SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________)
Filed by the Registrant /X/
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))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
MERCER INTERNATIONAL INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
MERCER INTERNATIONAL INC.
14900 INTERURBAN AVENUE SOUTH, SUITE 282
SEATTLE, WA 98168
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To: The Shareholders of Mercer International Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Mercer
International Inc. (the "Company") will be held at Hauptstrasse 16, D 07365,
Blankenstein, Germany at 8:00 a.m., Central Europe Time, on July 15, 2003, for
the following purposes:
1. To elect two Trustees of the Company;
2. To ratify the appointment of Deloitte & Touche LLP as the new independent
auditors of the Company; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Trustees has fixed the close of business on May 21, 2003 as
the record date for the determination of shareholders entitled to vote at the
Annual Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF TRUSTEES
Jimmy S.H. Lee
President
June 18, 2003
WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE THE FORM
OF PROXY THAT ACCOMPANIES THIS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. THIS WILL
ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. A PROXY MAY BE REVOKED
IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
MERCER INTERNATIONAL INC.
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
management of Mercer International Inc. (the "Company") of proxies for use at
the annual meeting of shareholders of the Company (the "Shareholders'") to be
held at Hauptstrasse 16, D 07365, Blankenstein, Germany at 8:00 a.m., Central
Europe Time, on July 15, 2003, or any adjournment thereof (the "Annual
Meeting"). If a proxy in the accompanying form (a "Proxy") is properly executed
and received by the Company prior to the Annual Meeting or any adjournment
thereof, the Company's shares of beneficial interest, $1.00 par value (the
"Shares") represented by such Proxy will be voted in the manner directed. In
the absence of voting instructions, the Shares will be voted for each of the
proposals set out in the accompanying Notice of Annual Meeting of Shareholders.
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 Secretary of the
Company c/o Suite 1620, 400 Burrard Street, Vancouver, British Columbia, Canada
V6C 3A6. A Proxy may also be revoked by attending the Annual Meeting and voting
Shares in person. Attendance at the Annual Meeting will not, in itself,
constitute revocation of a Proxy.
The holders of one-third of the outstanding Shares entitled to vote at the
Annual Meeting, present in person or represented by proxy, constitutes a quorum
for the Annual Meeting. Under applicable Washington law, abstentions and broker
non-votes will be counted for the purposes of establishing a quorum for the
Annual Meeting.
Proxies for the Annual Meeting will be solicited primarily by mail.
Proxies may also be solicited personally by the Trustees, officers or regular
employees of the Company without additional compensation. The Company may
reimburse banks, broker-dealers or other nominees for their reasonable expenses
in forwarding the proxy materials for the Annual Meeting to beneficial owners of
Shares. The costs of this solicitation will be borne by the Company.
This Proxy Statement and accompanying Proxy will be mailed to Shareholders
commencing on or about June 20, 2003. The close of business on May 21, 2003 has
been fixed as the record date (the "Record Date") for the determination of
Shareholders entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
1
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
There were 16,874,899 Shares of the Company issued and outstanding on the
Record Date. Each Share is entitled to one vote at the Annual Meeting.
The following table sets forth certain information regarding the beneficial
ownership of the Shares as of June 16, 2003 by each Shareholder known by the
Company to own more than five percent of the outstanding Shares. The following
is based solely upon statements made in filings with the Securities and Exchange
Commission (the "Commission") or other information the Company believes to be
reliable.
Percentage of
Name and Address of Owner Number of Shares Owned Outstanding Shares
-------------------------- ---------------------- ------------------
Greenlight Capital, L.L.C. 2,517,500 14.9%
420 Lexington Ave.
Suite 875
New York, NY 10170
Cramer Rosenthal McGlynn 1,729,700 10.3%
707 Westchester Avenue
White Plains, NY 10604
Merrill Lynch & Co., Inc. 1,596,700 9.5%
4 World Financial Center
New York, NY 10080
Peter R. Kellogg 893,300 5.3%
120 Broadway, 6th Floor
New York, NY 10271
Coghill Capital 891,679 5.3%
Management, LLC(1)
One North Wacker Drive
Suite 4725
Chicago, IL 60606
--------------
(1) Filed jointly with CCM Master Fund, Ltd. and Clint D. Coghill.
2
PROPOSAL 1
ELECTION OF TRUSTEES
The number of Trustees of the Company is established at seven pursuant to
resolutions passed by the Board of Trustees in accordance with the Company's
Declaration of Trust, as amended. Trustees will be elected by the majority of
votes cast at the Annual Meeting, in person or by Proxy, for the nominees.
Pursuant to applicable Washington law, abstentions and broker non-votes will
have no effect on the vote for the election of Trustees. Under the Company's
Declaration of Trust, as amended, cumulative voting in the election of Trustees
is not permitted.
The Board of Trustees is divided into three classes. Each class of
Trustees is elected for a three-year term. Michel Arnulphy has been a Trustee
since June 1995 and is a member of Class III to be elected to the Board of
Trustees to serve until the annual meeting of Shareholders to be held in 2006,
or until his successor is elected and qualified. Per Gundersby is nominated as
a Class III Trustee to replace Jong L. Ryu, who has declined to stand for
re-election, to serve until the annual meeting of Shareholders to be held in
2006, or until his successor is elected and qualified. Messrs. Arnulphy and
Gundersby have each indicated that they are willing and able to serve as
Trustees. If for any unforeseen reason any of the nominees 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 Trustees. Proxies received which do not
specify a choice for the election of the nominees will be voted FOR each of the
nominees. THE BOARD OF TRUSTEES RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE.
The following table sets forth the name, position with the Company, age and
expiration of the term as a Trustee of each nominee Trustee and each Trustee
whose term of office will continue after the Annual Meeting:
Current Position Expiration Of Term
Name with Company Age with Company
---- ---------------- --- ------------------
Jimmy S.H. Lee President, Chief 46 2005
Executive Officer
and Trustee
C.S. Moon Trustee 56 2004
Michel Arnulpy Trustee 69 2003
R. Ian Rigg Secretary, Chief 59 2004
Financial Officer and
Trustee
Per Gundersby(1) n/a 68 n/a
William McCartney Trustee 47 2005
Graeme Witts Trustee 64 2004
---------------
(1) Nominee for election as a Trustee.
The following provides certain background information about each of the
Trustees, nominee Trustees and executive officers of the Company:
J.S.H. Lee, age 46, has been a Trustee since May 1985 and President and
Chief Executive Officer since 1992. Previously, Mr. Lee served with MFC Bancorp
Ltd. as a director from 1986, Chairman from 1987 and President from 1988 to
December 1996, respectively.
C.S. Moon, age 56, has been a Trustee since June 1994. Mr. Moon is an
independent consultant. He was formerly the Executive Director of Shin Ho Group
of Korea, an international paper manufacturer headquartered in Korea, until
1998. Mr. Moon joined Shin Ho Group in 1990 and previously served in managerial
positions with Moo Kim Paper Manufacturing Co., Ltd. and Sam Yung Pulp Co., Ltd.
M. Arnulphy, age 69, has been a Trustee since June 1995. Mr. Arnulphy has
been the Managing Director of Electro Orient Ltd., a merchandise trading company
located in Hong Kong, since 1998. From 1975 to 1998, Mr. Arnulphy was the
Managing Director of J. Mortenson & Co., Ltd. in Hong Kong, a water treatment
equipment manufacturing company.
3
R. Ian Rigg, age 59, has been a Trustee and Secretary and Chief Financial
Officer since June 2003. Mr. Rigg also was a Trustee from July 1999 to December
2002, and acted as Secretary and Chief Financial Officer from October 1999 to
November 2002. Mr. Rigg has acted as a representative of Bank Gospodarki of
Poland since 1998 and has also been a director and officer of several public
companies. Mr. Rigg is a member of the Institute of Chartered Accountants in
Canada.
P. Gundersby, age 68, has been a consultant to Zellstoff Stendal GmbH
("Stendal"), a 63.6% owned project subsidiary of the Company, since June 2002
and was a project director of Stendal from December 2001 to May 2002. Mr.
Gundersby was Chairman of PEC-Tech, the construction subsidiary of RGM
International, which is a leading group of industrial companies in the Asia
Pacific region, from 1997 to December 2001. Mr. Gundersby was a director of
Jaakko Poyry Consulting Oy, a pulp and paper consulting company, from 1995 to
1996, Group Vice-Chairman of Jaakko Poyry International Oy from 1988 to 1995 and
President of Jaakko Poyry International Oy from 1986 to 1988. Mr. Gundersby has
a Masters of Science degree in Chemical Engineering.
W. McCartney, age 47, has been a Trustee since January 2003. Mr. McCartney
has been President and a director of Pemcorp Management Inc., a management
services company, since 1990. Mr. McCartney is a member of the Institute of
Chartered Accountants in Canada.
G. Witts, age 64, has been a Trustee since January 2003. Mr. Witts
organized Sanne Trust Company Limited, a trust company located in the Channel
Islands, in 1988 and was managing director from 1988 to 2000, when he retired.
W. Ridder, age 41, was appointed a managing director of Stendal in
September 2002. Mr. Ridder was the principal assistant to the Company's chief
executive officer from November 1995 until September 2002.
During the fiscal year ended December 31, 2002, no meetings of the Board of
Trustees were held, but the Board of Trustees acted on 13 occasions through
resolutions adopted by the unanimous written consent of the Trustees. Under the
Company's Declaration of Trust, as amended, resolutions of the Board of Trustees
may be adopted upon the written consent of a majority of the Trustees. In
connection with the Company's growth and expansion, the Company is considering
appointing up to two additional members to its Board of Trustees in the coming
year.
4
SECURITY OWNERSHIP OF TRUSTEES AND OFFICERS
The following table sets forth information regarding the ownership of the
Company's Shares as of June 16, 2003 by: (i) each Trustee, nominee Trustee and
Named Executive Officer (as defined below) of the Company; and (ii) all Trustees
and executive officers of the Company as a group. Unless otherwise indicated,
each person has sole voting and dispositive power with respect the Shares set
forth opposite his name. Each person has indicated that he will vote all Shares
owned by him in favor of each of the proposals to be considered at the Annual
Meeting.
Name of Owner Number of Shares Owned Percentage of Outstanding Shares
------------- ---------------------- --------------------------------
Jimmy S.H. Lee(1) 1,619,800 8.8%
C.S. Moon(2) 29,000 *
Michel Arnulphy(2) 23,000 *
Maarten Reidel(3) 153,333 *
R. Ian Rigg(2) 60,000 *
Jong L. Ryu - -
Per Gundersby - -
William McCartney - -
Graeme Witts - -
Wolfram Ridder(2) 60,000 *
Trustees and Officers
as a Group
(8 persons)(4) 1,791,800 9.6%
--------------
* Less than 1%.
(1) Includes presently exercisable stock options to acquire up to 1,585,000
Shares.
(2) Represents presently exercisable stock options.
(3) Includes presently exercisable stock options to acquire up to 33,333
Shares, which expire in September 2003 as a result of the resignation of
Mr. Reidel as a Trustee and officer of the Company in June 2003.
(4) Includes presently exercisable stock options to acquire up to 1,757,000
Shares, but excludes the 153,333 Shares and stock options held by
Maarten Reidel due to his resignation as a Trustee and officer of the
Company in June 2003.
5
COMMITTEES OF THE BOARD
The Board of Trustees has established an Audit Committee. The Audit
Committee operates pursuant to a charter adopted by the Board of Trustees, a
copy of which is attached as Appendix "A" to this Proxy Statement. The Audit
Committee is appointed by and generally acts on behalf of the Board of Trustees.
The Audit Committee is responsible primarily for monitoring: (i) the integrity
of the Company's financial statements; (ii) compliance by the Company with legal
and regulatory requirements; and (iii) the independence and performance of the
Company's internal and external auditors. The members of the Audit Committee
are Michel Arnulphy, William McCartney and Graeme Witts, each of whom is
independent under the standards of the NASDAQ National Market. The Audit
Committee met once during 2002.
The Board of Trustees has also established a Compensation Committee. The
Compensation Committee oversees the compensation of Trustees, officers,
employees and consultants of the Company. The members of the Compensation
Committee are C.S. Moon and Michel Arnulphy. The Compensation Committee met
once during 2002.
The Board of Trustees has not established a Nominating Committee.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements for the year ended December 31, 2002 with
management. The Audit Committee has also discussed with the Company's
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended. The
Audit Committee has received and reviewed the written disclosures and the letter
from the independent auditors required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, as amended, and has
discussed with the Company's independent auditors their independence. The Audit
Committee has considered whether the provision of services by the independent
auditors other than audit related conflicts with the independence of the
auditors.
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Trustees that the audited consolidated financial
statements of the Company for the year ended December 31, 2002 be included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Submitted by the members of the Audit Committee of the Board of Trustees.
William McCartney
Michel Arnulphy
Graeme Witts
CODE OF ETHICS
The Board of Trustees has adopted a Code of Business Conduct and Ethics
(the "Code") that applies to the Company's principal executive officer,
principal financial officer, other executives and employees. A copy of the Code
is attached as Appendix "B" to this Proxy Statement.
6
EXECUTIVE COMPENSATION
Summary Compensation Table
----------------------------
The following table sets forth information on the annual compensation for
each of the last three years paid to the Company's chief executive officer and
those executive officers that earned in excess of $100,000 during the most
recently completed fiscal year (the "Named Executive Officers"):
Annual Compensation Long-Term
Compensation
---------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($) ($) ($) (#) ($)
------------------ ---- ------ ----- ------------ ---------- ------------
Jimmy S.H. Lee 2002 238,504 - 90,941 - -
Chief Executive 2001 213,012 309,137 10,679 - -
Officer 2000 220,112 - - 1,360,000 -
Maarten Reidel(1) 2002 282,699 - - - -
Chief Financial
Officer
Wolfram Ridder(2) 2002 188,466 - - - -
Managing Director
of Stendal
------------
(1) Mr. Reidel was appointed Chief Financial Officer in November 2002 and
resigned as a Trustee, Secretary and Chief Financial Officer of the
Company in June 2003. The amount presented for Mr. Reidel has been
annualized.
(2) Mr. Ridder was appointed a managing director of Stendal effective
September 2002 for an indefinite term at a salary of E200,000 per annum,
increasing to E240,000 in April 2003, and a bonus of up to 25% of his
annual salary based upon performance targets. The amount presented for
Mr. Ridder has been annualized.
Stock Options
--------------
None of the Named Executive Officers were granted options to purchase
Shares during 2002. Pursuant to Mr. Reidel's employment agreement effective July
1, 2002, in March 2003, the Company granted Mr. Reidel options to acquire up to
100,000 Shares under the Company's stock option plan at an exercise price of
$6.375 per share, exercisable immediately as to one-third of the options granted
and one-third on each of the first and second anniversaries of the date of
grant. These options expire in September 2003 as a result of the resignation of
Mr. Reidel as Trustee, Secretary and Chief Financial Officer of the Company in
June 2003. For further information regarding Mr. Reidel's resignation, see the
Company's Current Report on Form 8-K dated June 18, 2003, which is incorporated
herein by reference.
The table below provides information regarding the exercise of options
during 2002 by the Named Executive Officers and information with respect to
unexercised options held by them at December 31, 2002:
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
Number of
Securities
Underlying Value
Unexercised of Unexercised
Shares Options at In-the-Money Options
Acquired Value Fiscal Year-End(#) at Fiscal Year-End($)
Name On Exercise Realized Exercisable/ Exercisable/
(#) ($) Unexercisable Unexercisable
---- ----------- -------- ------------------- ---------------------
Jimmy S.H. Lee - - 1,685,000/Nil Nil/Nil
Chief Executive
Officer
Wolfram Ridder - - 60,000/Nil Nil/Nil
Managing Director
of Stendal
7
The following table sets forth information as at June 16, 2003 regarding
the Company's stock option plan under which options to acquire an aggregate of
3,600,000 Shares may be granted to the Company's officers and employees, and to
the Company's Trustees who are not also officers or employees of the Company up
to a maximum of 130,000 Shares:
Number of Shares Weighted-average Number of Shares
to be Issued Exercise Price Available for
Upon Exercise of of Outstanding Future Issuance
Outstanding Options Options Under Plan
------------------- ---------------- ----------------
Stock Option Plan 2,218,000 $7.24 58,000
Compensation of Trustees
--------------------------
Non-management Trustees receive $20,000 annually for their services and
$500 for each meeting of the Board of Trustees that they attend. The Company
also reimburses Trustees and officers for expenses incurred in connection with
their duties as Trustees and officers. Trustees that are not also officers or
employees of the Company and who are in office at the end of a fiscal year may
receive options to acquire up to 6,000 Shares at an exercise price equal to the
closing price of the Shares on the NASDAQ National Market on the last trading
day of a fiscal year.
Indemnity Agreements
---------------------
The Company has entered into a Trustee's Indemnity Agreement with each of
the Trustees. The Company has agreed under each of these agreements to
indemnify each of the Trustees against any and all claims and costs that are or
may be brought against him as a result of his being a Trustee, officer or
employee of the Company or that of a company related to the Company. However,
under the agreements, the Company is not obligated to indemnify a Trustee
against any claims or costs in certain instances, including if it is determined
that the Trustee failed to act honestly and in good faith with a view to the
best interests of the Company, if the Trustee failed to disclose his interest or
conflicts as required under corporate legislation in Washington or the Company
is not permitted to indemnify the Trustee under such legislation, or if the
Trustee has violated any insider trading rules under United States federal and
state securities laws.
If there is a change in control (as defined in the agreement) of the
Company other than a change in control which has been approved by a majority of
the Board of Trustees, the Company is required to seek legal advice as to
whether and to what extent a Trustee would be permitted to be indemnified under
applicable law. In addition, the agreements allow the Company to defend any
claim made against a Trustee.
Employment Agreements
----------------------
Mr. Lee is a party to an amended and restated employment agreement dated
November 20, 2000 with the Company. The agreement generally provides, subject to
certain termination provisions, for the continued employment of Mr. Lee as
president and chief executive officer for a period of 36 months with automatic
one month renewals, so that the contract at all times has a remaining term of 36
months. The agreement provides for a base salary of $240,000 (which is paid in a
foreign currency) and other compensation as determined by the Board of Trustees.
The agreement contains change in control provisions pursuant to which, if a
change in control (as defined in the agreement) occurs, Mr. Lee may only be
discharged for cause. In the event Mr. Lee is terminated without cause or
resigns for good reason (as defined in the agreement) within eighteen months of
the change in control, he shall be entitled to a severance payment of three
times his annual salary under the agreement and all unvested rights in any stock
option or other benefit plans shall vest in full. If Mr. Lee is terminated
without cause or resigns for good reason within three years of the change in
control, he shall be entitled to a severance payment of three times the sum of
his then annual salary under the agreement plus the higher of his last annual
bonus and the highest bonus received during the preceding five years. In
addition, all unvested rights in any stock option or other benefit plans will
vest in full. Mr. Lee will also continue to receive equivalent benefits as were
provided at the date of termination for the remaining term of the agreement.
8
Mr. Lee may terminate his employment with the Company at any time for good
reason (as described in his employment agreement) within 180 days after the
occurrence of the good reason event.
Incentive Bonus Plan
----------------------
The Company adopted an employee incentive bonus plan ("EIP") which provides
for the award of interests in an incentive bonus pool established under the plan
to Trustees, officers and employees of the Company. The purpose of the plan is
to attract and retain the services of qualified people and to provide additional
incentive to them by granting them the opportunity to participate in the
Company's profits. Under the plan, up to 5% of the Company's Net Income (as
defined in the plan) for each fiscal year is set aside as a bonus pool. Units in
the bonus pool may be granted by the Board of Trustees at its discretion to
eligible persons during a fiscal year. The amount payable to a person from the
bonus pool equals the percentage of the total number of units granted during the
fiscal year which are held by the person at the end of the fiscal year.
Compensation Committee Interlocks and Insider Participation
----------------------------------------------------------------
C.S. Moon and Michel Arnulphy served as members of the Compensation
Committee of the Board of Trustees during the year ended December 31, 2002.
Neither Mr. Moon nor Mr. Arnulphy was an officer or employee of the Company
during the year ended December 31, 2002, or has formerly been an officer of the
Company.
Report of the Trustees on Executive Compensation
------------------------------------------------------
The compensation of the Company's executive officers is determined on an
annual basis by the Compensation Committee of the Board of Trustees in
consultation with management. The Compensation Committee is composed of
non-employee Trustees of the Company and the members of the Compensation
Committee are independent under the standards of the NASDAQ National Market.
The Company's compensation philosophy for executive officers is
performance-based and is meant to motivate executive officers to achieve and
maintain superior performance levels. To this end, the Company maintains annual
base salaries for executive officers at relatively low amounts and awards annual
bonuses and long-term incentives in the form of stock options to executive
officers. In implementing the Company's compensation philosophy, the
Compensation Committee considers, among other things, financial and operating
targets for the Company for a period and the contribution of the executive
officer in achieving these targets, the contribution of the executive officer to
the business and operation of the Company generally, as well as total
shareholder return.
Base salaries for executive officers are based upon, among other things,
job responsibilities, experience and performance of the executive officer, which
involves an assessment of an executive officer's skills, judgment, application
of knowledge and support of corporate values and priorities. In addition, the
impact an executive officer is expected to make to the business of the Company
in the future is considered.
Bonuses are granted to the Company's executive officers pursuant to the
EIP. Interests in the bonus pool established under the EIP are awarded to
executive officers based on the expectations of the Trustees and management for,
among other things, the financial and operating performance of the Company in a
particular period and the contribution of an executive officer in achieving
targets. The Compensation Committee also considers the contribution of the
executive officers to the business and operation of the Company generally.
9
Executive officers may also be granted long-term incentives in the form of
stock options under the Company's stock option plan. Options are generally
granted based upon the long-term financial and operating expectations of the
Trustees and management for the Company and the contribution an executive
officer is expected to make in the future in achieving targets. Stock options
produce value to executive officers only if the price of the Company's Shares
appreciate, thereby directly linking the interests of executive officers with
those of shareholders.
In determining the compensation of the Company's chief executive officer
for 2002, the Compensation Committee evaluated Mr. Lee based on the criteria set
forth above. In determining Mr. Lee's bonus award for 2002 under the EIP, the
Compensation Committee considered, among other things, the operating performance
of the Company in a difficult global economic environment for pulp and paper
companies, the contributions made by Mr. Lee in reducing operating costs and
bolstering the current and long-term competitive position of the Company during
2002 and the progress made by the Company with respect to the project to
construct a kraft pulp mill near the town of Stendal, Germany and the
contributions made by Mr. Lee in this regard. No options to acquire Shares of
the Company were granted to executive officers, including Mr. Lee, in 2002.
However, Mr. Lee holds a significant number of options to acquire Shares of the
Company, the exercise prices of which are higher than the current trading price
of the Shares on the NASDAQ National Market.
Submitted by the members of the Compensation Committee of the Board of
Trustees.
C.S. Moon
Michel Arnulphy
10
Performance Graph
------------------
The following graph compares the cumulative total shareholder return (share
price appreciation plus dividends) with respect to the Shares with the
cumulative total return of the NASDAQ Market Index and an additional group of
peer companies which comprise Standard Industrial Classification Code 262 -
Paper Mills, over the five years ending December 31, 2002. The companies which
comprise SIC Code 262 are Abitibi-Consolidated Inc., American Israeli Paper,
Badger Paper Mills Inc., Biomass Technologies, Boise Cascade Corporation,
Bowater Inc., Bunzl PLC ADS, Chesapeake Corporation, Domtar Inc., Fibermark
Inc., Fletcher Challenger Forests, Fletcher Challenger Building, Fort James
Corp., Glatfelter, Kimberly-Clark Corporation, Mercer International Inc., Pope &
Talbot Inc., Potlatch Corporation, Sappi Ltd. ADS, Schweitzer Mauduit
International, Stora Enso, UPM Kymmene Corp. ADS, Votorantim Cellulose,
Wausau-Mosinee Paper Corporation, and Weyerhauser Company.
Compare 5-Year Cumulative Total Return Among Mercer International Inc.,
NASDAQ Market Index and SIC Code Index
[GRAPH OMITTED]
Assumes $100 invested on January 1, 1998
Assumes Dividend Reinvested
Fiscal Year Ending December 31, 2002
Comparison of Cumulative Total Return
of Company Industry Index and Broad Market
Company 1997 1998 1999 2000 2001 2002
------------------------- ------ ------ ------ ------ ------ ------
Mercer International Inc. 100.00 77.62 53.11 91.15 85.66 63.04
Industry Index 100.00 104.32 126.63 125.33 122.23 109.63
Broad Market 100.00 141.04 248.76 156.35 124.64 86.94
11
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's officers and Trustees and persons who own more than 10% of
the Company's Shares file reports of ownership and changes in ownership with the
Commission and furnish the Company with copies of all such reports that they
file. Based solely upon a review of the copies of these reports received by the
Company, and upon written representations by the Company's Trustees and officers
regarding their compliance with the applicable reporting requirements under
Section 16(a) of the Exchange Act, the Company believes that all of its Trustees
and officers filed all required reports under Section 16(a) in a timely manner
for the year ended December 31, 2002.
INDEPENDENT ACCOUNTANTS AND AUDITORS
The Company will appoint Deloitte & Touche LLP as the Company's new
independent auditors in place of Peterson Sullivan PLLC effective at the Annual
Meeting. As a matter of good corporate practice, the Company intends to seek
Shareholder ratification of such appointment at the Annual Meeting.
Peterson Sullivan PLLC, Certified Public Accountants, examined the
consolidated financial statements of the Company for the fiscal year ended
December 31, 2002. Peterson Sullivan has examined the consolidated financial
statements of the Company each year since 1989. Representatives of Deloitte &
Touche and Peterson Sullivan are not expected to be present at the Annual
Meeting.
Fees paid to Peterson Sullivan by the Company during 2002 included:
AUDIT FEES. The Company paid Peterson Sullivan $358,839 in fees relating
to the audit of the Company's annual financial statements and reviews of the
Company's quarterly financial statements.
FINANCIAL INFORMATION SYSTEMS. The Company made no payments to Peterson
Sullivan relating to the operation, supervision, design or implementation of the
Company's financial information systems.
ALL OTHER FEES. All other fees paid to Peterson Sullivan totaled $399,420,
relating mainly to accounting and tax services.
12
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The Company will appoint Deloitte & Touche LLP as the Company's new
independent auditors in place of Peterson Sullivan PLLC effective at the Annual
Meeting. As a matter of good corporate practice, the Company intends to seek
Shareholder ratification of the appointment of Deloitte & Touche at the Annual
Meeting. The Company will also appoint Deloitte & Touche as the auditors for
the Company's significant subsidiaries effective as of the Annual Meeting. The
decision to change auditors was recommended and approved by the Company's Audit
Committee and also approved by the Board of Trustees.
Peterson Sullivan's reports on the Company's financial statements for the
fiscal years ended December 31, 2001 and 2002 did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. During the fiscal years ended December
31, 2001 and 2002 and the subsequent interim period ended March 31, 2003: (i)
there were no disagreements between the Company and Peterson Sullivan on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which, if not resolved to the satisfaction of
Peterson Sullivan would have caused Peterson Sullivan to reference the subject
matter of the disagreement in its reports; and (ii) there were no "reportable
events" as defined in Item 304(a)(1)(v) of Regulation S-K of the Commission.
During the last two complete fiscal years and through the date hereof,
neither the Company nor its significant subsidiaries consulted Deloitte & Touche
with respect to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements, or any
other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii)
of Regulation S-K.
The appointment of Deloitte & Touche must be ratified by the majority of
votes cast at the Annual Meeting, in person or by Proxy, in favor of such
ratification. Accordingly, abstentions and broker non-votes will have the same
effect as a vote against such ratification.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S AUDITORS.
In the event Deloitte & Touche are not ratified as the company's auditors
at the Annual Meeting, the Company's Audit Committee will consider whether to
retain Deloitte & Touche or appoint another firm. The Audit Committee may
appoint another firm as the Company's auditors without the approval of
Shareholders, even if Shareholders ratify the appointment of Deloitte & Touche
at the Annual Meeting.
13
FUTURE SHAREHOLDER PROPOSALS
Any proposal which a Shareholder intends to present at the next annual
meeting of Shareholders of the Company must be received by the Company on or
before January 30, 2004. A Shareholder must submit such a proposal to the
Company for inclusion in the proxy statement for the next annual shareholders'
meeting on or before April 16, 2004, or management will have discretionary
authority to vote proxies received for such meeting with respect to any such
proposal.
OTHER MATTERS
The Trustees know of no matters other than those set out in the Proxy
Statement to be brought before the Annual Meeting. If other matters properly
come before the Annual Meeting, it is the intention of the proxy holders to vote
the proxies received for the Annual Meeting in accordance with their judgment.
THE COMPANY'S CURRENT REPORT ON FORM 8-K DATED JUNE 18, 2003 HAS BEEN
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT. THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002 HAS BEEN FILED WITH THE
COMMISSION. A COPY OF SUCH FORM 8-K AND ANNUAL REPORT WILL BE PROVIDED TO
SHAREHOLDERS WITHOUT CHARGE UPON ORAL OR WRITTEN REQUEST DIRECTED TO MERCER
INTERNATIONAL INC., SHAREHOLDER INFORMATION, C/O SUITE 1620, 400 BURRARD STREET,
VANCOUVER, BRITISH COLUMBIA V6C 3A6, CANADA, TELEPHONE (206) 674-4639. THIS
PROXY STATEMENT, THE COMPANY'S CURRENT REPORT ON FORM 8-K DATED JUNE 18, 2003
AND THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2002 ARE ALSO AVAILABLE ON THE COMMISSION'S WEBSITE AT WWW.SEC.GOV.
BY ORDER OF THE BOARD OF TRUSTEES
Date: June 18, 2003
14
APPENDIX "A"
MERCER INTERNATIONAL INC.
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the Company, (2) the compliance
by the Company with legal and regulatory requirements and (3) the independence
and performance of the Company's internal and external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of any exchange or quotation system upon which the Company's
securities are listed or quoted. In particular, the Chairman of the Audit
Committee shall have accounting or related financial management expertise. The
members of the Audit Committee shall be appointed by the Board.
The Audit Committee shall have the authority to retain independent legal,
accounting or other consultants to advise the Committee. The Audit Committee
may request any officer or employee of the Company or the Company's outside
counsel or independent auditor to attend a meeting of the Committee or to meet
with any members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices as
well as the adequacy of internal controls that could significantly affect
the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements, including an
analysis of the effect of alternative GAAP methods on the Company's
financial statements and a description of any transactions as to which
management obtained Statement on Auditing Standards No. 50 letters.
4. Review with management and the independent auditor the effect of regulatory
and accounting initiatives as well as off-balance sheet structures on the
Company's financial statements.
5. Review with management and the independent auditor the Company's quarterly
financial statements prior to the filing of its Form 10-Q, including the
results of the independent auditors' reviews of the quarterly financial
statements.
6. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures.
7. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal accounting
or financial personnel or management.
8. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
9. Review the experience and qualifications of the senior members of the
independent auditor team, the quality control procedures of the independent
auditor and the rotation of the lead partner and reviewing partner of the
independent auditor.
10. Approve the fees to be paid to the independent auditor for audit services.
11. Pre-approve the retention of the independent auditor for all audit and
any non-audit service, including tax services, and the fees for such
non-audit services.
12. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, consider
whether the provision of non-audit services is compatible with maintaining
the auditor's independence and, if so determined by the Audit Committee,
recommend that the Board take appropriate action to satisfy itself of the
independence of the auditor.
13. Evaluate together with the Board the performance of the independent auditor
and whether it is appropriate to adopt a policy of rotating independent
auditors on a regular basis. If so determined by the Audit Committee,
recommend that the Board replace the independent auditor.
14. Recommend to the Board guidelines for the Company's hiring of employees of
the independent auditor who were engaged on the Company's account.
15. Review the appointment and replacement of the senior accounting and
financial executives.
16. Review the significant reports to management prepared by the internal
accounting and financial personnel and management's responses.
17. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
18. Obtain reports/confirmation from management, the Company's senior
accounting and financial personnel and the independent auditor that the
Company's subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Company's Code of Conduct, including
disclosures of insider and affiliated party transactions.
19. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit.
20. Review with management and the independent auditor any correspondence with
regulators or governmental agencies and any employee or anonymous
complaints or published reports which raise material issues regarding the
Company's financial statements or accounting policies.
21. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any disagreements between the independent
auditor and management of the Company and any management letter provided
by the auditor and the Company's response to that letter. Such review
should include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access
to required information, and any disagreements with management.
(b) The internal accounting and financial responsibilities.
(c) The investigation and implementation of the resolution of any
disagreement between the independent auditor and the management of
the Company.
22. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
23. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Code of Conduct.
24. Meet at least quarterly with the chief financial officer and the
independent auditor in separate executive sessions.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is
the responsibility of management and the independent auditor. Nor is it the
duty of the Audit Committee to conduct investigations, to resolve disagreements,
if any, between management and the independent auditor or to assure compliance
with laws and regulations and the Company's Code of Conduct.
APPENDIX "B"
MERCER INTERNATIONAL INC.
CODE OF BUSINESS CONDUCT AND ETHICS
Purpose
The Board of Trustees (the "Board") of Mercer International Inc. ("Mercer" or
the "Company") has adopted this Code of Business Conduct and Ethics (the "Code")
in connection with Section 406 of the Sarbanes-Oxley Act of 2002. The Code
applies to Mercer's Chief Executive Officer, President, Chief Financial Officer,
and all other executive officers (collectively, the "Officers"), to all other
employees of Mercer and its majority-owned subsidiaries, and to the members of
the Board (the "Trustees"). The Code is designed to deter wrongdoing and to
promote: (i) honest and ethical conduct; (ii) avoidance of conflicts of
interest; (iii) full, fair, accurate and timely disclosure in Mercer's public
filings with the Securities and Exchange Commission (the "SEC"); (iv) compliance
with applicable governmental laws, rules and regulations; (v) prompt internal
reporting to the Board or a committee of the Board of violations of the Code;
and (vi) accountability for adherence to the Code.
The Board believes the Code should be an evolving set of guidelines, subject to
alteration as circumstances warrant. Any modification to or waiver of the Code
may be made only by the Board, will be promptly disclosed as required by SEC
rules and other applicable laws and regulations.
Those who violate the standards in the Code will be subject to disciplinary
action, which may include loss of pay, termination, referral for criminal
prosecution and reimbursement to the Company or others for any losses or damages
resulting from the violation. If you are in a situation which you believe may
violate or lead to a violation of this Code, you must inform the Audit Committee
of the Board as soon as practicable.
Ethical Principles
Each Trustee, Officer and employee is expected to conduct his or her affairs
with honesty and integrity, and is required to adhere to the highest ethical
standards in carrying out his or her duties on behalf of the Company. Trustees,
Officers and employees are expected to be honest and ethical in dealing with
each other, clients, vendors and third parties. All Trustees, Officers and
employees' actions must be free from illegal discrimination, libel, slander or
harassment. Each person must be accorded equal opportunities in compliance with
applicable law.
Conflicts of Interest
All of us must be able to perform our duties and exercise judgment on behalf of
Mercer without influence or impairment, or the appearance of influence or
impairment, due to any activity, interest or relationship that arises outside of
work. Put more simply, when our loyalty to Mercer is affected by actual or
potential benefit or influence from an outside source, a conflict of interest
exists. We should all be aware of any potential influences that impact or appear
to impact our loyalty to Mercer. In general, we should avoid situations where
our personal interests conflict, or appear to conflict, with those of Mercer.
Any time you believe a conflict of interest may exist, Officers and Trustees
must disclose the potential conflict of interest in writing to their supervisor
and to the Audit Committee. Employees can disclose their actual or apparent
conflicts of interest to their supervisors or managing directors. Any activity
that is approved, despite the actual or apparent conflict, must be documented.
A potential conflict of interest that involves an Officer must be approved in
writing by the Audit Committee.
It is not possible to describe every conflict of interest, but some situations
that could cause a conflict of interest include:
* Doing business with family members, including your spouse, parents,
children, siblings and in-laws
* Having a financial interest in another company with whom Mercer does
business
* Managing your own business
* Serving as a director of another business
* Being a leader in some organizations
* Diverting a business opportunity from Mercer to another company
Employing Friends and Relatives
Employing relatives or close friends who report directly to you may also be a
conflict of interest. Although our company encourages employees to refer
candidates for job openings, employees who may influence a hiring decision must
avoid giving an unfair advantage to anyone with whom they have a personal
relationship. In particular, you should not hire relatives or attempt to
influence any decisions about the employment or advancement of people related to
or otherwise close to you, unless you have disclosed the relationship as
provided herein and the decision has been approved.
Ownership in Other Businesses
Investments can cause a conflict of interest. In general, you and your family
members should not own, directly or indirectly, a significant financial interest
in any company that does business with Mercer or seeks to do business with
Mercer or in any of our competitors.
Service on Boards
Serving as a director of another corporation may create a conflict of interest.
Being a director or serving on a standing committee of some organizations,
including government agencies, also may create a conflict. Before accepting an
appointment to the board or a committee of any organization whose interests may
conflict with Mercer's interests, you must discuss it with and obtain written
approval from the Audit Committee. This rule does not apply to non-employee
Trustees.
Public Filings and Communications
The Officers are responsible for ensuring full, fair, accurate, timely and
understandable disclosure in the reports and documents that the Company files
with the SEC and in the Company's other public communications (collectively,
"Reports"). However, if you are requested to provide information to be included
in, or to participate in the preparation of, Reports, you are responsible for
providing such information and preparing such Reports in a manner that will help
to ensure full, fair, accurate and timely disclosure.
Accounting, Recordkeeping and Personal Transactions
Mercer requires honest and accurate recording and reporting of information in
order to make responsible business decisions. All Mercer books, records,
accounts and financial statements must be maintained in reasonable detail, must
appropriately reflect Mercer's transactions and must conform both to applicable
legal requirements and to Mercer's system of internal controls. Unrecorded or
"off-the-books" funds or assets should not be maintained unless permitted by
applicable law or regulation and approved by Mercer's principal financial
officer.
Many employees regularly use business expense accounts, which must be documented
and recorded accurately. If you are not sure whether a certain expense is
legitimate, ask your supervisor or the accounting department.
Business records and communications often become public. Avoid exaggeration,
derogatory remarks, guesswork, or inappropriate characterizations of people and
companies in all e-mail, internal memos and reports. Records should always be
retained or destroyed according to Mercer's record retention policies. In
accordance with those policies and in the event of litigation or governmental
investigation, please consult the Audit Committee or the Company's counsel for
instructions.
If you suspect misconduct, irregularity, or other questionable matters regarding
accounting, internal accounting controls or auditing matters, immediately
contact your supervisor, the general counsel or the audit committee.
Relations with Auditors
None of us shall directly or indirectly attempt to coerce, influence,
manipulate, or mislead any of the Company's independent or internal financial
staff or auditors in connection with the preparation of the Company's financial
statements. This prohibits not only threats, bribery and blackmail, but also
offering non-bribe financial incentives such as future employment or engagements
and providing misleading information or analysis. If you become aware of any
such attempt, promptly report it in writing to the Audit Committee.
Compliance with Laws, Rules and Regulations
Obeying the law is the foundation on which Mercer's ethical standards are built.
All Trustees, Officers and employees must respect and obey the laws, rules and
regulations of the cities, states and countries in which Mercer operates.
Although not all employees are expected to know the details of these laws, it is
important to know enough to determine when to seek advice from supervisors,
managers, counsel or other appropriate personnel. If an employee suspects
misconduct, he or she may anonymously report it to supervisors, managers,
counsel or the Audit Committee.
Insider Trading
Confidential information is the Company's property and you may not improperly
use it for your personal benefit. Trustees, Officers and employees who have
access to confidential information are not permitted to use or share that
information for stock trading purposes or for any other purpose except the
conduct of Mercer's business. All non-public information about Mercer or its
customers should be considered confidential information. To use non-public
information for personal financial benefit or to "tip" others who might make an
investment decision on the basis of this information is both unethical and
illegal. Mercer will cooperate with any investigation by the SEC or other law
enforcement authorities regarding the misuse of Mercer's confidential
information.
Corporate Opportunities
You may not take for yourself business opportunities discovered through the use
of Mercer's property, information, or position, and you may not use Mercer's
property or information or your position for personal gain. Trustees, Officers
and employees owe a duty to Mercer to advance Mercer's legitimate interests when
the opportunity to do so arises.
Discrimination and Harassment
Mercer's long-standing policy is to offer fair and equal employment opportunity
to every person regardless of age, race, color, creed, religion, disability,
marital status, sex, sexual orientation, national origin, or other legally
protected status, as required by law. Mercer seeks to provide a work environment
that is free from intimidation and harassment based on any of these
characteristics and Mercer specifically prohibits such intimidation and
harassment.
Health and Safety
Mercer strives to provide each employee with a safe and healthful work
environment. Each employee is responsible for maintaining a safe and healthy
workplace for all employees by following safety and health rules and practices
and reporting incidents, injuries and unsafe equipment, practices or conditions.
Violence and threatening behavior are never permitted for any reason. Employees
must report to work in condition to perform their duties, free from the
influence of illegal drugs or alcohol and the use of illegal drugs in the
workplace will not be tolerated.
Environmental Protection
Mercer is an environmentally responsible company and operates its facilities in
compliance with applicable environmental, health and safety regulations and in a
manner that has the regard for the safety and well being of its employees and
the general public. Necessary permits, approvals and controls are maintained at
all Mercer facilities and Mercer strives to improve products, packaging and
manufacturing operations to minimize their environmental impact.
You are responsible for complying with all applicable environmental laws,
regulations and Mercer policies and for diligently following the proper
procedures with respect to the handling and disposal of hazardous materials.
Mercer insists that its suppliers and contractors also follow appropriate
environmental laws and guidelines. If you have questions or concerns relating to
Mercer's environmental compliance requirements or activities, you should contact
your local supervisor.
Protection and Proper Use of Company Assets
Mercer's resources should be used only for legitimate business purposes and for
the benefit of the Company. All of us should endeavor to protect Mercer's
assets and ensure their efficient use. Theft, carelessness, and waste directly
impact Mercer's profitability. Any suspected incident of fraud or theft should
be immediately reported for investigation. Mercer equipment should not be used
for non-Company business, though incidental personal use may be permitted.
Our obligation to protect Mercer's assets includes its proprietary information,
including intellectual property such as trade secrets, patents, trademarks, and
copyrights, as well as business, marketing and service plans, engineering and
manufacturing ideas, designs, databases, records, salary information and any
unpublished financial data and reports. Unauthorized use or distribution of this
information would violate Company policy and could result in civil or criminal
penalties.
International Operations
The United States Foreign Corrupt Practices Act prohibits giving anything of
value, directly or indirectly, to officials of foreign governments or foreign
political candidates in order to obtain or retain business. It is strictly
prohibited to make illegal payments to government officials of any country.
In addition, the United States government has a number of laws and regulations
regarding business gratuities which may be accepted by United States government
personnel. The promise, offer or delivery to an official or employee of the
United States government of a gift, favor or other gratuity in violation of
these rules would not only violate Company policy but could also be a criminal
offense. State and local governments,
as well as foreign governments, may have similar rules. If you need any guidance
regarding relationships with government personnel please consult the Company's
counsel.
All Mercer employees worldwide must comply with Mercer policies and procedures
applicable to international business transactions, with the legal requirements
and ethical standards of each country in which they conduct Mercer business and
with all U.S. laws applicable in other countries, including the Foreign Corrupt
Practices Act.
Reporting Concerns
Any Officer or employee who has a concern about the Company's conduct, its
disclosure, accounting or internal controls or about a possible violation of the
Code is strongly encouraged to report that concern to any non-employee Trustee,
the Audit Committee or other committee of the Board as may be designated from
time to time.
The Company will forward all such concerns to the appropriate Trustee and/or the
Audit Committee or other Board committee for review, and the status of all such
outstanding concerns will be reported to the Board on a quarterly basis. The
non-employee Trustees, the Audit Committee or other Board committee may direct
special treatment, including the retention of outside advisors or counsel, for
any concern addressed to them. Any retaliation or adverse action against anyone
for raising or helping to resolve an integrity concern is absolutely prohibited.
THIS CODE OF BUSINESS CONDUCT AND ETHICS IS NOT A CONTRACT OF EMPLOYMENT OR A
GUARANTEE OF CONTINUING MERCER POLICY. THE COMPANY MAY AMEND, SUPPLEMENT OR
DISCONTINUE THIS CODE OF BUSINESS CONDUCT AND ETHICS OR ANY PART OF IT AT ANY
TIME.
PROXY
MERCER INTERNATIONAL INC.
14900 INTERURBAN AVENUE SOUTH, SUITE 282
SEATTLE, WA 98168
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MERCER INTERNATIONAL
INC.
The undersigned hereby appoints Jimmy S.H. Lee, or failing him R. Ian Rigg,
as proxy, with the power of substitution, to represent and to vote as designated
below all the shares of beneficial interest of Mercer International Inc. held of
record by the undersigned on May 21, 2003 at the Annual Meeting of Shareholders
to be held on July 15, 2003, or any adjournment thereof.
1. Election of Trustees
FOR the nominees listed WITHHOLD AUTHORITY to vote
below (except as marked to for the nominees listed
the contrary below) / / below / /
(Instruction: to withhold authority to vote for a nominee, strike a line
through the nominee's name in the list below.)
Michel Arnulphy Per Gundersby
2. Ratification Of Appointment Of Deloitte & Touche LLP As Auditors
FOR / / AGAINST / / ABSTAIN / /
3. In his discretion, the proxyholder is authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR EACH OF THE MATTERS TO BE VOTED UPON OR RATIFIED AT THE MEETING.
Please sign exactly as name appears on your share certificate(s). When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: ,2003.
-------------------- ----------------------------------
Signature
----------------------------------
Print Name
----------------------------------
Signature, if jointly held
----------------------------------
Print Name
----------------------------------
Number of shares held
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.