UPM Annual Report 2023

GOVERNANCE

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

ACCOUNTS FOR 2023

muneration comprises fixed and variable components. These components are shown in the table on page 113. The variable components are linked to predetermined and measurable perfor mance criteria, and thresholds have been set for the payable amount. The payable amounts of incentives are linked to the man agement team member’s position, as well as their achievement of performance measures and targets set on an annual basis. The Company has the right to reclaim any paid or due variable remuneration under certain circumstances, such as in the event of violation of laws or other legal ob ligations or the violation of the UPM Code of Conduct or other Company policies. Overall circumstances will be considered before exercising this right. The Company also has the right to cancel, recover or restate any paid or due variable remuner ation if financial or other calculations are found to be incorrect. Salaries, benefits and incentives earned by the President and CEO and members of the Group Executive Team are shown in the tables on the right.

The aim of the remuneration process for the Company’s management team is to pro mote the Company’s long-term financial success, competitiveness and favourable development of shareholder value. Re

In 2023, costs under the Finnish statu tory pension scheme for the President and CEO amounted to EUR 469,000 (458,000). Payments under the voluntary pension plan amounted to EUR 911,000 (1,000,000). In 2023, costs under the Finnish and German statutory pension schemes for GET members (excluding the President and CEO) amounted to EUR 881,000 (941,000). Payments under the voluntary pension plan amounted to EUR 994,000 (987,000). Please also see the Remunera tion Report 2023 (subject to adoption at the AGM 2024) and Note 3.2 to the consoli dated Financial Statements. Auditor and audit fees At the AGM 2023, Pricewaterhouse Coopers Oy, a firm of authorised pub lic accountants, was re-elected as the Company’s statutory auditor for a one-year term, with Authorised Public Accountant Mikko Nieminen as the lead audit partner. Mr Nieminen has held this position since April 2019. The Company conducted a tendering process for auditing services in 2022. The previous tendering process was carried out in 2013. Following the stipulations of the Auditor Regulation, the last financial year that PricewaterhouseCoopers Oy could act as the Company’s auditor was 2023. The AGM 2023 elected the auditors for the financial years 2023 and 2024 (page 109) to give for the financial year 2024 elected new auditor, Ernst & Young Oy, time to prepare for the new audit engagement. The AGM 2023 further resolved that the audit fees for the financial years 2023 and 2024 will be paid against invoices, approved by the Board of Directors’ Audit Commit tee. The amounts paid to the auditor for the financial year 2023, as approved by the Audit Committee, are shown in the table on the right.

Remuneration of executive management Remuneration at UPM is designed to encour age values-based behaviour and the achieve ment of ambitious strategic targets, as well as compensate performance accordingly.

COMPONENTS OF MANAGEMENT REMUNERATION

COMPONENT

PAYABLE IN

BASIS OF PAYMENT TIME OF PAYMENT

Base salary

Cash

Service agreement/ Executive contract Service agreement/ Executive contract

Monthly

Fringe benefits

For example, company car and phone

Monthly

BOARD REMUNERATION AND PAYMENT MECHANISM

Short-term incentives Long-term incentives

Cash

Short-Term Incentive Plan Annually

Shares

Performance Share Plan (PSP)

Annually following a three year earning period

ANNUAL BASE FEE (EUR)

2023 2022

PAYMENT MECHANISM

Chair

218,000 200,000 •Approx. 40% in company shares, rest in cash to cover taxes. The Company paid costs and transfer tax related to the purchase of the Company shares 145,000 140,000

Deputy Chair

• Shares may not be transferred within two years from the purchase date or until the Director’s membership in the Board has ended, whichever occurs first

Member

120,000 115,000

REMUNERATION OF THE PRESIDENT AND CEO

SALARIES AND BENEFITS (EUR 1,000) Salary, paid during the financial year

2023 1,161 166 1) 853 3)

2022 1,153 1,473 2) 2,902 4)

COMMITTEE FEES AND PAYMENT MECHANISM

Short-term incentives, earned during the financial year

Share rewards, earned

ANNUAL COMMITTEE FEES IN 2022 AND 2023 (EUR)

Benefits, paid during the financial year

24

28

CHAIR MEMBERS

PAYMENT MECHANISM

Audit Committee

35,000

15,000

1) Paid in February 2024 2) Paid in February 2023

Remuneration Committee

27,500

10,000

3) PSP 2021-2023 (shares delivered in February 2024) 4) PSP 2020-2022 (shares delivered in February 2023)

cash

Nomination and Governance Committee

20,000

10,000

BOARD REMUNERATION IN 2023

REMUNERATION OF THE GROUP EXECUTIVE TEAM (EXCLUDING THE PRESIDENT AND CEO)

ANNUAL BASE FEE (EUR) OF WHICH

ANNUAL COMMITTEE FEE (EUR)

TOTAL REMUNERATION (EUR)

NUMBER OF SHARES PURCHASED AS PART OF ANNUAL BASE FEE 2)

40% FOR SHARES (EUR)

60% IN CASH (EUR)

SALARIES AND BENEFITS (EUR 1,000) Salaries, paid during the financial year

2023 3,950 1,359 1) 2,651 3)

2022 4,140 2,973 2) 9,242 4)

DIRECTOR 1)

218,000

Henrik Ehrnrooth

Short-term incentives, earned during the financial year

20,000

238,000

3,027

87,200 130,800

Share rewards, earned

145,000

Kim Wahl

35,000

180,000

2,013

Benefits, paid during the financial year

139

135

58,000 87,000

120,000

Pia Aaltonen-Forsell

15,000

135,000

1,666

1) Paid in February 2024 2) Paid in February 2023

48,000 72,000

120,000

3) PSP 2021-2023 (shares delivered in February 2024) 4) PSP 2020-2022 (shares delivered in February 2023)

Emma FitzGerald

10,000

130,000

1,666

48,000 72,000

120,000

Jari Gustafsson

10,000

130,000

1,666

48,000 72,000

120,000

Piia-Noora Kauppi

10,000

130,000

1,666

48,000 72,000

AUDITOR’S FEES

120,000

Topi Manner

10,000

130,000

1,666

48,000 72,000

EUR MILLION

2023

2022

2021

120,000

Marjan Oudeman

15,000

135,000

1,666

4.4 0.2 0.3 0.1 5.0

4.0 0.2 0.3 0.1 4.6

3.4 0.2 0.4 0.2 4.2

Audit fee

48,000 72,000

Audit-related services

120,000

Martin à Porta

27,500

147,500

1,666

Tax services Other services

48,000 72,000

1,203,000

Total

152,500

1,355,500

16,702

Total

481,200 721,800

1) Björn Wahlroos' term ended at the AGM 2023 due to his announcement that he was not available for re-election. No Board fees were payable to him during financial year 2023 2) Transaction date 26 April 2023

112

113

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023