UPM's Board of Directors has resolved to establish a new employee share savings arrangement and approved the commencement of new annual plans within UPM share incentive arrangements
UPM-Kymmene Corporation Stock Exchange Release (Other information disclosed according to the rules of the Exchange) 5 February 2025 at 13:00 EET
HELSINKI, Feb. 5, 2025 /PRNewswire/ -- UPM's Board of Directors has resolved to establish a new employee share savings arrangement and approved the commencement of new annual plans within UPM share incentive arrangements.
Employee Share Savings Arrangement
UPM's Board of Directors has resolved to establish a new Employee Share Savings Arrangement and approved the commencement of the first plan 2025-2028 under the arrangement.
The Employee Share Savings Arrangement is targeted at employees of UPM-Kymmene Corporation and its subsidiaries in the countries where it is legally and administratively feasible.
The purpose of the arrangement is to engage company employees, increase their interest towards company performance and long-term value creation and to align the interests of employees and shareholders.
The Employee Share Savings Arrangement consists of annually commencing plans, subject to the approval of the Board of Directors of UPM in each case, each one comprising of a 12-month savings period and a two-year holding period following the savings period. The employees will have an opportunity to save a proportion of their salaries and invest those savings in UPM shares. The savings will be used to acquire UPM shares from the market quarterly after the publication dates of the respective interim reports. As a reward UPM grants the participating employees a gross reward of one (1) matching share for each two (2) savings shares acquired with their savings. The delivery of the share reward is subject to the continuation of the employment or service and holding of acquired savings shares for the duration of the holding period. Additionally, each employee participating in the first commencing savings period will be rewarded ten (10) free gross shares after the 12-month savings period in July 2026, provided that the employee has not stopped their savings during the savings period and is employed the whole savings period. The applicable taxes will be deducted before the shares are delivered to the participants. Share delivery will be executed by using already existing shares and the arrangement, therefore, has no dilutive effect.
The first savings period is from 1 July 2025 to 30 June 2026. The holding period starts at the initial acquisition of savings shares and ends on 30 June 2028. The maximum monetary amount that all participants collectively may save during the savings period is EUR 22,0 million. The calculatory maximum number of matching shares (gross) and free shares (gross) for the first plan is approximately 478,100, calculated at the prevalent share price provided that the plan limit is met. The estimated maximum expense for the plan, based on UPM's current share value, is EUR 15,5 million in total. The final number of matching shares depends on the employees' participation and savings rate in the arrangement, and the fulfilment of the prerequisites for receiving matching shares, as well as the number of shares acquired from the market with savings. The final number of free shares depends on the employees' participation and the fulfilment of the conditions for receiving free shares.
Deferred Bonus Arrangement
UPM's Board of Directors has approved the commencement of a new plan for the period 2025–2027 within the company's Deferred Bonus Arrangement.
The Deferred Bonus Arrangement consists of annually commencing new plans subject to the approval of the Board of Directors of UPM in each case.
The Deferred Bonus Arrangement is targeted at key employees of the Company.
The earning criteria for the Deferred Bonus Plan for the period 2025-2027 are based on the Group and each business area's EBITDA. The plan for the period 2025–2027 consists of a one-year earning period (2025) and a two-year restriction period following thereafter (2026–2027).
The Deferred Bonus Plan for the period 2025–2027 covers in total 317 participants. The maximum number of shares (gross) for the plan period in case all the set earning criteria are met in full is approximately 510,300 shares calculated at the prevalent share price. The estimated maximum cost for the plan period is EUR 14,3 million. The estimated maximum number of shares represents the gross value of the rewards of which the applicable taxes will be deducted before the shares are delivered to the participants.
Share delivery will be executed by using already existing shares and the plan, therefore, has no dilutive effect. Besides the attainment of the earning criteria the reward under the plan is subject to the continuation of the employment. The share rewards earned on the basis of the plan for the period 2025–2027 will be delivered in 2028.
Restricted Share Arrangement
UPM's Board of Directors has approved the commencement of new plan for the period 2025–2028 within the company's Restricted Share Arrangement.
The Restricted Share Arrangement consists of annually commencing new plans subject to the approval of the Board of Directors of UPM in each case.
The Restricted Share Arrangement is used as a commitment instrument for individually selected participants in specific recruitment and retention situations. The Restricted Share Arrangement is targeted at the President and CEO, Group Executive Team members and other selected members of the senior management. The President and CEO is not eligible to receive a reward from this Arrangement for retention purposes.
The plan for the period 2025-2028 consists of four consecutive years and is divided into the grant period and the vesting period. The grant period comprises the first year of each plan (2025) during which rewards can be granted to the participants. Vesting period comprises the three-year period following the end of a grant period (2026-2028) during which share rewards are delivered in instalments to the participants. The first instalment of the reward shall be delivered no earlier than one year after the date the participant was nominated to the plan.
The share rewards based on the plan 2025–2028 will be delivered to participants in annual instalments by the end of 2028. Share delivery will be executed by using already existing shares and, therefore, has no dilutive effect.
The maximum number of shares that may be granted under the Restricted Share Plan 2025–2028 is 500,000 shares (gross). The maximum number of shares represents the gross value of the rewards of which the applicable taxes will be deducted before the shares are delivered to the participants. No earning criteria is applied to the Restricted Share Arrangement and the delivery of the share reward is subject to the continuation of the employment or service.
In addition to the Restricted Share Arrangement UPM has also Performance Share Arrangement targeted at the President and CEO, Group Executive Team members and other selected members of the senior management. Share reward under this arrangement is subject to the achievement of predefined earning criteria.
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We deliver renewable and responsible solutions and innovate for a future beyond fossils across six business areas: UPM Fibres, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers and UPM Plywood. As the industry leader in responsibility, we are committed to the UN Business Ambition for 1.5°C and the science-based targets to mitigate climate change. We employ 15,800 people worldwide and our annual sales are approximately EUR 10.3 billion. Our shares are listed on Nasdaq Helsinki Ltd. UPM Biofore – Beyond fossils. www.upm.com
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