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UPM Annual Report 2014
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UPM Annual Report 2014
99
CONTENTS
ACCOUNTS
Year ended 31 December
EURm
2014 2013
Personnel expenses
Salaries and fees
1,020 1,047
Share-based payments
(Note 37)
10
8
Indirect employee costs
Pension costs-defined benefit plans (Note 29)
16
27
Pension costs-defined contribution plans
116
119
Other post-employment benefits (Note 29)
2
2
Other indirect employee costs
2)
126 123
260 271
Other operating costs and expenses
Rents and lease expenses
52
59
Emission expenses (Note 6)
15
9
Losses on sale of non-current assets
4
2
Other operating expenses
3)
846 951
917 1,021
Costs and expenses, total
8,708 9,091
1)
External services and charges mainly comprise delivery costs of products sold.
2)
Other indirect employee expenses primarily include other statutory social
expenses, excluding pension expenses.
3)
Other operating expenses include, among others, energy and maintenance
expenses as well as expenses relating to services and the Group’s administration.
The research and development costs included in costs and expenses were
EUR 35 million (38 million).
Government grants
In 2014, the Group recognised government grants of EUR 3 million (1
million) as reduction of non-current assets. In 2014, government grants
relate to environmental investments in Austria. Government grants
recognised as deduction of costs and expenses totalled to EUR 7 million
(11 million) in 2014. In addition, the Group received emission rights
from governments, Note 17.
Remuneration paid to members of the Board of
Directors and the Group Executive Team
The Annual General Meeting 2014 resolved that the annual fee to the
Board Chair is EUR 175,000, to the Board Deputy Chair and Chair of
the Audit Committee EUR 120,000 and to other members of the Board
EUR 95,000. Of the annual fee, 60% was paid in cash to cover taxes and
40% in company shares purchased on the Board members’ behalf. Since
General Ari Puheloinen was able to participate in the Board work only
from the start of August, the Annual General Meeting decided that he
was entitled to two-thirds of the Board member’s annual fee. No annual
fee was paid to the President and CEO for his role as a member of the
Board.
In 2014, 5,595 (8,925) company shares were paid to the Chair, 3,836
(6,120) shares to the Deputy Chair and the Chair of the Audit Commit-
tee respectively and 3,037 (4,845) shares to each of the other members of
the Board, except for Ari Puheloinen 2,025 shares.
Shareholdings (no. of shares) and fees of the Board of Directors
Shareholdings
Fees (EUR 1,000)
31 Dec. 2014
1)
2014 2013
Board members
Björn Wahlroos, Chair
250,249
175 175
Berndt Brunow, Deputy Chair
300,703
120 120
Matti Alahuhta
58,991
95
95
Piia-Noora Kauppi
8,981
120
95
Wendy E. Lane
30,649
95
95
Ari Puheloinen
2,025
63
–
Veli-Matti Reinikkala
33,821
95
95
Kim Wahl
11,799
95
95
Jussi Pesonen, President and CEO
195,280
–
–
Former Board members
Karl Grotenfelt
–
120
Ursula Ranin
–
95
Total
892,498
858 985
1)
The above shareholdings include shares held by the Board members' closely as-
sociated persons and controlled entities.
Salaries, fees and other benefits of the Group Executive Team
Year ended 31 December
EUR
1,000
2014 2013
President and CEO Jussi Pesonen
Salaries and benefits
Salaries
1,052 1,059
Incentives
627
553
Benefits
27
26
Total
1,706 1,638
In 2014, costs under the Finnish statutory pension scheme for the Presi-
dent and CEO amounted to EUR 303,000 (282,000) and costs under the
voluntary pension plan were EUR 682,000 (677,000). In addition, a
single premium of EUR 268,000 was paid into to the President and
CEO's voluntary group pension plan (EUR 1.1 million) to cover past
service pension liabilities.
Year ended 31 December
EUR
1,000
2014 2013
Group Executive Team (excluding the President and
CEO)
1)
Salaries and benefits
Salaries
3,457 3,396
Incentives
869 1,067
Benefits
249
137
Total
4,575 4,600
1)
11 members in 2014 and in 2013.
In 2014, costs under the Finnish and German statutory pension schemes
for Group Executive Team members (excluding the President and CEO)
amounted to EUR 752,000 (740,000) and costs under the voluntary
pension plan were EUR 686,000 (531,000).
The total remuneration of the President and CEO and the members of
the Group Executive Team consists of base salary and benefits, short-
term incentives and share-based long-term incentive schemes.
The short-term incentive plan for the President and CEO and the
members of the Group Executive Team has been linked with achieve-
ment of the predetermined financial targets of the Group or Business
Areas and individual targets. The incentives amount to a total maximum
of 100% of annual base salary to the Business Area Executives and to a
total maximum of 70% 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
(1.4 million).
In accordance with the service contract of the President and CEO
the retirement age of the President and CEO, Jussi Pesonen, is 60 years.
For the President and CEO, the target pension is 60% of average indexed
earnings calculated according to the Finnish statutory pension scheme
from the last ten years of employment. The costs of lowering the retire-
ment age to 60 years is covered by supplementing statutory pension with
a voluntary defined benefit pension plan. Should the President and CEO
leave the company prior to the age of 60, immediate vesting right corre-
sponding to 100% of earned pension (pro rata) will be applied. The
retirement age of the other members of the Group Executive Team is 63
years. The expenses of the President and CEO's defined benefit pension
plan in 2014 were EUR 0.5 million (0.5 million), and the plan assets
amounted to EUR 6.6 million (4.6 million) and obligation to EUR 5.1
million (3.8 million). Other Group Executive Team members are under
defined contribution plans.
In case the notice of termination is given to the President and CEO,
a severance pay of 24 months' fixed salary will be paid in addition to the
salary for six months' notice period. Should the President and CEO give
a notice of termination to the company, no severance pay will be paid in
addition to the salary for the notice period. For other members of the
Group Executive Team, the period for additional severance compensa-
tion 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 employee.
If there is a change in the control over the company, as defined in
the employment or service contracts, the President and CEO may termi-
nate his service contract within three months and each member of the
Group Executive Team may terminate his/her service contract within
one month, from the date of the event that triggered the change of con-
trol and shall receive compensation equivalent to 24 months' base salary.
Auditor's fees
Year ended 31 December
EURm
2014 2013
Audit
2.0
2.6
Audit-related
–
0.1
Tax consulting
0.6
0.9
Other services
0.5
0.1
Total
3.1
3.7
8 Change in fair value of biological assets
and wood harvested
Year ended 31 December
EURm
2014 2013
Wood harvested
–91 –88
Change in fair value
169 156
Total
78
68
9 Share of results of associated companies
and joint ventures
Year ended 31 December
EURm
2014 2013
Associated companies
3
3
Joint ventures
–
–1
Total
3
2
10 Depreciation, amortisation and
impairment charges
Year ended 31 December
EURm
2014 2013
Amortisation of intangible assets
Intangible rights
16
17
Other tangible assets
30
28
46
45
Depreciation of property, plant and equipment
Buildings
81
81
Machinery and equipment
373 390
Other tangible assets
17
19
471 490
Depreciation of investment property
Buildings
3
3
Other assets
1
–
4
3
Impairment charges of intangible assets
Emission allowances
–1
4
–1
4
Impairment charges of property,
plant and equipment
Land areas
1
–
Buildings
42
–
Machinery and equipment
93
3
Other tangible assets
2
–
138
3
Total
658 545
In November 2014, UPM announced that it is planning to permanently
reduce its publication paper capacity in Europe by approximately
800,000 tonnes, including newsprint machine 3 at UPM Chapelle in
France, newsprint machine 1 at UPM Shotton in UK, SC paper machine
Jämsänkoski 5 at UPM Jämsänkoski in Finland and coated mechanical
paper machine 2 at UPM Kaukas in Finland. Based on the plan, UPM
recognised impairment charges of EUR 135 million related to property,
plant and equipment in the UPM Paper ENA segment. In addition,
impairment charges of EUR 3 million related to restructuring in the
UPM Raflatac segment were recognised in property, plant and equip-
ment.
In July 2013, UPM Raflatac announced that it will reduce labelstock
production capacity in Europe, South-Africa and Australia. Impairment
charges EUR 3 million were recognised in the UPM Raflatac segment´s
property, plant and equipment.
11 Gains on available-for-sale investments, net
Year ended 31 December
EURm
2014 2013
Net gains and losses on disposals
1)
59
1
Total
59
1
1)
In 2014, includes a gain of EUR 59 million related to the sale of Metsä Fibre Oy
shares in 2012.