📜 What This Document Is 📄

This document is a Definitive Proxy Statement, which is a critical filing required by the SEC (Securities and Exchange Commission). Think of it as the company's playbook for its shareholders, outlining what will be discussed and voted on at the Annual Meeting. It doesn't report financial results; rather, it provides the materials for shareholders to vote on key corporate governance issues.

👉 Key Takeaway: This statement guides shareholders on electing directors, approving executive pay, and ratifying external advisors, making it essential for understanding the company's governance structure.

🌲 What Mercer International Does 🏗️

In simple terms, Mercer International operates within the forest products industry. The company's core business revolves around managing and processing natural resources like wood and pulp. They are involved in several stages of the supply chain, from harvesting raw materials to manufacturing finished products.

👉 In Detail: The company’s operations span multiple segments, including:

• Pulp Segment: Producing wood pulp (e.g., for paper).
• Solid Wood Segment: Manufacturing lumber and other structural wood products.
• Energy: Generating and selling energy (like bioenergy) derived from their operations. These segments work together to turn raw forest resources into various commercial goods.

🗓️ Annual Meeting & Voting Instructions 🗳️

The annual shareholder meeting is the formal way shareholders exercise their rights and influence the company's leadership. The company has set a specific date and location for this gathering, and they provide detailed instructions on how to vote regardless of whether you attend in person or virtually.

• Annual Meeting Date: June 1, 2026.
• Location: Suite 1120, 700 West Pender Street, Vancouver, British Columbia, Canada.
• Voting Deadline: Shareholders must be of record at the close of business on March 26, 2026, to vote.
• Voting Methods: Shareholders can vote via the internet (using links like www.investorvote.com/merc), by calling a toll-free number (1-800-652-VOTE), scanning a QR code, or by mailing in a signed proxy form. 👉 Why it Matters: Shareholders should submit their proxy vote as early as possible, as voting in advance means you do not need to attend the meeting physically.

💰 Financial Performance Overview 📉

This section provides a high-level comparison of key financial and operational metrics for 2025 compared to 2024. Overall, the comparison shows a dramatic downturn in profitability metrics, while operational costs were actively managed.

• Total Revenues: Total revenues dropped from $2,043.4 million in 2024 to $1,868.1 million in 2025, representing a 9% decrease.
• Operational Profitability: The biggest drop is seen in operating profitability. Operating EBITDA fell from $243.7 million in 2024 to $15.6 million in 2025, a sharp 94% decline. This signals significant pressure on operational cash generation during the period.
• Net Loss: The company recorded a net loss of $497.9 million in 2025, compared to a net loss of $85.1 million in 2024, representing a significant increase in losses (485%).

Segment Performance Deep Dive:

• Pulp Segment: Revenue from external customers dropped 10%, falling from $1,548.6 million (2024) to $1,386.7 million (2025). The operating EBITDA fell sharply from $260.9 million to $15.6 million (a 94% drop).
• Solid Wood Segment: This segment saw its operating EBITDA drop from $4.4 million (2024) to a loss of $25.2 million (2025), a 473% decline.

🌳 Strategic Operational Highlights 🌱

Despite the challenging financial results, the company outlined several strategic areas where it is focusing resources to ensure future growth and stability.

• Cost Management ("One Goal One Hundred"): The company realized approximately $30.0 million in cost savings in 2025. This is part of a core initiative that targets achieving a total profitability improvement of $100.0 million by the end of 2026 (using 2024 as the baseline).
• Mass Timber Growth: The company continues to grow its order book for mass timber products, with production expected to ramp up in 2026.
• Climate Action: A pilot program was commissioned for the operation of a carbon capture demonstration unit at the Peace River mill, showing a commitment to sustainable industrial practices.
• Capital Projects: In 2025, the company implemented $88.6 million of capital projects, which focused on modernizing and improving facilities across various sites, including the wood room at the Celgar mill and log yard upgrades. 👉 Why it Matters: Management is actively using capital and efficiency measures (like the $100M target) to counteract the current market downturn and prepare for future growth in sustainable materials like mass timber.

🏛️ Board Governance & Structure 🧑‍💼

This section covers the rules and structure of the company's Board of Directors, emphasizing independence, committee roles, and governance policies. Good governance helps shareholders trust that the company is managed responsibly and transparently.

• Board Size and Independence: The Board is authorized to have between three and thirteen directors and currently has nine directors. Of these, eight nominees are independent, representing 89% of the Board, which is highly favorable for objective oversight.
• Governance Leadership: The Board structure includes an independent Chairperson, William D. McCartney, and independent committees for Audit (AC), Human Resources (HRC), and Governance and Nominating (GNC). This structure is designed to provide robust, independent oversight of management.
• Committee Function: The Board maintains four standing committees (AC, HRC, GNC, and Environmental, Health and Safety). These committees are responsible for granular oversight, such as managing risk (AC), overseeing employee matters (HRC), and setting long-term policies (GNC).

🤵 Director Nominations and Qualifications 🏅

The proxy statement lists the nine nominees running for election. Each director is expected to bring deep, specialized experience to the Board, which is crucial for guiding strategy and overseeing complex operations.

• The Nominees: The nominated directors include Juan Carlos Bueno (CEO), William D. McCartney (Chairperson), James Shepherd, Linda J. Welty, Rainer Rettig, Alice Laberge, Janine North, Thomas Kevin Corrick, and Markwart von Pentz.
• Key Expertise: The Board highly values a mix of skills, including:
  • Forest Products Industry Experience (e.g., James Shepherd, Thomas Kevin Corrick).
  • Senior Executive Leadership (from multiple global industries).
  • Financial Accounting and Capital Markets knowledge (e.g., William D. McCartney, Alice Laberge).
  • Experience in ESG (Environmental, Social, and Governance) matters. 👉 Why it Matters: The mix of experience confirms that the Board is attempting to maintain comprehensive oversight over the company’s complex physical operations (forest products) and its financial and ethical responsibilities (governance).

💸 Executive Compensation Practices ✨

The company is asking for a "Say-on-Pay" advisory vote, giving shareholders the chance to weigh in on the overall compensation philosophy for top executives. The structure emphasizes aligning executive rewards with long-term value creation.

• Pay Philosophy: The program emphasizes that a majority of compensation for Named Executive Officers (NEOs) is "variable" and "at risk," meaning executive pay is tied to performance rather than guaranteed.
• 2026 Updates (LTIP Re-Design): The Human Resources Committee approved a comprehensive re-design of the Long-Term Incentive Program (LTIP Re-Design) starting in 2026.
• New Performance Focus: This re-design includes adding a new performance criterion tied specifically to the net leverage ratio.
• Liquidity Measures: Due to market conditions, the Board implemented measures like deferring some awards until Q3 2026 and introducing cash-settled performance share units to minimize cash burn and shareholder dilution.

🛡️ Corporate Governance Policies & Risk Controls 🛡️

The company details its robust set of policies to ensure ethical conduct, legal compliance, and transparency across its global operations. These policies are vital for maintaining the company's "social license to operate."

• Whistleblowing & Ethics: The company maintains a Whistleblower Policy and a Code of Business Conduct and Ethics. Employees are encouraged to report concerns via an Integrity Hotline.
• Financial Compliance: A Clawback Policy is in place, allowing the company to recover incentive pay if an executive is found guilty of material misconduct or if financial statements require restatement.
• Anti-Corruption: The Anti-Corruption Policy ensures compliance with laws like the U.S. Foreign Corrupt Practices Act (FCPA) during international operations.
• Sustainability Policies: Dedicated policies address resource management, including the Environmental Policy and the Wood and Fibre Procurement Policy, promoting responsible stewardship.
• Indigenous Relations: A specific Western Canada Indigenous Relations Policy outlines a commitment to building respectful partnerships with Indigenous nations. 👉 Why it Matters: By formalizing these policies, Mercer signals to investors and regulators that it has institutionalized safeguards against fraud, corruption, and environmental harm.

📈 Sustainability and Social Goals ♻️

The company is integrating sustainability into its core business planning. This commitment goes beyond simple compliance and affects how they manage their physical assets and workforce.

• Climate Goals: The company is focused on its Climate Transition Plan and is working towards achieving a 50% scope 1 greenhouse gas emissions reduction target.
• Carbon Accounting: They have begun quantifying the biogenic carbon cycle of their products, which aims to show the full carbon benefit of the circular bioeconomy.
• Workforce Safety: In 2025, the company achieved an approximate 3.7% reduction in the average total recordable incident rate across its mills and facilities, reflecting continuous focus on employee safety.

📊 Independent Auditor & Financial Details 🔍

The Audit Committee is asking shareholders to ratify the selection of PricewaterhouseCoopers LLP (PwC) to serve as the independent registered public accounting firm for 2026.

• Auditor Fees: The fees paid by PwC for the fiscal year show the following trend:
  • Total fees in 2025 were $3,245,496.
  • Total fees in 2024 were $3,744,106.
  • This represents a decrease of $498,610. 👉 Why it Matters: Shareholder approval of the auditor confirms the transparency and reliability of the company's financial reporting to the market.

💡 Key Dates and Contact Information 📞

This section compiles all the necessary logistics, making it easy for shareholders to take action, vote, or get more information.

• Annual Meeting Date: June 1, 2026.
• Record Date (Must be Shareholder): Close of business on March 26, 2026.
• Voting Channels: Shareholders can vote online via www.investorvote.com/merc, by calling 1-800-652-VOTE (8683), or by scanning the provided QR code.
• Proxy Materials: The Proxy Statement and 2025 Annual Report will be available on or around April 21, 2026, at mercerint.com/investors/reports-filings/.

🧠 The Analogy

Think of the Annual Proxy Statement like a car’s detailed maintenance manual, but instead of oil changes, it contains governance guidelines. It doesn't tell you how fast the car (the company) was going last year, but it explains who is driving (the Directors), the rules of the road (Policies), and where the owner is directing the vehicle (Strategy and Compensation) for the coming year.

🧩 Final Takeaway

The company is undergoing a significant financial contraction (evidenced by the 94% drop in Operating EBITDA), but it is responding by implementing aggressive cost-cutting measures and focusing heavily on its long-term strategic assets, like mass timber and carbon capture, while dedicating significant resources to enhancing its governance structure and sustainability commitments.