UPM Launches New Employee Share Savings Arrangement to Boost Engagement and Performance

UPM's Newly Established Employee Share Savings Arrangement

UPM-Kymmene Corporation has announced significant advancements in its employee benefits structure. The company’s Board of Directors has recently approved the launch of a new Employee Share Savings Arrangement alongside annual plans aimed at incentivizing employees through company shares. This initiative is part of UPM's ongoing strategy to engage its workforce more deeply in the company's performance and its long-term aspirations.

Purpose of the Employee Share Savings Arrangement

The Employee Share Savings Arrangement targets employees at UPM and its subsidiaries in regions where it is legally permissible. The primary objective of this initiative is to bolster the interests of both employees and shareholders, thus fostering a culture of ownership and engagement. UPM believes that aligning employee interests with company performance can enhance overall productivity and create long-term value for the organization.

Key Features of the New Arrangement

The newly established plan will operate on an annual basis, with each plan consisting of a 12-month savings period followed by a two-year holding period. Employees can allocate a portion of their salaries to this savings plan, which in turn will allow them to purchase UPM shares. Shares will be acquired on a quarterly basis after the publication of interim reports, allowing employees to remain engaged with the company’s financial performance throughout the year.

As an incentive, UPM will reward employees with a matching share for every two shares purchased through their savings. This matching reward emphasizes the company's commitment to enhancing employee contributions towards its success. Notably, participating employees will receive an additional ten free shares at the conclusion of the first 12-month savings period in July 2026, provided they maintain their savings contribution and remain employed during this period. Taxes applicable will be deducted prior to the shares being issued.

Financial Considerations and Sustainability of the Plan

The first savings period is set from July 1, 2025, to June 30, 2026, with a holding period concluding on June 30, 2028. The total monetary threshold for collective employee savings throughout this initial phase is capped at EUR 22 million, marking a robust commitment by UPM to its workforce. Depending on participation rates, the anticipated number of matching shares is approximately 478,100, with an overall estimated plan expense of EUR 15.5 million.

Importantly, UPM has structured the plan to utilize existing shares for delivery during the program, ensuring that there is no dilutive effect on the company’s overall share value. This thoughtful approach reflects UPM's strategic foresight in maintaining stability while rewarding its employees.

Additional Initiatives for Employee Engagement

Apart from the Employee Share Savings Arrangement, UPM's Board has also initiated a Deferred Bonus Arrangement targeted at key employees, which spans the period from 2025 to 2027. This plan hinges on the group’s EBITDA performance, aligning the rewards earned with the company’s financial health. Furthermore, UPM has introduced a Restricted Share Arrangement, primarily aimed at senior management, which serves as a retention strategy without diluting shareholder value.

Commitment to Responsible Business Practices

UPM is recognized as an industry leader in sustainability and responsibility, employing nearly 15,800 people globally with annual sales of around EUR 10.3 billion. The company is resolutely committed to innovative solutions that are renewable and sustainable, having embraced science-based targets to combat climate change. As UPM advances its employee-centric initiatives, it reinforces its commitment to the UN Business Ambition for 1.5°C, showcasing its leadership role in fostering a responsible corporate environment.

In conclusion, UPM’s newly established Employee Share Savings Arrangement not only incentivizes its workforce but also cultivates a stronger bond between employees and the future success of the company. This initiative marks a significant step in the corporate landscape, emphasizing the importance of employee engagement in achieving long-term business objectives.