UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.     )

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Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material pursuant to § 240.14a-12

 

MERCER INTERNATIONAL INC.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

☒	No fee required.

 

☐	Fee paid previously with preliminary materials.

 

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0—11.

 

 

 

MERCER INTERNATIONAL INC.

 

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

 

The 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Mercer International Inc. (the “Company”) will be held at Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada on May 31, 2022 at 10:00 a.m. (Vancouver time) (doors open at 9:30 a.m. (Vancouver time)) for the following purposes:

 

1.	To elect ten directors nominated by the board of directors to serve until the 2023 Annual Meeting of Shareholders;

 

2.	To approve, on a non-binding advisory basis, the compensation of the Company’s executive officers as disclosed in these materials;

 

3.	To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2022;

 

4.	To approve the Mercer International Inc. Amended and Restated 2022 Stock Incentive Plan; and

 

5.	To transact such other business as may properly come before the meeting.

For those who are not able to attend in person, the Company is offering a virtual shareholder meeting in which shareholders may listen to the Annual Meeting, submit questions and vote online at: www.meetnow.global/MADWF5N.

Only shareholders of record at the close of business on March 28, 2022 will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment, postponement or rescheduling thereof.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend our Annual Meeting in person or through the virtual meeting, we urge you to cast your vote and submit your proxy as promptly as possible by one of the methods below. Make sure to have your proxy card or voting instruction form (VIF) in hand. You do not need to attend the Annual Meeting to vote if you submitted your proxy in advance of the Annual Meeting. A proxy may be revoked in the manner described in the accompanying proxy statement.

 

		By using the Internet at ·   www.investorvote.com/merc (for registered shareholders) ·   www.proxyvote.com (for beneficial shareholders)				By calling toll-free 1-800-652-VOTE (8683) within the United States, U.S. territories and Canada
		By scanning the QR code provided in your proxy with your smartphone				By mailing your signed proxy or voting instruction form

For further information on how to vote, please refer to the instructions on the accompanying proxy card and the accompanying proxy statement. Due to the ongoing public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance and will set forth details on how to participate in a press release available at www.mercerint.com.

 

April 12, 2022

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 31, 2022: Our proxy statement and our 2021 Annual Report to Shareholders are available at www.mercerint.com/investors/reports-filings/. Additionally, you may access our proxy materials at www.proxyvote.com or www.investorvote.com/merc, a site that does not have “cookies” that identify visitors to the site.

 

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PROXY STATEMENT

 

 

 

TABLE OF CONTENTS

 

 

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Notice Regarding Forward-Looking Statements

This Proxy Statement includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements contained in this Proxy Statement other than statements of historical fact, including statements relating to trends in or expectations relating to the expected effects of our initiatives, strategies and plans, as well as trends in or expectations regarding our financial results and long-term growth model and drivers, and regarding our business strategy and plans and our objectives for future operations, are forward-looking statements. Statements herein that describe our business, strategy, plans, goals, future capital spending levels and potential for growth, improved profit margins and cash generation are forward-looking statements. The words “can”, “believe”, “may”, “will”, “continue”, “anticipate”, “intend”, “expect”, “seek”, and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results and amounts to differ materially from those in forward-looking statements. For a detailed discussion of the risks and uncertainties, see the “Risk Factors” discussion in Item 1A of our 2021 Annual Report. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Proxy Statement may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results. The forward-looking statements included in this Proxy Statement are made only as of the date of this Proxy Statement and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

Non-GAAP Financial Measures

In this Proxy Statement we refer to Operating EBITDA which is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”) and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. We use Operating EBITDA as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider it to be a meaningful supplement to operating income as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not actual cash costs, and depreciation expense varies widely from company to company in a manner that we consider largely independent of the underlying cost efficiency of our operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.

The following table provides a reconciliation of net income (loss) to operating income and Operating EBITDA for the years indicated:

 

 

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MERCER INTERNATIONAL INC.

Suite 1120, 700 West Pender Street, Vancouver, B.C., V6C 1G8, Canada

 

 

 

 

PROXY STATEMENT

 

 

 

GENERAL INFORMATION

This proxy statement (“Proxy Statement”) is furnished in connection with the solicitation by management of Mercer International Inc. of proxies for use at the annual meeting of our Shareholders to be held at Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada at 10:00 a.m. (Vancouver time) on May 31, 2022 (the “Meeting”), or any adjournment, postponement or rescheduling thereof.

References to “we”, “our”, “us”, the “Company” or “Mercer” in this Proxy Statement mean Mercer International Inc. and its subsidiaries unless the context clearly suggests otherwise. References to “fiscal year” means an annual period ended December 31. Information herein for 2021 generally refers to our 2021 fiscal year.

If a proxy (a “Proxy”) is properly executed and received by us prior to the Meeting or any adjournment, postponement or rescheduling thereof, the Shares represented by such Proxy will be voted in the manner directed. Please see the Proxy for voting instructions. In the absence of voting instructions, the Shares will be voted for the proposals set out in the accompanying Notice of Annual Meeting of Shareholders and as shown in the table below and in accordance with the best judgment of the named proxies on any other matter properly brought before the Meeting:

 

Proposal No.		Vote		Board Recommendation		Broker Non-Vote		Vote Required for Approval		Effect of Abstentions and Broker Non-Votes
1		Election of each of the ten director nominees		FOR		This matter is non-routine, thus if you hold your shares in street name, your broker may not vote your shares for you		Majority of votes cast		No effect
2		Approval, on a nonbinding, advisory basis, of the compensation paid to our named executive officers		FOR		This matter is non-routine, thus if you hold your shares in street name, your broker may not vote your shares for you.		Majority of votes cast		No effect
3		Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2022		FOR		This matter is routine, thus if you hold your shares in street name, your broker may vote your shares for you		Majority of votes cast		Abstention has no effect and broker has discretion to vote
4		Approval of the Amended and Restated 2022 Stock Incentive Plan		FOR		This matter is non-routine, thus if you hold your shares in street name, your broker may not vote your shares for you		Majority of votes cast		No effect

A Proxy may be revoked at any time prior to its use by filing a written notice of revocation of proxy or a later dated Proxy with the Company’s registrar and transfer agent at Proxy Services, c/o Computershare, Inc., P.O. Box 505008, Louisville, KY 40233. A Proxy may also be revoked by submitting another Proxy with a later date over the Internet, by telephone, to our registrar and transfer agent or by voting in person at the Meeting. Attending the Meeting will not, in and of itself, constitute revocation of a Proxy.

The holders of one-third of the outstanding Shares entitled to vote at the Meeting, present in person or represented by Proxy, constitutes a quorum for the Meeting. Shares represented by proxies that reflect abstentions or broker non-votes (i.e., Shares held by a broker/dealer or other nominee that are not voted because the broker/dealer or other nominee does not have the authority to vote on a particular matter) will be counted as Shares that are present and entitled to vote for the purposes of determining the presence of a quorum for the Meeting.

 

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In accordance with rules of the Securities and Exchange Commission (the “SEC”), we are furnishing our proxy materials related to the Meeting primarily via the Internet, instead of mailing printed copies of those materials to each Shareholder. Beginning on or around April 21, 2022, we will mail a Notice of Internet Availability to our Shareholders (other than those who had previously requested electronic or paper delivery) containing instructions on how to access our proxy materials, including this Proxy Statement and our annual report for 2021 (the “2021 Annual Report”), which includes our annual report on Form 10-K for the fiscal year ended December 31, 2021 (the “Form 10-K” or “2021 Form 10-K”). The Notice of Internet Availability also instructs you on how to vote over the Internet. This process is designed to expedite Shareholders’ receipt of proxy materials, lower the cost of the Meeting and help conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. This Proxy Statement, accompanying Proxy and the 2021 Annual Report will be available on or around April 21, 2022 on our corporate website and at www.proxyvote.com and www.investorvote.com/merc for Shareholders.

Proxies may also be solicited by mail, telephone, facsimile or personal contact by our directors, officers or regular employees without additional compensation. All proxy-soliciting expenses in connection with the solicitation of votes for the Meeting will be borne by the Company. We also will request brokerage firms, banks, nominee custodians and fiduciaries to forward proxy materials to beneficial owners of our Shares as of the Record Date (as defined below) and will reimburse them for the cost of forwarding the proxy materials in accordance with customary practice.

Our Board has set the close of business on March 28, 2022 as the record date (the “Record Date”) for the determination of Shareholders entitled to notice of and to vote at the Meeting or any adjournment, postponement or rescheduling thereof.

You are entitled to attend the Meeting only if you were a Shareholder as of the close of business on the Record Date, or hold a valid Proxy for the Meeting. In order to be admitted to the Meeting, you must present proof of ownership of Shares on the Record Date. This can be any of the following:

 

·

a brokerage statement or letter from a bank or broker indicating ownership on the Record Date;

 

·

the Notice of Internet Availability of proxy materials;

 

·

a printout of the proxy distribution email (if you received your materials electronically);

 

·

a proxy card;

 

·

a voting instruction form; or

 

·

a legal Proxy provided by your broker, bank or nominee.

Shareholders and Proxy holders must also present a form of photo identification such as a driver’s license. We will be unable to admit anyone who does not present identification or refuses to comply with our security procedures. You may also attend the Meeting via the Internet. The accompanying proxy materials include instructions on how to participate in the Meeting and how you may vote your Shares if you participate electronically. To submit your questions during the Meeting, please log on to www.meetnow.global/MADWF5N. You will need to enter the 15-digit control number received with your Proxy or Notice of Internet Availability of proxy materials to enter the Meeting.

If you hold your Shares through a broker or other nominee and wish to attend the Meeting you will need to obtain a legal proxy from such broker or other nominee and send it, along with your name and email address to our registrar transfer agent by email at legalproxy@computershare.com or mail at Proxy Services, c/o Computershare, Inc. (Legal Proxy), P.O. Box 505008, Louisville, KY 40233. Such requests must be labelled “Legal Proxy” and must be received by Computershare no later than 5:00 p.m. (Eastern Time) on May 26, 2022.

 

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PROPOSAL 1 – ELECTION OF DIRECTORS

In accordance with our articles of incorporation and bylaws, each as may be amended from time to time, our Board is authorized to fix the number of the Company’s directors at not less than three (3) and not more than thirteen (13) and has fixed the number of directors at ten (10) for election at the Meeting. Directors are elected at each annual meeting of Shareholders to hold office until the next annual meeting. The persons identified below are nominated to be elected at the Meeting for the ensuing year. Other than Juan Carlos Bueno, all of the nominees are currently directors of the Company previously elected by Shareholders. Despite the expiration of a director’s term, the director shall continue to serve until the director’s successor is elected and qualified or until there is a decrease in the number of directors. If for any unforeseen reason any of the nominees for director declines or is unable to serve, Proxies will be voted for the election of such other person or persons as shall be designated by the directors. Our Board has no reason to believe that any of the nominees will be unable or will decline to serve, if elected. Proxies received which do not specify a choice for the election of the nominees will be voted “FOR” each of the nominees. Proxies cannot be voted for more than ten (10) persons since that is the total number of nominees.

Set forth below is certain information furnished to us by the director nominees. There are no family relationships among any of our current directors, nominees or executive officers. None of the corporations or other organizations referenced in the biographical information below is a parent, subsidiary or other affiliate of the Company.

We believe that our directors should satisfy a number of qualifications, including demonstrated integrity, a record of personal accomplishments, a commitment to participation in Board activities and other traits discussed below in “Our Director Nominations Process”. We believe that Mercer and all of its stakeholders benefit from the broader exchange of perspectives and balance brought by a diversity of background, thought and experience. We further believe that a diverse and balanced Board enhances our sustainability, understanding of risks and opportunities, decision-making processes and achievement of our strategic goals. We also endeavor to have a Board representing a range of skills and depth of experience in areas that are relevant to and contribute to the Board’s oversight of our operations. The Board believes its current size is appropriate for the size and scope of our business.

We believe that the following nominees represent a desirable mix of backgrounds, skills and experiences. Additionally, we believe that the specific leadership skills and other experiences of the nominees described below, particularly in the areas of forest products industry or related business experience, senior executive leadership, financial accounting/reporting, public company board experience, investment management, capital markets and finance, provide us with the perspectives and judgment necessary to guide our strategies and monitor their execution.

Following the biographical information for each director nominee, we describe the key experience, qualifications and skills our director nominees bring to the Board that, for reasons discussed below, are important in our business and a Board diversity mix.

The Board considered these experiences, qualifications and skills and the directors’ other qualifications in determining to recommend that the directors be nominated for election:

 

Industry and related business experience		We seek directors who have knowledge of and experience in the forest products industry, which is useful in understanding the operations of large manufacturing facilities, fiber procurement and harvesting, pulp, lumber and energy production, logistics and sales aspects of our business. Relevant experiences might include, among other things, forest products Chief Executive Officer or senior executive experience, international experience and relevant senior-level expertise in one or more of the following areas: forest products, bioenergy, chemicals, wood extractives, capital markets, finance and accounting.
Senior leadership experience		We believe that it is important for our directors to have served in senior leadership roles at other organizations, which demonstrates strong abilities to motivate and manage others, to identify and develop leadership qualities in others and to manage organizations. Senior leadership experience is necessary to ensure achievement of our strategic priorities and objectives.
		Directors who have served on other public company boards can offer advice and perspective with respect to Board dynamics and operations, oversight and leadership, the relationship between the Board and management and other matters, including:
Public company board experience		· corporate governance; · executive compensation; · oversight of strategic risk-management;		· oversight of sustainability and Environmental, Social and Governance (“ESG”) matters; · operational and compliance-related matters; and · relations with Shareholders.

 

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Capital markets and financial experience		Directors who have capital markets experience can offer advice and perspective on investor expectations and perspectives, capital raising, appropriate capital structure, financing strategic transactions, including mergers and acquisitions, financial statements and financial reporting matters.
International business experience		We operate internationally and a significant majority of our employees and operations are outside the United States and primarily in Canada and Germany. Further, a significant majority of our customers are located in Europe and China. Accordingly, international business experience is desirable for our directors to have.
ESG		We value and seek directors who have experience in ESG matters, as their advice and perspective can strengthen the Board’s oversight and assure that our strategic goals are achieved within a responsible and sustainable business model.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS.

 

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Nominees for Election as Directors

 

Jimmy S.H. Lee		JIMMY LEE, age 65, has served as a director since May 1985, as Executive Chairman since July 2015 and as President and Chief Executive Officer from 1992 to 2015. Mr. Lee was a director of Golden Valley Mines Ltd. from 2016 to 2021. Previously, during the period when MFC Bancorp Ltd. was our affiliate, he served as a director from 1986 and President from 1988 to December 1996 when it was spun out. During Mr. Lee’s tenure with Mercer, we acquired the Rosenthal mill and converted it to the production of kraft pulp, constructed and commenced operations at the Stendal mill and acquired the Celgar mill, Friesau mill and Peace River mill. He holds a Bachelor of Science Degree in Chemical Engineering from the University of British Columbia, Canada.

 

Director Qualifications
·   Mr. Lee possesses particular knowledge and experience in our business as a “founder” and as our former Chief Executive Officer for over 25 years. He also has broad knowledge and experience in finance and banking, credit markets, international pulp markets, derivative risk management and capital allocation. Through his experience and background, Mr. Lee provides vision and leadership to the Board. Mr. Lee also provides the Board with insight and information regarding our strategy, operations and business.

 

Juan Carlos Bueno		JUAN CARLOS BUENO, age 53, has served as Chief Executive Officer and President since May 1, 2022, and will be standing for election as a director at the Meeting. Mr. Bueno most recently served from 2019 to 2022 as the Chairman of the board and co-founder of Global Energy, which produces novel green energy generation devices. Prior to that, from 2011 to 2017, Mr. Bueno was Executive Vice President and Divisional CEO, Global Biomaterials of Stora Enso, a manufacturer of pulp, paper and other forest products. At Stora Enso he designed and led their new biomaterials division, growing sales and tripling profitability. The business included six manufacturing sites and a team of approximately 2,000 employees. Mr. Bueno created a vision and strategy to expand into new sectors such as lignins and hemicellulose. He also has broad experience in investor relations, board interaction and other key CEO functions. Prior to that, Mr. Bueno served in executive positions including Vice President, Crop Protection, Commercial Manager, Global Financial Analyst and Business Consultant with EI Dupont NE Nemours & Company in Brazil, UK, Argentina, Colombia and USA. EI Dupont NE Nemours & Company merged with the Dow Chemical Company to create DowDuPont. Mr. Bueno holds, among other things, a BSc., Industrial Engineering degree and a graduate degree in Negotiation & International Relations.

 

Director Qualifications
·   Mr. Bueno has extensive knowledge and experience in biomaterials, sales, marketing, strategy development and management. He brings to the Board global industrial experience and product experience and a proven track record of achieving commercial and operation excellence over a 30-year career. As our Chief Executive Officer, Mr. Bueno provides the Board with exposure to the Company’s executive team and insight into our specific strategic and operational challenges and opportunities.

 

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R. Keith Purchase		R. KEITH PURCHASE, age 78, has served as a director since June 2012. Mr. Purchase was Executive Vice-President and Chief Operating Officer for MacMillan Bloedel Ltd. from 1998 to 1999, President and Chief Executive Officer of TimberWest Forest Ltd. from 1994 to 1998 and Managing Director of Tasman Pulp and Paper from 1990 to 1994. Mr. Purchase was previously a director of Catalyst Paper Corporation and Chair of its board of directors.

 

Director Qualifications
·   Mr. Purchase has held several very senior positions in significant companies involved in the forestry industry, including internationally. He brings to the Board extensive senior executive experience relevant to the Company’s operations, as well as significant public company board experience from a wide variety of companies.

 

William D. McCartney		WILLIAM MCCARTNEY, age 66, has served as a director since January 2003 and Lead Director since May 28, 2021. He has been the President and Chief Executive Officer of Pemcorp Management Inc., a corporate finance and management consulting firm, since its inception in 1990. From 1984 to 1990, he was a founding partner of Davidson & Company, Chartered Accountants, where he specialized in business advisory services. He has been involved with numerous capital restructuring and financing events involving several public companies and brings substantial knowledge relating to the financial accounting and auditing processes. He is a chartered professional accountant and has been a member of the Chartered Professional Accountants of Canada since 1980. He holds a Bachelor of Arts degree in Business Administration from Simon Fraser University.

 

Director Qualifications
·   Mr. McCartney has extensive experience in accounting, financial and capital markets and international markets. He provides the Board with insight and leads its review and understanding of accounting, financial and reporting matters. Mr. McCartney provides the Board experience and leadership on accounting and financial matters in his role as a member of the Audit Committee.

 

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James Shepherd		JAMES SHEPHERD, age 69, has served as a director since June 2011. Mr. Shepherd was President and Chief Executive Officer of Canfor Corporation from 2004 to 2007 and Slocan Forest Products Ltd. from 1999 to 2004. He is also the former President of Crestbrook Forest Industries Ltd. and Finlay Forest Industries Limited and the former Chairman of the Forest Products Association of Canada. Mr. Shepherd has previously served as a director of Conifex Timber Inc., Canfor Corporation and Canfor Pulp Income Fund (now Canfor Pulp Products Inc.). Mr. Shepherd holds a degree in Mechanical Engineering from Queen’s University.

 

Director Qualifications
·   Mr. Shepherd has held several chief executive officer leadership and other senior positions in the forest industry. As a result, Mr. Shepherd brings to the Board extensive senior executive experience relevant to our operations, public company board experience and an understanding of all aspects of the forest products business, ranging from fiber harvesting to lumber and pulp and paper operations. He also brings to our Board significant experience and background in the designing, execution and implementation of large, complex capital projects at large manufacturing facilities like our mills.

 

Alan C. Wallace		ALAN WALLACE, age 62, has served as a director since June 2018. Mr. Wallace is currently the Chief Executive Officer of Peloton Advisors Inc., a corporate financial advisory firm. He is based in Vancouver, British Columbia. Mr. Wallace was the Vice Chairman, Investment Banking, CIBC World Markets Inc. from 1987 to 2013 where he was also the Co-Head of its Paper and Forest Products Group from 1995 to 2013. In this capacity, he worked with public and private companies on financial, strategic and merger and acquisition transactions. Mr. Wallace holds a Master of Business Administration from the University of Chicago and a Bachelor of Applied Science (Mech) from the University of Toronto.

 

Director Qualifications
·   Mr. Wallace has significant capital markets and mergers and acquisitions experience, including relating to debt and equity financings, corporate credit facilities and financial advisory assignments. He also has extensive forest products experience relating to financings and strategic transactions in the industry. He brings to the Board extensive experience in capital markets, cyclical industries, risk management, mergers and acquisitions, securities regulatory matters, financial and accounting matters, talent management, international business, equity and debt investors and corporate strategic planning.

 

 

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Linda J. Welty		LINDA WELTY, age 66, has served as a director since June 2018. Ms. Welty is currently an independent director of Huber Engineered Materials, a global manufacturer of engineered specialty ingredients, a portfolio company of J.M. Huber Corporation and has served in that role since 2014. In 2020, Ms. Welty was also elected as a director of GCP Applied Technologies Inc., which is a global provider of construction products technologies. She is the President and Chief Executive Officer of Welty Strategic Consulting, LLC, an advisory firm focused on the development and execution of value creation strategies. She formerly served as chairman and a director of the Atlanta Chapter of the National Association of Corporate Directors, whose mission is to advance excellence in corporate governance. From 2010 to 2011 she served as a director and member of the special committee of Massey Energy Company. She served as an independent director of Vertellus Specialties, Inc. from 2007 to 2016. Ms. Welty was President and Chief Operating Officer of Flint Ink Corp., a global producer of printing inks for packaging and publication from 2003 to 2005. From 1998 to 2003, she served as President of the Specialty Group of H.B. Fuller Company, a global manufacturer of adhesives, sealants and coatings. She also served for over twenty years in global leadership roles for Hoechst AG and its former U.S. subsidiary, Celanese. She holds a Bachelor of Science in Chemical Engineering from the University of Kansas.

 

Director Qualifications
·   Ms. Welty brings to the Board extensive global industrial experience spanning more than thirty-five years in corporate governance, executive leadership, operations, sales, marketing and manufacturing roles in the chemicals, specialty chemicals and energy industries.

 

Rainer Rettig		RAINER RETTIG, age 63, has served as a director since February, 2020. Mr. Rettig has served as head of the Circular Economy Program of Covestro AG (formerly known as Bayer Material Science, a subgroup of Bayer AG), one of the world’s leading manufacturers of high-tech polymer materials. Mr. Rettig brings significant experience in sales, marketing and strategy development in the field of chemicals and plastics. He had several senior leadership roles in Germany, Japan, Hong Kong and China. Mr. Rettig holds a Ph.D in polymer chemistry and polymer processing from the Technical University of Darmstadt in Germany.

 

Director Qualifications
·   Mr. Rettig has extensive knowledge and experience in manufacturing, sales, marketing, strategy development and management. He brings to the Board extensive global industrial experience and insight into the European and Asia-Pacific markets.

 

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Alice Laberge		ALICE LABERGE, age 66, has served as a director since February, 2021. Ms. Laberge is currently a director of Nutrien Ltd., a Canadian fertilizer company, and Russel Metals Inc., a metal distribution company, and has served in such roles since 2018 and 2007, respectively. Ms. Laberge is also a director of the BC Cancer Foundation and the Canadian Public Accountability Board. She most recently retired from the board of the Royal Bank of Canada in January 2021, on which she served for over 15 years. She formerly served as President and Chief Executive Officer of Fincentric Corporation, a global provider of software solutions to financial institutions, until 2005, and was previously Chief Financial Officer and Senior Vice-President, Finance for MacMillan Bloedel Ltd. Ms. Laberge is a Fellow of the Institute of Corporate Directors, and holds an MBA from the University of British Columbia and a Bachelor of Science from the University of Alberta.

 

Director Qualifications
·   Ms. Laberge brings to the Board extensive senior executive experience relevant to our operations and an understanding of the forest products business. She also brings significant corporate governance and public company board experience from a wide variety of companies. Ms. Laberge also has extensive knowledge in financial and accounting matters.

 

Janine North		JANINE NORTH, age 61, has served as a director since February 2021. Ms. North is currently a director of Conifex Timber Inc., a forest products company, and Imperial Metals Corporation, a Canadian mining company. She is also a director of the BC Ferry Services Corp. and the Fraser Basin Council. Ms. North retired from the Northern Development Initiative Trust in 2016 after serving 11 years as the founding Chief Executive Officer. Ms. North holds a Diploma in Management Studies from the Executive MBA Program at Simon Fraser University and a Bachelor of Science from the University of Alberta.

 

Director Qualifications
·   Ms. North brings with her significant public company board experience, and in particular, with companies involved in the resource sector. In particular, she has extensive knowledge and experience relevant to the Company’s operations in the forest products industry, including financings and strategic transactions in the industry, as well as corporate governance and talent management.

Majority Withheld Policy in Uncontested Director Elections

In order to provide Shareholders with a meaningful role in the outcome of director elections, our Board has adopted a provision on voting for directors in uncontested elections as part of our Corporate Governance Guidelines (the “Governance Guidelines”). This provision provides that any nominee in an uncontested election who receives more votes “Withheld” for his or her election than votes “For” his or her election shall have his or her term as a director terminate on the earliest to occur of: (i) 90 days after the date the election results are certified; (ii) the date such director resigns; or (iii) the date the Board fills the position. We have amended our bylaws to reflect such provision.

The complete terms of this provision are included in our Governance Guidelines which can be found at the “Governance” link on our website at www.mercerint.com.

The election of directors at the Meeting is an uncontested election.

 

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Board Snapshot

The following tables provide a snapshot of the independence, tenure, age, diversity and geographic mix of our director nominees.    

 

Board Tenure and Refreshment

Maintaining an appropriate balance of tenure among directors is an integral part of the Board’s consideration. Longer serving directors bring valuable experience and knowledge with respect to our business, industry and strategic and operational challenges. Newer directors bring, along with their own personal experiences, fresh perspective and ideas.

We have added three new independent directors to the Board over the last three years, not including our new Chief Executive Officer, Juan Carlos Bueno, who will be standing for election as a new director nominee at the upcoming Meeting, and have added six new independent directors to the Board over the last five years.

We do not believe that directors should be subject to term or age limits. While term and age limits could facilitate fresh ideas and viewpoints being consistently brought to the Board, we believe they are counter-balanced by the disadvantage of causing the loss of directors who, over a period of time, have developed insight into our strategies, operations and risks and continue to provide valuable contributions to Board deliberations. We believe that our decision not to establish term or age limits is consistent with the prevailing practice among companies in the S&P 500. We recognize that certain governance stakeholders have suggested that longer-serving directors may have decreased independence and objectivity; however, we believe that arbitrarily removing knowledgeable directors and the oversight consistency they bring – particularly during periods of management change – weighs against strict restrictions on director tenure. Ultimately, it is our Board’s responsibility to establish Board refreshment policies, using its discretion in the best interests of the Company and our Shareholders.

Snapshot of Attributes of Director Nominees

All director nominees exhibit the following personal attributes:

 

 

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Our director nominees also have the following qualifications:

 

Industry & Related Experience

Senior Leadership Experience

Public Company Board Experience

Capital Markets & Financial Experience

International Business Experience

Environment,   Health and Safety

Jimmy S.H. Lee

✓

✓

✓

✓

✓

✓

Juan Carlos Bueno

✓

✓

✓

✓

✓

William D. McCartney

✓

✓

✓

✓

James Shepherd

✓

✓

✓

✓

✓

✓

R. Keith Purchase

✓

✓

✓

✓

✓

✓

Alan C. Wallace

✓

✓

✓

✓

Linda J. Welty

✓

✓

✓

✓

✓

✓

Rainer Rettig

✓

✓

✓

✓

Alice Laberge

✓

✓

✓

✓

Janine North

✓

✓

✓

✓

✓

Board Diversity

We recognize the benefit of diversity and inclusion and consider it to be a key element of Board effectiveness. We believe diversity and inclusion on the Board provides us with a better understanding of issues, enhances our decision making, improves our execution and performance, enhances our oversight of risk, ESG matters and strategies and enhances value for Shareholders and other stakeholders. As a result, while all Board nominations are based on merit, our Governance and Nominating Committee will consider, along with the skills, experience and expertise of a director, other factors including gender, race, ethnicity, age and geography to ensure a diverse Board membership.

In August 2021, the SEC approved a NASDAQ Stock Market proposal to adopt new listing rules relating to board diversity and disclosure. As approved by the SEC, the new NASDAQ listing rules require all NASDAQ listed companies to disclose consistent, transparent diversity statistics regarding their boards of directors. The rules also require most NASDAQ listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an under-represented minority or LGBTQ+. In this regard, Ms. Welty, Ms. Laberge and Ms. North are female, Mr. Lee is Asian and Mr. Bueno is Hispanic or Latinx. Accordingly, the Company would be in compliance with NASDAQ’s diversity requirement.

The Board Diversity Matrix below presents the director nominee diversity statistics in the format prescribed by the NASDAQ rules, and such information is based on voluntary self-identification by each nominee:

 

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Board Diversity Matrix (As at April 6, 2022)
Total Number of Directors		10
		Female		Male		Non-Binary		Did not Disclose     Gender
Part I: Gender Identity
Directors		3		7		0		0
Part II: Demographic Background
African American or Black		0		0		0		0
Alaskan Native or Native American		0		0		0		0
Asian		0		1		0		0
Hispanic or Latinx		0		1		0		0
Native Hawaiian or Pacific Islander		0		0		0		0
White		3		4		0		0
Two or More Races or Ethnicities		0		0		0		0
LGBTQ+		0
Did Not Disclose Demographic Background		1

 

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CORPORATE GOVERNANCE AND BOARD MATTERS

Role of the Board

Our Board makes major policy decisions, participates in strategic planning, oversees risk management, oversees our sustainability and ESG initiatives and reviews management’s performance and effectiveness. Certain important matters must be dealt with by our Board, such as the approval of financial statements and the declaration of dividends to our Shareholders. Through our Governance Guidelines and/or formal resolution, the Board reserves for itself the right to make certain decisions and delegates others to management. In some matters, management’s discretion is limited by dollar thresholds beyond which Board approval is required.

Our Board, with management, also sets the tone from the top to set high standards of conduct and promote an open and transparent culture. The Board’s responsibility to oversee conduct and culture is broad and focuses on continuous improvement in our affairs.

Key Areas of Board Oversight

 

Responsibility		Activities
Conduct and Culture		·  Setting the tone from the top.   ·  Championing our values and satisfying ourselves that a culture of integrity is maintained by us. This is furthered by our Code of Business Conduct and Ethics and other policies.   ·  Promoting a respectful environment where colleagues can speak up and challenge behaviors that do not align with our values.
Governance		·  Through our Governance and Nominating Committee, monitoring best practices in governance, developing corporate governance principles and guidelines and establishing appropriate structures and procedures to allow our Board to function effectively and independently of management.
Risk Oversight		·  Overseeing and approving our risk management and appetite.   ·  Through our Board committees, overseeing strategic risk policies and monitoring conduct.   ·  Promoting a strong risk culture and ensuring conduct aligns with our business-wide risk appetite.
ESG Oversight		·  Overseeing, advising and assisting in developing, implementing and monitoring ESG polices, practices and strategies and our sustainability initiatives to meet high standards of environmental and social responsibility.   ·  Reviewing and setting our sustainability goals.   ·  Overseeing our approaches to managing climate-related impacts.   ·  Monitoring the social, political, environmental, public policy, legislative and regulatory trends, and developing governance principles and strategic guidelines and ESG initiatives in response to such trends including our approach to climate change.
Strategic Oversight		·  Overseeing our strategic direction and the formulation of our plans and priorities ensuring alignment with our risk appetite.   ·  Annually approving our strategic plan and initiatives which takes into account, among other things, the opportunities and risks of our business and aspects of our sustainability initiative.   ·  Approving our financial objectives and operating plans including significant capital allocations, expenditures and transactions that exceed prescribed thresholds.   ·  Regularly discussing and reviewing aspects of strategy with management and monitoring the implementation of strategic initiatives.   ·  Reviewing and approving our organizational structure.   ·  Reviewing the results of our annual business performance assessments.

 

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Responsibility		Activities
Talent Management and Succession Planning		Together with our Compensation and Human Resources Committee:   ·  Reviewing strategies and programs for assessment and development of senior talent;   ·  Supervising succession planning processes, which include selection, appointment and the development of our Chief Executive Officer and other senior executives; and   ·  Evaluating and approving compensation of our Executive Chairman, Chief Executive Officer and senior management team in a manner consistent with practical incentives.
Financial Reporting and Internal Controls		·  Overseeing compliance with applicable audit, accounting and financial reporting requirements.   ·  Requiring management to implement and maintain effective systems of internal control, including management information systems.   ·  Through our Audit Committee, assessing the adequacy and effectiveness of systems of internal control.   ·  Approving the quarterly and annual financial reports.

Governance Guidelines, Code of Conduct and Other Policies Available on Our Website

The Governance section of our website (https://mercerint.com/our-company/governance/) contains our policies regarding our governance and other practices including our:

 

·    Governance Guidelines;   ·    Code of Business Conduct and Ethics;   ·    Whistleblower Policy;   ·    Clawback Policy;   ·    Environmental Policy;   ·    Health and Safety Policy;   ·    Securities Law Compliance Policy;		·  Hedging Transactions Policy;   ·  Anti-Corruption Policy;   ·  Western Canada Indigenous Relations Policy;   ·  Sustainable Purchasing Policy;   ·  Wood and Fibre Procurement Policy; and   ·  Human Rights Policy.

Our Governance Guidelines provide a set of flexible guidelines for the effective functioning of our Board which are reviewed regularly and revised as necessary or appropriate in response to changing regulatory requirements and evolving best practices.

Our Governance Guidelines also:

 

·

provide for our charters for each Board committee including our Audit Committee Charter;

 

·

provide for the duties and responsibilities of the Board, its committees and certain of our officers including our Chief Executive Officer;

 

·

provide for practices with respect to the holding of regular quarterly and strategic meetings of the Board, including separate meetings of non-employee directors; and

 

·

reserve to the Board specific approval and authority for certain decisions or matters.

The Code of Business Conduct and Ethics provides a framework of fundamental principles that guide the Board in its deliberations, allows us to address sensitive and complex matters and sets forth our accountabilities if standards of conduct are not upheld.

Our Code of Business Conduct and Ethics, which applies to all of our executives, employees and directors, is designed to deter wrongdoing and promote:

 

·

honest and ethical conduct;

 

14

·

avoidance of conflicts of interest;

 

·

full, fair, accurate and timely disclosure in our public filings with the SEC;

 

·

compliance with applicable governmental laws, rules and regulations;

 

·

prompt internal reporting of violations of the code; and

 

·

accountability for adherence to the code.

Our Clawback Policy provides procedures which allow us to seek reimbursement with respect to incentive compensation paid or awarded to executive officers where the payment of a bonus or equity award or the vesting of such award was predicated upon the achievement of financial results that were the product of fraudulent activity or that were subsequently the subject of a material negative restatement. Further, our policy also provides for forfeiture or clawbacks of awards in specified cases where we determine an executive has engaged in material misconduct, material failure to comply with our policies or personal misconduct that is detrimental to us.

We encourage a transparent and open environment where all employees can speak up without reprimand. Our Whistleblower Policy provides a set of procedures for our employees to report, on a confidential basis, their concerns or complaints about questionable accounting or auditing matters or violations of legal or regulatory requirements and for the Audit Committee to receive and respond to such concerns and complaints. Accordingly, our employees can report any misconduct to a supervisor, manager, or the Audit Committee, or employees can make reports and raise concerns on a confidential basis through our Integrity Hotline.

Our Securities Law Compliance Policy applies to the handling of our material non-public information or other companies with whom we deal and the buying and selling of our stock and other securities and those of other companies.

Our Hedging Transactions Policy, which applies to our directors and all of our executive officers, is designed to prohibit such individuals from hedging their Mercer stock, including trading in options, puts, calls or other derivative instruments relating to our securities.

Our Anti-Corruption Policy is designed to expand upon the provisions of our Code of Business Conduct and Ethics relating to international operations and ensure compliance by us and our directors, officers, employees and agents with the United States Foreign Corrupt Practices Act of 1977 and other applicable anti-corruption laws.

Our Environmental Policy is designed to promote responsible environmental stewardship, and to encourage efforts in protecting and sustaining our resources and their ecosystems in the course of our operations. Our Health and Safety Policy applies to all of our employees and operations, and is designed to promote the creation and maintenance of a safe and healthy work environment. Our Wood and Fibre Procurement Policy is designed to promote sustainable forest management and wood sourcing practices in the course of our operations. Each of the policies outline certain practices we undertake to promote positive environmental performance and a safe and healthy workplace.

We recognize that in Western Canada we conduct some of our operations on the treaty, settlement, traditional and unceded territories of Indigenous peoples. Indigenous communities are important partners in maintaining sustainable forest management. Our Western Canada Indigenous Relations Policy outlines our commitment to pursuing positive and respectful relationships with Indigenous nations, settlements and individuals, and provides a framework of practices that encourages and supports such relationships.

Our Sustainable Purchasing Policy is designed to promote responsible procurement and purchasing practices by providing a set of standards that we seek from our suppliers when they conduct business with us. This policy is based on the recognition of human and labour rights, Indigenous rights, environmental sustainability and anti-corruption practices, and is a commitment to meeting the standards of the United Nations Global Compact, to working towards the ISO 20400 Standard for Sustainable Procurement and to building on the ISO 26000 Standard for Social Responsibility.

Our Human Rights Policy applies to all of our employees, and reflects our recognition of human rights as one of our core values. The policy provides a framework for how we conduct our business from a human rights perspective, including providing guiding principles on approaching relationships with employees, suppliers and Indigenous communities in a respectful manner.

 

15

Board Meetings and Attendance

In 2021,

 

·

each member of the Board, during their term of service, attended 100% of all meetings of our Board and each committee on which he or she serves;

 

·

each of our independent directors, during their term of service, attended 100% of our executive sessions for independent directors without management; and

 

·

all of our directors virtually attended the annual meeting held in May 2021. (Although we do not have a formal policy with respect to attendance of directors at our annual meetings, all directors are encouraged and expected to attend such meetings in person or through the virtual meeting, if possible.)

Current committee membership and the number of meetings of our full Board and committees held in 2021 are shown in the table below.

 

		Board		Audit     Committee		Compensation     and Human Resources Committee		Governance     and Nominating Committee		Environmental,     Health and Safety     Committee
Jimmy S.H. Lee
David M. Gandossi(1)
William D. McCartney
James Shepherd
R. Keith Purchase
Alan Wallace
Linda Welty
Rainer Rettig
Alice Laberge(2)
Janine North(2)
Number of 2021 Meetings		17		5		5		4		4

 

Chair

Member

Lead Independent Director

 

(1)	Mr. Gandossi is not standing for re-election at the Meeting, and upon Mr. Gandossi’s retirement from the Board, Mr. Bueno will become a member of the Environmental Health and Safety Committee.

(2)	Ms. Laberge and Ms. North were appointed to the Board on February 17, 2021.

 

16

Affirmative Determination Regarding Director Independence

The NASDAQ listing standards require that a majority of the members of a listed company’s board of directors be independent.

To determine whether directors are independent, the Board uses information about their personal and business relationships. The Board collects this information from sources such as:

 

·

director responses to an annual detailed questionnaire; and

 

·

director biographical information.

Based upon the NASDAQ rules, our Board has determined that the following eight director nominees are independent and represent 80% of our director nominees:

 

Director Nominee Independence		Independent Director Nominees
		·   William D. McCartney ·   James Shepherd ·   Keith Purchase ·   Alan Wallace ·   Linda Welty ·   Rainer Rettig ·   Alice Laberge ·   Janine North

Board Leadership Structure

Our Board is responsible for overseeing the exercise of corporate power and seeing that our business and affairs are managed to meet our own stated goals and objectives and that the long-term interests of our Shareholders are served.

Our Governance and Nominating Committee, which is made up entirely of independent directors, is responsible for the continuing review of the governance structure of the Board, and for recommending to the Board governance structures and practices best suited for our particular situation. This committee determines what leadership structure it deems appropriate, based on factors such as experience of the applicable individuals and the current business environment.

 

Our Board Leadership Structure		Practices
Leadership:   ·  Executive Chairman   ·  Lead Director   ·  Audit, Compensation and Human Resources and Governance and Nominating Committees led by and composed solely of independent directors   ·  Active engagement by all directors		Our Board leadership structure includes practices such as:   ·  a Lead Director, who provides leadership to our independent directors, assists in establishing agendas for Board and committee meetings and chairs executive sessions of our independent directors; and   ·  holding regular executive sessions at each Board meeting to allow for the active engagement of independent directors and appropriate oversight of management.
The Board believes our leadership structure and practices provide an optimal framework to guide the Company and maintain the focus required to achieve our long-term business goals.

Our Board believes that it should maintain flexibility to select our Chairman and its Board leadership structure from time to time and our policies do not preclude our Chief Executive Officer from also serving as Chairman of the Board. Our Executive Chairman, Mr. Lee, was formerly our Chief Executive Officer until 2015 when he became Executive Chairman. Our Board believes Mr. Lee serving as Executive Chairman allows the Board to benefit from Mr. Lee’s in-depth knowledge of our business and industry as well as leadership in formulating and implementing strategic initiatives.

 

17

In considering its leadership structure, the Board has taken a number of factors into account. In particular, the Governance and Nominating Committee has sought to ensure that independent backgrounds and opinions dominate both the Board and the Board’s committees. Consequently, the Board, which currently consists of eight independent directors out of ten, who are highly qualified and experienced, exercises a strong, independent oversight function. This oversight function is enhanced by the fact that all of the Chairs of our Board committees are independent directors, and the Audit Committee, Compensation and Human Resources Committee and Governance and Nominating Committee are composed entirely of independent directors.

Our Board leadership structure and practices, including the appointment of a Lead Director for a three-year term and meetings in executive sessions, support the independence of our non-employee directors. Meetings are also held formally and informally from time to time with our Executive Chairman and Chief Executive Officer for discussion of relevant subjects.

Duties and Responsibilities of Lead Director

 

Lead Director		Primary Responsibilities
Lead Director   William D. McCartney(1)   Executive Sessions Led in 2021: 4   Executive Sessions Led in 2021 by Mr. Purchase, the former Lead Director: 1   Average Attendance of Independent Directors at Executive Sessions in 2021: 100%   The position of Lead Director comes with a clear mandate and significant authority. While the Lead Director is elected annually, in order to provide consistency and continuity, it is generally expected that he or she will serve for a three-year term.   The Lead Director shall serve in such capacity for not more than two consecutive three-year terms.   (1) Mr. McCartney was appointed Lead Director in May 2021.		·  Provide leadership to non-employee directors on the Board.   ·  Ensure that the Board can operate independently of management.   ·  Serve as a liaison between the independent directors and the Executive Chairman.   ·  Ensure that the Board has adequate resources to support its decision-making process and is appropriately approving strategy and supervising management’s progress against that strategy.   ·  Ensure, with the Executive Chairman, that the committees are working effectively.   ·  Establish, in consultation with the Executive Chairman and Chief Executive Officer, procedures to govern the Board’s work, ensuring that the Board is appropriately approving strategy and supervising management’s progress against that strategy.   ·  Provide input and help to develop, with the Executive Chairman, Board agendas and timetables for Board and committee meetings.   ·  Annually review the effectiveness of the Board and committees in conjunction with the Governance and Nominating Committee.   ·  Lead and assist the Board in the discharge of its duties and responsibilities.   ·  Ensure that independent directors have adequate opportunities to meet and discuss without management present.   ·  Chair meetings of the Board when the Executive Chairman is not in attendance.   ·  Ensure delegated committee functions are carried out and reported to the Board.   ·  Be the senior spokesperson for the Board on governance matters and executive management compensation matters.   ·  Ensure that the Board receives adequate and regular updates from the Executive Chairman and Chief Executive Officer on all issues important to the business and future of the Company.

Executive Sessions

Our Board believes it is important to have executive sessions without the Chief Executive Officer, Executive Chairman and other members of management, which are scheduled during every meeting of the Board. Our independent directors have robust and candid discussions at these executive sessions, during which they evaluate the performance of the Chief Executive Officer, Executive Chairman and other senior officers, our governance practices, the reports of our independent registered public accountants, the meetings themselves and any other relevant matter.

 

18

Mr. McCartney was appointed our Lead Director effective May, 2021. After his appointment, he chaired all 4 executive sessions of our independent directors. Prior to Mr. McCartney’s appointment, the former Lead Director, Mr. Purchase, chaired one executive session of our independent directors in 2021. Our independent directors generally hold two executive sessions at each meeting of the Board, both before and after such meetings.

Committees of the Board

Our Board currently has four standing committees: the Audit Committee, the Compensation and Human Resources Committee, the Governance and Nominating Committee and the Environmental, Health and Safety Committee. Our committee meetings are generally open to all directors, who often voluntarily attend all committee meetings. Copies of the charters for all of our committees are included in our Corporate Governance Guidelines which are available on our website.

 

Audit Committee		Primary Responsibilities
Members in 2021:   ·  Alan Wallace (Chair) ·  William D. McCartney ·  Alice Laberge(1) ·  Janine North(1)   Meetings in 2021: 5   Average Attendance in 2021: 100%   All members satisfy the audit committee independence requirements of the NASDAQ rules and are financially sophisticated, as interpreted by the Board.   Our Board has also determined that the committee Chair, Mr. Wallace, qualifies as an “audit committee financial expert”, as defined in applicable SEC rules and applicable NASDAQ listing standards.   (1)   Ms. Laberge and Ms. North were appointed to the Board on February 17, 2021. (2)   James Shepherd ceased to be a member of the Audit Committee on May 28, 2021, but attended 100% of the committee meetings prior to such date during the 2021 fiscal year.		·  Oversee our accounting and financial reporting processes, including the review of the financial statements to be included in our annual reports on Form 10-K and quarterly reports on Form 10-Q, the external audit process and our systems of internal accounting and financial controls.   ·  Provide an open avenue of communication between the Board, management and our independent registered public accounting firm.   ·  Appoint and approve the Company’s independent registered public accounting firm, all audit engagement terms and fees to be paid to the independent auditor.   ·  Oversee the relationship with our independent registered public accounting firm, including reviewing auditor independence, the scope of their work and the pre-approval of audit and non-audit services.   ·  Review our quarterly and financial results with management and our independent registered public accounting firm and, based on such review, recommend to the Board that quarterly and annual financial statements be included in our annual reports on Form 10-K and quarterly reports on Form 10-Q.   ·  Meet with and review the results of the annual audit performed by the independent registered public accounting firm and the results of their review of our annual and quarterly financial statements.   ·  Review and approve the terms of all related party transactions.   ·  Review management’s assessment of the effectiveness of our internal controls over financial reporting and consider with management and our independent registered public accounting firm whether any changes to such internal controls are appropriate.   ·  Review periodically and discuss with management our major risk exposures.   ·  Establish and maintain procedures for receiving, reviewing and responding to complaints regarding accounting, internal accounting controls or auditing matters.   ·  Review and reassess the adequacy of our Audit Committee Charter annually and recommend any changes to the Board for approval.

 

19

Compensation and Human Resources Committee		Primary Responsibilities
Members in 2021:   ·  Keith Purchase (Chair) ·  James Shepherd ·  Alan Wallace ·  Rainer Rettig ·  Alice Laberge(1)   Meetings in 2021: 4   Average Attendance in 2021: 100%   All members of the Compensation and Human Resources Committee have been determined to be independent directors under NASDAQ rules.   (1)   Ms. Laberge was appointed to the Board on February 17, 2021 (2)   Keith Purchase became a member of the Compensation and Human Resources Committee on May 28, 2021.		·  Oversee appropriate compensation practices and determine the compensation and other benefits for executive officers.   ·  Periodically review and advise the Board on our overall compensation philosophy and plans and assess the competitiveness and adequacy of our compensation programs.   ·  Analyze executive compensation data, including base salaries, annual bonuses, long-term incentives and pay, as well as executive compensation principles, strategies, trends, regulatory requirements and current programs.   ·  Annually review and recommend compensation packages for both our Executive Chairman and Chief Executive Officer and approve the compensation packages for our other executive officers.   ·  Based on discussions with our independent directors, the Chair of the Governance and Nominating Committee and the Chair of the Compensation and Human Resources Committee, annually review the performance of our Executive Chairman and Chief Executive Officer.   ·  Review and make recommendations to our Board with respect to non-employee director compensation, including compensation for members of committees of the Board.   ·  Administer the Company’s incentive compensation and equity-based plans, including reviewing and approving equity grants to executive officers and employee benefit plans and other perquisites.   ·  Review annual performance objectives and goals for our executive officers and actual performance against previous year’s goals to evaluate individual performance and, in turn, compensation levels.   ·  Annually review and approve the peer group companies used for the purposes of assessing executive officer compensation.   ·  Review and approve management development strategies and succession plans for our key executive officers.   ·  Review and consider the results of any advisory vote on executive compensation.   ·  Review and assess the adequacy of its charter and recommend any changes to the Board for approval.

 

20

Governance and Nominating Committee		Primary Responsibilities
Members in 2021:   ·  William D. McCartney (Chair) ·  R. Keith Purchase ·  Linda Welty ·  Janine North(1)   Meetings in 2021: 5   Average Attendance in 2021: 100%   All members of the Governance and Nominating Committee have been determined to be independent directors under NASDAQ rules.   (1)   Ms. North was appointed to the Board on February 17, 2021		·  Provide leadership with respect to corporate governance.   ·  Recommend to the Board nominees for appointment to the Board, including identifying and screening potential Board candidates and committee members.   ·  Make recommendations to the other independent directors for their selection of the Lead Director.   ·  Determine the skills, qualifications and other expertise required of directors and develop criteria to be considering in selecting potential Board candidates.   ·  Develop and monitor our overall approach to corporate governance issues.   ·  Review with the Board, on a regular basis, the methods and processes by which the Board fulfills its duties and responsibilities.   ·  Evaluate the overall effectiveness of the Board and its performance.   ·  Based on discussions with our independent directors, the Chair of the Governance and Nominating Committee and the Chair of the Compensation and Human Resources Committee, annually review the performance of our Executive Chairman and Chief Executive Officer.   ·  Review our Governance Guidelines, including committee charter, in light of changing conditions and make recommendations to the Board on appropriate modifications.   ·  Monitor compliance with our Governance Guidelines.

 

21

Environmental, Health and Safety Committee		Primary Responsibilities
Members in 2021:   ·  James Shepherd (Chair) ·  Jimmy S.H. Lee ·  David Gandossi(1) ·  Linda Welty ·  Rainer Rettig   Meetings in 2021: 4   Average Attendance in 2021: 100%   All members of the Environmental, Health and Safety Committee, other than Messrs. Lee and Gandossi, have been determined to be independent directors under NASDAQ rules.   (1)  Mr. Gandossi has decided not to stand for re-election at the Meeting. If elected as a director at the Meeting, Mr. Bueno will fill the vacancy on the Environmental Health and Safety Committee, and will not be considered an independent director under NASDAQ rules.   (2)  Keith Purchase ceased to be a member of the Environmental, Health and Safety Committee on May 28, 2021, but attended 100% of the committee meetings prior to such date during the 2021 fiscal year.		·  Review, approve and, if necessary, revise the environmental, health and safety policies and environmental compliance programs of the Company.   ·  Monitor the Company’s environmental, climate change, health and safety management systems including internal and external audit results and reporting.   ·  Provide direction to management on the frequency and focus of external independent environmental, health and safety audits.   ·  Review and assess its charter and recommend any changes to the Board for approval.

Risk Oversight

The Board oversees the proper safeguarding of our assets, the maintenance of appropriate financial and other internal controls and our compliance with applicable laws and regulations and proper governance. Inherent in these responsibilities is the Board’s understanding and oversight of the various risks facing us. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of our business strategy. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for us to be competitive on a global basis and to achieve our long-term strategic business objectives.

 

Oversight of Risk

·  The Board oversees risk management.   ·  Board committees, which meet regularly and report back to the full Board, play significant roles in carrying out the risk oversight function.   ·  Management is charged with managing risk, through robust internal processes and effective internal controls.

Effective risk oversight is an important priority of the Board. The Board has implemented a risk governance framework designed to:

 

·

understand critical risks in our business and strategy;

 

·

allocate responsibilities for risk oversight among the full Board and its committees;

 

·

evaluate our risk management processes and whether they are functioning adequately;

 

·

facilitate open communication between management and directors;

 

·

oversee our initiatives and communication relative to our sustainability initiatives relating to ESG matters; and

 

·

foster an appropriate culture of integrity and risk awareness.

While the Board oversees risk management, our management is charged with managing risk.

 

22

We have robust internal processes and an effective internal control environment which facilitate the identification and management of risks and regular communication with the Board. These include an enterprise risk management program under the leadership of the Chief Financial Officer, regular internal management disclosure committee meetings, a Code of Business Conduct and Ethics and other policies, strong internal controls and a comprehensive external audit process. The Board and the Audit Committee monitor and oversee the evaluation of the effectiveness of the internal controls and the risk management program. Management communicates routinely with the Board, Board committees and individual directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management.

The Board implements its risk oversight function both as a whole and through delegation to Board committees, which meet regularly and report back to the full Board. Board committees assist in carrying out the risk oversight function as follows:

 

Audit Committee: Oversees risks related to our financial statements, the financial reporting process and accounting and legal matters. The committee oversees the audit function, our ethics programs, including the Code of Business Conduct and Ethics, our Whistleblower Policy and our quality, safety, environmental assurance and information technology security programs. The committee periodically receives reports on and discusses oversight of our risk management process and reviews significant risks and exposures identified by management or the independent auditors (whether financial, operating or otherwise), and management’s steps to address them. In connection with its oversight of these matters, the committee members will regularly meet separately with representatives of the independent auditors.

 

Compensation and Human Resources Committee: Evaluates the risks and rewards associated with our compensation philosophy and programs. As discussed in more detail in the Compensation Discussion and Analysis herein, the committee reviews and approves compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation. Management discusses with the committee the procedures that have been put in place to identify and mitigate potential risks in compensation. This committee also oversees management development and succession planning across senior management positions.

 

Environmental, Health and Safety Committee: Oversees our environmental, health and safety policies and environmental compliance programs and associated risks relating thereto. In connection with such oversight, the committee regularly visits and tours our mills and meets with mill-level managers, superintendents and other employees.

 

Governance and Nominating Committee: Oversees our governance practices, director succession and committee leadership to manage risks associated with corporate governance.

The full Board regularly evaluates and discusses risk, risk mitigation strategies and our internal control environment. Topics examined at these meetings include, but are not limited to, financial risks, risks related to the global COVID-19 pandemic, environmental risks, governance risks, political and regulatory risks, legal risks, information technology risks, economic risks, risks relating to growth strategies, social licence and stakeholder risks and risks related to our productivity and reinvestment efforts. In 2021, the Board actively and regularly reviewed, monitored and assessed our responses, including our health and safety protocols, to address the risks posed by the COVID-19 pandemic, including virtually attending senior management planning sessions and receiving written updates from our executives. Because overseeing risk is an ongoing process and inherent in our strategic decisions, the Board also discusses risk throughout the year.

We believe that our Board leadership structure, previously discussed herein, supports the risk oversight function of the Board. We have an Executive Chairman, a Chief Executive Officer, a Lead Director and strong directors chairing the various committees involved with risk oversight. There is open communication between management and directors and all directors are actively involved in the risk oversight function.

To learn more about risks facing us, you can review the factors included in Part 1, Item 1A. “Risk Factors” in the Form 10-K. The risks described in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company’s business, financial condition or results of operations in future periods.

 

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