UPM annual report 2015

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UPM Annual Report 2015 UPM Annual Report 2015 69 70
contents
IN BRIEF STRATEGY BUSINESSES STAKEHOLDERS GOVERNANCE ACCOUNTS
Management
remuneration
The remuneration of the President and CEO
and other members of the Group Executive
Team consists of the base salary and fringe
benefits, performance-based short and long
term incentives, and pension benefits. The
Board of Directors resolves annually on the
remuneration of the President and CEO and
other members of the Group Executive Team
based on the proposals by the Remuneration
Committee. The Board of Directors also
approves the terms and conditions of the short
and long term incentive plans prepared by the
Remuneration Committee. When preparing
long term incentive plans, the committee
consults independent advisors.
The aim of the company’s management
remuneration is to promote the company’s
long term financial success, competitiveness
and favourable development of shareholder
value. The remuneration comprises non-varia-
ble and variable components. The variable
components are linked to predetermined and
measurable performance and results criteria,
and maximum levels have been set for the
variable components of the remuneration.
Further information on the variable compo-
nents is available in the Remuneration State-
ment under
The base salary is paid monthly in cash.
The base salary includes the fringe benefits e.g.
company car and phone. Short term incentives
are based on the company’s Short Term Incen-
tive Plan and they are paid annually in cash.
The amount of the incentive is linked to the
executive’s position and achievement of annu-
ally set targets.
Long term incentives are based on the
Performance Share Plan targeted at the Presi-
dent and CEO and other Group Executive
Teammembers, and other selected members of
the management. The Performance Share Plan
consists of annually commencing three-year
plans, and the incentives are payable in com-
pany shares following a three-year earning
period. The number of payable shares is linked
to the executive’s position and achievement of
annually set targets. Long term incentives are
also paid to other key employees of the group
based on the Deferred Bonus Plan.
The company’s short and long term incen-
tive plans, and the termination payments and
pension benefits of the President and CEO and
other members of the Group Executive Team
are presented in the Remuneration Statement
which is available under
governance.
Remuneration of the President
and CEO
The President and CEO’s annual salary and
other financial benefits are shown in the table
below.
REMUNERATION OF THE
PRESIDENT AND CEO
Salaries and benefits
(EUR 1,000)
2015 2014
Salary 1,052 1,052
Short term incentives 856 627
Share rewards 824 –
Benefits 27 27
Total 2,759 1,706
Personal income tax
withholding in Finland *)
1,381 927
*) Income taxes withheld from salaries and benefits
and remitted to tax authorities by UPM.
REMUNERATION OF
THE GROUP EXECUTIVE TEAM
Salaries and benefits
(EUR 1,000)
2015 2014
Salaries 3,455 3,457
Short term incentives 1,733 869
Share rewards 1,805 –
Benefits 238 249
Total 7,231 4,575
RESPONSIBILITY AREAS OF THE MEMBERS OF THE GROUP EXECUTIVE TEAM
President and CEO Jussi Pesonen
CFO 1) Tapio Korpeinen Heikki Vappula UPM Biorefining
General Counsel Juha Mäkelä Tapio Korpeinen UPM Energy
Strategy Kari Ståhlberg Tapio Kolunsarka UPM Raflatac
Technology 2) Jyrki Ovaska Bernd Eikens UPM Paper Asia
Human Resources Riitta Savonlahti Winfried Schaur UPM Paper ENA
Stakeholder Relations 3) Pirkko Harrela Mika Sillanpää UPM Plywood
1) Incl. Finance & Control, Treasury, IR, IT, Sourcing and Real Estate (incl. Finnish forest assets)
2) Incl. Investment Management, R&D, new business development (biocomposites, biochemicals)
3) Incl. Brand & Communications, Environment & Responsibility, Public Affairs
MEMBERS OF THE GROUP EXECUTIVE TEAM
Executive Team member since Position at UPM Shareholdings on
31 Dec. 2015
Shareholdings on
31 Dec. 2014
Jussi Pesonen *) 2001 President and CEO 220,275 195,280
Bernd Eikens *) 2013 Executive Vice President,
UPM Paper ENA
13,747 10,000
Pirkko Harrela 2004 Executive Vice President,
Stakeholder Relations
40,870 35,488
Tapio Kolunsarka *) 2013 Executive Vice President,
UPM Raflatac
13,588 10,000
Tapio Korpeinen *) 2008 CFO, Executive Vice
President, UPM Energy
54,747 45,792
Juha Mäkelä 2008 General Counsel 37,500 32,068
Jyrki Ovaska 2002 Executive Vice President,
Technology
74,269 64,612
Kim Poulsen
(until 31 Oct. 2015) *)
2013 Executive Vice President,
UPM Paper Asia
–
Riitta Savonlahti 2004 Executive Vice President,
Human Resources
17,803 16,570
Mika Sillanpää *) 2013 Executive Vice President,
UPM Plywood
11,883 10,117
Kari Ståhlberg 2013 Executive Vice President,
Strategy
7,229 4,212
Heikki Vappula *) 2010 Executive Vice President,
UPM Biorefining
17,111 10,000
Total 509,022 434,139
*) Executives belonging to UPM’s public insiders. Their shareholdings above include shares
held by their closely associated persons and controlled entities, if any.
Corporate
management
Jussi Pesonen is the President and Chief Exec-
utive Officer of UPM-Kymmene Corporation
since January 2004. He is also member of the
company’s Board of Directors since March
2007. The President and CEO leads the com-
pany’s day-to-day operations in accordance
with the instructions and orders given by the
Board of Directors. The duties and responsibili-
ties of the President and CEO are presented on
the Corporate Governance Statement 2015 and
under
In the operative management of the com-
pany, the President and CEO is assisted by the
Group Executive Team, the Business Area
Boards and the Strategy Team as presented in
the illustration on page 63 of this report.
The company’s management systemwas
modified during the year with the purpose of
creating a more direct leadership channel from
the group level to the business area level. As a
result of this modification, UPM initiated a new
forum, Business Area Boards, for business area
level decision-making. Also, the roles of the
Group Executive Team and the Strategy Team
were reconsidered. The duties and responsi-
bilities and the composition of these manage-
ment bodies are presented below. Members of
the Group Executive Team continue to carry
the main responsibility for the business areas
and global functions they are heading.
The Group Executive Team consists of the
executives heading the business areas and the
global functions, and it is responsible for
approving and executing group-level guidelines
and procedures. The President and CEO chairs
the Group Executive Team.
The Business Area Boards comprise, in
addition to the President and CEO chairing the
boards, the CFO, the EVPs of the global func-
tions, and the EVP of the business area in
question. The Business Area Boards are
responsible for business area level decision-
making in matters pertaining to each business
area’s strategy, budget, business performance,
operative investments, commercial strategies,
business development plans, business and
strategic risks, strategic and organizational
changes as well as HRmatters.
The Strategy Team is chaired by the Presi-
dent and CEO and its other members are the
CFO and the heads of the strategy, technology
and legal functions. The team assists the Presi-
dent and CEO in matters pertaining to the
preparation of group strategies, strategic pro-
jects, capital expenditure, M&A and other
strategic development initiatives for the Board
of Directors’ approval.
Members of the Group Executive Team and
their position and shareholdings in the com-
pany are presented in the table below, and their
responsibility areas in the illustration on the
following page. Kim Poulsen headed UPM
Paper Asia until he left the company at the end
of October 2015. Bernd Eikens, Executive Vice
President of UPMPaper ENA, was appointed
his successor in December and he assumed his
new duties as the Executive Vice President of
UPMPaper Asia on 1 February 2016. Winfried
Schaur was appointed Executive Vice President
of UPMPaper ENA succeeding Mr Eikens as of
8 February 2016.
The executives’ personal details, career
histories and positions of trust are presented
on pages 73–74 of this report and under www.
Remuneration of the Group
Executive Team
The annual salaries and other financial benefits
of the members of the Group Executive Team
(excluding the President and CEO) are shown
in the table below.
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