UPM Annual Report 2024

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WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

3. Employee rewards 3.1 Employee costs

Salaries and benefits paid to the President and CEO and the Group Executive Team President and CEO 1)

Other members of Group Executive Team 2)

EUR 1,000

2024

2023 1,161 1,473 2,902

2024 3,736

2023 3,950 2,973 9,242

Salaries

894 363 125

Short-term incentives

996

EURm

2024

2023 1,039

Share rewards

2,871

Salaries and fees

937

Benefits

146

139

Share-based payments

Total

1,418

5,561

7,748

16,304

Pension and other post-employment benefits, defined benefit plans Pension costs, defined contribution plans

1) Massimo Reynaudo was appointed as President and CEO of UPM-Kymmene Corporation as of 1 January 2024. Jussi Pesonen continued as the President and CEO until 31 December 2023. 2) Group Execurive Team was composed of 10-11 members in addition to CEO during 2024 and 2023.

101 106

101 111

Other indirect employee costs 1)

Total

1,179

1,287

1) Other indirect employee expenses primarily include other statutory social expenses, excluding pension expenses.

In October 2023, Massimo Reynaudo was appointed as President and CEO of UPM-Kymmene Corporation as of 1 January 2024. Jussi Pesonen continued as the President and CEO until 31 December 2023, after which he worked as an advisor to the Company and its management until he retired from UPM on 30 April, 2024. In 2024, costs under the Finnish statutory pension scheme for the President and CEO amounted to EUR 220,000 (469,000) and payments under the voluntary pension plan amounted to EUR 190,000 (911,000). In 2024, costs under the Finnish and German statutory pension schemes for Group Executive Team (GET) members (excluding the President and CEO) amounted to EUR 731,000 (881,000) and payments under the voluntary pension plan amounted to EUR 671,000 (994,000). The remuneration of the President and CEO and other members of the Group Executive Team consists of the base salary and benefits, short term incentive and long-term share-based incentive. In 2024 and 2023, the short-term incentives were based on the company's Short-Term Incentive Plan and they are paid annually in cash. The amount of the incentive is linked to the executive's position and achievement of annually set targets. The maximum incentives amount to a total of 110% of the annual base salary to the Business Area Executives and to a total of 90% of annual base salary to the other members of the Group Executive Team. For the President and CEO, the maximum annual incentive amounts to 150% of the annual base salary. The expenses recognised in income statement in respect of share based payments for the Group Executive Team were EUR 2.8 million (4.3 million). The UPM’s President and CEO Massimo Reynaudo's retirement age is 65 years. He has a voluntary pension benefit to supplement the Finnish statutory pension scheme (TyEL). The voluntary pension benefit is arranged through a defined contribution plan. Should the company give notice of termination of the President and CEO Massimo Reynaudo's service agreement, severance pay of 12 months base salary will be paid in addition to the salary for the 12-month notice period. Should the President and CEO give notice of termination to the company, no severance pay will be paid in addition to the salary for the notice period. The former President and CEO Jussi Pesonen had a voluntary pension benefit in addition to the Finnish statutory pension scheme. This voluntary pension benefit was arranged through a defined benefit plan until the end of November 2020. The last contribution to the defined benefit plan was made in 2020. Under the defined benefit plan, the target pension was 60% of the average indexed earnings from the last ten full calendar years of employment calculated according to the Finnish statutory pension scheme. The income of the former President and CEO Jussi

Pesonen’s defined benefit pension plan in 2024 was EUR 0.9 million (0.7 million). In 2024, the pension plan was fully settled, reducing both plan assets (EUR 10.4 million in 2023) and obligations (EUR 9.7 million in 2023) to EUR 0 million. As of December 2020, the voluntary pension benefit was arranged through a defined contribution plan for the former President and CEO. The retirement age of other members of the Group Executive Team is 65 or 63 for executives who have become Group Executive Team members before December 2023. They are covered by the statutory pension plan in the country of residence, supplemented by voluntary defined contribution pension plans. For other GET members, the period for severance pay is 12 months, in addition to the six months’ salary for the notice period, unless notice is given for reasons that are solely attributable to the executive. Should a GET member give notice of termination to the company, no severance pay will be paid in addition to the salary for the notice period. If there is a change of control in the company, the President and CEO may terminate his service agreement within three months and each GET member within one month from closing the takeover and shall receive compensation equivalent to 24 months' base salary.

3.2 Key management personnel The remuneration of the Chair of the Board of Directors was resolved to be raised so that the Chair of the Board was paid an annual base fee of EUR 231,000, the Deputy Chair of the Board EUR 145,000 and the other members of the Board EUR 120,000. The annual base fee was paid in company shares and cash so that approximately 40% of the fee was paid in the company shares purchased on the Board members’ behalf, and the rest in cash. The company paid any costs and transfer tax related to the purchase of the company shares.

The remuneration of the Audit Committee was resolved to be raised and other annual committee fees remained unchanged. The Chair of Audit Committee received annual committee fee of EUR 45,000, the Chair of Nomination and Governance Committee EUR 20,000 and the Chair of Remuneration Committee EUR 27,500. The members of the Audit Committee received an annual committee fee of EUR 25,000 and members of other committees EUR 10,000. The annual committee fees were paid in cash. In 2024, 2,816 (3,027) company shares were purchased to the Chair, 1,767 (2,013) to the Deputy Chair and 1,462 (1,666) to other members of the Board.

Shareholdings (no. of shares) and fees of the Board of Directors

Annual committee fee (EUR 1,000)

Shareholdings 31 December

Annual base fee (EUR 1,000)

2024

2023

2024

2023

2024

2023

Board members Henrik Ehrnrooth, Chair Kim Wahl, Deputy Chair

30,304 29,729

17,488 27,962

231 145 120 120 120 120 120 120 120

218 145 120 120 120 120 120 120 120 —

20 10 45 10 25 10 10 25 28

20 35 15 10 10 10 15 28 10 —

Pia Aaltonen-Forsell

3,128 1,462 5,964

1,666

Melanie Maas-Brunner 1)

—

Jari Gustafsson

4,502

Piia-Noora Kauppi

27,163

25,701

Topi Manner

7,929

3,097

Marjan Oudeman

12,722 27,972

11,260 26,510

Martin à Porta

Emma FitzGerald 2)

—

3,097

—

Total

146,373

121,283

1,216

1,203

183

153

1) Melanie Maas-Brunner, was elected as a new director to the Board in 2024 2) Emma FitzGerald, member of the Board of Directors until 4 April 2024