and

GROUP EXECUTIVE TEAM BUSINESS AREA BOARDS

STRATEGY TEAM

President and CEO (Ch.)

President and CEO (Ch.)

President and CEO (Ch.)

CFO

CFO

CFO

General Counsel Business area EVPs

General Counsel Business area EVP

General Counsel

EVP Strategy

EVPs of global functions

EVPs of global functions

EVP Technology

RESPONSIBILITY AREAS OF THE MEMBERS OF THE GROUP EXECUTIVE TEAM

PRESIDENT AND CEO MASSIMO REYNAUDO

CFO 1)

UPM Fibres 4)

Aki Temmes

Tapio Korpeinen

UPM Energy

General Counsel

Tapio Korpeinen

Juha Mäkelä

UPM Raflatac

Strategy

Antti Jääskeläinen

Kari Ståhlberg

UPM Specialty Papers

Technology 2)

Jaakko Nikkilä

Winfried Schaur

UPM Communication Papers Antti Jääskeläinen 5)

Human Resources

Riitta Savonlahti

Stakeholder Relations 3)

UPM Plywood

Mika Kekki

Pirkko Harrela 6)

1) Incl. Finance & Control, Treasury, IR, IT, Sourcing and Real Estate (incl. Finnish forest assets) 2) Incl. Investment Management, R&D and UPM Biorefining business unit (UPM Biofuels, UPM Biochemicals, UPM Biomedicals and UPM Biocomposites) 3) Incl. Communications & Brand, Responsibility, Public Affairs 4) Incl. UPM Pulp and UPM Timber 5) Interim 6) Saara Tahvanainen has been appointed as successor of Pirkko Harrela who will retire in March 2024

Remuneration In accordance with the CG Code, UPM has published the Remuneration Report for the financial year 2023. The Remuneration Re port and information on the remuneration of the Group Executive Team members is available on the corporate website at www. upm.com/governance. The Remuneration Report for governing bodies presents the remuneration of direc tors and the President and CEO, and has been prepared by the Board of Directors’ Remuneration Committee and Nomination and Governance Committee. The Remuner ation Report 2023 for governing bodies will be presented at the AGM 2024. The Remuneration Policy sets out the framework for the remuneration of the Company’s governing bodies and it must be presented to the general meeting at least every four years. UPM’s Remuneration Policy was presented to and adopted by the AGM 2020 and the Remuneration Policy

The approved annual fees and total remuneration of each Board member, as well as the number of shares purchased, are presented in the tables on the next page. Board members did not receive any other financial benefits for their Board or Committee membership in addition to the annual base and Committee fees. Travel and accommodation expenses incurred for meetings held outside a Director’s place of residence were paid against invoice. Shares purchased for Board members in 2023 may not be transferred for two years from the purchase date (26 April 2023) or until the membership of the respective Board mem ber has ended, whichever occurs first. It is a long-standing custom at UPM to remunerate Board members in both shares and cash. Board members are encouraged to own Company shares on a long-term basis and all of them have holdings, indicating close alignment of the interests of Board members with those of shareholders.

will thus be presented to the AGM 2024. The prevailing Remuneration Policy is available on the corporate website at www. upm.com/governance. Remuneration of the members of the Group Executive Team and information on the Company’s short- and long-term incen tive schemes and plans, as well as the terms and conditions of the aforementioned executives’ service agreements, is available on the corporate website at www.upm.com/ governance. Remuneration of the Board of Directors At the AGM 2023, in accordance with the Nomination and Governance Committee’s proposal, it was decided that the annual base fee of the Chair, Deputy Chair and other members of the Board be raised and that the annual committee fees will remain unchanged. The approved annual base fees and committee fees in 2022 and 2023 are presented in tables on the following page.

SPOTLIGHT

LEADERSHIP IS ABOUT COLLABORATION

Pia Aaltonen-Forsell, CFO of Outokumpu Oyj, was elected to UPM’s Board of Directors at the AGM last spring. With a long career in the forest and manufacturing industries, she is now looking at UPM from a strategic perspective. “UPM is a company with a strong tradition and foundation. The company has implemented the Biofore strategy relentlessly for a long time now and sustainability is truly at the core of this strategy. I have been particularly impressed by

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023