A shareholder has the right to ask questions referred to in Chapter 5, Section 25 of the Finnish Limited Liability Companies Act with respect to the matters to be considered at the meeting. Such questions had to be sent by email to agm@upm.com no later than 15 March 2022. As a prerequisite for presenting questions, a shareholder must present sufficient evidence to the Company of his/her shareholdings. The company has answered the questions on 18 March 2022.
Shareholders’ questions to UPM-Kymmene Corporation’s Annual General Meeting on 29 March 2022
Shareholder’s introduction and related questions nr 1 and nr 2 (unofficial translation from Finnish)
”UPM values and culture of integrity
UPM strives to lead by example, in accordance with UPM’s values and with integrity. UPM’s values — trust and be trusted; achieve together; renew with courage — guide and support employees in their daily actions. Each UPM value has been created together with our employees.
We are committed to a culture of integrity and our leading principle is that we do not compromise our standards under any circumstances. The UPM Code of Conduct lays the foundation for responsible business operations and continuous improvement, and sets the standards for responsible behaviour towards stakeholders for each and every UPM employee."
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Election of members of the Board of Directors.
UPM has fallen off the list of responsible companies. As an investor, I want to rely on the fairness of management, compliance with laws and codes of conduct. Therefore, to the board such members should be elected who are prepared to evaluate the way in which the company's management operates in accordance with the laws. I am also referring to the process energiansäästökuivaamot.fi. In addition, the impression has been created that the hands of internal audit are also tied by the management. Although the matter is small, it affects shareholder confidence in the way the company operates, including in the biggest matters.
UPM is just letters that can never have an opinion. Instead, physical persons at different levels of the company use letters as collateral for their own opinions. Everyone must also take responsibility for them.
Shareholder’s question nr 1 (unofficial translation from Finnish)
Why does the company's management act against the company's values and have not addressed the found wrongdoings? The image that has emerged of an old boy network, even at lower levels. Problems are not tackled for fear of losing your own job. Leading with fear in progress.
Shareholder’s question nr 2 (unofficial translation from Finnish)
Are the hands of the internal audit also tied because it does not provide fair feedback to the notifications made? The investor has created an illusion of a so-called "Kreml’s model”. (now maybe the disqualification of the question?) Due to the fragmented ownership base, it is impossible for the shareholders to influence the way the company's management operates. Even months of strikes would hardly have been approved by the owners.”
The company's answer to the shareholder's question nr 1
All UPM employees, including management, are bound by UPM's values and UPM Code of Conduct. UPM Code of Conduct includes, for example, chapters on avoiding conflicts of interest and raising concerns. UPM investigates suspected misconduct that have come to its attention in accordance with the company's internal process. Each case shall be investigated by an objective person or a team with the necessary expertise. Substantiated misconduct results in proportionate consequences.
The company's answer to the shareholder's question nr 2
UPM's Internal Audit function operates in accordance with the Charter approved by UPM's Board of Directors and International Standards for the Professional Practice of Internal Auditing. The Internal Audit carries out independent and objective in-house assurance and consultation with the aim of improving the company's operations. The Internal Audit function investigates suspected misconduct that have come to its attention in accordance with the company's internal process and informs the relevant parties of the outcome of the investigations. The particular case referred to by the shareholder has been duly investigated and the outcome has been communicated to interested parties.
Shareholder’s question nr 3 (unofficial translation from Finnish)
”The reason why UPM has been standing in Finnish mills for ten weeks now, even though there is a shortage of paper, pulp, diesel around the world. Prices are currently at their peak. Is it an ideologic battle?
This does not serve the interests of the shareholders of the shares, at least the dividend has not risen for many years, and the fact that machines worth one billion are standing empty-handed will not contribute to dividends and increases in value.
The role of a listed company is to generate profits for the owners, which is not what UPM wants to do at the moment.”
The company's answer to the shareholder's question nr 3
By the decision of its member companies, The Finnish Forest Industries Federation, which has earlier been responsible for the country level collective bargaining among others with the Paperworkers’ Union and Industrial Union, discontinued its engagement in the bargaining in November 2020. In the future, the new terms of employment will be based on agreements between each company and the unions. Each company will carry out negotiations based on its own considerations, and, as the negotiation parties change, the terms of previous collective labour agreements will not be applied after their terms expire. At UPM, the business-specific nature of the contracts is essential because the businesses differ significantly in their production processes, markets and customer needs. UPM has also seen it as important to bring agreement closer to the place where the work is done and where the conditions affecting competitiveness are best known.
Negotiations with the employee representatives and Industrial Union started in UPM Plywood and UPM Timber in May 2021 and the agreements acceptable to all parties were separately signed in both business operations in December 2021. UPM’s businesses have tried to initiate similar business level negotiations with Paperworkers’ Union since spring 2021. The new agreements were not reached in UPM Pulp, UPM Communication Papers, UPM Specialty Papers, UPM Raflatac and UPM Biofuels before the old agreements expired at the end of 2021 and the Paperworkers’ Union started a strike in five of UPM’s businesses in Finland as of 1 January 2022.
In view of the negotiations, UPM is conducting a longer-term competitiveness of its business operations in Finland. We are pursuing mutually beneficial outcomes that will enable each business and their employees to prosper well into the future. UPM Plywood’s and UPM Timber’s agreements provide a good example of this. UPM’s target is to negotiate business-specific agreements and improve the competitiveness of products and create prerequisites for the further development of the units. At the same time, UPM aims to be an attractive employer, with competitive offering for all UPM employees. UPM businesses call for rapid progress and spirit of compromise to find satisfactory solutions for all parties and start the mills again. UPM businesses are doing their best to advance an open dialogue between the negotiating parties.
Shareholder’s question nr 4 (unofficial translation from Finnish)
”How much has the strike cost shareholders and UPM-Kymmene.”
The company's answer to the shareholder's question nr 4
At this point (18 March 2022), UPM does not disclose estimates of the economic impacts of the strike. The strike has been taken into account in the outlook statement in UPM Financial Statements Release.
Shareholder’s question nr 5 (unofficial translation from Finnish)
”The CEO and other executives and senior officers are richly rewarded for UPM-Kymmene's brilliant billion-dollar results from last year, which is a really good result, the best ever. What is the position of employees, i.e. members of the Paperworkers’ Union at UPM. Is the Paperworkers’ Union employee the only personnel group to whom they do not want to give anything about UPM's hard result. UPM is in the ongoing collective bargaining negotiations demanding approximately 150 hours of free work and a 20% pay cut for employees.”
The company's answer to the shareholder's question nr 5
UPM’s annual short-term incentive rewards all employees of company’s success. Each employee belongs to a unified annual Short-Term Incentive (STI) scheme. The annual incentives from 2020 STI plan were EUR 58 million and the estimated amount of annual incentives for the 2021 STI plan is EUR 60 million. We recognise significant individual or team success with a separate Achievement Award system. It is designed to support UPM’s high-performance culture and recognise individuals and teams for outstanding contribution, significant achievements and exceptional performance.
UPM is not aiming to cut salaries in the new business-specific agreements, but it has stated its willingness to pay previous annual earnings in case in the business-specific agreements it is agreed on elements that increase productivity. In recent weeks UPM businesses have negotiated intensively and the parties are familiar with each other’s objectives so the negotiators have the chance to find satisfactory solutions for all parties.
