UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

3.3 Share-based payments UPM offers rewards and recognition with an emphasis on high performance. All UPM’s employees belong to a unified annual Short- Term Incentive (STI) scheme. In addition, in 2024 UPM had three long term incentive schemes: the Performance Share Plan (PSP) for senior executives, the Deferred Bonus Plan (DBP) for other key employees and Restricted Share Plan (RSP) for individually selected participants in specific recruitment and retention situations. In 2023, UPM had two long-term incentive schemes as the Restricted Share Plan was established in 2023 and the first plan was approved for the period 2024–2027.

Restricted Share Plan The Restricted Share Plan (RSP) is used as a commitment instrument for individually selected participants in specific recruitment and retention situations. The Restricted Share Plan is targeted at the President and CEO, the other Group Executive Team members and the other selected members of the senior management. The President and CEO is not eligible to receive a reward from this Plan for retention purposes. Each plan consists of a one-year grant period and a three-year vesting period

during which share rewards are delivered in instalments to the participants. The first instalment of the reward shall be delivered no earlier than one year after the date the participant was nominated to the Plan. No earning criteria is applied to the Restricted Share Plan and the delivery of the share reward is subject to the continuation of the employment or service.

Performance Share Plan The Performance Share Plan (PSP) is targeted at the President and CEO and other Group Executive Team (GET) members as well as other selected members of the management. Under the PSP 2021–2023 UPM shares are awarded based on total shareholder return during a three year earning period. Total shareholder return takes into account share price appreciation and paid dividends. The performance measures for the PSP 2022–2024, PSP 2023–2025 and PSP 2024-2026 comprise the total shareholder return (80% weighting) and selected environmental, social and governance related (ESG) measures. In all plans, the earned shares are delivered after the earning period has ended .

RESTRICTED SHARE PLAN

RSP 2024-2027

No. of participants (at 31 December 2024)

11

Estimated no. of shares to be delivered at 31 December 2024 1)

238,340

Share delivery (year)

2025, 2026, 2027*

PERFORMANCE SHARE PLANS No. of participants at 31 December 2024

PSP 2021-2023 PSP 2022-2024 PSP 2023-2025 PSP 2024-2026

1) Share delivery in annual instalments

21

17

17

25

Actual achievement

34.62 %

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—

—

The indicated actuals and estimates of the share rewards under the Performance Share Plan, the Deferred Bonus Plan and the Restricted Share Plan represent the gross amount of the rewards of which the applicable taxes will be deducted before the shares are delivered to the participants.

Max no. of shares to be delivered 1) to the President and CEO

28,829 89,562 42,272 160,663

30,000 150,500 105,500 286,000

29,000 146,000 93,500 268,500

72,952 204,000 158,000 434,952

to other members of GET

to other selected members of management Total max no. of shares to be delivered

Share delivery (year)

2024

2025

2026

2027

Accounting policies

Total shareholder return (80%) ESG (20%) 2)

Total shareholder return (80%) ESG (20%) 3)

Total shareholder return (80%) ESG (20%) 4)

Total shareholder return (100%)

Earning criteria (weighting)

The group’s long-term share incentive plans are recognised as equity settled or cash-settled share-based payment transactions depending on the settlement. The group classifies the transactions with net settlement features for tax obligations as equity-settled in its entirety. Shares are valued using the market rate on the grant date. The settlement is a combination of shares and cash. The group may obtain the necessary shares by using its treasury shares or may purchase shares from the market. Share deliveries are executed by using already existing shares and the plans, therefore, have no dilutive effect.

1) For PSP 2021–2023, the gross number of shares actually earned. 2) ESG measures are reduction of fossil CO ₂ emissions from UPM’s own combustion and purchased electricity by 65% by 2030 from 2015 level (10% weighting), achievement of a net positive impact on biodiversity in the company’s own forests in Finland (5% weighting) and achievement of gender pay equity (5% weighting). 3) ESG measures are reduction of fossil CO 2 emissions from UPM’s on-site combustion and purchased energy by 65% by 2030 from 2015 level (10% weighting), achievement of a net positive impact on biodiversity in the company’s own forests in Finland (5% weighting) and achievement of gender pay equity (5% weighting). 4) ESG measures are reduction of fossil CO ₂ emissions from UPM’s on-site combustion and purchased energy, the achievement of a net positive impact on biodiversity in the Company’s own forests in Finland and the achievement of gender pay equity globally.

Deferred Bonus Plan The Deferred Bonus Plan (DBP) is targeted at other selected key employees and it consists of annually commencing plans. Each plan consists of a one-year earning period and a two-year restriction period. UPM shares are awarded based on achievement of group or group and business area EBITDA targets. Prior to share delivery, the share rewards earned are adjusted with dividends and other capital distributions, if any, paid to all shareholders during the restriction period.

DEFERRED BONUS PLANS No. of participants (at grant)

DBP 2021

DBP 2022

DBP 2023

DBP 2024

428 350

451 369

446 120

453 436

No. of participants (at 31 December 2024) Max no. of shares to be delivered (at grant)

459,912 355,032

487,130 382,038

477,052 57,876

571,338 191,209

Estimated no. of shares to be delivered at 31 December 2024 1)

Share delivery (year)

2024

2025

2026

2027

Group/Business Area EBITDA

Group/Business Area EBITDA

Group/Business Area EBITDA

Group/Business Area EBITDA

Earning criteria

1) For DBP 2021, the gross number of shares actually earned

UPM FINANCIAL REPORT 2024 276

276

UPM FINANCIAL REPORT 2024

277

277

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024