UPM annual report 2015

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UPM Annual Report 2015 UPM Annual Report 2015 63 64
contents
Governance
IN BRIEF STRATEGY BUSINESSES STAKEHOLDERS GOVERNANCE ACCOUNTS
UPM-Kymmene Corporation (UPM or the company) follows the Finnish Corporate Governance Code 2015 (Code)
issued by the Securities Market Association which entered into force on 1 January 2016. The Code is available on
the Securities Market Association’s website . UPM complies with all recommendations of the Code.
UPM’s Corporate Governance Statement for the financial year 2015 and the Remuneration Statement dated
1 March 2016 have been prepared in accordance with the reporting section of the Code. The statements and this
governance section complement each other, and this section contains references to the statements and also to the
governance pages on the corporate website. The statements and the governance pages provide additional
information on UPM’s governance practices and policies and they can be found on the corporate website under
UPM’s governance
structure
UPM-Kymmene Corporation is a Finnish
limited liability company with headquarters in
Helsinki, Finland. The parent company UPM
and its subsidiaries form the UPMGroup
having approximately 19,600 employees in 45
countries. The group’s business operations are
divided into six business areas supported by
global functions. UPM shares are listed on
the Nasdaq Helsinki exchange.
UPMuses a one-tier governance model,
which, in addition to the general meeting of
shareholders, comprises the Board of Directors
and the President and CEO as presented in the
illustration below. In the operative manage-
ment of the company, the President and CEO is
assisted by the Group Executive Team, the
Business Area Boards and the Strategy Team.
The general meeting elects the members of the
Board of Directors annually, and the Board of
Directors appoints the President and CEO and
the members of the Group Executive Team.
The members of the Group Executive Team
report directly to the President and CEO.
Governance guidelines
and monitoring of
compliance
UPM’s decision-making and management are
guided by UPM values and the Code of Con-
duct. The Code of Conduct has been approved
by the Board of Directors and it is available in
all company languages on UPM intranet and
under The Code
of Conduct is complemented by more detailed
rules and guidelines approved by the Group
Executive Team, business areas and global
functions. These rules and guidelines cover,
among others, such topics as anti-bribery,
competition law, confidentiality, contract
management, taxation, human resources,
environment, information security, safety,
and equality. UPM is committed to observing
applicable laws and its Code of Conduct wher-
ever it operates and strives to ensure compli-
ance with the Code of Conduct and related
rules by training employees and by developing
the company’s auditing, monitoring and
reporting processes. More than 90% of UPM
employees had participated in the Code of
Conduct training by the end 2015.
The Code of Conduct was renewed during
the year and the Board of Directors approved
the new Code of Conduct in February 2016.
The implementation of the new Code of Con-
duct has started and will include a comprehen-
sive training programme, which is mandatory
to all employees.
UPMLegal Function manages legal compli-
ance programmes and arranges related train-
ings. The compliance programmes have spe-
cific target audiences which have been defined
based on risk assessments. Persons belonging
to a specific target group receive separate
invitations to participate in trainings arranged
in a form of either a face-to-face training or
e-learning. So far, legal compliance pro-
grammes and trainings are provided for anti-
corruption, competition law, confidentiality,
insider matters, energy markets and trade
sanctions.
The Board of Directors, with the assistance
of the Audit Committee, is responsible for
monitoring the company’s compliance with the
applicable legal and regulatory requirements
and with the company’s Code of Conduct. In
addition, the Audit Committee oversees proce-
dures for treatment of complaints and con-
cerns received anonymously or otherwise by
the company regarding accounting, internal
accounting controls or auditing matters, or
potential violations of law. As a part of the
committee’s compliance review, the committee
is provided with a quarterly report by the com-
pany’s Ethics Advisory Committee and a report
of submissions under the company’s Report
Misconduct channel by the Head of Internal
Audit. This channel is available on UPM’s
intranet for any UPM employee, and on
the corporate website under
governance for the company’s external
stakeholders.
Further information on the company’s
governance policies, guidelines and practices
is available under
General meeting of
shareholders
The company’s supreme decision-making body
is the general meeting of shareholders. Accord-
ing to the Articles of Association, the general
meeting shall be held annually by the end of
June. Usually, the Annual General Meeting
(AGM) takes place late March or early April. In
2015, the AGMwas held on 9 April in Helsinki.
A total of 2,607 (in 2014: 1,984) shareholders
attended the meeting either in person or
through a legal or proxy representative, repre-
senting a total of 51.4% (45.6%) of the com-
pany’s registered share capital and voting rights
at the time of the meeting. All decisions at the
meeting were taken without voting. These
decisions are summarized below.
Financial statements and dividend
The AGM adopted the company’s financial
statements for the period 1 January–31 Decem-
ber 2014, decided to distribute dividends
amounting to EUR 0.70 (EUR 0.60) per share,
and discharged the President and CEO, and
the members of the Board of Directors from
liability for the financial year 2014. The divi-
dends, totalling EUR 373 million, were paid
on 23 April 2015.
Board composition
The AGM elected ten members to UPM’s Board
of Directors for a termwhich will end upon
closing of the AGM 2016. Berndt Brunow,
Piia-Noora Kauppi, Wendy E. Lane, Jussi
Pesonen, Ari Puheloinen, Veli-Matti Reinik-
kala, KimWahl and BjörnWahlroos were
re-elected to the Board and Henrik Ehrnrooth
and Suzanne Thoma were elected as new
directors. Matti Alahuhta, member since 2008,
stepped down from the Board. All directors
except President and CEO Jussi Pesonen are
non-executive. The directors’ personal details,
career histories and other significant positions
are presented on pages 71–72 of this report
and under
Board remuneration
As regards Board remuneration, the AGM
resolved that the Chairman of the Board be paid
an annual fee of EUR 175,000, the Board Deputy
Chairman and Chairman of the Audit Commit-
tee EUR 120,000, and other members of the
Board EUR 95,000. The annual fee was decided
to be paid in the company shares and cash so
that 40% of the fee was to be paid in shares to
be acquired on the Boardmembers’ behalf,
and the rest in cash to cover withholding tax.
The company was to pay any costs and transfer
tax related to the acquisition of the company
shares. No annual fee was paid to the President
and CEO for his role as a member of the Board.
The Board members’ annual fees, the num-
ber of acquired shares and the number of UPM
shares held by the members at the end of 2015
are presented in the table on the following
page. The Board members do not receive any
other financial benefits for their Board or
committee membership in addition to the
annual fees. The annual fees have remained
the same since 2007. According to the Board
charter, Board members are encouraged to
own company shares on a long term basis.
Auditor and auditor remuneration
The AGM also resolved on the company’s
auditor, and re-elected Pricewaterhouse­
Coopers Oy, a firm of Authorized Public
Accountants, as the company’s statutory
auditor for a one-year term, with Authorized
Public Accountant Merja Lindh as the lead
audit partner. Ms Lindh holds this position
since 8 April 2014. The AGM further resolved
that the audit fee would be paid against invoices
approved by the Board of Directors’ Audit
Committee. The fees paid to the auditor, as
approved by the Audit Committee, are shown
in the following table.
Board authorizations
Further resolutions taken at the AGM include
authorizations to the Board of Directors to
decide on the repurchase of the company’s own
shares and to decide on donations for charita-
ble or corresponding purposes. The maximum
number of shares that may be repurchased
amounts to 50 million shares, and the total
amount of donations may not exceed EUR
250,000. From before, the Board of Directors
has the authorization to issue 25 million shares
or special rights entitling to shares. The Board
has not exercised the repurchase or the share
issue authorizations but donations totalling
EUR 60,000 have been made to the Depart-
ment of Neurosurgery at the Helsinki
University Hospital and to the Stiftung Lesen,
a German foundation helping refugee children
to integrate through improved reading skills.
GOVERNANCE STRUCTURE OF UPM-KYMMENE CORPORATION
General Meeting of Shareholders
President and CEO
Group Executive Team business area boards
Board of Directors
Remuneration Committee
Nomination and
Governance Committee
Audit Committee
Auditor
Strategy Team Internal Audit
Elects
Assist
Elects
Issues
Auditor’s
Report
Appoints,
steers,
monitors
Reports
Reports Reports
Reports
Report
Appoints
Chairs Chairs
AUDITOR’S REMUNERATION
EUR million 2015 2014
Audit fee 2.3 2.0
Tax consulting 0.8 0.6
Other services 0.5 0.5
Total 3.6 3.1
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