MERCER INTERNATIONAL INC.

The Committee believes that the STIP:

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rewards our NEOs and executives by producing objective outcomes that are closely aligned with the interests of Shareholders; and

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is transparent to executives and Shareholders.

Our STIP for fiscal 2025 provided that:

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awards be based upon six components, being: (i) overall corporate Operating EBITDA; (ii) safety; (iii) GHG emissions (fuel oil) intensity; (iv) productivity; (v) unit production costs or unit profitability; and (vi) individual achievement;

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the corporate Operating EBITDA component comprising 40% of the STIP for all executives was measured by how our Operating EBITDA achievement compared to the "target" Operating EBITDA ("STIP Target EBITDA"). STIP Target EBITDA was established and determined by the Committee based on estimates of EBITDA under mid-cycle pricing assumptions. At the end of each year, actual Operating EBITDA was compared to the STIP Target EBITDA, and the achievement of this component was measured. For fiscal 2025, the STIP Target EBITDA and payout were as follows:

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the safety component, comprising 10% of the STIP for all eligible executives, was measured as follows:

(1)

Total Recordable Incident Rate.

(2)

The Minimum Target, Target and Maximum Target for 2025 were based on TRIR targets, which vary by mill and facility and were set with a view to achieving improved TRIR annually based on the specific requirements of, and past TRIR improvements at, each site. For NEOs, achievement levels were based on the average site-by-site results weighted by total working hours.

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the GHG emissions (not applicable for our sawmill and mass timber operations), comprising 5% of the STIP for all eligible executives, was measured as follows:

(1)

Each of the thresholds for Minimum Target, Target and Maximum Target of GHG emissions (measured in kgCO2e/ADMT) were determined taking into consideration the specific circumstances of each of our mills. Accordingly, such thresholds varied with respect to each mill.

(2)

Minimum Target was mill and facility based and was equal to GHG emissions equivalent to 111% to 120% of the budgeted target of GHG emissions established for each mill and facility.

(3)

Target metrics were mill and facility based, and were equal to the budgeted target GHG emissions established for each mill and facility.

(4)

Maximum Target was mill and facility based and ranged from a value of 87% to 93% of the specific mill or facility target.

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the production component, comprising 15% of the STIP for those eligible executives, was measured as follows:

(1)

Each of the thresholds for Minimum Target, Target and Maximum Target of productivity (total ADMTs or m 3/hour, as applicable) were determined taking into consideration the specific circumstances of each of our mills and facilities. Accordingly, such thresholds varied with respect to each site. Further, with respect to our pulp mills, Target was based on annual production, for our sawmills, Target was based on productivity per hour and for our mass timber operations, Target was based on the dollar value of orders executed and delivered in fiscal 2025, percentage of project backcharges and percentage of project remakes. For our NEOs, payouts were based upon the average results of each of the sites, weighted by fiber consumption.

(2)

Minimum Target was calculated as productivity equal to, for our pulp mills: 90% of Target, for our sawmills: 95% of Target and for our mass timber operations: 85% of Target for orders executed and 150% of Target for each of project backcharges and project remakes.

(3)

Target metrics were mill and facility based, and were equal to the budgeted productivity established in accordance with our budgeted plans for each mill and facility and for our mass timber operations, in accordance with our budgeted ramp-up plan.

(4)

Maximum Target was calculated as productivity equal to, for our pulp mills: 103% of Target, for our sawmills: 103% of Target and for our mass timber operations: 115% of Target for orders executed and 50% of Target for each of project backcharges and project remakes.

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the costs component, comprising 10% of the STIP for those eligible executives, was measured primarily as follows, provided that for certain mills, it was measured against profitability and the satisfaction of certain performance conditions and operational milestones:

(1)

Each of the thresholds for Minimum Target, Target and Maximum Target of costs and/or profitability were determined taking into consideration the specific circumstances of each of our sites. Accordingly, such thresholds varied with respect to each mill. Further, with respect to our pulp mills, Target was based on unit cost per tonne (cash production costs), for our sawmills, Target was based on EBITDA profitability per cubic meter of lumber and for our mass timber operations, Target was based on total EBITDA for 2025. For our NEOs, payouts were based upon the average results of each of the sites, weighted by fiber consumption.

(2)

Minimum Target was calculated as, for our pulp mills: unit costs per tonne equal to 120% of Target, for our sawmills: EBITDA profitability per cubic meter of lumber equal to 60% of Target and for our mass timber operations: approximately $10 million below Target.

(3)

Target metrics were mill and facility based, and were equal to the budgeted costs/profitability established in accordance with our budgeted plans for each mill and facility and for our mass timber operations, in accordance with our budgeted ramp-up plan.

(4)

Maximum Target was calculated as, for our pulp mills: unit costs per tonne equal to 90% of Target, for our sawmills: EBITDA profitability per cubic meter of lumber equal to 140% of Target and for our mass timber operations: approximately $10 million above Target.

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the individual component, comprising 20% of the STIP for those eligible executives, were measured against annual goals and performance targets provided by management and reviewed and approved by the Committee;

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the measurement period was a fiscal year and payout of awards was determined after year-end audited financial statements had been provided to and reviewed by the Committee;

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for each of the STIP components above a stipulated minimum threshold, the Committee "interpolated" performance within ranges; and

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the potential payout of awards under the STIP were determined in February 2026 for fiscal 2025. However, such STIP bonus payments have been deferred until the third quarter of 2026. See below for more information.

The following sets out the annual bonus opportunities of our NEOs as a percentage of their 2025 base salary upon achieving the STIP target components:

The Committee has discretion to lower awards under the STIP if it determines that circumstances so warrant.

In February 2026, the Committee determined that, given current market conditions and our focus on liquidity, STIP awards to our NEOs and certain other executives have been deferred for cash conservation purposes until the third quarter of 2026, at which time the Committee will review and make further recommendations based on various factors, including financial condition at the time.