UPM introduces new share incentive plans

As the previous Share Ownership Plan and Stock Option Plan have come to the maturity, UPM introduces new long-term share incentive plans that are compatible with the long-term business cycle of UPM. The new share incentive plans cover approximately 550 participants. In case all the set performance targets are met in full, the total maximum number of the shares for the plans is 2,100,000 shares.

In addition, the Board has reconfirmed a share ownership recommendation for the Group Executive Team.

Performance Share Plan

The Performance Share Plan is targeted to the Group Executive Team and other selected members of the management. Under the plan UPM shares are awarded based on the group level performance for a three-year earning period. The earned shares are delivered after the closing of the earning period.

The earning criteria for the first plan earning period of 2011-2013 are the operating cash flow and earnings per share (EPS).

Deferred Bonus Plan

The Deferred Bonus Plan is targeted for other key personnel of the company. The share incentives are based on the participants' short term incentive target. Each annual plan is based on the one-year earning period and the two-year restriction period. During the restriction period, prior to the share delivery, the earned share rewards are adjusted with dividends and other capital distribution, if any, paid to all shareholders.

The first plan commences at the beginning of 2011 and the earned shares will be delivered in the spring of 2014.

Other aspects relating to the arrangements

The above indicated estimates of the maximum share rewards represent 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 existing shares of the company. Besides the attainment of the performance criteria the share reward is, in both arrangements, subject to the continuation of the employment relationship.

Ownership recommendation to the executive management

The Board encourages the Group Executive Team to a direct share ownership in the company. The Board has, therefore, reconfirmed the ownership recommendation of the Group Executive Team. The Board recommends that the President and CEO maintains a share ownership corresponding to a two-year gross base salary and the other persons belonging to the Group Executive Team a share ownership corresponding to a one-year gross base salary.