UPM Annual Report 2016

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UPM Annual Report 2016 UPM Annual Report 2016 74 75
In brief Strategy Businesses Stakeholders Accounts Governance
a compliance risk assessment (incl. corrup­
tion) was made with all of UPM’s business
areas. The assessment led to agreeing certain
risk mitigation actions including, among
others, more thorough anti-bribery and anti-
corruption reviews in certain specific
operations.
The UPMLegal Function manages legal
compliance programmes and arranges related
trainings to specific target groups, which have
been defined based on risk assessments. So far,
these 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 compliance with applicable legal
and regulatory requirements and with the
UPMCode of Conduct and other corporate
policies. In addition, the Audit Committee
oversees procedures for treatment of
complaints and concerns received anony­
mously or otherwise by the company. As a
part of the committee’s compliance review,
the committee is provided with a quarterly
report by the company’s Chief Compliance
Officer 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 UPM
employees, and also on the corporate website
for the company’s external stakeholders.
General meeting
of shareholders
The company’s supreme decision-making
body is the general meeting of shareholders.
In 2016, the Annual General Meeting (AGM)
was held on 7 April in Helsinki. All decisions
at the meeting were taken without voting.
These decisions are summarised in the
following:
Financial statements and dividend
The AGM adopted the company’s financial
statements for the period 1 January–31
December 2015, decided to distribute dividends
amounting to EUR 0.75 (EUR 0.70) per share,
and discharged the President and CEO, and
the members of the Board of Directors from
liability for the financial year 2015. The
dividends, totalling EUR 400 million, were
paid on 21 April 2016.
Board composition
The AGM elected ten members to Board of
Directors for a term that will end upon closing
of the AGM 2017. All incumbent directors, i.e.
Berndt Brunow, Henrik Ehrnrooth, Piia-Noora
Kauppi, Wendy E. Lane, Jussi Pesonen, Ari
Puheloinen, Veli-Matti Reinikkala, Suzanne
Thoma, KimWahl and BjörnWahlroos, were
re-elected to 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 82-83 of this report
and on the corporate website.
Board remuneration
With regard to 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
Committee EUR 120,000, and other members
of the Board EUR 95,000. In accordance with
the AGM resolution, the annual fees were paid
in the company shares and cash so that 40%
of the fees were paid in shares and the rest in
cash to cover withholding tax. The company
paid the 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
number of acquired shares and the number
of UPM shares held by the members at the
end of 2016 are presented in the table below.
In addition to the annual fees, the Board
members did not receive any other financial
benefits for their Board or committee
membership. 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 re-elected PricewaterhouseCoopers
Oy, a firm of Authorised Public Accountants,
as the company’s statutory auditor for a one-
year term, with Authorised Public Accountant
Merja Lindh as the lead audit partner.
Ms Lindh has held 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 authorisations
The AGM granted four authorisations to the
Board of Directors. These authorisations are
listed in the table below.
Excluding the authorisation to decide
on charitable contributions, the Board has
not exercised these authorisations. Under
the authorisation for charitable contributions,
EUR 100,000 has been donated for the
“Words Matter” project, organised by the
Finnish Reading Centre, and another EUR
100,000 to the project called “The Young
Business Generations” organised by the
Economic Information Office. The purposes
of these projects are to inspire students
of technical vocational schools to read and
improve their reading skills, and to develop
international business online courses for
high school students. Including other minor
contributions to several parties, charitable
contributions in 2016 totalled EUR 232,500.
Board of Directors
The primary role of the Board is to be
responsible for the governance of the company
with the focus on overseeing the long-term
value creation of UPM. In pursuing this goal,
the directors have a duty to act on an informed
basis with due care and in the best interests of
the company, consistent with their other
statutory duties.
To fulfil its role effectively, the Board sets
the company’s strategic objectives, reviews
and approves financial and other plans
relevant to the achievement of these
objectives, and reviews the performance of
the management in meeting these objectives.
The Board’s other main responsibilities relate
to the integrity of the company’s financial
reporting, effectiveness of internal control
and risk management systems, and the
appointment, remuneration and succession
planning of the senior management of the
company.
The Board has prepared a written charter
for its work including the Board’s main duties
and operating principles. The board and
committee charters were amended during the
year to reflect the changes in the regulatory
framework. Several corporate policies were
also amended or completely revised during
the year. The updated charters and
information on the corporate policies is
available on the corporate website.
Board work in 2016
In 2016, the Board held ten meetings. In April,
one of the Board meetings was held in China,
where the Board attended the inauguration
ceremonies of the third paper machine in
UPMChangshu mill, and was updated on the
recent developments in the Chinese economy
and business environment. More information
on the UPMChangshu investment is on the
next page.
The directors’ average attendance at the
Board meetings was 98% (96.4%). There is
no minimum attendance requirement for
the directors’ attendance at the meetings as
the general assumption is that directors
attend all meetings unless there is a valid
reason for non-attendance. Directors’
personal attendance rates are presented
in the table on the left.
Auditor’s remuneration
EUR MILLION 2016 2015
Audit fee 2.3 2.3
Audit-related services 0.1 0.0
Tax services 0.7 0.8
Other services 0.5 0.5
Total 3.6 3.6
Board remuneration and shareholdings in 2016
BOARD MEMBER POSITION
ANNUAL
FEE (EUR)
40% FOR
SHARES (EUR)
60% IN
CASH (EUR)
NO OF ACQUIRED
SHARES
SHAREHOLDINGS
ON 31 DEC. 2016
Björn Wahlroos Chairman 175,000 70,000 105,000 4,235 256,677
Berndt Brunow Deputy Chairman 120,000 48,000 72,000 2,904 306,482
Henrik Ehrnrooth Member 95,000 38,000 57,000 2,299 4,575
Piia-Noora Kauppi Member, Audit Committee Chairman 120,000 48,000 72,000 2,904 14,460
Wendy E. Lane Member 95,000 38,000 57,000 2,299 35,224
Jussi Pesonen Member, President and CEO – – – – 304,064
Ari Puheloinen Member 95,000 38,000 57,000 2,299 6,600
Veli-Matti Reinikkala Member 95,000 38,000 57,000 2,299 38,396
Suzanne Thoma Member 95,000 38,000 57,000 2,299 4,575
Kim Wahl Member 95,000 38,000 57,000 2,299 16,374
Total 985,000 394,000 591,000 23,837 987,427
AUTHORISATION MAXIMUM AMOUNT VALIDITY
Issuance of shares and
special rights entitling to shares
25 million shares
(4.7% of all shares)
3 years from
the AGM 2016
Repurchase of the
company's own shares
50 million shares
(9.4% of all shares)
18 months from
the AGM 2016
Recognition of reversal
entries of revaluations
EUR 158 million Until the
AGM 2017
Contributions to charitable
or corresponding purposes
EUR 250,000 Until the
AGM 2017
Further information on these authorisations is available on the corporate website.
Board authorisations
13 14 15 16 12
4,000
3,000
2,000
1,000
0
100
75
50
25
0
% of shares No. of
shareholders
Shareholder attendance
at the AGM
DIRECTOR
DIRECTOR
SINCE
ATTENDANCE/
NO. OF MEETINGS ATTENDANCE-%
Björn Wahlroos (Chairman) 2008 10/10 100
Berndt Brunow (Deputy Chairman) 2002 10/10 100
Henrik Ehrnrooth 2015 9/10 90
Piia-Noora Kauppi 2013 10/10 100
Wendy E. Lane 2005 10/10 100
Jussi Pesonen 2007 10/10 100
Ari Puheloinen 2014 10/10 100
Veli-Matti Reinikkala 2007 10/10 100
Suzanne Thoma 2015 10/10 100
Kim Wahl 2012 9/10 90
Attendance in Board meetings 2016
CONTENTS