6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2022

Commission File No. 001-39974

WEST FRASER TIMBER CO. LTD.

(Translation of registrant’s name into English)

501- 858 Beatty Street

Vancouver, British Columbia

Canada V6B 1C1

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F  ☐            Form 40-F  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)  ☐

SUBMITTED HEREWITH

Exhibits
99.1	Notice of Annual General and Special Meeting to be held on April 20, 2022
99.2	Management Information Circular dated March 8, 2022
99.3	Form of Proxy
99.4	Financial Statements Request Form
99.5	Annual Report

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 14, 2022

WEST FRASER TIMBER CO. LTD.

/s/ Christopher A. Virostek

Christopher A. Virostek

Vice-President, Finance and Chief Financial Officer

EX-99.1

Exhibit 99.1

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS

We will hold the Meeting in Quesnel, B.C. Additionally, a live-webcast option will be provided for Shareholders to listen in and view the Meeting and ask questions.

The annual general and special meeting (the “Meeting”) of shareholders (“Shareholders”) of West Fraser Timber Co. Ltd. (the “Company”) will be held on April 20, 2022 at 11:30 a.m. (Vancouver time). The Meeting will be held at 1250 Brownmiller Road, Quesnel, B.C. Additionally, through our online meeting platform Registered Shareholders (as defined in the accompanying Circular) and duly appointed proxyholders will have a live-webcast option at https://web.lumiagm.com/459109891, password “westfraser2022” (case sensitive), where they can listen in and view the Meeting and ask questions. The Meeting will be held, for the following purposes:

1. to receive the consolidated financial statements of the Company for the financial years ended December 31, 2021 and 2020, together with the Auditor’s report on them;

2. to fix the number of Directors at eleven;

3. to elect the Directors to hold office until the close of the next annual meeting of Shareholders;

4. to appoint an auditor of the Company to serve until the close of the next annual meeting of Shareholders and to authorize the Directors to fix the auditor’s remuneration;

5. to consider, and if appropriate, to pass a special resolution to amend the corporate Articles of the Company to increase the quorum requirements and to provide for additional methods for delivery of notices, as more particularly set out in the section of the accompanying Circular entitled “Amendment of Corporate Articles”;

6. to consider, and if appropriate, to pass an ordinary resolution to approve the Company’s U.S. employee stock purchase plan for the U.S. employees of the Company’s U.S. subsidiaries in order to qualify as an “employee stock purchase plan” under Section 423 of the United States Internal Revenue Code, as more particularly set out in the section of the accompanying Circular entitled “Approval of the U.S. Employee Stock Purchase Plan; and

7. to consider an advisory (non-binding) resolution on the Company’s approach to executive compensation, as more particularly set out in the section of the accompanying Circular entitled “Advisory Resolution on the Company’s Approach to Executive Compensation (Say on Pay)”.

No other matters are contemplated for consideration at the Meeting, however any permitted amendment to or variation of any matter identified in this Notice of Annual General and Special Meeting of Shareholders (the “Notice”) may properly be considered at the Meeting. The Meeting may also consider the transaction of such other business as may properly come before the Meeting or any adjournment thereof.

A copy of the annual report of the Company for the financial year ended December 31, 2021 (the “Annual Report”) will accompany this Notice for those Shareholders that had requested a copy of the Annual Report. The Annual Report may also be found on our website (www.westfraser.com) and under the Company’s profiles on SEDAR (System for Electronic Document Analysis and Retrieval) at www.sedar.com and on EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) at www.sec.gov/edgar.shtml. The Annual Report includes our consolidated financial statements and the Auditor’s report thereon.

Shareholders registered at the close of business on March 2, 2022 will be entitled to receive this Notice and to vote at the Meeting.

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INFORMATION ON NOTICE AND ACCESS

(You have not been sent a physical copy of the Circular.)

General Information

The Company has prepared this Notice of the Annual General and Special Meeting (the “Notice”) of the Company, which includes Information on Notice and Access, the Circular and a form of proxy relating to the Meeting, and the Circular contains details of the matters to be considered at the Meeting. This Notice has been prepared and mailed to you under the notice and access rules that came into effect on February 11, 2013, pursuant to applicable Canadian securities laws. Notice and access enables issuers to reduce the volume of materials that must be physically mailed to shareholders by posting the information circular and related proxy materials on the Internet. Please call Computershare Investor Services Inc. (“Computershare”) toll-free at 1-800-564-6253 (North American toll free) or 1-514-982-7555 (International) if you have any questions about notice and access procedures.

How to Access the Circular and Obtain a Physical Copy

The Circular and related proxy materials are available under the Company’s profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml, and on the Company’s website at www.westfraser.com. Shareholders are reminded to review these online materials in connection with the Meeting and before voting. Shareholders may obtain a physical copy of the Circular by: (a) calling the Company’s transfer agent, Computershare, toll free at 1-800-564-6253 (North American toll free) or 1-514-982-7555 (International); or (b) emailing a request to Computershare at service@computershare.com. A request for a physical copy of the Circular should be sent sufficiently in advance so that it is received by Computershare by April 6, 2022, in order to allow sufficient time for the Company to mail, and the Shareholder to receive, the physical copy of the Circular and return the completed form of proxy before the Proxy Deadline (defined below).

Forms of Proxy and Voting Instruction Forms (“VIFs”)

Registered Shareholders have received a form of proxy with this Notice. To have proxy votes counted in the voting at the Meeting, the deadline for submitting a completed form of proxy is 11:30 a.m. (Vancouver time) on April 18, 2022 (the “Proxy Deadline”). Please complete, date and sign the form of proxy and deliver it before the Proxy Deadline in accordance with the instructions set out in the form of proxy and in the Circular.

Non-registered Shareholders (as defined in the accompanying Circular) have received a voting instruction form with this Notice. The deadline for returning voting instruction forms is specified within the form itself. Voting instruction forms, whether provided by the Company or an intermediary, should be completed and returned in accordance with the specific instructions, and by the deadline specified, within the form. Please ensure you carefully follow the instructions set out in the voting instruction form, including those specifying to where and when the form is to be returned.

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Please review the Circular before completing your form of proxy or voting instruction form, as the Circular contains additional information about each matter to be voted on at the Meeting. The following guide will assist you in locating the relevant disclosure for each matter.

For disclosure about:	Refer to the following section(s) in the Circular
•  the fixing of the number of Directors at eleven	“Size of Board”
•  the election of Directors	“Information Regarding Nominees for Election as Directors”
•  the appointment of the Company’s auditor	“Appointment of the Auditor”
•  the special resolution concerning amendment of the Articles of the Company	“Amendment of Corporate Articles”
•  the ordinary resolution concerning approval of the U.S. employee stock purchase plan in order to qualify as an “employee stock purchase plan” under Section 423 of the United States Internal Revenue Code	“Approval of the U.S. Employee Stock Purchase Plan”
•  the approval of the Company’s approach to executive compensation	“Advisory Resolution on the Company’s Approach to Executive Compensation (Say on Pay)”

A Shareholder who is unable to attend the Meeting in person and who wishes to ensure that such Shareholder’s shares are voted must complete, date and sign an acceptable form of proxy or voting instruction form and deliver it in accordance with the instructions set out in the enclosed form of proxy or voting instruction form and in the Circular.

DATED at Vancouver, B.C., March 8, 2022.

BY ORDER OF THE BOARD

Raymond Ferris

President and Chief Executive Officer

EX-99.2

Exhibit 99.2

West Fraser Timber Co. Ltd.

Notice of Annual General and Special

Meeting of Shareholders

To Be Held April 20, 2022

Management Information Circular

Your Participation is Important

Please Take the Time to Vote

WHAT’S INSIDE
INVITATION TO SHAREHOLDERS	1
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS	1
MANAGEMENT INFORMATION CIRCULAR	1
DEFINITIONS	1
ADDITIONAL INFORMATION REGARDING THE MEETING	5
FREQUENTLY ASKED QUESTIONS	7
VOTING BY NON-REGISTERED SHAREHOLDERS	11
BUSINESS TO BE TRANSACTED AT THE MEETING	13
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS	15
BOARD RENEWAL	27
DIRECTOR COMPENSATION	30
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS	34
APPOINTMENT OF THE AUDITOR	35
AMENDMENT OF THE CORPORATE ARTICLES	36
ADVISORY RESOLUTION ON THE COMPANY’S APPROACH TO EXECUTIVE COMPENSATION (SAY ON PAY)	41
OUR CORPORATE GOVERNANCE POLICIES AND PROCEDURES	41
GOVERNANCE POLICY	41
CHAIR OF THE BOARD	41
LEAD DIRECTOR	42
GOVERNANCE & NOMINATING COMMITTEE	43
MAJORITY VOTING POLICY	43
ADVANCE NOTICE POLICY	43
CODE OF CONDUCT	44
ANTI-TRUST POLICY	44
CHARTERS	45
MINIMUM EQUITY HOLDING	45
MANDATE OF THE BOARD	46
ESG OVERSIGHT	47
CORPORATE DISCLOSURE POLICY	49
AUDIT COMMITTEE	50
DECISIONS REQUIRING PRIOR APPROVAL BY THE BOARD	51
SHAREHOLDER FEEDBACK AND CONCERNS	51
EXPECTATIONS OF MANAGEMENT	52
COMPOSITION OF THE BOARD	52
BOARD DIVERSITY POLICY	55
SERVING ON OTHER BOARDS	55
COMMITTEES OF THE BOARD	56
ORIENTATION PROGRAM AND CONTINUING EDUCATION	59
PERFORMANCE REVIEWS	62
MEETING ATTENDANCE RECORD	62
EXECUTIVE COMPENSATION DISCUSSION & ANALYSIS	63
HUMAN RESOURCES & COMPENSATION COMMITTEE RESPONSIBILITY	63
COMPOSITION OF THE HR&C COMMITTEE	63
REPORT ON EXECUTIVE COMPENSATION	63
PERFORMANCE GRAPH	74
EXECUTIVE COMPENSATION	75
SUMMARY COMPENSATION TABLE	76
OPTION GRANTS	77
RS UNITS AND PS UNITS	82
PENSION PLANS	83
SEVERANCE AND CHANGE OF CONTROL AGREEMENTS	86
DIRECTORS’ COMPENSATION AND HOLDINGS	87
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS	87
INDEBTEDNESS OF DIRECTORS, OFFICERS AND EMPLOYEES	87
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS	88
ADDITIONAL INFORMATION	88
SCHEDULE “A” AMENDMENT OF ARTICLES	A-1
SCHEDULE “B” U.S. EMPLOYEE STOCK PURCHASE PLAN	B-1

INVITATION TO SHAREHOLDERS

We will hold the Meeting in Quesnel, B.C. with a live-webcast option for Shareholders to listen in and view the Meeting and ask questions.

March 8, 2022

Dear Shareholder:

You are invited to attend the annual general and special meeting (the “Meeting”) of shareholders (“Shareholders”) of West Fraser Timber Co. Ltd. (the “Company”), which will take place on April 20, 2022 at 11:30 a.m. (Vancouver time) at 1250 Brownmiller Road, Quesnel, B.C. Additionally, through the online meeting platform, Registered Shareholders and proxyholders (including non-registered Shareholders who have duly appointed themselves as proxyholder) will have a live-webcast option at https://web.lumiagm.com/459109891, password “westfraser2022” (case sensitive) to be able to listen in and view the Meeting and ask questions.

The items of business to be considered at the Meeting are described in the accompanying notice of annual general and special meeting (the “Notice”) and management information circular (the “Circular”).

Your participation and views are very important to us. You are encouraged to vote, which can be done by following the instructions enclosed with these materials. Whether or not you plan to attend the Meeting, please submit your vote as soon as possible to ensure your views are represented at the Meeting. You can vote online or by phone, fax, mail or in person at the Meeting.

At the Meeting, in addition to dealing with the matters described in the Notice, we will review the affairs of the Company. Also, you will have an opportunity to ask questions.

All of our public documents, including the annual report of the Company for the financial year ended December 31, 2021 and quarterly reports, are available on our website at www.westfraser.com. You are encouraged to access our website during the year for continuous disclosure items, including news releases and investor presentations.

We look forward to your participation at the Meeting.

Yours sincerely,

Raymond Ferris

President and Chief Executive Officer

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS

We will hold the Meeting in Quesnel, B.C. Additionally, a live-webcast option will be provided for Shareholders to listen in and view the Meeting and ask questions.

The annual general and special meeting (the “Meeting”) of shareholders (“Shareholders”) of West Fraser Timber Co. Ltd. (the “Company”) will be held on April 20, 2022 at 11:30 a.m. (Vancouver time). The Meeting will be held at 1250 Brownmiller Road, Quesnel, B.C. Additionally, through our online meeting platform Registered Shareholders (as defined in the accompanying Circular) and duly appointed proxyholders will have a live-webcast option at https://web.lumiagm.com/459109891, password “westfraser2022” (case sensitive), where they can listen in and view the Meeting and ask questions. The Meeting will be held, for the following purposes:

1. to receive the consolidated financial statements of the Company for the financial years ended December 31, 2021 and 2020, together with the Auditor’s report on them;

2. to fix the number of Directors at eleven;

3. to elect the Directors to hold office until the close of the next annual meeting of Shareholders;

4. to appoint an auditor of the Company to serve until the close of the next annual meeting of Shareholders and to authorize the Directors to fix the auditor’s remuneration;

5. to consider, and if appropriate, to pass a special resolution to amend the corporate Articles of the Company to increase the quorum requirements and to provide for additional methods for delivery of notices, as more particularly set out in the section of the accompanying Circular entitled “Amendment of Corporate Articles”;

6. to consider, and if appropriate, to pass an ordinary resolution to approve the Company’s U.S. employee stock purchase plan for the U.S. employees of the Company’s U.S. subsidiaries in order to qualify as an “employee stock purchase plan” under Section 423 of the United States Internal Revenue Code, as more particularly set out in the section of the accompanying Circular entitled “Approval of the U.S. Employee Stock Purchase Plan; and

7. to consider an advisory (non-binding) resolution on the Company’s approach to executive compensation, as more particularly set out in the section of the accompanying Circular entitled “Advisory Resolution on the Company’s Approach to Executive Compensation (Say on Pay)”.

No other matters are contemplated for consideration at the Meeting, however any permitted amendment to or variation of any matter identified in this Notice of Annual General and Special Meeting of Shareholders (the “Notice”) may properly be considered at the Meeting. The Meeting may also consider the transaction of such other business as may properly come before the Meeting or any adjournment thereof.

A copy of the annual report of the Company for the financial year ended December 31, 2021 (the “Annual Report”) will accompany this Notice for those Shareholders that had requested a copy of the Annual Report. The Annual Report may also be found on our website (www.westfraser.com) and under the Company’s profiles on SEDAR (System for Electronic Document Analysis and Retrieval) at www.sedar.com and on EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) at www.sec.gov/edgar.shtml. The Annual Report includes our consolidated financial statements and the Auditor’s report thereon.

Shareholders registered at the close of business on March 2, 2022 will be entitled to receive this Notice and to vote at the Meeting.

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INFORMATION ON NOTICE AND ACCESS

(You have not been sent a physical copy of the Circular.)

General Information

The Company has prepared this Notice of the Annual General and Special Meeting (the “Notice”) of the Company, which includes Information on Notice and Access, the Circular and a form of proxy relating to the Meeting, and the Circular contains details of the matters to be considered at the Meeting. This Notice has been prepared and mailed to you under the notice and access rules that came into effect on February 11, 2013, pursuant to applicable Canadian securities laws. Notice and access enables issuers to reduce the volume of materials that must be physically mailed to shareholders by posting the information circular and related proxy materials on the Internet. Please call Computershare Investor Services Inc. (“Computershare”) toll-free at 1-800-564-6253 (North American toll free) or 1-514-982-7555 (International) if you have any questions about notice and access procedures.

How to Access the Circular and Obtain a Physical Copy

The Circular and related proxy materials are available under the Company’s profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml, and on the Company’s website at www.westfraser.com. Shareholders are reminded to review these online materials in connection with the Meeting and before voting. Shareholders may obtain a physical copy of the Circular by: (a) calling the Company’s transfer agent, Computershare, toll free at 1-800-564-6253 (North American toll free) or 1-514-982-7555 (International); or (b) emailing a request to Computershare at service@computershare.com. A request for a physical copy of the Circular should be sent sufficiently in advance so that it is received by Computershare by April 6, 2022, in order to allow sufficient time for the Company to mail, and the Shareholder to receive, the physical copy of the Circular and return the completed form of proxy before the Proxy Deadline (defined below).

Forms of Proxy and Voting Instruction Forms (“VIFs”)

Registered Shareholders have received a form of proxy with this Notice. To have proxy votes counted in the voting at the Meeting, the deadline for submitting a completed form of proxy is 11:30 a.m. (Vancouver time) on April 18, 2022 (the “Proxy Deadline”). Please complete, date and sign the form of proxy and deliver it before the Proxy Deadline in accordance with the instructions set out in the form of proxy and in the Circular.

Non-registered Shareholders (as defined in the accompanying Circular) have received a voting instruction form with this Notice. The deadline for returning voting instruction forms is specified within the form itself. Voting instruction forms, whether provided by the Company or an intermediary, should be completed and returned in accordance with the specific instructions, and by the deadline specified, within the form. Please ensure you carefully follow the instructions set out in the voting instruction form, including those specifying to where and when the form is to be returned.

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Please review the Circular before completing your form of proxy or voting instruction form, as the Circular contains additional information about each matter to be voted on at the Meeting. The following guide will assist you in locating the relevant disclosure for each matter.

For disclosure about:	Refer to the following section(s) in the Circular
•  the fixing of the number of Directors at eleven	“Size of Board”
•  the election of Directors	“Information Regarding Nominees for Election as Directors”
•  the appointment of the Company’s auditor	“Appointment of the Auditor”
•  the special resolution concerning amendment of the Articles of the Company	“Amendment of Corporate Articles”
•  the ordinary resolution concerning approval of the U.S. employee stock purchase plan in order to qualify as an “employee stock purchase plan” under Section 423 of the United States Internal Revenue Code	“Approval of the U.S. Employee Stock Purchase Plan”
•  the approval of the Company’s approach to executive compensation	“Advisory Resolution on the Company’s Approach to Executive Compensation (Say on Pay)”

A Shareholder who is unable to attend the Meeting in person and who wishes to ensure that such Shareholder’s shares are voted must complete, date and sign an acceptable form of proxy or voting instruction form and deliver it in accordance with the instructions set out in the enclosed form of proxy or voting instruction form and in the Circular.

DATED at Vancouver, B.C., March 8, 2022.

BY ORDER OF THE BOARD

Raymond Ferris

President and Chief Executive Officer

1

MANAGEMENT INFORMATION CIRCULAR

(As of March 2, 2022, except as otherwise provided)

This Circular is furnished in connection with the solicitation of proxies by the management of West Fraser for use at the Meeting to be held on April 20, 2022 at 11:30 a.m. (Vancouver time) in Quesnel, B.C. (and at any adjournment thereof) for the purposes set out in the attached Notice.

DEFINITIONS

Unless stated otherwise, in this Circular:

“2022 NCIB” has the meaning set out in “Voting Securities and Principal Shareholders – Share Repurchases”;

“2021 NCIB” has the meaning set out in “Voting Securities and Principal Shareholders – Share Repurchases”;

“$” means Canadian dollars;

“Annual Information Form” means the annual information form of the Company for the financial year ended December 31, 2021;

“Annual Report” means the annual report of the Company for the financial year ended December 31, 2021;

“Articles” means the latest Notice of Articles issued by the British Columbia Registrar of Companies and the corporate Articles of the Company;

“Auditor” means our external auditor, currently PricewaterhouseCoopers LLP;

“B.C.” means British Columbia;

“BCA” means the Business Corporations Act (British Columbia), R.S.B.C. 2002, c.57, as amended;

“Board” or “Board of Directors” means our board of Directors as presently constituted or proposed to be constituted;

“Bonus Plan” has the meaning set out in “Executive Compensation Discussion & Analysis – Report on Executive Compensation – Annual Incentive Bonus Plan”;

“Cash Value Alternative” has the meaning set out in “Executive Compensation Discussion & Analysis – Report on Executive Compensation – Long-Term Incentive Component – Stock Option Plan – Annual Burn Rate”;

“CEO” means our Chief Executive Officer;

“CFO” means our Chief Financial Officer;

“Chair” or “Chair of the Board” has the meaning set out in “Our Corporate Governance Policies and Procedures – Chairman of the Board”;

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“Circular” means this management information circular;

“Class B Shares” means the Class B Common shares in the capital of West Fraser;

“Closing Price” has the meaning set out in “Information Regarding Nominees for Election as Directors –Director Compensation – Direct and Indirect Share and Other Holdings of Current and Proposed Directors (as at March 2, 2022)”;

“Code” means the United States Internal Revenue Code of 1986, as amended;

“Code of Conduct” has the meaning set out in “Our Corporate Governance Policies and Procedures – Code of Conduct”;

“Committees” means the committees of the Board;

“Computershare” means Computershare Investor Services Inc., our transfer agent;

“Corporate Disclosure Policy” has the meaning set out in “Our Corporate Governance Policies and Procedures – Corporate Disclosure Policy”;

“Director” means a director of the Company;

“Disclosure Committee” has the meaning set out in “Our Corporate Governance Policies and Procedures – Corporate Disclosure Policy”;

“DSU Plan” means our Director Deferred Share Unit Plan;

“DS Unit” means a Deferred Share Unit granted under our DSU Plan;

“EDGAR” means the U.S. Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval system;

“Equity Holding Requirements Policy” has the meaning set out in “Executive Compensation Discussion – Report on Executive Compensation & Analysis – Executive Equity Holding Requirements”;

“Exchange Ratio” means the exchange ratio of 0.675 of a Common share for each Norbord Share acquired by the Company in connection with the Norbord Acquisition;

“Governance Committee” means the Governance & Nominating Committee of the Board;

“Governance Policy” has the meaning set out in “Our Corporate Governance Policies and Procedures – Governance Policy”;

“HR&C Committee” means the Human Resources & Compensation Committee of the Board;

“Lead Director” means the lead Director of the Board;

“Meeting” means the annual general and special meeting of Shareholders to be held on April 20, 2022 and any adjournment of it;

“NI 52-110” has the meaning set out in “Our Corporate Governance Policies and Procedures – Composition of the Board – Independence”;

3

“NI 54-101” means National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer;

“Non-registered Shareholder” means any Shareholder who is not a Registered Shareholder;

“Notice” means the notice of annual general and special meeting of Shareholders, which accompanies this Circular;

“Norbord” means Norbord Inc.;

“Norbord Acquisition” means the acquisition by the Company of all of the issued and outstanding Norbord Shares, which occurred on February 1, 2021;

“Norbord Continuing Executives” means the holders of Norbord Options, Norbord RSUs and Norbord DSUs who have continued as officers and employees of the Company following completion of the Norbord Acquisition;

“Norbord DSUs” means the outstanding deferred share units credited under certain Norbord deferred share unit plans, which have been adjusted by the Exchange Ratio and are to be paid out in reference to the Common shares following completion of the Norbord Acquisition;

“Norbord Options” means the outstanding options to purchase Norbord Shares granted under or otherwise subject to certain Norbord stock option plans, which have been exchanged for, or are otherwise characterized as, Replacement Options following completion of the Norbord Acquisition;

“Norbord RSUs” means the outstanding restricted share units credited under the Norbord restricted share unit plan, which have been adjusted by the Exchange Ratio and are to be paid out in reference to the Common shares following completion of the Norbord Acquisition;

“Norbord Shares” means the common shares in the capital of Norbord;

“NYSE” means the New York Stock Exchange;

“Options” means share purchase options granted under the Stock Option Plan;

“Phantom Share Unit Plan” means the plan described as set out in “Executive Compensation Discussion & Analysis – Report on Executive Compensation – Long-Term Incentive Component – Phantom Share Unit Plan”;

“PS Unit” or “PSU” means a performance share unit granted under our Phantom Share Unit Plan;

“Registered Shareholder” means a Shareholder who is in possession of a physical share certificate registered in their name or who appears as the Registered Shareholder in the records of Computershare;

“Replacement Option Plans” has the meaning set out in “Executive Compensation Discussion & Analysis – Option Grants – Description of Replacement Option Plans”;

“Replacement Options” means the options to purchase Common shares that are held by former holders of Norbord Options following completion of the Norbord Acquisition;

“ROSE” has the meaning set out in “Executive Compensation Discussion & Analysis – Report on Executive Compensation – Annual Incentive Bonus Plan”;

4

“RS Unit” means a restricted share unit granted under our Phantom Share Unit Plan;

“SEC” means the U.S. Securities and Exchange Commission;

“SEDAR” means the System for Electronic Document Analysis and Retrieval, a filing system developed for the Canadian securities regulatory authorities;

“Shares” or “Common shares” means the common shares in the capital of West Fraser, as currently constituted and that are currently listed and posted for trading on the TSX and the NYSE under the symbol “WFG”;

“SIB” has the meaning set out in “Voting Securities and Principal Shareholders – Share Repurchases”;

“Shareholder” means a holder of any Share or Class B Share, as the context requires;

“Stock Dividend” means the stock dividend of one Common share declared and issued in respect of each issued and outstanding Common share in the capital of the Company and each issued and outstanding Class B Share and paid to Shareholders on January 13, 2014;

“Stock Option Plan” means the West Fraser Timber Co. Ltd. Stock Option Plan, as amended;

“Towers Watson” has the meaning set out in “Executive Compensation Discussion & Analysis – Report on Executive Compensation”;

“TSR” has the meaning set out in “Executive Compensation Discussion & Analysis – Report on Executive Compensation – Long-Term Incentive Component – Phantom Share Unit Plan”;

“TSX” means the Toronto Stock Exchange;

“U.S.” means the United States of America, its territories, any State of the United States and the District of Columbia;

“U.S. ESPP” means the United States Employee Stock Purchase Plan;

“VWAP” means Volume Weighted Average Price; and

“West Fraser”, “Company”, “we”, “us” or “our” means West Fraser Timber Co. Ltd.

5

ADDITIONAL INFORMATION REGARDING THE MEETING

We will hold the Meeting in Quesnel, B.C. Additionally, a live-webcast option will be provided to Shareholders to listen in and view the Meeting and ask questions. Shareholders will be able to access the live-webcast will at https://web.lumiagm.com/459109891, password “westfraser2022” (case sensitive), where they can listen in and view the Meeting and ask questions.

Registered Shareholders and duly appointed proxyholders (including Non-registered Shareholders who have duly appointed themselves as proxyholder) will have a live-webcast option where they can listen in and view the Meeting and ask questions, provided they are connected to the Internet and follow the instructions in this Circular. Non-registered Shareholders who have not duly appointed themselves as proxyholder will be able to use the live-webcast option as guests but will not be able to ask questions.

Shareholders who wish to appoint a person other than the management nominees identified in the form of proxy or voting instruction form (including a Non-registered Shareholder who wishes to appoint themselves as their own proxy to use the live web-cast) must carefully follow the instructions set out in this Circular and on their form of proxy or voting instruction form. These instructions include the additional step of registering such proxyholder with Computershare, after submitting the form of proxy or voting instruction form. Failure to register the proxyholder with Computershare will result in the proxyholder not receiving a 15-digit control number required to ask questions in the Meeting, which would only allow the proxyholder to attend the Meeting as a guest. Guests will be able only to listen to the Meeting but will not be able to ask questions.

Your vote is important. Good corporate governance begins with Shareholder participation. If you cannot attend the Meeting or if you plan to attend but prefer the convenience of voting in advance, we encourage you to exercise your vote using either of the voting methods described below. Please read pages 7 through 11 for answers to commonly asked questions regarding voting and proxies.

How to Vote

You have two ways to vote:

1. you may vote in person at the Meeting; or

2. by submitting your form of proxy or voting instruction form in accordance with the instructions set out therein.

If a Registered Shareholder is a body corporate or association, the form of proxy must be signed by a person duly authorized by that body corporate or association. Completing, signing and returning a form of proxy will not prevent you from attending the Meeting in person. As the Company is relying on notice and access provisions of applicable Canadian securities laws, the Notice and form of proxy is being sent to Registered Shareholders.

How to Ask Questions at the Meeting

Shareholders will have an opportunity to ask questions in person and online (as applicable) by following the procedures set out below.

1. Registered Shareholders and proxyholders (including Non-registered Shareholders who have duly appointed themselves as proxyholder) attending the Meeting in person will have an opportunity to ask questions at the Meeting during the Q&A session.

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2. Registered Shareholders and proxyholders (including Non-registered Shareholders who have duly appointed themselves as proxyholder) following the Meeting online will have an opportunity to ask questions through the webcast platform. To do so, they will need to obtain a control number by following the instructions provided below. Once they have registered and obtained a control number and are logged into the online platform, they should select the messaging icon and type the question within the chat box at the bottom of the messaging screen. Once satisfied with the question, the Shareholder or proxyholder should click the arrow button to submit the question to the Chair of the Meeting. All submitted questions will be moderated before being sent to the Chair of the Meeting. Questions can be submitted at any time during the Q&A session up until the Chair of the Meeting closes the session.

It is anticipated that Shareholders will have substantially the same opportunity to ask questions online on matters of business during the Meeting as if they attend the Meeting in person.

How Shareholders and appointees can obtain a control number to ask questions during the Meeting

● Registered Shareholders: Registered Shareholders can find their control number on their proxy form.

● Non-registered Shareholders and Appointees: Non-registered Shareholders and duly appointed proxyholders must complete the additional step of registering as a proxyholder by calling Computershare at 1-800-564-6253 (North American toll free) or 1-514-982-7555 (International) by no later than 11:30 a.m. (Vancouver time) on April 18, 2022. Non-registered Shareholders and proxyholders who have not appointed themselves as proxyholder will not receive a control number, which is required to ask questions at the Meeting.

Non-registered Shareholders who have not duly appointed themselves as proxyholder and registered with Computershare will not be able to ask questions at the Meeting but will be able to follow the proceedings as a guest.

Technical Assistance

Shareholders with questions regarding the live-webcast platform or requiring assistance accessing the Meeting website should visit the provider’s website at https://www.lumiglobal.com/faq. Furthermore, should a Shareholder wish to speak with a Computershare representative concerning the live-webcast, both a live chat service and a contact ticket system are available through the website above.

If you are accessing the Meeting using the live-webcast, you must remain connected to the Internet at all times during the Meeting in order to listen in, view the Meeting and ask questions. It is your responsibility to ensure Internet connectivity for the duration of the Meeting. Note that if you lose connectivity once the Meeting has commenced, there may be insufficient time to resolve your issue before the Meeting is completed.

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FREQUENTLY ASKED QUESTIONS

Q. Am I entitled to vote?

A.      Holders of Shares at the close of business on the record date of March 2, 2022 and their duly appointed representatives are eligible to vote. Each Share is entitled to one vote.

Q. How do I vote?

A.      If you are a Registered Shareholder, you may vote your Shares by appointing a proxyholder to attend the Meeting and vote on your behalf. Voting by proxy is the easiest way to vote because you do not have to attend the Meeting. Instead, you appoint the persons named in the form of proxy or another person or entity of your choosing, who need not be a Shareholder, to represent you as a proxyholder and vote your Shares at the Meeting. A proxy will not be valid unless it is dated and signed by the Registered Shareholder or by the Registered Shareholder’s attorney with proof that they are authorized to sign, and is completed according to the instructions therein.

There are different ways to submit your voting instructions depending on whether you are a Registered Shareholder or a Non-registered Shareholder. If your Shares are held in an account with a bank, trust company, securities broker, trustee or other intermediary, please refer to “Voting by Non-registered Shareholders”.

See “How to Vote” for further details on how to vote.

Q. What am I voting on?

A. You will be asked to vote on the following matters:

● fixing the number of Directors at 11;

● the election of Directors to hold office until the close of the next annual meeting of Shareholders;

● the appointment of PricewaterhouseCoopers LLP as our auditor until the close of the next annual meeting of Shareholders, at a remuneration to be fixed by the Directors;

● the special resolution to approve amendment of the corporate Articles of the Company to increase the quorum requirements and to provide for additional methods for delivery of notices;

● the ordinary resolution to approve the Company’s U.S. employee stock purchase plan for the U.S. employees of the Company’s U.S. subsidiaries; and

● the advisory (non-binding) resolution on the Company’s approach to executive compensation.

Q. What if amendments are made to these matters or if other matters are brought before the Meeting?

A.       If you attend the Meeting and are eligible to vote, you may vote on such matters as you choose.

If you have completed and returned a proxy in the form enclosed, the persons named in it will have discretionary authority with respect to amendments or variations to matters identified in the Notice and to

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other matters which properly come before the Meeting. If any other matter properly comes before the Meeting, the persons so named will vote on it in accordance with their best judgment. As of the date of this Circular, our management does not know of any such amendment, variation or other matter expected to come before the Meeting.

Q. Who is soliciting my proxy?

A.      The management of West Fraser is soliciting your proxy. Solicitation of proxies is done primarily by mail, supplemented by telephone or other contact, by Company employees, and the Company bears all associated costs.

This Circular is prepared under the notice and access rules that came into effect on February 11, 2013 pursuant to applicable Canadian securities laws. Accordingly, this Circular is being posted on the Internet instead of being mailed to either Registered Shareholders or Non-registered Shareholders. This Circular and related proxy materials are available under the Company’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml, and on the Company’s website at www.westfraser.com/. Shareholders are reminded to review these materials online in connection with the Meeting and before voting. Shareholders may obtain a physical copy of this Circular by: (a) calling Computershare, toll free at 1-800-564-6253 (North American toll free) or 1-514-982-7555 (International); or (b) emailing a request to Computershare at service@computershare.com. A request for a physical copy of this Circular should be sent sufficiently in advance so that it is received by Computershare by April 6, 2022 in order to allow sufficient time for the Shareholder to receive the physical copy of this Circular and return the proxy by its due date.

Q. How do I know if I am a “Registered” Shareholder or a “Non-registered” Shareholder?

A. You may own Shares in one or both of the following ways:

1. If you are in possession of a physical share certificate in your name or you appear as the Registered Shareholder in the records of Computershare, you are a “Registered Shareholder” and your name and address are known to West Fraser through Computershare.

2. If you own Shares through a bank, trust company, securities broker, trustee or other intermediary, you are a “Non-registered Shareholder” and you will not have a physical share certificate. In this case, you will have an account statement from your bank or broker as evidence of your Share ownership.

Most Shareholders are Non-registered Shareholders. The Shares of Non-registered Shareholders are registered in the name of an intermediary, such as a bank, trust company, securities broker, trustee, custodian or other nominee who holds the Shares in a nominee account or in the name of such nominee, or in the name of a clearing agency in which the intermediary is a participant (such as CDS). Intermediaries have obligations to forward Meeting materials to such Non-registered Shareholders unless instructed otherwise by the holder (and as required by regulation in some cases, despite such instructions).

Non-registered Shareholders fall into two categories — those who object to their identity being known to the issuers of the securities which they own (“OBOs”) and those who do not object to their identity being made known to the issuers of the securities which they own (“NOBOs”). Subject to the provisions of NI 54-101, issuers may request and obtain a list of their NOBOs from intermediaries directly or via their transfer agent and may obtain and use the NOBO list for the distribution of proxy-related materials to such NOBOs. These securityholder materials are being sent to both registered and non-registered owners of securities of the Company. If you are a non-registered owner (a NOBO or an OBO) and the Company or its agent has sent the Meeting materials directly to you, your name, address and information about

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your holdings of Common shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding the Common shares on your behalf. The Company’s OBOs can expect to be contacted by their intermediary. The Company does not intend to pay for intermediaries to deliver the Meeting materials to OBOs and it is the responsibility of such intermediaries to ensure delivery of the Meeting materials to their OBOs.

Q. Must I use the enclosed form of proxy?

A.      No. If you do not wish to use the enclosed proxy form, you may use any other form of proxy to appoint your proxyholder, although the Articles require that a form of proxy be substantially in the form enclosed.

Q. Can I appoint someone to vote my Shares other than persons named in the enclosed form of proxy?

A.      Yes. Shareholders who wish to appoint a person other than the management nominees identified in the form of proxy or voting instruction form (including a Non-registered Shareholder who wishes to appoint themselves as their own proxy to attend the Meeting) must carefully follow the instructions in this Circular and on their form of proxy or voting instruction form. These instructions include the additional step of registering such proxyholder with Computershare, after submitting the form of proxy or voting instruction form. Failure to register the proxyholder with Computershare, which will result in the proxyholder not receiving a 15-digit control number to ask questions in the Meeting and, consequently such proxyholder will only be able to follow the Meeting as a guest. Guests may only listen to the Meeting but will not be able to ask questions.

Q. What if my Shares are registered in more than one name or in the name of my company?

A.      If your Shares are registered in more than one name, all those registered must sign the form of proxy. If your Shares are registered in the name of your company or any name other than yours, we may require that you provide documentation that proves you are authorized to sign the form of proxy.

Q. What if I plan to attend the Meeting and vote at the Meeting?

A.      If you are a Registered Shareholder and plan to attend the Meeting and you wish to vote your Shares at the Meeting, do not complete or return a form of proxy. Your vote will be taken and counted at the Meeting.

If your Shares are not registered in your name, but you wish to attend the Meeting, please see “Voting by Non-registered Shareholders”.

Q. What happens when I sign and return a form of proxy?

A.      You will have given authority to whomever you have appointed as your proxyholder to vote your Shares at the Meeting in accordance with the voting instructions you provide.

Q. What do I do with my completed form of proxy?

A.      You must deposit your completed form of proxy (by mail, telephone, fax or online) with Computershare no later than 11:30 a.m. (Vancouver time) on April 18, 2022, or at least 48 hours (excluding Saturdays, Sundays and holidays) prior to the time of any adjournment or postponement of the Meeting. The Chair of the Meeting has the discretion to accept or reject any late proxies, and can waive or extend

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the deadline for receiving proxy voting instructions without notice. If you hold Shares through an intermediary you should refer to “Voting by Non-registered Shareholders”.

Q. How will my Shares be voted if my proxy is in the enclosed form with no other person named as proxyholder?

A.      The persons named in it will vote or withhold from voting your Shares in accordance with your instructions. In the absence of such instructions, however, your Shares will be voted FOR fixing the number of Directors at 11, FOR the election of the Directors nominated by management, FOR the appointment of the Auditor, FOR the special resolution to approve amendment of the Articles, FOR the ordinary resolution to approve the U.S. ESPP and FOR the advisory (non-binding) resolution on the Company’s approach to executive compensation.

Q. If I change my mind, can I revoke my proxy once I have given it?

A.      In addition to revocation in any other manner permitted by law, a Registered Shareholder who has completed a form of proxy may revoke it by:

● executing a new form of proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or the Registered Shareholder’s authorized attorney in writing or, if the Registered Shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the form of proxy bearing a later date or notice of revocation to Computershare, or to the Company’s office at 501-858 Beatty Street, Vancouver, British Columbia, V6B 1C1, at any time up to and including the last business day that precedes the day of the Meeting or, if the Meeting is adjourned, the last business day that precedes any reconvening thereof, or to the chairman of the Meeting on the day of the Meeting or any reconvening thereof, or in any other manner provided by law; or

● personally attending the Meeting and voting at the Meeting.

A revocation of a form of proxy will not affect a matter on which a vote is taken before the revocation.

Non-registered Shareholders who wish to change their vote must, within sufficient time in advance of the Meeting, arrange for their respective intermediaries to change their vote.

Q. What documents are sent to Shareholders?

A.      Registered Shareholders who have provided us with the required request will receive a package of the usual annual corporate documents (our Annual Report, our consolidated financial statements for the years ended December 31, 2021 and 2020 and Auditor’s report and management’s discussion and analysis thereon), along with the Notice and the form of proxy.

Our Circular may be accessed under our profile on SEDAR at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml, and on our website at www.westfraser.com.

Copies of our Annual Report, including our consolidated financial statements and Auditor’s report and management’s discussion and analysis thereon, are filed with Canadian securities regulators and are available under the Company’s profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml, and may also be obtained, without charge, upon request by contacting Robert B. Winslow, CFA, Director, Investor Relations & Corporate Development at (416) 777-4426 or by email at shareholder@westfraser.com.

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Q. Who are our Principal Shareholders?

A.      The Principal Shareholders (persons or companies that beneficially own or exercise control or direction over, directly or indirectly, more than 10% of a class of our outstanding Shares) are set out in this Circular under the heading “Voting Securities and Principal Shareholders”.

Q. What if I have other questions?

A.      If you have a question regarding the Meeting, please contact our transfer agent as set out below, the General Counsel of the Company at (604) 895-2700 or by email at shareholder@westfraser.com.

Q. How can I contact the transfer agent?

A.        You can contact the transfer agent at:

Computershare Investor Services Inc.

8^th Floor, 100 University Avenue

Toronto, Ontario M5J 2Y1

Phone   1-800-564-6253 (North American toll free) or

              514-982-7555 (International).

Fax       1-888-453-0330

Online   www.computershare.com/service

VOTING BY NON-REGISTERED SHAREHOLDERS

Q. If my Shares are not registered in my name, how do I vote my Shares?

A.      Our share register does not list Non-registered Shareholders. The Shares of Non-registered Shareholders are usually held in the name of an intermediary or a “nominee”, such as a trust company, securities broker or other financial institution. If you are a Non-registered Shareholder, there are two ways that you can vote your Shares:

1. By providing voting instructions to your nominee

Applicable securities laws require institutional nominees to seek voting instructions from you in advance of the Meeting. Accordingly, you will receive, or have already received with these materials, from your nominee, either a voting instruction form or a form of proxy for the number of Shares you hold with that nominee. Every institutional nominee has its own mailing procedures and provides its own signing and return instructions, which you should follow carefully to ensure that your Shares are voted at the Meeting.

As the Company is relying on notice and access provisions of applicable Canadian securities law, the Notice and voting instruction form are being sent to both Non-registered Shareholders and Registered Shareholders.

2. By being appointed as Proxy and attending the Meeting

The Company generally does not have access to the names of its Non-registered Shareholders. Therefore, if you attend the Meeting, the Company will have no record of your shareholdings or of your entitlement to vote unless you have directed your nominee to appoint you as proxyholder.

If you wish to attend the Meeting and vote your Shares, insert your own name in the space provided on the voting instruction form or form of proxy provided by your nominee to appoint yourself as proxyholder. If you are a Non-registered Shareholder and instruct your nominee to appoint yourself as proxyholder, you

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must follow the additional steps set out above under the heading “How to Vote – How Non-registered Shareholders/Appointees can obtain a control number to vote during the Meeting”.

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BUSINESS TO BE TRANSACTED AT THE MEETING

(See Notice of Annual Meeting of Shareholders)

1)      Presentation of Financial Statements

The consolidated financial statements of the Company for the financial years ended December 31, 2021 and 2020 and the Auditor’s report thereon will be submitted to Shareholders at the Meeting, but no vote with respect to them is required or proposed to be taken. The consolidated financial statements are included in our Annual Report which is being mailed to those Shareholders who have provided us with the required request.

2)      Fixing the Number and Election of Directors

Gerry Miller has decided not to stand for re-election as a Director. Management is nominating the other 11 current Directors. As a result, management is seeking approval to fix the number of Directors at 11.

The table of nominees on the following pages sets out the name, background and experience of each person proposed to be nominated for election as a Director, as well as other relevant information. Management of the Company recommends the election of the 11 nominees set out in the table of nominees to fill the 11 positions as Director. The term of office of each current Director will expire at the conclusion of the Meeting. Each Director elected at the Meeting will hold office until the conclusion of the next annual meeting of Shareholders at which a successor Director is elected, unless the Director’s office is earlier vacated in accordance with the Articles or the provisions of the BCA.

The Board of Directors has adopted a majority voting policy, which is described under the heading “Majority Voting Policy”, relating to the election of Directors.

On February 13, 2014, the Board adopted an advance notice policy setting out requirements for Director nominations and elections. On April 29, 2014, our Shareholders approved a special resolution to amend the Articles to include this advance notice requirement, which is described under the heading “Advance Notice Policy”.

The Board of Directors may fill vacancies on the Board resulting from the death, resignation or retirement of Directors. As well, the Board is authorized to appoint up to one-third additional Directors to hold office until not later than the next annual meeting of Shareholders.

3)      Appointment of Auditor

The Auditor is to be appointed to serve until the close of the next annual meeting of Shareholders, and the Directors are to be authorized to fix the Auditor’s remuneration.

The Board of Directors and management of the Company, on the advice of the Audit Committee of the Board, recommend that PricewaterhouseCoopers LLP, Vancouver, Canada, be appointed as Auditor, at a remuneration to be fixed by the Board of Directors.

4)      Special Resolution to Amend the corporate Articles of the Company

The Board of Directors and management of the Company, on the advice of the Governance Committee, is seeking approval by special resolution for amendments to the Company’s Articles to (i) increase the quorum requirements to one-fourth of the votes eligible to be cast at the Meeting from the present one-tenth; and (ii) provide for additional delivery methods for a notice provided pursuant to the Articles.

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The Board believes that an increase in the quorum requirements and the provision of additional methods for delivery of notices are in the best interests of the Company and are consistent with current corporate governance practices of similar dual-listed issuers on the TSX and the NYSE. The Board believes that this new quorum threshold is high enough to ensure that a broad range of Shareholders are represented in person or by proxy, but low enough that the Company may still transact its necessary business. The additional notice requirements will ensure that the Company can take advantage of modern forms of communication (e.g. e-mail, fax, scanning, etc.) particularly given increasing emphasis on such mediums during the course of the COVID-19 pandemic. At the Meeting, Shareholders will be asked to consider and, if deemed advisable, approve, by way of special resolution, an amendment to the Company’s Articles to adopt the new quorum requirements and to provide for additional methods for delivery of notices.

5)      Approval of the U.S. Employee Stock Purchase Plan

The Board of Directors and management of the Company are seeking approval by ordinary resolution of the U.S. ESPP in order to qualify as an “employee stock purchase plan” under Section 423 of the Code. Under the U.S. ESPP, any regular full-time employee of the Company or any of its subsidiaries who is a resident of the U.S., and at the date of enrolment in the U.S. ESPP, has six months of service with the Company or any of its subsidiaries, may acquire Shares of the Company at a price equal to 85% of the fair market value per Share. The Company will acquire Shares under the U.S. ESPP through market purchases on the NYSE and does not intend to issue any Shares from treasury under the U.S. ESPP, and is not seeking Shareholder approval to do so. The U.S. ESPP is not considered to be a “securities-based compensation arrangement” under TSX rules. The maximum number of Shares which may be purchased under the U.S. ESPP is 1,800,000 Shares, subject to adjustments.

The expansion of the Company’s operations in the United States, the acquisition of Norbord and the listing of the Company’s Shares on the NYSE have all increased the focus of the Company’s business in the United States. In order to provide the Company’s U.S. employees with comparable opportunities to its Canadian employees, the Board of Directors approved the adoption of the U.S. ESPP on June 11, 2021. The plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. In accordance with the terms of the U.S. plan and for the plan to qualify as an “employee stock purchase plan” under the Code, it requires approval of the Shareholders within 12 months of the adoption by the Board. If the plan is not so approved by the Shareholders within 12 months after the plan is adopted by the Board, the plan will not qualify as an “employee stock purchase plan” under the Code.

6)      Advisory Resolution on our Approach to Executive Compensation (Say on Pay)

Our executive compensation philosophy, policies and programs are based on the fundamental principle of pay-for-performance to align the interests of our executives with those of our Shareholders. At the Meeting, Shareholders will be asked to consider and, if deemed advisable, to approve (on an advisory basis), by way of ordinary resolution, the Company’s approach to executive compensation.

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INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS

The following table sets out the name of each person nominated by management for election as a Director, as well as the date that person first became a Director, their age, residence, position in the Company, independence status, principal occupation, background, experience, committee memberships, attendance records and their voting results at the last annual meeting of Shareholders. Additional information concerning compensation and security holdings of such persons is provided elsewhere in the Circular, including in “Direct and Indirect Share and Other Holdings of Current and Proposed Directors.” All of our Directors elected at our last annual meeting of Shareholders are standing for re-election, with the exception that Gerry Miller will be retiring from the Board.

Unless otherwise indicated, each nominee has held the same or similar principal occupation with the organization set out below, or a predecessor of that organization, for the last five years. The information as to principal occupation and securities beneficially owned or controlled by each nominee has been furnished by the nominee and is not within the knowledge of our management.

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HENRY H. (HANK) KETCHAM Director since September 16, 1985 Age: 72 Place of Residence: Vancouver, B.C., Canada Independent	Hank Ketcham is the Chair of the Board. Mr. Ketcham was our President until April 2012 and retired from the position of CEO effective March 1, 2013 when his title as Chair of our Board was re-designated as Executive Chair. Effective April 19, 2016, he became our Chair of the Board. He is also a director and minority shareholder of Ketcham Investments, Inc., which owns 3,912,718 Common shares and 1,743,228 Class B Shares of the Company. See “Voting Securities and Principal Shareholders” for a description of such shareholdings. Mr. Ketcham has been actively involved with the Company since 1973. He was formerly a director of The Toronto -Dominion Bank. Key Areas of Expertise and Experience:
	Strategic Leadership   Senior Executive   Industry Experience		Geographic Expertise Government & Stakeholder Relations
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	92,056,368	1,555,254	98
Current Other Public Board Memberships   None Past Public Board Memberships (2016 – 2021)   None Securities held and total market value as at March 2, 2022:

Shares1	395,896
Options	Nil
DS Units	933
Total market value of securities	$50,111,566
Meets share ownership target	Yes
1.  Includes Common shares and Class B shares.

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REID E. CARTER Director since April 19, 2016 Age: 65 Place of Residence: West Vancouver, B.C., Canada Independent	Reid E. Carter is a corporate Director. From 2003 to the end of 2018, Mr. Carter was a Managing Partner at Brookfield Asset Management, Inc., a global asset manager, and was President of Brookfield Timberlands Management LP. In this role, Mr. Carter led the acquisition of approximately 3.5 million acres of private timberlands throughout North America and Brazil as well as the teams responsible for all growth and operations aspects of these businesses. From 2010 to 2015, Mr. Carter also served as President and Chief Executive Officer, and until May 2021 as a director, of Acadian Timber Corp. and, from 2006 to 2010, as President and Chief Executive Officer of its predecessor, Acadian Timber Income Fund, which is listed on the TSX. He served as National Bank Financial’s Paper and Forest Products Analyst between 1996 and 2003. Between 1990 and 1996 he served as a resource analyst with TimberWest Forest Corp. Mr. Carter served as a director of Enercare Inc. until the end of 2019. Mr. Carter holds a combined undergraduate degree in Forestry and Biology and a master’s degree in Forest Soils, both from the University of British Columbia. Mr. Carter is the Chair of the Audit Committee and a member of the Governance & Nominating Committee. Key Areas of Expertise and Experience:
	Senior Executive   Finance Literacy   Industry Experience		Geographic Expertise Technology
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Audit	5 of 5	100
	Governance & Nominating	4 of 4	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	92,693,811	917,811	99
Current Other Public Board Memberships:   None Past Public Board Memberships (2016 – 2021):   Enercare Inc.                                              Acadian Timber Corp. Securities held and total market value as at March 2, 2022:

Shares	3,000
DS Units	11,978
Total market value of securities	$1,868,691
Meets share ownership target	Yes

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RAYMOND FERRIS Director since April 23, 2019 Age: 59 Place of Residence: Vancouver, B.C., Canada Non-Independent	Ray Ferris is our President and CEO. Before April 19, 2018, Mr. Ferris was our Executive Vice-President and Chief Operating Officer, and before February 15, 2016 he was our Vice-President, Wood Products. On April 19, 2018 the Company announced a senior leadership transition plan and Mr. Ferris replaced Mr. Seraphim as President of the Company, and on June 30, 2019, Mr. Ferris replaced Mr. Seraphim as CEO following Mr. Seraphim’s retirement from that office. Mr. Ferris is the board chair of the Forest Products Association of Canada. Mr. Ferris holds a Bachelor of Science Degree in Engineering from the University of New Brunswick. Key Areas of Expertise and Experience:
	Strategic Leadership   Senior Executive   Industry Experience	Geographic Expertise Environment, Health & Safety
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	93,240,045	371,577	99
Current Other Public Board Memberships:   None Past Public Board Memberships (2016 – 2021):   None Securities held and total market value as at March 2, 2022:

Shares	39,452
Options	208,627
DS Units	Nil
PS Units	51,070
Total market value of securities	$4,981,9991
Meets share ownership target	Yes

1.  Mr. Ferris also holds Options and Units as described in the Summary Compensation Table and under the heading Summary of Outstanding Options and the heading RS Units and PS Units.

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JOHN N. FLOREN Director since April 19, 2016 Age: 63 Place of Residence: Eastham, Massachusetts, USA Independent	John N. Floren has been President and Chief Executive Officer of Methanex Corporation since January 2013. Prior to this appointment, Mr. Floren was Senior Vice-President, Global Marketing and Logistics of Methanex from June 2005 and, prior to that, Director, Marketing and Logistics, North America from May 2002. He has been an employee of Methanex for approximately 21 years and has worked in the chemical industry for over 30 years. He currently serves as a director of Methanex, which is listed on the TSX. Mr. Floren holds a Bachelor of Arts in Economics from the University of Manitoba. He also attended the Harvard Business School’s Program for Management Development and has attended the International Executive Program at INSEAD. He also completed the Directors Education Program at the Institute of Corporate Directors. Mr. Floren is the Chair of the Health, Safety & Environment Committee and a member of the Human Resources & Compensation Committee and the Governance & Nominating Committee. Key Areas of Expertise and Experience:
	Strategic Leadership   Senior Executive   Risk Management	Environment, Health & Safety Sustainability, Climate Change & Social Responsibility
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Human Resources & Compensation	3 of 3	100
	Health, Safety & Environment	2 of 2	100
	Governance & Nominating	4 of 4	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	92,908,935	702,687	99
Current Other Public Board Memberships:   Methanex Corp. Past Public Board Memberships (2016 – 2021):   None Securities held and total market value as at March 2, 2022:

Shares	Nil
DS Units	7,962
Total market value of securities	$1,005,441
Meets share ownership target	Yes

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ELLIS KETCHAM JOHNSON Director since April 20, 2021 Age: 58 Place of Residence: Greenwich, Connecticut, USA Independent	Ellis Ketcham Johnson is currently the President of a private philanthropic foundation and a member of the Parents Leadership Council of Georgetown University. She previously worked at Imax Corporation in Canada. Ms. Johnson completed her undergraduate degree at Lewis and Clark College and received a graduate degree from Yale University. She recently completed a Directorship Program with an emphasis on Board Governance. Key Areas of Expertise and Experience:
	Government & Stakeholder Relations   Human Resources & Compensation   Environment, Health & Safety	Sustainability, Climate Change & Social Responsibility
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	6 of 6	100
	Health, Safety & Environment	1 of 1	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	93,238,823	372,799	99
Current Other Public Board Memberships:   None Past Public Board Memberships (2016 – 2021):   None Securities held and total market value as at March 2, 2022:

Shares	1,004,990
DS Units	Nil
Total market value of securities	$126,910,137
Meets share ownership target	Yes

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BRIAN G. KENNING Director since April 19, 2017 Age: 72 Place of Residence: Vancouver, B.C., Canada Independent	Brian G. Kenning is a corporate Director. He was a Managing Partner of Brookfield Asset Management Inc., a company involved in the real estate, asset management and power generation sectors, from 1995 to 2005. From 1988 to 2005, Mr. Kenning was also Chairman and Managing Partner of B.C. Pacific Capital Corporation, an affiliate of Brookfield Asset Management Inc., active in merchant banking and investing. Over the past 10 years, Mr. Kenning has served as director of a number of public and private corporations. He served as a director of British Columbia Ferry Services Inc. until May 2019, and as a director of Maxar Technologies Ltd. from 2003 to 2019. In addition, Mr. Kenning is a past Governor of the B.C. Business Council and a past Director of the B.C. chapter of the Institute of Corporate Directors. Mr. Kenning graduated from Queen’s University with an MBA in 1973. Mr. Kenning is the Chair of the Human Resources & Compensation Committee and a member of the Governance & Nominating Committee. Key Areas of Expertise and Experience:
	Financial Literacy   Risk Management   Capital Markets	Human Resources & Compensation Board Experience
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Human Resources & Compensation	3 of 3	100
	Governance & Nominating	4 of 4	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	93,142,595	469,027	99
Current Other Public Board Memberships   None Past Public Board Memberships (2016 – 2021)   Maxar Technologies Ltd. Securities held and total market value as at March 2, 2022:

Shares	1,200
DS Units	6,144
Total market value of securities	$927,400
Meets share ownership target	Yes

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MARIAN LAWSON Director since February 1, 2021 Age: 66 Place of Residence: Toronto, Ontario, Canada Independent	Marian Lawson retired from Scotiabank in 2018, with over 30 years of experience in banking and capital markets. Ms. Lawson served as a director of Norbord from May 6, 2020 until her resignation and was appointed to the Board of West Fraser on February 1, 2021 in connection with the Norbord Acquisition. During her tenure, Ms. Lawson held numerous senior roles at Scotiabank including Executive Vice-President, Global Head, Financial Institutions and Transaction Banking, Deputy Head of Corporate Banking, Managing Director, Capital Markets, and Vice - President, Internal Audit. The majority of her roles involved assisting management teams in the execution of their strategies, which included acquisitions, expansions, divestitures, refinancings and restructurings. In addition, during the latter part of her career, Ms. Lawson successfully expanded and restructured several businesses. In 2016, Ms. Lawson received the Women in Capital Markets Award for Leadership and the Women’s Executive Network, Top 100 Corporate Executive Award. Ms. Lawson holds a BA in Economics from York University, an MBA (Finance) from McMaster University, and an ICD.D designation. Ms. Lawson is a director of Canadian Tire Bank (2018 to present) and was a board member of 1832 Asset Management LP, a wealth management subsidiary of Scotiabank, from 2016 to 2018. Ms. Lawson is a member of the Human Resources & Compensation Committee and the Health, Safety & Environment Committee. Key Areas of Expertise and Experience:
	Strategic Leadership   Financial Literacy   Risk Management	Capital Markets Board Experience
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Human Resources & Compensation	2 of 2	100
	Health, Safety & Environment	2 of 2	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	93,543,822	67,800	99
Current Other Public Board Memberships   None Past Public Board Memberships (2016 – 2021)   Norbord Inc. Securities held and total market value as at March 2, 2022:

Shares	Nil
DS Units	3,242
Total market value of securities	$409,400
Meets share ownership target	No1

1.  Ms. Lawson was appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition and is permitted to meet the minimum shareholding requirement within five years of her appointment.

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COLLEEN M. MCMORROW Director since February 1, 2021 Age: 65 Place of Residence: Oakville, Ontario, Canada Independent	Colleen McMorrow earned a Bachelor of Commerce Degree and a Graduate Diploma in Accountancy, both from the John Molson School of Business, Concordia University. She is a Fellow Certified Public Accountant, Fellow Chartered Accountant and is currently a corporate Director. Ms. McMorrow served as a director of Norbord from May 6, 2020 until her resignation and was appointed to the Board of West Fraser on February 1, 2021 in connection with the Norbord Acquisition. Ms. McMorrow was also a senior client assurance partner with Ernst & Young LLP (EY), a global professional services firm, until her retirement in June 2016. She has more than 35 years of experience in advising audit committees and senior management of public and private global companies. In addition to her client serving role, Ms. McMorrow held a number of leadership roles at EY and, from 2009 to 2016, she was the National Director in Canada of EY’s signature Entrepreneur of the Year awards program and the firm’s Growth Markets Leader (high-growth entrepreneurial companies). She is currently a director of Ether Capital Corporation, whose common shares are listed for trading on the Aequitas NEO Exchange, and Exco Technologies Limited, which is listed on the TSX (see “Our Corporate Governance Policies and Procedures – Serving on Other Boards”). Ms. McMorrow was formerly a director of LOGIQ Asset Management from April 2017 until it was acquired in June 2018. She has also been a member of the board of the Investment Management Corporation of Ontario since 2016 and of Plan International Canada Inc. since 2015. Ms. McMorrow is a member of the Audit Committee and the Health, Safety & Environment Committee. Key Areas of Expertise and Experience:
	Financial Literacy   Risk Management   Board Experience		Human Resources & Compensation Technology
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Audit	4 of 4	100
	Health, Safety & Environment	2 of 2	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	93,521,087	90,535	99
Current Other Public Board Memberships   Ether Capital Corporation                                Exco Technologies Limited. Past Public Board Memberships (2016 – 2021)   Norbord Inc.                                                       Logiq Asset Management Inc. Securities held and total market value as at March 2, 2022:

Shares	Nil
DS Units	2,606
Total market value of securities	$329,086
Meets share ownership target	No1

1.  Ms. McMorrow was appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition and is permitted to meet the minimum shareholding requirement within five years of her appointment

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ROBERT L. PHILLIPS Director since April 28, 2005 Age: 71 Place of Residence: Anmore, B.C., Canada Independent	Robert L. Phillips was designated by the Board to serve as Lead Director in February 2008. Before July 2004, he was President and Chief Executive Officer of the BCR Group of Companies, which was involved in rail transportation and marine terminal operations. Before joining BCR, he was Executive Vice-President, Business Development and Strategy for MacMillan Bloedel Limited, and has held the position of President and Chief Executive Officer of the PTI Group Inc. and Dreco Energy Services Ltd. He was appointed Queen’s Counsel in Alberta in 1991. He is a director of the following public corporations: Canadian National Railway Company, which is listed on the TSX and the NYSE, Capital Power Corporation, which is listed on the TSX and Canadian Western Bank, which is listed on the TSX, (see “Our Corporate Governance Policies and Procedures – Serving on Other Boards”). On December 31, 2018, Mr. Phillips retired as the Chairman and a director of Maxar Technologies Ltd. (formerly known as MacDonald Dettwiler & Associates Ltd.) and served as a director of Maxar Technologies Inc., its new U.S. parent company, from January 1, 2019 to May 13, 2020. Mr. Phillips holds a B.Sc. (Chemical Engineering) and an LL.B., both from the University of Alberta. In his capacity as Lead Director he serves as Chair of the Governance & Nominating Committee. Mr. Phillips is also a member of the Human Resources & Compensation Committee. Key Areas of Expertise and Experience:
	Strategic Leadership   Senior Executive   Industry Experience		Human Resources & Compensation Board Experience
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Human Resources & Compensation	3 of 3	100
	Governance & Nominating	4 of 4	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	87,927,088	5,684,534	94
Current Other Public Board Memberships   Canadian National Railway Company            Canadian Western Bank   Capital Power Corporation Past Public Board Memberships (2016 – 2021)   Maxar Technologies Ltd.                                Precision Drilling Corporation Securities held and total market value as at March 2, 2022:

Shares	11.000
DS Units	17,138
Total market value of securities	$3,553,267
Meets share ownership target	Yes

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JANICE G. RENNIE Director since April 28, 2004 Age: 64 Place of Residence: Edmonton, Alberta, Canada Independent	Janice G. Rennie who holds a Bachelor of Commerce, is a Chartered Professional Accountant, Chartered Accountant. She was elected as a Fellow of the Chartered Accountants in 1998. Ms. Rennie has chaired or been a member of several audit committees of public companies in the past and currently is chair of the audit committee of Major Drilling Group International Inc. From September 7, 2004 to September 9, 2005 she was the Senior Vice - President, Human Resources and Organizational Effectiveness of EPCOR Utilities Inc., a provider of energy, water and energy-related services and products that is solely owned by the City of Edmonton, on whose board she previously served for over 10 years and rejoined as a director in 2017 and currently serves as the Chair of its board. She currently serves as a director of Major Drilling Group International Inc., which is listed on the TSX (see “Our Corporate Governance Policies and Procedures - Serving on Other Boards”). Ms. Rennie was formerly a director of Methanex Corporation, Teck Resources Ltd. and WestJet Airlines Ltd. Ms. Rennie earned a Bachelor of Commerce Degree from the University of Alberta. Ms. Rennie is also the former Chair of the Provincial Audit Committee of Alberta. In recognition of her career achievements, in 2022, Ms. Rennie was also recognized by CPA Alberta with the Lifetime Achievement Award. Key Areas of Expertise and Experience:
	Financial Literacy   Capital Markets   Human Resources & Compensation	Board Experience Sustainability, Climate Change & Social Responsibility
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Audit	5 of 5	100
	Human Resources & Compensation	3 of 3	100
	Governance & Nominating	4 of 4	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	90,661,597	2,950,025	97
Current Other Public Board Memberships   Major Drilling Group International Inc.        EPCOR Utilities Inc. Past Public Board Memberships (2016 – 2021)   Methanex Corporation Securities held and total market value as at March 2, 2022:

Shares	1,000
DS Units	20,725
Total market value of securities	$2,743,433
Meets share ownership target	Yes

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GILLIAN D. WINCKLER Director since April 19, 2017 Age: 59 Place of Residence: Vancouver, B.C., Canada Independent	Gillian D. Winckler is a former mining and business executive with over 25 years of diversified experience in the metals and mining industry and the financial sector. Ms. Winckler spent 16 years with BHP Billiton in London, England and Vancouver, Canada where she was involved with corporate and divisional strategy, mergers and acquisitions, divestments, exploration as well as project evaluation and development. Upon leaving the company she joined Coalspur Limited, a thermal coal development company listed in Canada and Australia, as its Chief Executive Officer and President. Ms. Winckler held this position, as well as Chief Financial Officer for a brief period of three years until the company was acquired in June 2015. Prior to the mining industry, Ms. Winckler spent five years as a corporate financier in South Africa and London and five years in the auditing profession. Ms. Winckler is a Chartered Accountant (South Africa), with a B.Sc. and B.Commerce (Honours) obtained in South Africa. Ms. Winckler also obtained an ESG Competent Boards Certificate and Global Competent Boards Designation (GCB.D). Ms. Winckler currently is the Chair of the Board of Directors of Pan American Silver Corp., which is listed on the TSX and The NASDAQ Stock Market, and a director of FLSmidth & Co. A/S, a Danish engineering company, which is listed on The NASDAQ OMX Exchange Copenhagen. Ms. Winckler is a member of the Audit Committee and the Health, Safety & Environment Committee. Key Areas of Expertise and Experience:
	Senior Executive   Financial Literacy   Geographic Expertise		Environment, Health & Safety Sustainability, Climate Change & Social Responsibility
	Board and Committee memberships and attendance record in 2021:
		Attendance	% Overall
	Board	7 of 7	100
	Audit	5 of 5	100
	Health, Safety & Environment	2 of 2	100
	Voting results of 2021 annual meeting of Shareholders:

	Votes for	Votes withheld	% Votes For
Number of votes	93,526,258	85,364	99
Current Other Public Board Memberships   Pan American Silver Corp.                FLSmidth & Co. Past Public Board Memberships (2016 – 2021)   None Securities held and total market value as at March 2, 2022:

Shares	1,750
DS Units	7,016
Total market value of securities	$1,106,970
Meets share ownership target	Yes

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Each nominee has consented to act as a Director if elected. We do not contemplate that any proposed nominee will be unable to serve as a Director, but if for any reason that occurs before the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee at their discretion.

Board Renewal

The Board recognizes the need for, and benefits of, introducing new and diverse characteristics and perspectives at the Board level, and it also understands the importance of having continuity of institutional and industry knowledge and experience. Our Board renewal process is designed to achieve and maintain a balance between those considerations.

The Governance Committee is responsible for identifying new candidates to stand as nominees for election or appointment as Directors to our Board. In identifying potential Director candidates, the Governance Committee takes into account a broad variety of factors it considers appropriate, including skills, independence, financial acumen, Board dynamics and personal characteristics. In addition, the Governance Committee considers diversity in perspective arising from personal, professional or other attributes and experiences when identifying potential Director candidates. Desirable individual characteristics of nominees include integrity, credibility, the ability to generate public confidence and maintain the goodwill and confidence of our Shareholders, sound and independent business judgment, general good health and the capability and willingness to travel to, attend and contribute at Board functions on a regular basis. Background checks, as appropriate, are completed prior to nomination.

In 2015, the Governance Committee implemented the first phase of the Board renewal process by searching for and identifying two suitable candidates for nomination as Directors. As part of this process, the Governance Committee engaged an outside search firm and also sought input and advice from current Directors and our executive management. The major criteria adopted by the Governance Committee for candidates were: (a) chief executive officer experience; (b) experience in a cyclical, capital-intensive industry; (c) strong strategic thinker; and (d) representing diverse background and experience.

As a result of this process, in 2016, Reid Carter and John Floren were identified as nominees to the Board and they were elected as Directors at the 2016 annual meeting of Shareholders.

In 2016, the Governance Committee implemented the second phase of the Board renewal process through continuing efforts to search for and identify additional suitable candidates. As a result, the Governance Committee identified Brian Kenning and Gillian Winckler as important additions to the Board and they were elected as Directors at the 2017 annual meeting of Shareholders. Additionally, as part of the second phase of this process, Clark Binkley, Duncan Gibson and Harald Ludwig retired and did not stand for re-election as Directors.

The Governance Committee continues to focus on diversity and inclusion and to accelerate diverse representation on our Board, management and talent across the organization. In connection with the Norbord Acquisition, two independent directors of Norbord, being Marian Lawson and Colleen McMorrow, were added to the Board in 2021.

Further at the conclusion of the 2021 annual shareholders meeting, John Ketcham retired from our Board after serving for six years. Ellis Ketcham Johnson was nominated by management for election as a Director and was elected to the Board at the Company’s annual general meeting held April 20, 2021. This year, Gerry Miller has decided to retire from the Board at the conclusion of the Meeting. As a result, if all the director nominees are elected, five of the 10 of the independent Directors (50%) on the Board and five of the 11 directors (45%) will be women.

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To enhance the Board renewal process, the Company has implemented a robust performance review process and employs a skills matrix to identify skills or experience gaps, which was recently updated based on the advice and recommendation of the Governance Committee.

Performance Reviews

The Governance Committee regularly, and not less frequently than annually, reviews the performance of the Board and its Committees. This review has been conducted by way of formal questionnaire and report and by informal interviews and discussions led by the Chair or the Lead Director. The Board performance review also includes a “peer” or individual Director review process. To date, no significant problem with respect to performance of the Board, any Committee or any individual Director has been identified.

Skills Matrix

The Governance Committee uses a skills matrix to assist in the process of identifying suitable additions to the Board. The Governance Committee reviews a matrix that sets out the various skills and experience considered to be desirable for the Board to possess in the context of the Company’s strategic direction. The Governance Committee then assesses the skills and experience of each current Board member against this matrix. When completed, the matrix helps the Governance Committee identify any skills or experience gaps and provides the basis for a search to be conducted for new Directors to fill any gaps.

In February 2022, on the recommendation of the Governance Committee, the Board adopted changes to the skills matrix to align with the Company’s strategic direction and the skills and experience desirable for the Board. The Board believes the revised skills matrix is better aligned to meet the current skills and experience for the Board as a dual-listed TSX and NYSE company and the expectations of its Shareholders.

The following skills matrix sets out the skills or experience that the Governance Committee has targeted for Directors.

	Target Number
STRATEGIC LEADERSHIP
Experience in strategic management, planning and development, or leading organic or acquisition growth.	5
SENIOR EXECUTIVE
Experience as CEO or senior executive officer of a public company or a major private corporation.	4
FINANCIAL LITERACY
Executive or professional experience in public company financial accounting and reporting with knowledge of internal financial controls.	4
INDUSTRY EXPERIENCE
Senior executive experience in the forest products industry or related industries including building products or home building, or with other significant manufacturing operations, including upstream and downstream supply chain and logistics.	3
GEOGRAPHIC EXPERTISE
Executive, management or other significant experience in organizations with international operations including in those countries in which West Fraser operates.	4

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	Target Number
RISK MANAGEMENT
Experience identifying, assessing, managing and reporting on corporate risks, including experience with risk management systems.	4
CAPITAL MARKETS
Experience in corporate finance with knowledge of debt and equity markets or experience in investment banking or mergers and acquisitions.	4
GOVERNMENT AND STAKEHOLDER RELATIONS
Experience in, or strong understanding of, public policy related to the forest products industry including community, first nations and shareholder relations.	2
HUMAN RESOURCES AND COMPENSATION
Experience managing or overseeing compensation, benefits and pension programs and executive compensation.	4
Experience with developing or assessing succession planning, talent development and retention.	4
BOARD EXPERIENCE
Prior or current experience as a board member of a major organization (public or private) other than West Fraser.	5
ENVIRONMENT, HEALTH AND SAFETY
Experience in workplace health and safety practices and protection of the environment, including the requirement for a strong safety culture.	4
SUSTAINABILITY, CLIMATE CHANGE AND SOCIAL RESPONSIBILITY
Experience in or with sustainability, climate change, diversity, equity and inclusion and social responsibility programs.	4
TECHNOLOGY
Experience with technology programs and systems, including emerging technologies, information technology systems and/or cybersecurity.	2

The key skills and experience of each Director are also set out in the table under the heading “Information Regarding Nominees for Election as Directors”. The Board is of the view that the minimum target levels have been achieved by the current Board and will be achieved assuming all nominees described above are elected at the Meeting.

Board Tenure

The Company does not have term limits for its Directors, as the Board is of the view that term limits are arbitrary and can result in the removal or exclusion of valuable and experienced Directors solely because of length of service. For similar reasons, in September 2016, the Board considered the continued use of an age limitation for Directors and determined that its continuation was no longer appropriate nor in the best interests of the Company. The Board believes that arbitrary age or term limits can be detrimental to the Company by excluding experienced and valuable candidates with the accompanying loss of continuity and institutional knowledge. Such belief is consistent with the positions of a number of governance and advisory groups.

The decision to not have term limits and to eliminate the age limitation was based upon the Board’s belief that Directors should be assessed on their ability to make meaningful contributions. The Company undertakes regular and rigorous reviews of Board, Committee and Director performance and skills as part

30

of evaluating the overall performance of the Board, Committees and the contributions made by each Director. The Company’s annual performance review and skills assessment is a more meaningful way to evaluate and assess Director performance, and a more effective way to maintain an appropriate balance between the benefits of new and diverse characteristics and perspectives and ensuring there is continuity of institutional and industry knowledge and experience. The Board has demonstrated the effectiveness of its approach.

Over the past five years, the Company identified and added seven new Board members and four of its long-term serving Board members retired, in addition to Ted Seraphim who retired as our CEO and as a Director in 2019 and Ray Ferris who was appointed our CEO and a Director on Ted’s retirement. The Board is composed of members with an appropriate mix of Directors who are new to the Company, and who bring fresh perspectives, including those with institutional knowledge and experience. With the conclusion of the Meeting, Gerry Miller will also be retiring from the Board.

The following table shows the tenure of the Directors standing for election at the Meeting (and assumes all proposed Director nominee candidates are elected):

Board Tenure
Tenure	Number of Directors	% of Directors
0 to 1 years	1	9
1 to 5 years	7	64
6 to 10 years	0	0
11 years and over	3	27

Upon election, these Directors will have an average tenure of approximately 7.8 years.

Director Compensation

The HR&C Committee regularly reviews our Director compensation policy and, following a review in December 2018 and October 2021 of director compensation programs of our peers, approved a number of changes to Director compensation. The Board adopted a fixed fee Director compensation structure, which, effective October 1, 2021, consists of the following:

Annual base retainer	$90,0001
Annual equity retainer	$110,000 in DS Units
Annual Committee Chair retainer2	$20,000 per Committee
Lead Director annual retainer	$30,000
Chair annual retainer3	$200,000

1.    Each Director may elect once each year that up to 100% of the annual base retainer and other retainers be paid in DS Units.

2.    For each Chair of the Audit Committee, Governance Committee, Health, Safety & Environment Committee and the HR&C Committee.

3.    Exclusive of annual base and equity retainers.

Directors are not paid separate meeting fees or fees for Committee membership and are not provided a travel allowance. The HR&C Committee believes that this compensation structure is consistent with current governance best practices and emphasizes that the role of a corporate Director is not confined to attendance and participation at meetings. Directors are reimbursed for out-of-pocket expenses incurred in attending meetings of the Board or Committee meetings or otherwise on Company business.

Under our Equity Holding Requirements Policy, the minimum shareholding requirement for each Director is a multiple of three times the aggregate of a Director’s annual base retainer and annual equity retainer, as described in further detail under the heading “Minimum Equity Holding”. If a Director’s equity ownership

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exceeds this threshold, that Director has the right to elect to receive cash in lieu of their annual equity retainer payable in DS Units.

The Company has a DSU Plan which provides a structure for Directors to accumulate an equity-like holding in the Company. The DSU Plan allows Directors to participate in our growth by providing a deferred payment based on the value of a Common share at the time of redemption. Each Director may elect to receive up to 100% of their annual retainers in DS Units and must receive DS Units in payment of the annual equity retainer, unless the Director has achieved the minimum shareholding requirement and elected to receive cash in lieu of DS Units in payment of the annual equity retainer (see “Minimum Equity Holding”). The DS Units are issued based on the weighted average trading price of the Common shares on the TSX during the five trading days prior to their issue. Additional DS Units are issued to take into account the value of dividends paid on Common shares from the date of issue to the date of redemption. DS Units are redeemable only after a Director retires, resigns or otherwise leaves the Board and has ceased to fulfill any other role as an officer or employee of the Company. A holder of DS Units may on redemption elect to redeem DS Units in cash or in Common shares, or a combination of cash and Common shares. The redemption value for each DS Unit a Director has elected to be redeemed in cash is the weighted average of the trading price on the TSX of a Common share over the last five trading days ending on the date of redemption. DS Units qualify as equity for the purposes of the minimum equity holding requirement for Directors.

In addition, Ms. Lawson and Ms. McMorrow continue to hold Norbord DSUs, the number of which have been adjusted by the Exchange Ratio and are to be paid out in reference to Common shares, in accordance with the terms of the Norbord Acquisition. The Norbord DSUs operate in a similar fashion to the DS Units. See “Norbord RSU Plan and DSU Plans”.

The Company has a Directors’ Share Compensation Plan (the “Compensation Plan”), the purpose of which is to enable each Director to participate in our growth by receiving Common shares in lieu of cash for services performed as Directors. Under the Compensation Plan, Common shares are issued after each quarter at a price per share equal to the weighted average of the trading price for the Common shares on the TSX for the last five trading days in the quarter. The maximum number of Common shares that may be allotted for issuance under the Compensation Plan and the DSU Plan is 100,000. No Common shares were issued to Directors during 2021 under the Compensation Plan. As at December 31, 2021, 92,120 DS Units were held by the Directors that could be redeemed for Common shares should a Director who retires, resigns or leaves the Board elect to redeem DS Units for Common shares instead of cash. No DS Units were redeemed for Common shares in 2021.

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Total Director Compensation

2021

Name	Fees earned1 ($)	Share- based awards2 ($)	Option- based awards ($)	Non-equity incentive plan compensation ($)	Pension value ($)	All other compensation ($)	Total ($)
Hank Ketcham	357,500	91,250	Nil	Nil	Nil	Nil	448,750
Reid E. Carter	98,750	91,250	Nil	Nil	Nil	Nil	190,000
John N. Floren	98,750	91,250	Nil	Nil	Nil	Nil	190,000
Ellis Ketcham Johnson	60,278	65,2783	Nil	Nil	Nil	Nil	125,556
Brian G. Kenning	98,750	91,250	Nil	Nil	Nil	Nil	190,000
Marian Lawson4	79,167	84,166	Nil	Nil	Nil	Nil	163,333
Colleen M. McMorrow4	79,167	84,166	Nil	Nil	Nil	Nil	163,333
Gerry Miller	86,250	91,250	Nil	Nil	Nil	Nil	177,500
Robert L. Phillips	136,250	91,250	Nil	Nil	Nil	Nil	227,500
Janice G. Rennie	86,250	91,2503	Nil	Nil	Nil	Nil	177,500
Gillian D. Winckler	86,250	91,250	Nil	Nil	Nil	Nil	177,500

1. The amount represents the total fees earned during 2021, other than the annual equity retainer which is included in the Share-based awards column of this table. These amounts were paid either in cash or DS Units as described in the following chart. Effective October 1, 2021, the Director compensation structure was revised and updated. The total Director compensation shown in this table, including fees earned and share based rewards, reflects the total fees earned under the previous structure until September 30, 2021 and the new structure starting October 1, 2021.

2. DS Units granted at the end of each quarter in payment of the annual equity retainer are valued based on the weighted average trading price of the Common shares on the TSX for the last five trading days of the quarter.

3. This amount was paid in cash rather than DS Units given that the individual Director achieved the minimum equity holding requirement (see “Minimum Equity Holding”) and elected to receive cash.

4. Ms. Lawson and Ms. McMorrow were appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition.

Payment of 2021 Compensation

Name	Cash5	DS Units1 5
Hank Ketcham	$357,500	$91,250
Reid E. Carter	$91,250	$98,750
John N. Floren	$98,750	$91,250
Ellis Ketcham Johnson2	$125,556	Nil4
Brian G. Kenning	$98,750	$91,250
Marian Lawson3	Nil	$163,333
Colleen M. McMorrow3	Nil	$163,333
Gerry Miller	$113,750	$63,750
Robert L. Phillips	$136,250	$91,250
Janice G. Rennie	$177,500	Nil4
Gillian D. Winckler	$60,000	$117,500

1. DS Units are granted quarterly based on the weighted average trading price of the Common shares on the TSX for the last five trading days of the quarter.

2. Ms. Johnson was appointed to the Board on April 20, 2021.

3. Ms. Lawson and Ms. McMorrow were appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition.

4. This amount was paid in cash rather than DS Units given that the individual Director achieved the minimum equity holding requirements (see “Minimum Equity Holding”) and elected to receive cash.

5. Effective October 1, 2021, the Director compensation structure was revised and updated. The Director compensation shown in this table reflects the total payments made under the previous structure until September 30, 2021 and the new structure starting October 1, 2021.

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Direct and Indirect Share and Other Holdings of Current and Proposed Directors

(as at March 2, 2022)

	Shares1		DS Units
Hank Ketcham2		395,896		933
Reid E. Carter		3,000		11,798
Ray Ferris3		39,452		Nil
John N. Floren		Nil		7,962
Ellis Ketcham Johnson		1,004,990		Nil
Brian G. Kenning		1,200		6,144
Marian Lawson4		Nil		3,242
Colleen McMorrow4		Nil		2,606
Gerry Miller		6,142		14,755
Robert L. Phillips		11,000		17,138
Janice G. Rennie		1,000		20,725
Gillian D. Winckler		1,750		7,016

1. Includes Common shares and Class B Shares.

2. Does not include 3,912,718 Common shares and 1,743,228 Class B Shares held by Ketcham Investments, Inc. See “Voting Securities and Principal Shareholders” for a description of such shareholdings.

3. Mr. Ferris also holds Options and Units as described in the Summary Compensation Table and under the heading Summary of Outstanding Options and the heading RS Units and PS Units.

4. Ms. Lawson and Ms. McMorrow were appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition. The units in column for DS Units held by Ms. Lawson and Ms. McMorrow include Norbord DSUs, the number of which have been adjusted by the Exchange Ratio and will be paid out in reference to the value of Common shares in accordance with the terms of the Norbord Acquisition. See “Norbord RSU Plan and DSU Plans”.

As at March 2, 2022, based on the closing price of the Common shares on the TSX (the “Closing Price”) of $126.28, the total value of all Shares, exercisable Options and DS Units held by each current Director is as follows:

Value of Shares and DS Units Held by Current and Proposed Directors

(as at March 2, 2022)

Name	Shares ($)	DS Units ($)	Total Value ($)
Hank Ketcham	49,993,747	117,819	50,111,566
Reid E. Carter	378,840	1,489,851	1,868,691
Ray Ferris1	4,981,999	Nil	4,981,999
John N. Floren	Nil	1,005,441	1,005,441
Brian G. Kenning	151,536	775,864	927,400
Ellis Ketcham Johnson	126,910,137	Nil	126,910,137
Marian Lawson2	Nil	409,400	409,400
Colleen McMorrow2	Nil	329,086	329,086
Gerry J. Miller	775,612	1,863,261	2,638,873
Robert L. Phillips	1,389,080	2,164,187	3,553,267
Janice G. Rennie	126,280	2,617,153	2,743,433
Gillian D. Winckler	220,990	885,980	1,106,970

1. Mr. Ferris also holds Options and Units as described in the Summary Compensation Table and under the heading Summary of Outstanding Options and the heading RS Units and PS Units.

2. Ms. Lawson and Ms. McMorrow were appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition. The units in the column for DS Units held by Ms. Lawson and Ms. McMorrow include Norbord DSUs, the number of which have been adjusted by the Exchange Ratio and will be paid out in reference to the value of Common shares in accordance with the terms of the Norbord Acquisition. See “Norbord RSU Plan and DSU Plans”.

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VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

As of March 2, 2022, a total of 103,366,141 Common shares and 2,281,478 Class B Shares were issued, each carrying the right to one vote. Our Class B Shares are equal in all respects to our Common shares and are exchangeable on a one-for-one basis for Common shares. Our Common shares are listed for trading on the TSX and the NYSE, while our Class B Shares are not listed for trading. Certain circumstances or corporate transactions may require the approval of the holders of our Common shares and Class B Shares on a separate class-by-class basis.

The Directors have fixed the close of business on March 2, 2022 as the record date for the Meeting, being the date for the determination of the Registered Shareholders entitled to receive notice of, and to vote at, the Meeting and any adjournment thereof.

To the knowledge of the Directors and the Named Executive Officers (as defined in this Circular under the heading “Executive Equity Holding Requirements”), the only persons who, as at March 2, 2022, beneficially own or control or direct, directly or indirectly, Shares carrying 10% or more of the voting rights attached to any class of our voting securities are as follows:

Name of Beneficial Holder	Title of Class	Amount Beneficially Owned or Controlled	% of Class	% of Total   Votes
Ketcham Investments, Inc.1	Common shares Class B Shares	3,912,718 1,743,228	3.79 76.41	3.70 1.65 5.353
Tysa Investments, Inc.2	Common shares Class B Shares	3,887,792   333,066	3.76 14.60	3.68 0.32 4.003

1. Ketcham Investments, Inc. is controlled by three separate families related to Hank Ketcham, our Chair. Hank Ketcham’s immediate family owns an approximately 22% interest in Ketcham Investments, Inc. and Hank Ketcham is one of four directors on its board and has advised that he does not exercise independent control or direction over Ketcham Investments, Inc. or the Shares of the Company owned by Ketcham Investments, Inc.

2. Tysa Investments, Inc. is controlled by William P. Ketcham, one of our former Directors.

3. In connection with the Norbord Acquisition, we issued 54,484,188 Common shares to the shareholders of Norbord which resulted in the reduction of the percentage of total voting rights owned or controlled by Ketcham Investments, Inc. and Tysa Investments, Inc.

Share Repurchases

On February 23, 2022, we commenced a normal course issuer bid (the “2022 NCIB”), allowing us to acquire an additional 10,194,000 Common shares for cancellation until the 2022 NCIB’s expiry on February 22, 2023. The 2022 NCIB represents approximately 10% of the Common shares in the public float as at February 14, 2022. As at March 2, 2022, 292,403 Common shares have been purchased under the 2022 NCIB.

Last year, on February 17, 2021, we commenced a normal course issuer bid (the “2021 NCIB”), allowing us to acquire 6,044,000 Common shares for cancellation until the 2021 NCIB’s expiry on February 16, 2022. The 2021 NCIB represented approximately 5% of the Company’s issued and outstanding Common shares as at February 8, 2021. Effective June 11, 2021, we amended the Company’s 2021 NCIB to increase the authorization to purchase up to 9,582,470 Common Shares for cancellation, which represented 10% of the public float as at February 8, 2021. At expiry, 7,340,311 Common shares have been purchased under the 2021 NCIB.

On July 12, 2021, we also commenced a substantial issuer bid (the “SIB”), under which the Company offered to purchase from shareholders for cancellation up to $1.0 billion of Shares. The SIB was made by way of a “modified Dutch auction” procedure with a tender price range from $85.00 to $98.00 per share.

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The SIB expired on August 17, 2021, and the Company took up and purchased for cancellation a total of 10,309,278 Shares at a price of $97.00 per Share for an aggregate purchase price of $1.0 billion. The Shares purchased represented approximately 8.7% of the total number of West Fraser’s issued and outstanding Shares and Class B Shares at the time the SIB was announced in early July 2021. For the duration of the SIB, we suspended share repurchases under our 2021 NCIB, but resumed after the expiration of the SIB.

Shareholders may obtain a copy of the notices filed with the TSX in relation to the 2022 NCIB, 2021 NCIB or the SIB, free of charge, by contacting Robert B. Winslow, CFA, Director, Investor Relations & Corporate Development at (416) 777-4426 or by email at shareholder@westfraser.com.

APPOINTMENT OF THE AUDITOR

Our current Auditor is PricewaterhouseCoopers LLP, Chartered Professional Accountants, of 700 - 250 Howe Street, Vancouver, B.C. PricewaterhouseCoopers LLP has been our Auditor for more than six years.

The Auditor is appointed by the Shareholders, performs its role as the Auditor of our annual financial statements on their behalf, and reports the results of the audit to them. In order to assure the Shareholders that the audit is effective, the Auditor is required to confirm to the Audit Committee its independence from our management in connection with the audit. PricewaterhouseCoopers LLP has confirmed its independence from our management in connection with the audit of our consolidated financial statements for the years ended December 31, 2021 and December 31, 2020.

All services provided by the Auditor are subject to the pre-approval of the Audit Committee through established procedures and a written policy. Management provides regular updates to the Audit Committee of the services that the Auditor undertakes on the Company’s behalf. As part of its mandate, the Audit Committee manages the Company’s relationship with the Auditor, through, among other things, a formal review of the performance of the Auditor.

During 2021, the Audit Committee met with the Auditor and members of management to review the overall scope and specific plans for the audit of our consolidated financial statements. In addition, the Auditor was engaged to review our unaudited quarterly consolidated financial statements and earnings releases and discussed these with management and the Audit Committee during the relevant quarters. Representatives of the Auditor meet with the Audit Committee in the absence of management representatives as part of each regularly scheduled meeting of the Audit Committee.

The Auditor, the Audit Committee and management maintain regular and open communications regarding the audit of our financial statements. No disagreement arose among the Auditor, the Audit Committee and our management on any matter affecting the audit of our financial statements.

For the years ended December 31, 2021 and 2020, the fees for audit, audit-related, tax and all other services provided to the Company by PricewaterhouseCoopers LLP were the following:

Fees (in USD$ thousands)	2021	2020
Audit1	1,734	763
Audit-related2	249	11
Tax3	250	212
All other4	36	-

1. Audit fees relate to the audit of our annual consolidated financial statements, reviews of interim consolidated financial statements, and statutory audits of the financial statements of our subsidiaries and represent actual and estimated fees related to fiscal year ends. Amounts are billed and paid in Canadian dollars and have been translated to United States dollars, using the average exchange rate for the respective years noted. Certain amounts related to 2020 have been reclassified to conform to the current year presentation.

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2. Audit–related fees include employee benefit audits, services associated with registration statements, prospectuses, and other documents filed with securities regulators, and due diligence assistance.

3. Tax fees relate to tax compliance, tax advice, and tax planning services.

4. All other fees relate to fees in connection with translation services.

For additional information concerning the Audit Committee and its members see “Audit Committee” in the Annual Information Form, which is available at www.sedar.com and www.sec.gov/edgar.shtml under the Company’s profiles.

AMENDMENT OF THE CORPORATE ARTICLES

At the Meeting, the Company is seeking Shareholder approval for amendments to the Company’s Articles to (i) increase the quorum requirements to one-fourth of the votes eligible to be cast at the Meeting from the present one-tenth; and (ii) provide for additional delivery methods for a notice provided pursuant to the Articles.

Increase in Quorum

Section 26 of the Company’s existing Articles currently sets the quorum for the transaction of business at a meeting of Shareholders at two persons who are, or who represent by proxy, Shareholders who, in the aggregate, hold at least one-tenth of the issued shares entitled to be voted at the Meeting. The Company recognizes that the quorum requirement for meetings of Shareholders should encourage wide-ranging participation from all Shareholders. At the Meeting, the Shareholders will be asked to consider and, if thought advisable, to approve by special resolution an alteration to the Articles to increase such quorum from one-tenth to one-fourth. The Board believes that an increase to the quorum requirements is consistent with the current corporate governance practices of similar other dual-listed issuers. This increased quorum threshold is set at a level high enough to ensure that a broad range of Shareholders are represented in-person or by proxy, but low enough that the Company may still transact its necessary business.

Additional Notice Methods

Section 88 of the Company’s existing Articles currently provides that a notice may be given or a document delivered by the Company to a member or Director, either personally or by sending it through the post to them in a prepaid letter, envelope or wrapper addressed to the member or Director at their registered address. The Board believes that the provision of additional methods for delivery of notices will ensure that the Company can take advantage of modern forms of communication (e.g. e-mail, fax, scanning, etc.) particularly given increased emphasis on such mediums during the course of the COVID-19 pandemic. The Board believes that the provision of additional methods for delivery of notices is in the best interests of the Company as it is consistent with corporate governance best practices.

The proposed special resolution to be passed at the Meeting is as follows:

“Resolved, as a special resolution, that:

1.                The quorum requirement in the Company’s Articles be amended by deleting the reference to “one-tenth” from Article 26 and adding “one-fourth” to Article 26 in its place;

2.                The Company’s Articles be amended by adding thereto Article 88A, a copy of which is attached as Schedule “A” to the information circular of the Company dated March 8, 2022;

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3.             Any one Director or officer of the Company be authorized and directed to execute and deliver all such documents and instruments, and to do such further acts, as in such person’s opinion may be necessary to give full effect to these resolutions or as may be required to carry out the full intent and meaning thereof; and

4.              The Directors be and are authorized to revoke this special resolution before it is acted on without further approval of the Shareholders.”

In accordance with the Company’s Notice of Articles and the Act, an alteration of the Company’s Articles requires the approval of at least three quarters of the votes cast in person or represented by proxy at the Meeting. Accordingly, Shareholders will be asked at the Meeting to vote on the above special resolution to approve the alteration of the Company’s Articles to increase the quorum requirements and to include the additional notice methods, and such special resolution must be approved by a special majority of at least 75% of the votes cast on such resolution by the Shareholders present in person or represented by proxy at the Meeting.

Management and the Board have concluded that the amendment of corporate Articles is in the best interests of the Company and its Shareholders. Accordingly, management and the Board recommend that Shareholders vote FOR the special resolution to amend the corporate Articles. The management proxyholders intend to vote FOR the special resolution, except in relation to Shares held by a Shareholder who instructs otherwise.

Other than the aforementioned amendments all other provisions of the Articles shall remain unchanged and in full force and effect. A copy of the existing version of the Articles is available under the Company’s profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml, and on the Company’s website at www.westfraser.com.

APPROVAL OF THE U.S. ESPP

At the Meeting, the Company is seeking Shareholder approval of the Company’s U.S. ESPP for U.S. employees in order to qualify as an “employee stock purchase plan” under Section 423 of the Code by way of an ordinary resolution.

Background

The Company adopted an employee share purchase plan for its Canadian employees (the “Canadian ESPP”) in 1997. The Canadian ESPP is intended to provide eligible employees of the Company and its subsidiaries with opportunities to acquire Shares of the Company.

The expansion of the Company’s operations in the United States, the acquisition of Norbord and the listing of the Company’s Shares on the NYSE have all increased the focus of the Company’s business in the United States. In order to provide the Company’s U.S. employees with comparable opportunities to its Canadian employees, the Board of Directors of the Company approved the adoption of the U.S. ESPP on June 11, 2021. The purpose of the U.S. ESPP is to provide employees of the Company and participating subsidiaries added incentive to promote the best interests of the Company by permitting eligible employees to acquire Shares through payroll deductions at a discount to the current market price.

The Company will acquire Shares under the U.S. ESPP through market purchases on the NYSE. The Company does not intend to issue any Shares from treasury under the U.S. ESPP, and is not seeking shareholder approval to do so. The U.S. ESPP is not considered to be a “securities based compensation arrangement” under TSX rules.

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The U.S. ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. In order for the plan to qualify as an “employee stock purchase plan” under the Code, the Shareholders of the Company must approve the U.S. ESPP within 12 months of the adoption by the Board. Accordingly, the Company is seeking approval of the U.S. ESPP by shareholders at the Meeting in order to qualify as an “employee stock purchase plan” under Section 423 of the Code.

Material Features of the U.S. ESPP

The following summary of the material features of the U.S. ESPP is qualified in its entirety by the complete text of the U.S. ESPP, which is attached to this Circular as Schedule “B”.

Administration

The U.S. ESPP is administered by the Board of Directors (the “Plan Administrator”), with the assistance of the HR&C Committee. The HR&C Committee has full power and authority to interpret and administer the U.S. ESPP, to establish rules and regulations relating to the U.S. ESPP, and to make all other determinations it deems appropriate for the proper administration of the U.S. ESPP.

Plan Components

The U.S. ESPP includes two components:

(a) a component intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “423 Component”), the provisions of which shall be construed so as to extend and limit participation in a uniform and nondiscriminatory manner consistent with the requirements of the Code; and

(b) a component that does not qualify as an “employee stock purchase plan” under Section 423 of the Code (the “Non-423 Component”), under which options shall be granted pursuant to rules, procedures or sub-plans adopted by the Committee designed to achieve tax, securities laws or other objectives for eligible employees.

It is anticipated that the Non-423 Component will operate and be administered in the same manner as the 423 Component.

Stock Subject to the U.S. ESPP

The maximum number of Shares which may be purchased or issued under the U.S. ESPP is 1,800,000 Common shares, subject to adjustment in the event of a stock split, stock dividend or other similar change in the common stock or the capital structure of the Company. Shares may not be issued under the U.S. ESPP without further shareholder approval, and the Company is not seeking approval of shareholders to permit the issuance of Shares under the U.S. ESPP at this time. Accordingly, it is anticipated that all Shares purchased under the U.S. ESPP will be purchased on the NYSE in the manner described below. The 1,800,000 Shares under the ESPP represent less than 2% of the Company’s issued and outstanding shares.

Eligibility

Participation in the U.S. ESPP is generally available to all U.S. employees of the Company and its designated U.S. subsidiaries, subject to certain limitations imposed by Section 423 of the Code. An employee who satisfies the eligibility requirements of the Plan is referred to as a “Participant”. To be an eligible Participant, an employee must be regularly scheduled to work at least 20 hours per week and for

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more than five months per calendar year. Under the Code, no employee will be entitled to participate in the U.S. ESPP if such employee would own Shares with 5% or more of the total combined voting power of all classes of stock of the Company and its subsidiaries.

Offering Period

Under the U.S. ESPP, options to purchase shares are granted to Participants for offering periods designated by the Committee (“Option Periods”). The U.S. ESPP provides that these Option Periods will be quarterly periods commencing on the first day of each calendar quarter and ending on the last day of each calendar quarter. The Committee has the authority to vary these Option Periods provided that, in conformance with the rules under Section 423 of the Code, in no event shall any offering period exceed a period of 27 months.

Options under the U.S. ESPP

On the first day of each Option Period, each Participant will be deemed to have been granted an option (an “Option”) to purchase on the last date of the offering period (the “Exercise Date”) a number of full and fractional Shares determined by dividing (i) the Participant’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s purchase account as of the applicable Exercise Date, by (ii) an amount equal to 85% of the fair market value of a Common share on the Exercise Date (the “Purchase Price”). Fair market value means the weighted average purchase price for the Common shares acquired on the NYSE on the relevant date; or, if the Common shares are no longer listed on the NYSE, the weighted average purchase price for Common Shares acquired on such other exchange on which the Shares are listed. No Participant will be granted Options to purchase more than 5,000 Shares during any offering period.

Purchase of Shares under Options

Each Option granted to a Participant under the U.S. ESPP will be exercised automatically on the last business day of each offering period and the maximum number of Shares subject to the Option shall be purchased for such Participant at the applicable Purchase Price with the payroll deductions accumulated during the Purchase Period in his or her purchase account. The Company will satisfy the exercise of all Participants’ Options for Shares through the purchase of Shares on the NYSE on the open market through an independent broker retained by the Administrative Agent (defined below).

Purchase Accounts

The Company has appointed a trust company as the administrative agent (the “Administrative Agent”) to administer the U.S. ESPP pursuant to an administrative agreement entered into with the Administrative Agent. The Administrative Agent will establish a purchase account for each Participant and will record in each purchase account (i) accumulated payroll deductions in the Participant’s purchase account, (ii) the number of Shares credited to the Participant’s purchase account upon each Option exercise, and (iii) the amount of any expenses, if any, allocated to such purchase account.

Annual Purchase Limit

No employee may purchase any Shares under all employee stock purchase plans of the Company and its related corporations at a rate that exceeds $15,000 per calendar year.

Adjustments

In the event of certain changes in the capitalization of the Company, as provided for in the U.S. ESPP, the maximum number of Shares available for purchase under the U.S. ESPP, the purchase price, and the number

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of Shares covered by each outstanding Option under the U.S. ESPP will be appropriately adjusted by the Board or the HR&C Committee, whose determination will be final, binding, and conclusive.

Amendments

The Board has the right to terminate, suspend or amend the U.S. ESPP at any time, subject to applicable laws and the requirements of any stock exchange or governmental or regulatory body (including any requirement for shareholder approval). However, Shareholder approval must be obtained for any amendment that (1) increases the number of Shares reserved for issuance, except in connection with adjustment provisions provided in the plan, (2) decrease the Purchase Price payable for the Shares under the U.S. ESPP, (3) increases effective matching contribution provided by the Company to an amount greater than 15% or (4) deletes or reduces the range of amendments requiring Shareholder approval.

Term of the ESPP

The U.S. ESPP will continue in force until the earlier of (i) a determination of the Board or the HR&C Committee to terminate the plan, and (ii) the ten year anniversary of the adoption of the U.S. ESPP on June 11, 2031.

Registration with the SEC

The Company has filed a registration statement on Form S-8 with respect to the registration of the Shares that may be purchased by Participants under the U.S. ESPP.

Proposed Resolution

The proposed ordinary resolution to be passed at the Meeting is as follows:

“Resolved, as an ordinary resolution, that:

1. The adoption by the Company of the U.S. Employee Stock Purchase Plan in order to qualify as an “employee stock purchase plan” under Section 423 of the Code is hereby approved, ratified and adopted

2. Any one director or officer of the Company be authorized and directed to execute and deliver all such documents and instruments, and to do such further acts, as in such person’s opinion may be necessary to give full effect to these resolutions or as may be required to carry out the full intent and meaning thereof; and

3. The directors of the Company be and are authorized to revoke this ordinary resolution before it is acted on without further approval of the Shareholders.”

Management and the Board have concluded that the U.S. ESPP approval resolution is in the best interests of the Company and its Shareholders. Accordingly, management and the Board recommend that Shareholders vote FOR the ordinary resolution approving the U.S. ESPP. The management proxyholders intend to vote FOR the ordinary resolution, except in relation to Shares held by a Shareholder who instructs otherwise.

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ADVISORY RESOLUTION ON THE COMPANY’S APPROACH TO EXECUTIVE COMPENSATION (SAY ON PAY)

Our executive compensation philosophy, policies and programs are based on the fundamental principle of pay-for-performance to align the interests of our executives with those of our Shareholders. This compensation approach allows us to attract and retain high-performing executives who will be strongly incentivized to create value for our Shareholders on a sustainable basis. As a Shareholder you are asked to consider and approve the following advisory (non-binding) resolution:

Resolved, on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, that the Shareholders accept the approach to executive compensation disclosed in the Company’s management information circular delivered in advance of the 2022 annual general and special meeting of the Shareholders of the Company.

Because your Say on Pay vote is advisory, it will not be binding upon the Board. However, the HR&C Committee will review and analyze the results of the vote and take into consideration such results when reviewing executive compensation philosophy, policies and programs. The Board confirms that the Company’s current practices achieve substantially the same results as the Canadian Coalition for Good Governance’s “Say on Pay” Policy for Boards of Directors released in September 2010.

We have held advisory votes on our approach to executive compensation at each annual meeting of Shareholders since 2014. In the most recent “Say on Pay” vote in April 2021, 99% of the votes were voted FOR the Company’s approach to executive compensation.

The management proxyholders intend to vote FOR the approval of the advisory (non-binding) resolution on executive compensation, except in relation to Shares held by a Shareholder who instructs otherwise.

OUR CORPORATE GOVERNANCE POLICIES AND PROCEDURES

Governance Policy

Our Board believes that sound governance practices are essential to the effective and efficient operation of the Company and to the enhancement of Shareholder value. We established a corporate governance policy (the “Governance Policy”) in 2002 which was updated and re-approved by our Board on December 7, 2021. The Governance Policy is reviewed annually by the Governance Committee which, from time to time, recommends updates and changes to such policy to the Board as may be required. The full text of the Governance Policy may be reviewed on our website at www.westfraser.com.

The following disclosure has been prepared under the direction of our Governance Committee and has been approved by the Board.

Chair of the Board

Hank Ketcham retired from his role as our Executive Chair effective April 19, 2016 and assumed the position of Chair of the Board. Hank Ketcham was appointed our President and CEO in 1985 and assumed the role of Chair of the Board in 1996. In 2012, he relinquished the title of President and, on March 1, 2013, Mr. Ketcham retired as our CEO and was designated as our Executive Chair of the Board. Ted Seraphim was appointed our President on April 19, 2012 and also became our CEO on March 1, 2013. As part of our senior leadership transition plan, Ray Ferris replaced Mr. Seraphim as our President on April 19, 2018 and replaced Mr. Seraphim as our CEO on June 30, 2019.

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For his duties as Chair of the Board, the Board has approved, on the advice of the HR&C Committee, Hank Ketcham’s annual Chair retainer in the aggregate amount of $200,000 per annum, exclusive of annual Director base and equity retainers. As of May 1, 2016, Mr. Ketcham was permitted to elect to receive all or a portion of his compensation in DS Units. Mr. Ketcham ceased to participate in our Bonus Plan after 2014 and ceased to participate in our long-term incentive plans as of January 1, 2016.

The Board has considered the issue of the Chair’s relationship with management in the context of the need to ensure the Board’s independence from management and has determined that the Chair is sufficiently aligned with Shareholder interests to ensure Board independence from management. The Chair is a director and minority shareholder, and is related to the other directors and shareholders, of Ketcham Investments, Inc., whose shareholdings are described under “Voting Securities and Principal Shareholders”. The Board considers that these relationships assure that the interests of the Chair are closely aligned with Shareholder interests. However, the Board has established the position of Lead Director to ensure that the Board’s independence from management is clear in appearance as well as in fact. The Board has indicated its intention to continue the appointment of a Lead Director until such time as the Board determines that the role is no longer necessary to ensure that the Board’s independence is clear, and its intention is to retain the role of the Lead Director until at least the Company’s annual meeting of Shareholders in April 2022 (see “Composition of the Board – Independence”).

The Board has developed a formal position description for the position of Chair of the Board, which provides that the Chair of the Board leads the Board in its supervision of the business and affairs of the Company and its oversight of management. The responsibilities of the Chair include, among other things: (a) managing the affairs of the Board and monitoring its effectiveness; (b) ensuring that all matters of strategic importance are being dealt with at the Board level during the course of the year; (c) facilitating the Board’s and management’s efforts to promote engagement with, and feedback from, Shareholders and other stakeholders; (d) acting as an advisor to, and principal sounding board for, the CEO; (e) communicating to the CEO any matters arising from the Board’s meetings or meetings with Shareholders and other stakeholders that require management’s attention; and (f) supporting and assisting the Board, the HR&C Committee and the Governance Committee in the evaluation of, and succession planning for, the CEO.

Lead Director

Robert Phillips has been the Lead Director since February 2008. Our Board has indicated its intention to continue the appointment of a Lead Director until such time as it determines that the role is no longer necessary to ensure that the Board’s independence is clear in appearance as well as in fact, and its intention is to retain the role until at least the Company’s annual meeting of Shareholders in April 2022. The Lead Director’s role is to focus on enhancing the effectiveness of the Board and to help ensure that it functions in an independent and cohesive fashion. In addition, the Lead Director participates in setting agendas for Board meetings, chairs meetings of the Governance Committee, acts as a liaison between members of the Board and management when necessary, and ensures that the Board has the resources necessary to effectively carry out its functions.

The Board has adopted a formal position description for the Lead Director, which provides that the Lead Director will facilitate the functioning of the Board independently of management of the Company with the following included as part of the Lead Director’s responsibilities: (a) ensuring the independent Directors meet in-camera in conjunction with regular quarterly meetings of the Board; (b) identifying and addressing any impediments to the Board functioning independently from management of the Company; (c) identifying and addressing any activities that reflect a failure on the part of members of management to understand the independent role of the Board or the boundaries between the responsibilities of the Board and those of management; (d) ensuring that there is a regular evaluation of and assessment of the effectiveness of the

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Board, and its individual members and Committees; (e) acting as liaison between members of the Board and management when necessary or appropriate; and (f) co-ordinating feedback to the Chair of the Board.

Governance & Nominating Committee

The Board has established a Governance Committee comprised entirely of independent Directors. The mandate of the Governance Committee is summarized later in this Circular under “Committees of the Board”. The Board, through the Governance Committee, monitors changes to the regulatory, business and investment environments with respect to governance practices and regularly reviews governance issues with a view to ensuring that both our Governance Policy and our actual practices continue to serve the best interests of our Shareholders, employees and other stakeholders.

Majority Voting Policy

In February 2011, the Board reviewed and adopted a majority voting policy on the recommendation of the Governance Committee. The majority voting policy was updated and re-approved by the Board, on the recommendation of the Governance Committee, in February 2018 and again in February 2019, and has been reviewed for corporate governance best practices in each of the past three years, including most recently in February 2021. Under this policy, a Director who is elected in an uncontested election with more votes withheld than cast in favour of their election will be required to tender their resignation to the Chair of the Board. If such a Director refuses to tender their resignation, such Director will not be nominated for election the following year. The resignation will be effective when accepted by the Board, and any Director who tenders their resignation may not participate in the deliberations of either the Committee or the Board which relate to such Director’s resignation. This policy does not apply to an election that involves a proxy contest.

The Governance Committee will convene a meeting and will consider the offer of resignation and make its recommendation to the Board on whether the resignation should be accepted. The Governance Committee will generally be expected to recommend to the Board that it accept the resignation, except in exceptional circumstances. The Board expects that resignations will be accepted unless there are exceptional circumstances that warrant a contrary decision. The Board will announce its decision (including the reasons for not accepting any resignation) by way of a news release within 90 days of the date of the Shareholders’ meeting at which the election occurred, and a copy of the news release will be provided to the TSX and the NYSE. Management will not re-nominate for re-election any Director who fails to comply with this policy.

In addition, subject to the requirements of the Articles and the BCA, in the event a majority of the members of the Governance Committee receive a greater number of votes withheld than votes for their election, the other Directors will appoint a Committee consisting only of those other Directors and solely for the purpose of considering the tendered resignations and such Committee will convene a meeting and recommend to the Board whether or not to accept these resignations.

Advance Notice Policy

Pursuant to the advance notice policy adopted by the Board on February 13, 2014, and subsequently incorporated as an amendment to our Articles following approval by Shareholders on April 29, 2014, any additional Director nominations for the Meeting must have been received by the Company no later than the close of business on March 22, 2022. No such nominations have been received as of the date of this Circular. If no such nominations are received by the Company prior to such date, management’s nominees for election as Directors set forth above will be the only nominees eligible to stand for election at the Meeting. The advance notice provisions provide Shareholders, Directors and management of the Company with a clear framework for nominating Directors. See our Articles on SEDAR at www.sedar.com, EDGAR

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at www.sec.gov/edgar.shtml and our website at www.westfraser.com for the terms of our advance notice provisions.

Code of Conduct

In 2004, the Board approved a code of conduct for the Company and its Directors, officers and employees (the “Code of Conduct”). The Code of Conduct was most recently amended on February 11, 2021 and has been filed on SEDAR under the Company’s profile. The Code of Conduct sets out expectations for compliance with laws, safety and health, environmental stewardship, discrimination and harassment, conflicts of interest, ethical conduct, fair dealing and other areas.

The Code of Conduct also establishes a “whistleblower” procedure for the reporting of potential breaches of the Code of Conduct. On February 13, 2014, the Board approved amendments to the Code of Conduct which included provisions prohibiting certain insiders who are subject to minimum shareholding requirements from purchasing financial instruments designed to hedge or offset any decrease in the market value of our Shares, Options or units, and, on February 18, 2015, the Board approved amendments to the Code of Conduct, which included additional provisions related to the Company’s commitment to human rights and compliance with anti-bribery laws.

On December 11, 2018, the Board approved further amendments to the Code of Conduct to: (a) provide that the Code of Conduct applies to West Fraser’s contractors, consultants, agents and representatives when acting on behalf of West Fraser; (b) emphasize and expand West Fraser’s commitment to environmental stewardship and supporting the communities in which West Fraser operates; (c) bolster our anti-discrimination and anti-harassment policies in order to ensure a work environment free from discrimination and harassment, in particular sexual harassment; (d) expand the anti-bribery and anti-corruption policy both in terms of persons covered and the activities prohibited; and (e) more clearly articulate provisions relating to substance abuse.

In February 2020, the Board approved additional amendments to the Code of Conduct, to align it with current best practices, to provide protection over confidential personal information and to clarify the Company’s expectations regarding the maintenance of Company records and the participation by employees with internal and external investigations.

Further amendments were made to the Code of Conduct in April 2021 for compliance with SEC guidelines that issuers acknowledge the requirement to provide full, fair, accurate, timely and understandable disclosure in reports and documents filed with the SEC. At the same time, the whistleblower provision was updated to further clarify the option to report misconduct through the reporting hotline.

The Code of Conduct includes an acknowledgement with respect to compliance to be confirmed by each Director and each member of management. All Directors, members of management and substantially all salaried employees periodically confirm compliance with the Code of Conduct and any instances of non-compliance are reported to the Board. In 2021, no waivers of the application of the Code of Conduct were requested of, or granted by, the Board. The full text of the Code of Conduct may be viewed on our website at www.westfraser.com.

Anti-Trust Policy

On September 8, 2021, the Company adopted the Anti-Trust Policy outlining our commitment to comply with all applicable competition and antitrust laws, which are in place to prevent activities among competitors that could unfairly control the market and harm the consumer and not engage in activities that would reasonably appear to be an unfair trade practice, unreasonable restraint of trade or an attempt to use

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a dominant position to discourage competition. We expect all our employees, officers and Directors to comply with the Anti-Trust Policy, a full copy which is available at: www.westfraser.com.

Charters

The Board has developed and approved formal charters for each of the Audit, HR&C, Governance, and Health, Safety & Environment Committees as well as formal position descriptions for each of the positions of Chair of the Board, Lead Director and CEO. The charters of these Committees and position descriptions are reviewed annually and revised, as required, by the Board.

On December 11, 2018, the Board approved amendments to the position descriptions of the Chair of the Board, Lead Director and CEO. The Chair of the Board’s general mandate is to ensure the effective and independent conduct of the Board. The Lead Director’s general mandate is to plan and chair meetings of the Governance Committee, and the CEO’s general mandate is to implement the Company’s strategic and operating plans and enhance Shareholder value.

The Governance Committee Charter was updated and re-approved by the Board on December 7, 2021 to include some housekeeping matters.

The Health, Safety & Environment Committee Charter was revised and re-approved by the Board on December 7, 2021.

The Audit Committee Charter is reviewed annually and was revised by the Board in 2017 and was again reviewed and updated in February 2020 to provide, among other things, that the Audit Committee would have oversight responsibility over the information technology, cyber security and information systems risks and on April 20, 2021, following the listing of Common shares on the NYSE, the Audit Committee Charter was further revised for compliance with NYSE rules and regulations and conformity with best corporate governance practices. These changes included certain administrative matters such as setting out the matters under the Audit Committee’s oversight responsibility, other disclosure-oriented process items such as specifying that the Audit Committee will review with management and the Auditor all news releases that contain first time disclosure of significant financial information and certain technical items such as setting out in detail the independence and financial literacy qualifications for Audit Committee members.

On December 10, 2019, the Board reviewed and re-approved the HR&C Committee Charter. The HR&C Committee Charter was further updated on February 11, 2021, to provide for conformity with best practices related to engagement of outside advisors or consultants and the NYSE rules for determination of independence of HR&C Committee members.

The Company continues to review its Committees’ charters for updates and changes as may be required in connection with best practices and regulatory and stock exchanges requirements and will continue to monitor and update its Committees’ charters as necessary to comply with applicable law and current best governance practices.

These materials may be viewed on our website at www.westfraser.com.

Minimum Equity Holding

Under our Equity Holding Requirements Policy, the minimum equity holding requirement for Directors is a number of Shares or DS Units having a value of not less than three times a Director’s total annual base and equity retainers. Based on the current retainer amounts, this would total $600,000.

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Shares, DS Units, Norbord DSUs (in the case of Ms. Lawson and Ms. McMorrow) and RS Units held by a Director are eligible to be included in determining whether the minimum equity holding requirement has been met (but Options and PS Units are not eligible). For the purposes of such calculation, Shares, DS Units and Norbord DSUs (in the case of Ms. Lawson and Ms. McMorrow) held by a Director will be valued annually based on the greater of (1) their original cost or grant date value, and (2) the Closing Price on December 31 of the most recently completed financial year (or, if such date is not a trading date, on the last trading date of such year). This policy requires that all Directors meet the minimum equity holding requirement within five years of election or appointment and, if after any annual valuation of a Director’s equity holdings the value of the Director’s holdings fall below the requirement, the Director will have one year to regain compliance.

If a Director exceeds the minimum equity holding requirement, the Director may elect to receive, in lieu of DS Units, all or a designated portion of their annual equity retainer in cash.

For a description of the equity holdings of the Directors as of March 2, 2022, see the chart under the heading “Payment of 2021 Compensation”. The equity holding requirements for senior executives are described under “Executive Equity Holding Requirements”.

Director Equity Holdings

(as at December 31, 2021)

Name	Shares	DS Units	Total	Value1 ($)	Meets Requirement?
Hank Ketcham	395,896	931	396,827	47,889,082	Yes
Reid E. Carter	3,000	11,773	14,773	1,782,806	Yes
Ray Ferris	39,452	Nil	39,452	4,761,067	Yes
John N. Floren	Nil	7,945	7,945	958,803	Yes
Ellis Ketcham Johnson	1,004,990	Nil	1,004,990	121,282,193	Yes
Brian Kenning	1,200	6,131	7,331	884,705	Yes
Marian Lawson	Nil	3,2353	3,235	390,400	No2
Colleen McMorrow	Nil	2,6003	2,600	313,768	No2
Gerry Miller	8,142	14,723	22,865	2,759,348	Yes
Robert L. Phillips	11,000	17,101	28,101	3,391,229	Yes
Janice G. Rennie	1,000	20,680	21,680	2,616,342	Yes
Gillian Winckler	1,750	7,001	8,751	1,056,071	Yes

1. Based on the Closing Price on December 31, 2021 of $120.68. Equity holdings and compliance under the Equity Holding Requirements Policy are valued and assessed annually.

2. Ms. Lawson and Ms. McMorrow were appointed to the Board on February 1, 2021 on completion of the Norbord Acquisition and are permitted to meet the minimum shareholding requirement within five years of their appointment.

3. DS Units held by Ms. Lawson and Ms. McMorrow include both DS Units and Norbord DSUs, which have been adjusted by the Exchange Ratio and to be paid in Common shares in accordance with the terms of the Norbord Acquisition. See “Norbord RSU Plan and DSU Plans”.

Mandate of the Board

Our Board has expressly assumed overall responsibility for the stewardship of the Company, including responsibility for: (i) adoption of a strategic planning process and approval of a strategic plan; (ii) identification of the principal risks to our business and implementation of appropriate systems to manage these risks; (iii) succession planning, including appointment, training and monitoring of our senior management; (iv) implementation of a communication policy regarding our disclosure of corporate

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information; and (v) ensuring the integrity of our internal controls and management information systems including accounting systems.

The Board met seven times in 2021. Independent Directors also met without management at every Board meeting in 2021. During the regularly scheduled meetings, the Board received, reviewed and contributed to management’s strategic planning and operating and capital plans, taking into account identified business opportunities and business risks. In conjunction with the ongoing planning process, the Board regularly reviews, with management, the strategic environment, the emergence of new opportunities and risks, and the implications for our strategic direction.

The Board has, with the advice of management, identified the principal risks to our business and has overseen management’s establishment of systems and procedures to ensure that these risks are monitored. These systems and procedures provide for the effective management of our manufacturing assets, forest resources and financial resources, and compliance with all regulatory obligations. Management prepares and submits annually to the Board a matrix identifying key short-term and long-term enterprise risks together with an analysis of each risk and management’s mitigation strategy. In addition, management regularly reports to the Board on key evolving or new focus risks. The annual risk matrix and the focus risks are reviewed by the Board and consideration is given to any changes in circumstances that could either heighten or diminish the nature of a particular risk. The Board understands that our major risks are associated with safety, the environment, climate change and sustainability, access to raw materials our product end markets, recruitment and retention, and cyber security.

The Board receives and reviews regular reports on our operations, including reports dealing with safety and environmental issues.

The Board is responsible for the supervision of our senior management to ensure that our operations are conducted in accordance with objectives set by the Board. All appointments of senior management are approved by the Board. As part of our planning process, succession planning for senior management positions is regularly reviewed and discussed.

ESG Oversight

Our commitment to sustainability starts at the top and at the Board level. Our Board of Directors is responsible for overseeing overall management and integration of sustainability, climate change and environmental, social, and governance (“ESG”) matters throughout the Company. This includes overseeing sustainability strategies and monitoring the practices of the Company relating to health and safety, workplace diversity, equity and inclusion. The Board’s goal is to ensure we operate as a sustainable business, optimizing financial returns while effectively managing risk. ESG governance, risk oversight and disclosure is a regular topic of discussion at Board and committee meetings.

The Company’s approach to ESG continues to grow and evolve in line with the needs, demands and expectations of its shareholders, regulators and stakeholders. In 2021, the Board and management conducted a comprehensive review of our sustainability and ESG-related approach and evaluated both the best practices and approaches of our peers.

As a result of the review, our Board has delegated oversight of certain ESG responsibilities to its Committees and management, which report their findings and provide recommendations to the Board. As ESG is a cross-functional discipline encompassing a wide range of issues, and thus is relevant to all Committees, different aspects of our ESG performance fall under each of our Committees and management. The Committees work together with management to identify ESG issues most pertinent to the Company’s

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business and its key stakeholders, and to help develop the policies and processes to integrate ESG into the Company’s long-term strategy and risk management responsibilities.

Oversight of governance-related ESG policies and programs is a responsibility that was specifically added in 2021 to the Charter of the Governance Committee, which also is responsible for monitoring diversity at the Board level, corporate governance practices and compliance with the Code of Conduct. In addition to oversight responsibility for the Company’s annual financial statements and audits, the Audit Committee ensures that financial risks, compliance matters and ethics complaints are properly managed and addressed. The HR&C Committee oversees the goals and risks associated with the Company’s compensation programs and oversight of the equity holding policy and the clawback policy. The Health, Safety and Environment Committee is responsible for, among other things, overseeing the Company’s key environmental and sustainability objectives established by management and the Board and reviewing the Company’s current sustainability report. Furthermore, management reports to the Board on issues related to stakeholder engagement, particularly with respect to relationships with local communities and Indigenous peoples and our actions to meaningfully advance reconciliation.

At the management level, West Fraser’s CEO and executive team are responsible for implementing the Company’s strategy and sustainability targets. The Vice-President, Canadian Woodlands oversees compliance with Canadian forestry regulations and certification. He is responsible for the practice and maintenance of sustainable forest management, strategic issues with regard to forest management-related environmental performance, climate risks and opportunities, and forest carbon. The Senior Vice-President, Western Canada oversees pulp and bioproducts manufacturing, bioenergy development, projects, energy reduction initiatives and greenhouse gas emissions reporting. The Manager, Energy & Bioproduct Development leads corporate initiatives in energy reduction, bioproduct research and development and greenhouse gas emissions reporting. The Vice-President, Corporate and Government Relations is responsible for the company’s sustainability report and regularly engages with federal and provincial governments on climate policy, and the Company’s environmental performance. The Chief Environment and Sustainability Officer assists West Fraser’s operations to meet climate and carbon policy and regulations that may affect the Company or manufacturing facilities.

A snapshot of the Board’s delegated responsibilities to its Committees as related to ESG matters is as follows:

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Corporate Disclosure Policy

The Board has, as part of our Governance Policy, approved a corporate disclosure policy (the “Corporate Disclosure Policy”), to be overseen by a disclosure committee (the “Disclosure Committee”) that is intended to ensure that all material information relating to the Company is communicated appropriately to our Shareholders and the public. On February 15, 2022, the Disclosure Policy was revised and the Corporate Disclosure Committee was modified from seven members to a minimum of five members and maximum of seven members, comprised of the CEO, the Vice-President, Finance and CFO and senior leadership from operations, sales and legal as designated by the CEO and the Vice-President and CFO from time to time. Under the Corporate Disclosure Policy, the Disclosure Committee will be responsible for reviewing and approving all material continuous disclosure, including annual and interim financial statements, management discussion and analysis and financial results press releases, other press releases that contain material information or disclosure of first-time significant financial information, information circulars, annual information form, annual reports, prospectuses and other offering or tender documents. The Disclosure Committee will review these materials before they are provided to the Board or the

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applicable Board committee for review and approval. The Corporate Disclosure Policy may be viewed on our website at www.westfraser.com. In addition to annual meetings of Shareholders, meetings are held from time to time each year between management representatives and various investors, investment analysts, credit rating agencies and financial institutions, all of which are governed by the Corporate Disclosure Policy.

Audit Committee

The Board, through the Audit Committee, is responsible for overseeing our financial reporting and audit process and requiring that management has designed and implemented and maintains an effective system of internal controls and management information systems. The Audit Committee generally meets twice annually with the Auditor to discuss the annual audit. These meetings are in addition to regular meetings, in which the Auditor participates, during which the Audit Committee reviews and approves certain of our quarterly reports. The Audit Committee has been delegated the authority to approve our quarterly financial statements and quarterly earnings announcements before publication, other than those related to the fourth quarter and annual results. At regular meetings, the Audit Committee also meets separately and in-camera with the Auditor without management and separately and in-camera with management without the Auditor. The Audit Committee has complete and unrestricted access to the Auditor.

In 2021, the Audit Committee focused on these key areas:

• reviewing significant accounting and financial reporting issues and assessing the appropriateness of our financial reports;

• overseeing and assessing the adequacy and effectiveness of our internal control procedures over annual and interim financial reporting;

• managing our relationship with the Auditor, through, among other things, a formal review of the performance of the Auditor;

• reviewing with management the adequacy and effectiveness of our systems for monitoring compliance with financial reporting and disclosure laws, including disclosure controls and procedures;

• overseeing compliance with our Code of Conduct and the process through which complaints are received and dealt with, including confidential and anonymous submissions and those that are of a sensitive or “whistleblower” nature; and

• identifying and overseeing our principal information technology, cyber security, information security and information technology networks and information systems risks.

In order to provide reasonable assurance that our financial reporting is complete, fairly presented and employs appropriate accounting principles, the Audit Committee reviews the following documents with management and the Auditor and recommends them to the Board for approval:

• annual and interim financial statements and reports; and

• the related management’s discussion and analysis of financial performance.

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The Audit Committee reviews with management and the Auditor relevant and applicable legal and regulatory developments and the adoption and disclosure of new accounting standards. It also assesses the potential impacts of choosing between accounting alternatives.

As part of its mandate, the Audit Committee is responsible for reviewing any related party transaction in which a Director or a member of senior management has an interest, and making recommendations to the Board. The Audit Committee reviews such transactions in accordance with applicable legislation to ensure they reflect market terms and conditions, are at commercial arm’s length terms, and are in the best interests of the Company. The Audit Committee has the ability to retain independent advisors to provide advice on any proposed related party transactions. Any recommendations or advice pertaining to a specific matter is then communicated to the Board.

Decisions Requiring Prior Approval by the Board

The Board has overall responsibility for the stewardship of the Company. Any responsibility that is not delegated to management or to a Committee remains with the full Board. We maintain policies with respect to matters requiring prior approval of the Board. These policies, and understandings between management and the Board through previous Board practice and accepted legal practice require that our annual operating and capital plans, significant capital expenditures and all transactions or other matters of a material nature involving the Company or any of its subsidiaries must be presented by management for approval by the Board.

Shareholder Feedback and Concerns

The Board and management welcome interaction with our Shareholders and believe that it is important to have direct regular and constructive engagement with our Shareholders to permit open dialogue and the exchange of ideas.

West Fraser communicates with its Shareholders and other stakeholders through various channels, including our annual report, management information circular, annual information form, quarterly reports, news releases, website, presentations at investor and industry conferences and other materials prepared in connection with the continuous disclosure requirements of the TSX, the NYSE and securities regulatory authorities. In addition, our quarterly earnings call is open to all Shareholders. Our website, at www.westfraser.com, also provides extensive information about the Company and all news releases issued by us are available on the website for viewing.

We maintain a policy of ongoing communication with investors and with representatives of the investment community. This process consists of periodic meetings with investment fund managers and investment analysts as well as individual investors and Shareholders, although always in circumstances that assure full compliance with disclosure requirements.

Inquiries by Shareholders are directed to, and dealt with by, members of senior management. Shareholders and potential investors are encouraged to communicate on any issues, including those relating to executive and Director compensation, directly with members of our senior management. All communications are subject to our Corporate Disclosure Policy. Shareholders may communicate their views to senior management by contacting our main investor contact as set out below:

West Fraser Timber Co. Ltd.

501-858 Beatty Street

Vancouver, British Columbia

V6B 1C1

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Attention: Robert B. Winslow, CFA, Director, Investor Relations & Corporate Development

Email: shareholder@westfraser.com

Our Board values regular and constructive engagement with Shareholders and encourages Shareholders to express their views on governance matters directly to the Board. Questions regarding our governance practices can be sent to the Chair as set out below:

West Fraser Timber Co. Ltd.

501-858 Beatty Street

Vancouver, British Columbia

V6B 1C1

Attention: Chair of the Board

Expectations of Management

The Board has determined its expectations of management, which include provision of information and implementation of processes that enable the Board to identify risks and opportunities for the Company, the identification of appropriate comparisons and benchmarks against which our performance may be measured, and the provision of information and data that permits the Board to monitor ongoing operations, and management understands these expectations. As part of the ongoing process of monitoring the performance of management, the Board receives operational updates on each of our business units at each Board meeting. These updates compare actual performance to our annual plan and historical results and include a discussion of all significant variances.

As part of the monitoring process, the CEO submits to the Board at the beginning of each year a written report setting out goals, expectations and priorities for the year. These are reviewed by the Board and may be varied based on the Board’s comments. At the end of the year, a report is submitted to the Board by the CEO that sets out achievements relative to the original goals and expectations. Both the Board and the CEO expect that the level of those achievements will be taken into account when establishing the CEO’s compensation for the following year.

Composition of the Board

Independence

We are required to assess and disclose which of our Directors are, or are not, “independent” of management as that term is used in National Instrument 52-110 – Audit Committees (“NI 52-110”). We also assess the independence of our Directors under the applicable rules of the NYSE. 11 of our 12 current Directors are independent, including Ellis Ketcham Johnson, who is the most recently elected Director, while Ray Ferris is considered not independent. Below is a summary of the basis of our determinations in respect of all current and proposed Directors:

Name	Determination and Basis
Hank Ketcham	Independent (see commentary below)
Reid E. Carter	Independent
Ray Ferris	Non-independent (Basis for Determination: Currently our President and CEO)
John N. Floren	Independent
Ellis Ketcham Johnson	Independent (see commentary below)
Brian G. Kenning	Independent
Marian Lawson	Independent
Colleen McMorrow	Independent

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Name	Determination and Basis
Gerry Miller	Independent (see commentary below)
Robert L. Phillips	Independent
Janice G. Rennie	Independent
Gillian D. Winckler	Independent

Where an individual is, or has been within the last three years, an employee or executive officer of an issuer, NI 52-110 provides that such individual is deemed to have a material relationship with the issuer and thus would be considered non-independent of the issuer.

Hank Ketcham was appointed our President and CEO in 1985 and assumed the role of Chair of the Board in 1996. In 2012, he relinquished the title of President and, on March 1, 2013, Mr. Ketcham retired as our CEO and was designated as our Executive Chair of the Board. Hank Ketcham retired from his role as our Executive Chair effective April 19, 2016 and assumed the position of Chair of the Board. As of March 2, 2022, more than five years has elapsed since Hank Ketcham served in any executive capacity with the Company, and six years will have elapsed as of the date of the Meeting. Since Hank Ketcham’s retirement as our CEO, the Board has engaged in a board renewal process, which has resulted in the expansion of the size of our Board from nine Directors to 12 Directors and the appointment of six new Directors with no prior relationship with Mr. Ketcham. Mr. Ketcham does not engage in any related party transactions with the Company and does not have any consulting, advisory or other contractual arrangements with the Company outside of his role as the non-executive Chair and a member of the Board.

Having regard to Hank Ketcham’s past relationships with the Company and considering his current relationships with management and the Company and the passage of time and other factors, the Board determined that there are no “material relationships” (within the meaning of NI 52-110) which could, in the view of the Board, be reasonably expected to interfere with Hank Ketcham’s exercise of independent judgment. The Board also considered the issue of the Chair’s relationship with management in the context of the need to ensure the Board’s independence from management and determined that the Chair is sufficiently aligned with Shareholder interests to ensure Board independence from management. The Chair is a director and shareholder, and is related to the other directors and shareholders, of Ketcham Investments, Inc., whose shareholdings are described under “Voting Securities and Principal Shareholders”. The Board also considers that these relationships assure that the interests of the Chair are closely aligned with Shareholder interests. The Board also established the position of Lead Director to ensure that the Board’s independence from management is clear in appearance as well as in fact and has indicated its intention to continue the appointment of a Lead Director until such time as it determines that the role is no longer necessary to ensure that the Board’s independence is clear, and its intention is to retain the role of the Lead Director until at least the Company’s annual meeting of Shareholders in April 2022.

Gerry Miller retired as an employee and senior officer of the Company on July 31, 2011. As the third anniversary of his retirement has passed, he may be considered independent if the Board determines that he is otherwise sufficiently independent of management. The Board has considered Mr. Miller’s prior employment with the Company, and the Board has determined that, given the passage of time and other factors including Mr. Miller’s active participation as a Director since 2012 and his experience as a director of another Canadian public company, Mr. Miller is sufficiently independent of our management. Mr. Miller will be retiring from the Board and will not be standing for election at the Meeting.

Ellis Ketcham Johnson was appointed to the Board at the Company’s annual general meeting held April 20, 2021. Ellis Ketcham Johnson is a cousin of Hank Ketcham, the Company’s current Chair and former member of our management. The Board has considered this relationship and interest, including the shareholding interests of Ellis Ketcham Johnson and those of Hank Ketcham, and the fact that neither Ellis Ketcham Johnson nor Hank Ketcham are executives or employees of the Company and do not have any

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other material financial, familial or other relationship with the Company or its executives, and has determined that Ellis Ketcham Johnson is sufficiently independent of our management and has interests aligned with Shareholders to the extent that such independence qualifies her to be a member of the Board and make a valuable contribution in that role.

The Governance Committee is currently comprised of Robert Phillips (Chair), Reid Carter, John Floren, Brian Kenning and Janice Rennie, all of whom are independent Directors. The Governance Committee was reconstituted to its current membership effective April 20, 2021. The Governance Committee meets without any members of management present as part of each regularly scheduled meeting of the Board. There were four such meetings during 2021.

Diversity – Board and Executive Officers

The Company is committed to providing equal opportunities for individuals who have the necessary qualifications for employment and advancement within the Company. The Company’s objectives, as outlined in its Policy on Diversity Equity and Inclusion as well as its Human Rights, Discrimination & Harassment Policy that is part of our Code of Conduct and its employment practices, include providing an equal opportunity for employment and advancement and a work environment that is free of discrimination and harassment, including based on gender, race, ethnicity, disability or sexual orientation. The Company believes inclusive diverse teams build vibrant workforces, safer operations, and a stronger and more competitive company overall.

In connection with the Norbord Acquisition, two independent directors of Norbord, being Marian Lawson and Colleen McMorrow, were added to the Board. As a result, if all of management’s nominees are elected, five out of ten of the independent Directors (50%) and five of the 11 Directors (45%) will be women. The Company and its major subsidiaries have in the aggregate eighteen executive officers, including three executives who are gender or non-gender diverse. Although, the Company has not adopted any formal targets regarding gender or non-gender diverse candidates in Director and executive positions, we do consider diversity when considering Director candidates and making employee hiring or advancement decisions. In 2019, we adopted the Board Diversity Policy (described below). The Company firmly believes that all of its stakeholders benefit from the broader exchange of perspectives and balance brought by diversity of background, thought and experience. The Company’s commitment to inclusion and diversity is demonstrated through several facets, including initiatives in recruitment and retention, diversity and inclusion training, the consideration of diversity in employee development and advancement decisions, and workshops for identified diverse successors.

The Company does consider diversity to be important and believes that its current framework for evaluating Board and executive officer candidates takes into account diversity along with a broad variety of factors the Company considers appropriate. The Company also encourages female and minority candidates to apply for vacant positions, and the Company is an equal opportunity employer.

The Company strives to create workplaces and leadership teams that are reflective of the diverse communities where we live and work. Creating a culture of belonging for all employees aligns with our other core values of teamwork, respect, humility, and integrity. Our diversity, equity and inclusion approach applies to all levels of our organization and is foundational to achieving our strategic objectives to attract and retain engaged, talented, and high-performing people.

The Company’s objectives in advancing or recruiting new candidates is to attract, employ and retain engaged, talented and high-performing individuals who bring value to the Company and its Shareholders by possessing a suitable mix of qualifications, experience, skills and expertise. It is ultimately the skills,

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experience, characteristics and qualifications of the individual that are most important in assessing the value the individual could bring to the Company.

Board Diversity Policy

The Company recognizes the benefits of inclusion and diversity in its broadest sense and considers inclusion and diversity at the Board level to be an essential element of Board effectiveness. The Company views inclusion and diversity on the Board as leading to a better understanding of opportunities, issues and risks; enabling stronger decision-making; and ultimately improving our performance and ability to provide strategic oversight and maximize Shareholder value. To continue progress on this goal, in February 2019, the Board adopted a formal, written policy relating to Board diversity, including gender diversity (the “Board Diversity Policy”). The purpose of the Board Diversity Policy is to promote an environment within the Company that will attract and advance those Director candidates with the widest range of knowledge, skills and experience. While all Director appointments are made based on merit, the Board expects that when selecting and presenting candidates to the Board for appointment, the Governance Committee will consider not only the skills, experience and expertise of a candidate, but also other factors, including gender, race, ethnicity, age and geography to ensure that the Board has a diverse membership. Moreover, the Board recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with the relevant skills and experience can play in contributing to a diversity of perspectives on the Board.

While the Board does not support fixed percentages or quotas for achieving diversity, in recruiting candidates for nomination, the Board and the Governance Committee consider a variety of factors including decision-making ability, skill, geography, experience with businesses of a comparable size, diversity of backgrounds and perspectives, gender, race, ethnicity, age, the interplay of a candidate’s skills and experience with the skills and experience of other Board members and the extent to which a candidate would be a desirable addition to the Board.

The Governance Committee may from time to time consider adopting measurable objectives for achieving diversity on the Board, including gender and minority diversity, and recommend such objectives to the Board for adoption.

The Board Diversity Policy requires the Governance Committee to review and monitor the implementation of the policy on an annual basis to ensure its effectiveness and report the results of its review to the Board. The Board currently has five female Directors. A copy of the Board Diversity Policy is available on the Company’s website at www.westfraser.com.

In addition to the Board Diversity Policy, the charter of the Governance Committee provides that the Governance Committee will review and make recommendations to the Board on the composition of the Board in order to ensure that the Board has the requisite expertise and that its membership consists of persons with sufficiently diverse and independent backgrounds, with a view to facilitating effective decision-making. Similarly, in the process of identifying candidates for executive officer appointments, the Company considers whether our senior executive group consists of persons with sufficiently diverse and independent backgrounds.

Serving on Other Boards

Each of Robert Phillips, Janice Rennie, Marian Lawson, Colleen McMorrow and Gillian Winckler is an active corporate director serving on several corporate boards. The Board and the Governance Committee have reviewed each of their board memberships and determined that they have devoted, and are expected to continue to devote, the required time and attention to discharge their duties as members of our Board.

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Mr. Phillips, Ms. Rennie and Ms. Winckler have each demonstrated a strong understanding of West Fraser’s business, have been and are well prepared for all Board and Committee proceedings, and make consistent and valuable contributions to those proceedings. Similarly, since closing of the Norbord Acquisition in February 2021, when Ms. Lawson and Ms. McMorrow joined the Board of West Fraser, they have each been well prepared and ready for all Board and Committee proceedings. In 2021, Mr. Phillips, Ms. Rennie, Ms. Winckler, Ms. Lawson and Ms. McMorrow each maintained a 100% attendance record at Board and Committee meetings. They also made themselves available to meet with management and fellow Directors, and attend tours of the Company’s facilities on an ad hoc basis whenever required to do so.

The disclosure under “Information regarding Nominees for Election as Directors” lists the other public company directorships held by our Directors. West Fraser does not limit the number of outside directorships. The Governance Committee discusses our Director expectations with potential candidates to ensure the candidates understand the time commitments and expectations before agreeing to be nominated as a Director of the Company.

Committees of the Board

The Board has concluded that Committees should be kept to a minimum so that all members of the Board are able to participate in discussions on significant issues. Matters that are outside of management’s authority are reported to and approved by the Board.

Committees may engage outside advisors at the expense of the Company. Under the Governance Policy an individual Director may, with the approval of the Board, retain an outside advisor at the Company’s expense.

The Board has appointed the following four Committees, each of which is comprised entirely of Directors who are not members of our management: Audit Committee; HR&C Committee; Health, Safety & Environment Committee; and Governance Committee.

In order to facilitate open and candid discussion, in-camera sessions are held at every Committee meeting without management present. It is also the practice of each Committee to meet in-camera during each of its meetings. Topics discussed at these meetings include, but are not limited to, Board processes, succession planning, executive assessments, organizational changes, and strategy.

Each Committee chair helps ensure that their Committee governs itself independently of management and discharges its mandate in accordance with the Committee’s charter. Each chair also sets the agenda for their Committee meetings in consultation with other members of the Committee, the Board and senior management, as needed.

Audit Committee
Chair:	Reid E. Carter
Other Members:	Colleen M. McMorrow
	Gerry Miller
	Janice G. Rennie
	Gillian D. Winckler

The Audit Committee is responsible for reviewing our annual financial statements and making recommendations as to the approval of the annual financial statements by the Board. Material issues related to the audit of our internal control and management information systems are discussed by management

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representatives and the Audit Committee as they arise. The Audit Committee has been delegated the authority to approve our quarterly financial statements and quarterly earnings announcements before publication other than those related to our fourth quarter and annual results. The Audit Committee has direct access to the Auditor and is responsible for approving the nomination, and establishing the independence, of the Auditor. The role of the Audit Committee has been discussed at various times with our Auditor.

Under NI 52-110, the Audit Committee must be comprised of independent directors. An “independent director” is a director that has no direct or indirect material relationship with the Company, including not being affiliated with management or the Company in terms of specific familial or commercial relationships. Each member of our Audit Committee is considered “independent” and, in addition, “financially literate” as such terms are used in NI 52-110.

Additional disclosure concerning the Audit Committee is contained in our Annual Information Form. The full text of the Audit Committee Charter, which forms part of our Annual Information Form, is available for viewing on our website at www.westfraser.com. The Audit Committee Charter was last reviewed and revised by the Board on April 20, 2021.

Human Resources & Compensation Committee
Chair:	Brian G. Kenning
Other Members:	John N. Floren
	Marian Lawson Robert L. Phillips
	Janice G. Rennie

The HR&C Committee consists of at least three members who must be independent directors. The independence of each Director on the HR&C Committee is determined in accordance with the applicable securities laws and in accordance with the applicable rules of the NYSE.

The HR&C Committee is responsible for reviewing and making recommendations to the Board with respect to the remuneration of our executive management and the remuneration of each Director, and has the authority to grant Options to officers and employees under our Stock Option Plan (described below), although in practice the Board gives final approval of all Option grants. The HR&C Committee reviews the remuneration of Directors and executive management each year. The HR&C Committee oversees succession planning of our executive management and reviews and makes recommendation to the Board on proposed executive management appointments. Under its mandate, the HR&C Committee is authorized to retain or obtain the advice of independent compensation consultants, legal counsel and other advisors.

In December 2019, the HR&C Committee reviewed the HR&C Committee Charter and made recommendations to update it in accordance with best practices and to, among other things, supplement the HR&C Committee’s responsibilities to oversee the Director remuneration every two years and CEO emergency succession planning. These recommendations were approved by the Board on December 10, 2019. In connection with the listing of the Common shares on the NYSE on February 1, 2021, the Company revised the HR&C Committee Charter on February 11, 2021 to address certain NYSE requirements. Further amendments related to the NYSE listing were also made on December 7, 2021. The HR&C Committee Charter may be viewed on our website at www.westfraser.com.

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Health, Safety & Environment Committee
Chair:	John N. Floren
Other Members:	Ellis K. Johnson
	Marian Lawson
	Colleen M. McMorrow
	Gerry Miller
	Gillian D. Winckler

The Health, Safety & Environment Committee is responsible for monitoring our health, safety and environmental performance, including West Fraser’s short- and long-term environmental and sustainability objectives and assessing the Company’s performance with respect to such objectives. The Health, Safety & Environment Committee conducts an ongoing review of our health, safety and environment-related policies and performance, including compliance with applicable laws and regulations. The Health, Safety & Environment Committee also reviews the suitability and effectiveness of safety and environment management systems and the environment sustainability certification programs to which we subscribe. The Committee is also responsible for periodically reviewing West Fraser’s disclosure of responsibility, sustainability, and health, safety and environmental reports. The Health, Safety & Environment Committee Charter was last reviewed and revised by the Board on December 7, 2021. The Charter of the Health, Safety & Environment Committee may be viewed on our website at www.westfraser.com. Additional information about our environmental, social and governance policies and practices can be found on the “Responsibility” section of our website and in our Responsibility Report on our website, as well as in our Annual Information Form that can be found on our website and also under the Company’s profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.

Governance & Nominating Committee
Chair:	Robert L. Phillips
Other Members:	Reid E. Carter
	John N. Floren
	Brian G. Kenning
	Janice G. Rennie

The Governance Committee is comprised of Directors, each of whom is “independent” of management as that term is used in NI 52-110, and, in addition, our Chair will not serve on the Governance Committee for so long as we continue with the appointment of a Lead Director. The Governance Committee is responsible for providing support for the governance role of the Board and, as part of that support, reviews and makes recommendations on the composition of the Board, periodically assesses the function of the Board and its Committees, and monitors developments in corporate governance. The Governance Committee is also responsible for reviewing and monitoring the Company’s exposure to risks and opportunities related to governance practices, ethics, compliance, and independence of Directors. In addition, the Governance Committee is responsible for establishing criteria and procedures for identifying candidates for election to the Board, engaging search firms, where necessary, and recommending to the Board nominees to stand for election as Directors. The Governance Committee Charter was last reviewed and revised by the Board on December 7, 2021. The Governance Committee Charter may be viewed on our website at www.westfraser.com.

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Orientation Program and Continuing Education

New Directors receive a broad range of materials that provide both historical and forward-looking information concerning West Fraser, its operations, senior management and the Board, and its strategic objectives. As part of our orientation program, new Directors have an opportunity to meet with senior management to discuss our business, receive historical and current operating and financial information and are encouraged to tour our facilities. Directors have access to an archive of Board materials, including management presentations from prior meetings. In addition to the formal orientation and continuing education programs, in connection with the appointment of Marian Lawson and Colleen McMorrow, the Governance Committee implemented a custom program for their orientation including an overview of the Company’s key policies, codes and mandates and briefings on the Company’s operations, business and key issues. A similar customized orientation program was also developed and implemented for Ellis Ketcham Johnson by the Governance Committee. In connection with the appointment of new Directors, the Governance Committee will develop and implement similar orientation programs customized for each candidate’s skills and experience.

We regularly provide and organize continuing education programs for all Directors. Our continuing education programs include regular presentations by senior executives about emerging issues, risks and topics relevant to our business and operations and the regulatory environment, as well as information packages developed to enhance the Director’s understanding of the subject matter. Furthermore, special subjects are also covered with a view to keeping the Directors informed and up to date in relation to industry developments, new legislation that affects operations and distribution, major files and projects, as well as economic, political, sustainability and ESG trends. External experts are also invited from time to time to speak on various topics. Committee chairs may also coordinate education sessions on specific topics for their Committee members.

The continuing education sessions and presentations by our senior executive and external experts to our Board during 2020 and 2021 included the following subject matter and topics:

Subject	Topic	Presenter
2021
Sustainability	•  Forestry Climate and Social License Update	External Expert
	•  Environment and Climate Strategy	Senior Management
	•  Forest Products Industry and Carbon Capture	External Expert
	•  Carbon strategy update	Senior Management
	•  ESG Assessment and Strategy	Senior Management
Regulatory & Government Affairs	•  British Columbia and Alberta Stumpage Overview	Senior Management
	•  B.C. Forest Policy Update – Old growth, First Nations and Timber Tenure	Senior Management
	•  First Nations Overview	Senior Management
Governance	•  Governance — Trends and Best Practices	External Expert
	•  Enterprise Risk Matrix Overview	Senior Management
Operations	•  Introduction to Pulp Industry and Operations	Senior Management
	•  Introduction to Lumber Industry and Operations	Senior Management
	•  Introduction to OSB Industry and Operations	Senior Management
	•  U.S. South Industry Manufacturing Operating Environment	Senior Management
Capital Markets and Finance	•  Future of Housing	External Expert
	•  Capital Allocation Perspectives	External Expert

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	•  West Fraser Market Perspectives	External Expert
Technology	•  Cyber Security Overview	Senior Management
2020
Regulatory & Government Affairs	•  Forest Industry and Social License Issues	External Expert
	•  British Columbia First Nations Overview	Senior Management
	•  Alberta Political Environment	External Expert
Capital Markets and Finance	•  Equity Capital Market Perspectives of Wood Products Sector (Investor Perspectives, ESG and U.S. Listing)	External Expert

Board proceedings also include regular review of risk factors including detailed reviews of focus risks and periodic presentations by management and outside industry experts on important and evolving issues. Directors also visit and tour certain of our facilities on a regular basis which contributes to a more complete understanding of our business. Site visits also give Directors an opportunity to meet directly with management and other employees in those areas or regions.

Each of our Directors has had, or currently has, executive or Board of Director responsibilities and there is a regular sharing of those experiences, which assists our Board in identifying and adopting, on a continuing basis, best corporate governance practices.

A key part of each regularly scheduled Board meeting is a business overview provided by the CEO. This overview includes an operational and financial review, but also provides perspectives on growth strategies, human resources, political, legal and regulatory issues and material changes in our risk environment. These discussions help our Directors to understand the full scope of our underlying business environment when making decisions that affect our future.

We also encourage individual Directors to participate in outside professional development programs. We pay for these expenses as long as the Chair of the Board and the Chair of the Governance Committee approve the program in advance. They are also provided with corporate subscriptions to certain relevant industry publications. All of our Directors are members of the Institute of Corporate Directors (“ICD”), which provides continuing education for directors through publications, seminars and conferences.

On an ongoing basis, the Company:

• ensures that Directors have timely access to materials and information required to properly discharge their responsibilities;

• maintains a secure Directors’ portal for prompt dissemination of information and provides published information, industry publications, articles of interest and other relevant materials to Directors in between meetings; and

• canvasses Directors for suggestions as to topics and issues for which they would like to receive a presentation, briefing or report.

Individual Directors attended and, in some cases, were participants or presenters at, third party conferences, seminars, webinars and presentations on a broad range of topics in 2019, 2020 and 2021, including the following:

Topic	Presented By
2020 Year-End Executive Compensation	Willis Towers Watson
2021 National Corporate Governance Conference	ICD

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Topic	Presented By
A New Executive Pay Landscape	Willis Towers Watson
AcSB Domestic Standards Update for Part II and Part III	CPA Canada
AcSB Framework for Reporting Performance Measures	CPA Canada
Asia Pacific Board Intelligence	ICD Webinar
Blockchain Disruption	NACD
Board Governance and Effectiveness	Hugessen
Board Oversight of Corporate Culture	E&Y - Canadian Directors Network
Board Oversight of Strategic Issues	ICD
Board Risk Oversight	Global Risk Institute
Bringing Artificial Intelligence to the Financial Audit	CPA Canada
Canada Planning Across the Enterprise	CPA Canada
Canadian Public Company Financial Reporting Update	CPA Canada
Climate Action at the International Level	Embassy of Canada
Continuing the Digital Transformation	ICD
CPAB Audit Committee Forum	CPAB
Cyber Security	EPCOR
Developments in the Evolution of ESG	ICD
Dialogue with Indigenous Peoples	ICD
Economic and Geopolitical Outlook 2020 and Beyond and Shifting Stakeholder Power Dynamics	E&Y - Canadian Directors Network
ESG Framework for Financial Institutions	KPMG
ESG Investment Themes – The Perspective of the Institutional Investor	CN
Executive Compensation Trends	ICD and Hugesson
Fraud Prevention for Professionals	CPA Canada
Governance in Today’s World	ICD
Governance of Artificial Intelligence	ICD
Human Resources and Compensation Committee Effectiveness	ICD
Introduction to Anti-Money Laundering	CPA Canada
Just for Chairs	Ozone Advisory Group
Lessons Learned from Board Missteps	E&Y - Canadian Directors Network
Next Level of Governance for the New Normal	ICD
Responding to COVID-19: Insights for Audit Committees	CPA Canada
Responding to COVID-19: Insights for Audit Committees	Deloitte
Rethinking Risk Management	ICD
Shifting Ground – The Collision of Business and Government Policy	ICD
Social Purpose	ICD
Technology, Investors and the Evolving Financial Information Landscape	CPA Canada
The CEO’s New Technology Agenda	McKinsey

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Topic	Presented By
The Changing Role of CEOs and Corporations in Society	ICD
The Future of Governance in Canada	ICD/TMX Committee
The Future of Work	ECD Global Directors Dialogue

Performance Reviews

The Governance Committee regularly and, not less frequently than annually, reviews the performance of the Board and its Committees. This review has been conducted both by way of a formal questionnaire and report and by informal interviews and discussions led by the Chair or the Lead Director. The Board performance review also includes a “peer” or individual Director review process. To date, no problems with respect to performance of the Board, any Committee or any individual Director has been identified.

Meeting Attendance Record

In 2021, the attendance record for Board and Committee meetings was 100%. The following chart sets out meeting attendance records of each of the current Directors during 2021, including each Committee of which the Director is currently a member. When reviewing the table below, please note that each of Ms. Lawson and Ms. McMorrow joined the Board on February 1, 2021. Ms. Johnson joined the Board on April 20, 2021.

		Committees
Director	Board     Meetings	Audit		Human Resources & Compensation		Health, Safety & Environment		Governance & Nominating
H.H. Ketcham	7 of 7	Nil		Nil		Nil		Nil
R.E. Carter	7 of 7	5 of 5		Nil		Nil		4 of 4
R.W. Ferris	7 of 7	Nil		Nil		Nil		Nil
J.N. Floren	7 of 7	Nil		3 of 3		2 of 2		4 of 4
E.K. Johnson1	6 of 6	Nil		Nil		1 of 1		Nil
B.G. Kenning	7 of 7	Nil		3 of 3		Nil		4 of 4
M. Lawson2	7 of 7	Nil	-	2 of 2	-	2 of 2	-	Nil
C. McMorrow3	7 of 7	4 of 4	-	Nil	-	2 of 2	-	Nil
G.J. Miller	7 of 7	5 of 5		Nil		2 of 2		Nil
R.L. Phillips	7 of 7	Nil		3 of 3		Nil		4 of 4
J.G. Rennie	7 of 7	5 of 5		3 of 3		Nil		4 of 4
G.D. Winckler	7 of 7	5 of 5		Nil		2 of 2		Nil
J.K. Ketcham4	1 of 1	Nil		Nil		1 of 1		1 of 1

Notes:

1. Ellis Johnson was elected to the Board of Directors on April 20, 2021 and joined her Committees on that date. She did not participate in any Committees or their meetings prior to her joining such Committees.

2. Marian Lawson was appointed to the Board of Directors on February 1, 2021 and joined her Committees on February 11, 2021. She did not participate in any Committees or their meetings prior to her joining such Committees.

3. Colleen McMorrow was appointed to the Board of Directors on February 1, 2021 and joined her Committees on February 11, 2021. She did not participate in any Committees or their meetings prior to her joining such Committees.

4. John Ketcham retired from the Board on April 20, 2021.

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EXECUTIVE COMPENSATION DISCUSSION & ANALYSIS

Human Resources & Compensation Committee Responsibility

The HR&C Committee is responsible for recommending to the Board the level and nature of compensation for executive officers and Directors and may grant Options to officers and employees under the Stock Option Plan, although in practice the Board provides final approval of all compensation matters for Directors and executive officers, including Option grants. In making its determinations, the HR&C Committee has access to comparative data and, if considered appropriate, receives advice from selected independent consultants.

The HR&C Committee is also responsible for reviewing and recommending to the Board the approval of our compensation and benefits (including retirement and pension) philosophy and policies and any incentive compensation plans and equity based plans and assessing on an ongoing basis whether such compensation and benefits policies are consistent with the sustainable achievement of our business objectives, the prudent management of our operations and risks, and the promotion of adherence to our Code of Conduct, its policies concerning safety and environmental stewardship and other material policies, procedures and controls. In reviewing such policies, the HR&C Committee may consider the recruitment, development, promotion, retention and compensation of executive management and other employees and any other factors that it deems appropriate.

The HR&C Committee also ensures that such compensation and benefit policies do not encourage unwarranted risk taking and undertakes annual risk assessments of these policies either through regular independent or internal reviews of material compensation-related risks. When it reviews and recommends compensation for the CEO and executive management, the HR&C Committee assesses the appropriateness of compensation relative to business risks undertaken by considering, among other things, adherence to our Code of Conduct and other material policies, procedures and controls, as well as any other factors it considers appropriate.

The HR&C Committee is also responsible for overseeing the financial position, governance, administration and compliance with statutory and regulatory requirements of the Company’s pension plans and reporting to the Board annually on these plans. The HR&C Committee also oversees talent development and succession planning for our executive management and annually reports to the Board on such planning.

Composition of the HR&C Committee

The HR&C Committee currently consists of five independent Directors, each of whom has held senior executive roles that have included involvement in executive compensation issues. The HR&C Committee met three times in 2021 to review matters relating to the compensation of executive officers. In addition to meetings, members of the HR&C Committee regularly receive reports and advice from independent consultants and members of executive management on executive compensation issues. None of the members of the HR&C Committee is indebted to the Company.

See also “Human Resources & Compensation Committee”.

Report on Executive Compensation

The policy of the HR&C Committee and the Board with respect to executive compensation is to provide compensation to each executive officer in the form of a base salary, employment benefits, performance-related bonus, equity-based long-term incentives and post-retirement pension benefits in order to attract and retain a highly-motivated, cohesive and results-oriented management team. Total

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compensation for each executive officer (inclusive of long-term incentives and post retirement pension benefits) is designed to be competitive with that provided by comparable companies in Canada to executive officers in similar positions as well as to align the interests of executive officers with those of our Shareholders and not encourage excessive risk taking. Each of the components of total compensation is established based on the following criteria:

Base Salary	–	to be below the median base salaries for comparable positions
Annual Incentive Bonus	–	based on our financial performance above a minimum return on shareholders’ equity, and targeted to be below the median for comparable positions
Long-Term Incentive	–	to be above the median on long-term incentives for comparable positions

Overall, the total compensation package (including long-term incentives and post retirement pension benefits) is designed to compensate executive officers for above-average, long-term, sustainable financial results, and is designed to be competitive at the 50^th percentile for overall compensation for comparable positions.

In order to establish compensation for executive officers other than the CEO, the HR&C Committee receives recommendations with supporting documentation, including data on comparable compensation levels, from the CEO. The HR&C Committee considers the recommendations and comparative data and makes its recommendation to the Board. In respect of compensation for the CEO, the HR&C Committee bases its recommendation to the Board on its review of comparable compensation data for chief executive officer positions. In 2018, as part of its review the HR&C Committee considered a survey and report prepared by Willis Towers Watson (“Towers Watson”), a professional services firm, of our executive compensation program relative to those of different peer groups, which included a review of the compensation for the CEO and our other executive officers and comparable compensation data for chief executive officer and other executive officer positions of those peers. In 2021, the HR&C Committee updated its review and considered an updated survey and report prepared by Towers Watson of our executive compensation program relative to those of different peer groups.

In determining the comparability of similar positions in other companies, the HR&C Committee considers responsibility levels as well as industry similarity, annual revenues and cash flows, total assets, market capitalization and number of employees of the selected companies. For positions where compensation data is not comparable, internal guidelines and data are used.

The Company uses, and periodically participates in, broad-based compensation surveys prepared by independent consulting firms. As well, from time to time, the Company and the HR&C Committee may obtain specific benchmarking data prepared by independent consulting firms. This information, along with Company-specific data, is considered when establishing compensation for executive officers.

In connection with the updated survey and report prepared in 2021 by Towers Watson of our executive compensation program relative to those of different peer groups, and on the recommendation of Towers Watson, the peer group for the compensation benchmarking study was updated in 2021 and is currently comprised of the publicly traded, Canadian and U.S. companies set out in the table below. Prior to the adoption of the updated peer group, the compensation peer group was based on the peer group in the 2018 survey and report and recommendation of Towers Watson.

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Paper and Forest Products	Capital-Intensive
Resolute Forest Products Inc.	Finning International Inc.
Canfor Corporation	Gibson Energy Inc.
Cascades, Inc.	Keyera Corp.
Louisiana-Pacific Corporation	Methanex Corporation
Domtar Corporation	Parkland Corporation
Boise Cascade Company	WSP Global Inc.
	Kinross Gold Corporation
	Masco Corporation

Base Salaries

The HR&C Committee reviews executive management base salaries periodically and considers annual adjustments to be effective in October of each year. The most recent review of base salaries was conducted in September 2021.

In determining its September 2021 recommendation for the base salary of each executive officer, the HR&C Committee considered the comparative data for the peer group.

Annual Incentive Bonus Plan

The annual incentive bonus plan (the “Bonus Plan”) covers our CEO and our Vice-Presidents. The Bonus Plan is the variable compensation component of total executive compensation designed to compensate these officers annually based on the achievement of our objective annual financial return targets.

The annual bonus is calculated as a percentage of current base salary, with the percentage earned based on the adjusted net income (adjusted to exclude equity-based compensation expense or recovery and any accrual for bonuses to our senior executives, both on an after-tax basis) divided by average Shareholders’ equity (“ROSE”). If the ROSE for the year is below 5% for the applicable year, no bonuses are payable under the Bonus Plan. At the 5% ROSE level, bonuses for the Vice-Presidents are earned at 17.5% of base salary. The bonus percentage increases as the ROSE increases, and the bonus percentage earned will reach 100% of base salary at a 15% ROSE level, which is the maximum bonus percentage payable. The bonus percentage for the CEO is equal to 150% of the bonus percentage for other officers covered by the Bonus Plan for bonuses earned in 2021 and later years, and was 125% prior to 2021.

The Board may, in its discretion, also consider other issues, including safety and environmental performance, when determining the amount, if any, of bonuses earned under the Bonus Plan that will be paid.

In 2021, on an adjusted basis (adjusted by excluding equity based compensation expense or recovery and any accrual for bonuses to our senior executives, both on an after tax basis) our earnings were $2,947 million, which resulted in an annual ROSE of 43% for 2021. This exceeded the bonus threshold and annual incentive bonuses of 100% of the base salary were awarded to the qualifying senior executives in accordance with the Bonus Plan (with the bonus percentage for the CEO equal to 150% of such bonus percentage) and were paid in 2022. In 2020, the annual ROSE was 29% which exceeded the bonus threshold and annual incentive bonuses of a maximum of 100% of base salary were awarded to each of the qualifying senior executives in accordance with the Bonus Plan (with the bonus percentage for the CEO equal to 125% of such bonus percentage) and were paid in 2021. In 2019, the annual ROSE was -5.6%, which did not exceed the bonus threshold under the Bonus Plan, and therefore no annual incentives bonuses were awarded for 2019. See also “Clawback Policy” which applies to the Bonus Plan.

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Long-Term Incentive Component

The long-term incentive component of compensation is comprised of Options and phantom share units (which are either RS Units or PS Units) that are intended to directly align the long-term interests of our senior management with those of our Shareholders. The proportion of Options and phantom share units included in a long-term incentive grant will vary from time to time at the discretion of the Board. In 2019, the Board, on the recommendation of the HR&C Committee, changed the mix of the long-term incentive components of executive compensation to eliminate grants of RS Units and grant additional PS Units in their place in order to increase the award of performance-conditioned equity incentive components of executive compensation. As a result, approximately 50% of the value of the long-term incentives granted in 2021 and 2020 to executive officers (which consisted of only Options and PS Units) are performance-conditioned.

Stock Option Plan

The Board established the Stock Option Plan on February 24, 1994 as a means of recognizing contributions to the Company made by Directors, officers and employees and to provide a long term incentive for their continuing relationship with the Company and its subsidiaries. Directors ceased to participate under the Stock Option Plan in 2004. The Stock Option Plan has been amended from time to time. In February of 2021, the Stock Option Plan was amended to increase the number of Common shares that may be issued in respect of Options granted under it, to impose certain limits on the number of Options that may be issued to our insiders, to establish certain restrictions on amendments to the Stock Option Plan without Shareholder approval, to provide for certain automatic extensions for Options expiring during or within five business days of a blackout period under the Company’s Securities Trading Policy, and to address certain incidental housekeeping changes. In February of 2022, the Stock Option Plan was amended to provide that the cash value is determined using the VWAP as at the trading day prior to the date of exercise.

In addition, the Company has adopted Replacement Option Plans in connection with the Norbord Acquisition, pursuant to which the Company has issued Replacement Options. The Replacement Options carry substantially the same terms as the original Norbord Options, except that they are exercisable into Common shares and have been adjusted in accordance with the Exchange Ratio. The Replacement Option Plans exist solely to grant and administer the Replacement Options and did not require Shareholder approval under the policies of the TSX, as the aggregate number of Common shares issuable under them is less than 2% of the number of Common shares issued and outstanding prior to the Norbord Acquisition. Upon the exercise or expiry of all Replacement Options, the Replacement Option Plans will be terminated. See also “Option Grants”.

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Outstanding and Authorized Options

Year	Outstanding	Weighted Average Price	Remaining Authorized	Total	% of Outstanding Common Shares and Class B Shares (Dilution)
20221	1,064,7512	$74.21	901,115	1,965,866	1.9
20211	1,077,8403	$66.64	1,025,3374	2,103,177	2.0
20201	1,316,994	$53.64	182,506	1,499,500	2.2
20191	1,211,137	$51.78	338,052	1,549,189	2.3

1. As at March 2, 2022, December 31, 2021, December 31, 2020, and December 31, 2019, respectively.

2. Includes 888,216 under the Stock Option Plan and 176,535 under the Replacement Option Plans.

3. In connection with the Norbord Acquisition, the Company issued 887,961 Replacement Options to the former holders of Norbord Options. The Replacement Options were issued under the Replacement Option Plans, which were adopted by the Company on closing of the Norbord Acquisition. Includes 791,617 under the Stock Option Plan and 286,223 under the Replacement Option Plans. No new Replacement Options may be granted under the Replacement Option Plans and they will be terminated when all Replacement Options are exercised or expire.

4. At the special meeting of Shareholders held on January 19, 2021, the Shareholders approved an increase of 1,000,000 Common shares to the maximum number of Common shares that may be issued on the exercise of Options under the Stock Option Plan.

Annual Burn Rate

The following table summarizes the burn rate during the last three fiscal years. Burn rate is defined as the total number of Options granted during the applicable fiscal year divided by the weighted average number of Common shares and Class B Shares outstanding for the applicable fiscal year.

	Options Granted in Year	Net Burn Rate1	Burn Rate2	Weighted average number of securities outstanding
2021	171,975	0.1%	0.2%	109,020,975
2020	157,685	0.2%	0.2%	68,671,747
2019	151,530	0.2%	0.2%	68,882,315

1. Number of Options granted in a fiscal year, minus expired Options, divided by the weighted average number of Common shares and Class B Shares outstanding for the applicable fiscal year.

2. Number of Options granted divided by weighted average number of Common shares and Class B Shares outstanding for the applicable fiscal year.

Since the introduction in 2003 of the right of a holder to surrender an Option for a cash payment (the “Cash Value Alternative”) under the Stock Option Plan, as at March 2, 2022, 219,535 Options have been exercised for Common shares under the Stock Option Plan, resulting in a 0.2% dilution to Shareholders (as adjusted to reflect the Stock Dividend). During the financial year ended December 31, 2021, 58,000 Options were exercised for Common shares under the Stock Option Plan and 73,452 under the Replacement Option Plans. See “Option Grants”. Of the 1,064,751 outstanding Options, 560,259 are exercisable and, of the outstanding Options, 749,493 Options were held by insiders, representing 0.7% of the total number of issued and outstanding Common shares and Class B Shares, in each case as of March 2, 2022.

A total of 171,975 Options were granted to officers or employees in 2021 representing 0.16% of the total number of issued and outstanding Common shares and Class B Shares as at the end of 2021, and a total of

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124,566 Options were granted to officers or employees in February 2022, representing 0.12% of the total number of issued and outstanding Common shares and Class B Shares as of March 2, 2022.

Our Board has adopted a policy to manage the Stock Option Plan with a goal of limiting the potential dilution of outstanding and remaining authorized Options to 10% or less of the number of our outstanding Shares. The aggregate potential dilution of all issued and authorized Options under our Stock Option Plan was 1.7% at March 2, 2022 and the aggregate potential dilution of all issued and authorized Options under our Stock Option Plan together with all outstanding Replacement Options under the Replacement Option Plans was, 1.9% at March 2, 2022.

Phantom Share Unit Plan

In 2010, the Board approved the Phantom Share Unit Plan, which is intended to supplement, in whole or in part, the granting of Options as long term incentives for officers and employees. This plan provides contingent future compensation based on Common share price performance, but is payable only in cash and represents no potential for Shareholder dilution. The HR&C Committee and the Board believe that this Phantom Share Unit Plan, combined with other components of compensation, provides a broader range of alternatives in developing retention and performance incentives for officers and employees that more directly align their interests with those of current and future Shareholders.

The Phantom Share Unit Plan permits the Board to grant, as it determines appropriate, two types of units, RS Units and PS Units, which vest on the third anniversary of the grant date. A vested RS Unit must be redeemed by us by payment to the holder of an amount equal to the VWAP of a Common share over the 20 trading days immediately preceding its vesting date (the “Vesting Date Value”). A vested PS Unit must be redeemed by us by payment to the holder of an amount, determined by the Board, that is equal to or between nil and twice its Vesting Date Value based on two performance criteria measuring our performance relative to the performance of a peer group of companies over the three year performance period. At the end of such period, in order to determine the amount to be paid on vested PS Units, the Company’s performance is measured by reference to (i) the Company’s cumulative total Shareholder return (the “TSR”) relative to the TSR of the peer group, and (ii) the Company’s average annual return on capital employed (“ROCE”) relative to the ROCE of the peer group over the three-year performance period. The amount paid, if any, on such PS Units is based on an equal weighting of these two performance measurements, although if the ROCE is negative for the performance period, the weighting for that factor is capped at one half its potential maximum, regardless of relative performance. The peer group used for the purposes of the Phantom Share Unit Plan currently consists of Canfor Corporation, Interfor Corporation, Western Forest Products Inc. and Weyerhaeuser Company, all of which are North American publicly traded forest products companies. On the recommendation of the HR&C Committee, this peer group may be reviewed and changed by the Board, from time to time, as it deems appropriate. The Board also has discretion to vary the payout calculation as it considers appropriate to take into account factors that may have a significant or extraordinary effect on relative performance.

Officers and employees granted phantom share units under the Phantom Share Unit Plan are also entitled to additional phantom share units to reflect cash dividends paid on Common shares from the applicable grant date until payout. The final amount to be paid, in cash, to each officer or employee on RS Units and PS Units is based on the type and number of vested phantom share units they hold, multiplied by the applicable payout value. Other than officers or employees who retire, become totally disabled or die, phantom share units will be automatically cancelled, without payout, on termination of employment or resignation. In the event of retirement, total disability or death of a holder of RS Units or PS Units granted after 2012, the number of phantom share units held will be reduced based on the proportion of the three-year period that the holder was not an officer or employee.

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In February 2022, the Board made a number of amendments to the Phantom Share Unit Plan including (a) updating the peer group, (b) providing that for U.S. residents units may be issued and cash settled in U.S. dollars with the fair-market value on settlement referencing the VWAP on the NYSE, and (c) providing that cash value on settlement and value for dividend entitlements is to be determined using a single day VWAP as at the prior trading day.

In 2018, the Board granted phantom share units under the Phantom Share Unit Plan to officers and employees and, in the case of executive officers, the proportion of the grants for each of the RS Units and the PS Units to executive officers were equal. In 2019, the Board granted phantom share units under the Phantom Share Unit Plan to officers and employees and, in the case of executive officers, granted only PS Units and no RS Units. In 2020, the Board granted only PS Units under the Phantom Share Unit Plan to officers and employees, and no RS Units were granted to executive officers or employees in 2020. The change in the mix of phantom share units granted in 2019 and 2020 was made to increase the award of performance-conditioned long-term incentives granted to executive officers and employees and reduce the award of time-conditioned incentives. As a result, approximately 50% of the value of the long-term incentives granted in 2019 to executive officers and 50% of the value of the long-term incentives granted in 2020 to executive officers and employees (which in both cases consisted of only Options and PS Units) are performance-conditioned. See also “Clawback Policy”, which applies to the Phantom Share Unit Plan.

For PS Units which vested in February of 2022, the relative performance multiplier was 1.25. The calculation is set out below.

PS Unit Relative Performance Multiplier

First Comparison (out of a maximum of 1.00) – Return on Capital Employed (“ROCE”), annual average of calendar years 2019, 2020 and 2021:

1.00        (exceeded four of four in peer group)

Second Comparison (out of a maximum of 1.00) – Total Shareholder Return (“TSR”), cumulative from January 1, 2019 to December 31, 2021:

0.25         (exceeded one of four in peer group)

Total             1.25

Previous PS Unit Relative Performance Multipliers were as follows:

For PS Units Vesting in February of:	Multiplier
2017	1.27
2018	1.40
2019	1.92
2020	1.83
2021	1.83

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Norbord RSU Plan and DSU Plans

In addition, in connection with the Norbord Acquisition, the Company assumed Norbord’s obligations under the Norbord RSU Plan and the Norbord DSU Plans with respect to the Norbord RSUs held by Norbord Continuing Executives who are continuing and with respect to all outstanding Norbord DSUs.

Norbord RSUs held by Norbord Continuing Executives outstanding immediately prior to the closing of the Norbord Acquisition remained outstanding on their existing terms following completion, except that the number of such Norbord RSUs were adjusted by the Exchange Ratio and are to be paid out in reference to Common shares in accordance with the terms of the Norbord Acquisition. No new Norbord RSUs may be issued under the Norbord RSU Plan following completion of the Norbord Acquisition and, upon settlement of all outstanding Norbord RSUs, the Norbord RSU Plan will be terminated.

All Norbord DSUs outstanding immediately prior to the closing of the Norbord Acquisition remained outstanding on their existing terms following the completion of the Norbord Acquisition, except that the number of such Norbord DSUs were adjusted by the Exchange Ratio and are to be paid out in reference to Common shares in accordance with the terms of the Norbord Acquisition. No new Norbord DSUs may be issued under the director Norbord DSU Plan following completion of the Norbord Acquisition. Both the management Norbord DSU Plan and the director Norbord DSU Plan will remain in place to administer Norbord DSUs outstanding thereunder until such time as all outstanding Norbord DSUs are settled, at which point the Norbord DSU Plans will be terminated.

In February 2022, the Board amended the Norbord RSU Plan and the Norbord DSU Plans to provide that cash value on settlement and value for dividend entitlements is to be determined using a single day VWAP as at the prior trading day.

Post-Retirement Pension Benefit

Most executive officers, including the CEO, are members of our non-contributory defined benefit pension plans for salaried employees. Certain executive officers are members of our defined contribution pension plan. The pension benefit provided under these pension plans is described under “Pension Plans” of this Circular. The Company does not provide any additional post-retirement benefits, such as medical or dental insurance, to the executive officers.

Clawback Policy

We have recognized a trend in recent years towards the adoption of recoupment and “clawback” policies, particularly among large public companies. As a prudent aspect of risk management and our commitment to operate consistently with good governance practices, the Board, in 2013, approved amendments to the Phantom Share Unit Plan and the Bonus Plan to incorporate payment adjustment provisions. These plans now both contain financial restatement triggers, permitting West Fraser to recoup the amount of the incentive awards that have been paid in excess of the amount that would have been payable under the restated financial statements, or deduct such excess amount from future payments to be made under such plans. These payment adjustment provisions also allow the Company to adjust incentive awards upwards to reflect restated financial statements that are more favourable than the original financial statements. The payment adjustment provisions have a three-year look-back period.

CEO’s Compensation

In recommending compensation for the CEO, the HR&C Committee follows similar principles to those applied for all of our other executive officers. The HR&C Committee considers market competitive-salary information for chief executive officer positions in similar-sized companies in Canada and the U.S. This

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includes manufacturing companies in other sectors as well as in the forest products sector. The Company periodically participates in broad-based compensation surveys and also periodically seeks the advice of independent compensation consultants engaged to review the executive compensation program. In 2016, Towers Watson conducted a survey on our behalf concerning executive compensation and, in 2018, Towers Watson conducted a survey and review of our executive compensation program relative to those of different peer groups. The survey and review results, along with Company-specific data, are used to determine the competitiveness of the CEO’s compensation and its alignment with the interests of Shareholders. The CEO establishes, with guidance and direction from the Board, annual goals and reports to the Board at the end of each year on his performance against those goals. The HR&C Committee considers this performance when considering its recommendation of compensation of the CEO.

Details of our CEO’s compensation are described in the table titled “Summary Compensation Table”.

Executive Equity Holding Requirements

In February 2013, our Board approved the adoption of minimum equity holding requirements, which were subsequently amended in September 2013. The minimum equity holding requirements are reviewed from time to time to align with what the Board considers best governance practices. In February 2019, on the recommendation of the HR&C Committee, the Board adopted a new equity holding requirements policy (the “Equity Holdings Requirements Policy”) to take into account changes to the Company’s equity compensation practices, which eliminated grants of RS Units and replaced them with grants of additional PS Units (which do not qualify as eligible equity under the Policy) to increase the award of performance-conditioned equity incentive components of executive compensation. As a result of these changes, approximately 50% of the value of the long-term incentives granted in 2020 and 2021 to executive officers (which consisted of only Options and PS Units) are performance-conditioned.

Under the Equity Holding Requirements Policy, each executive officer is required to hold Shares and RS Units having a value of not less than the executive’s base salary in the case of a Vice-President and not less than three times the executive’s base salary in the case of the CEO. Shares and RS Units held by an executive officer will be valued based on the greater of (1) their original cost or grant date value and (2) December 31 of the most recently completed financial year (or, if such date is not a trading date, on the last trading date of such year).

Initially, executive officers had until January 1, 2018, or if appointed after 2013, five years from the date of their appointment to meet the minimum equity holding requirements. In connection with changes to the long-term incentive components of executive compensation to reduce the award of time-conditioned incentives by eliminating grants of RS Units and to increase the award of performance-conditioned incentives with grants of additional PS Units (which do not qualify as eligible equity under the policy), executive officers will now have five years from the date of adoption of the new Equity Holding Requirements Policy in February 2019 to meet the minimum equity holding requirements, provided that officers who did not meet the requirements in February 2019 must acquire not less than a pro-rata amount of equity each year to achieve full compliance by the end of such five year period.

For the purposes of the following disclosure, the following officers are each a “Named Executive Officer” of the Company:

Ray Ferris, President and CEO,

Chris Virostek, Vice-President, Finance and CFO,

Peter Wijnbergen, President, Engineered Wood,

Sean McLaren, Chief Operating Officer, and

Robin Lampard, Senior Vice-President Finance.

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The following table shows the total holdings of Shares and RS Units held by each Named Executive Officer as at December 31, 2021, valued based on the closing price on December 31, 2021 of $120.68:

Named Executive Officer Share and Unit Holdings

(December 31, 2021)

Named Executive Officer	Shareholdings	Value of total holdings1 ($)	Total as multiple of 2021 salary3
Ray Ferris2 President and CEO	39,452	4,761,067	4.8
Chris Virostek2 Vice-President, Finance and CFO	5,317	641,656	1.3
Peter Wijnbergen2 President, Engineered Wood	44,129	5,325,488	7.7
Sean McLaren2 Chief Operating Officer	10,083	1,216,816	2.4
Robin Lampard2 Senior Vice-President Finance	10,474	1,264,002	2.9

1. Based on the Closing Price on December 31, 2021 of $120.68. Equity holdings and compliance under the Equity Holding Requirements Policy are valued and assessed annually.

2. Named Executive Officers also hold PS Units as follows: R. Ferris – 38,655; C. Virostek – 12,035; S. McLaren – 8,915; R. Lampard – 2,940 as of December 31, 2021. In addition, R. Lampard also held an additional 13,404 Norbord RSUs, including all dividend entitlements as of December 31, 2021. On December 31, 2021, 7,515 PS Units held by Mr. Wijnbergen were cancelled.

3. For Mr. Wijnbergen and Ms. Lampard the 2021 salary reflects salary from commencement of employment with the Company on February 1, 2021.

Independent Consultant

Compensation Advice

Towers Watson has provided consulting services to us for several years with respect to executive and non-executive compensation. In 2012, the HR&C Committee adopted a protocol under which all consulting services provided by Towers Watson related to executive compensation must be retained and authorized by the HR&C Committee. Towers Watson reports to the HR&C Committee as its outside compensation consultant to advise on compensation policies, including providing information on comparative levels of compensation for our senior executives and Directors. In 2014, in addition to a survey concerning CEO and Executive Chair compensation, the HR&C Committee also received advice from Towers Watson on various executive compensation issues. In 2016, Towers Watson conducted a survey for the Company concerning executive compensation. In addition, in 2021, Towers Watson conducted a survey and review of our executive compensation program relative to those of different peer groups and to assess market competitiveness of our executive compensation programs. In 2015, 2016, 2017 and 2018, Towers Watson provided advice on executive compensation.

Compensation Risk Assessment Advice

The Company engaged Towers Watson in 2017 and 2019 to conduct independent reviews of material compensation-related risks. In 2017 and 2019, the HR&C Committee received advice and a compensation risk assessment report from Towers Watson, which concluded that there did not appear to be significant risks arising from the Company’s compensation policies and practices that were likely to have a material

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adverse effect on the Company. In its assessment, Towers Watson took into account the limited compensation-related risks within the Company, the involvement and authority of the Board in both compensation and risk management oversight, the greater emphasis on at-risk and variable compensation and the presence of effective risk mitigating practices in the design of the Company’s compensation programs.

Last year in 2021, the HR&C Committee again received advice and updated compensation risk assessment reports from Towers Watson, which also concluded that there did not appear to be significant risks arising from the Company’s compensation policies and practices that were likely to have a material adverse effect on the Company. In its updated assessment and reports, Towers Watson also took into account and considered the limited compensation-related risks within the Company, the involvement and authority of the Board in both compensation and risk management oversight, the presence of effective risk mitigating practices in the design of compensation programs and the changes to the long-term executive incentive compensation mix that place a greater emphasis on performance-conditioned long-term incentive grants.

Fees

The following table shows the fees paid to Towers Watson for services provided in the last two fiscal years:

Type of Work	2021	2020
Executive Compensation-Related Fees	81,415	$2,272
All Other Fees1	6,825	Nil

1. All Other fees relate to fees paid for general industry compensation related services and surveys.

Submitted by the HR&C Committee:

Brian G. Kenning (Chair)

John N. Floren

Marian Lawson

Janice G. Rennie

Robert L. Phillips

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Performance Graph

The following graph and table compare the total cumulative return to a Shareholder who invested $100 in our Common shares on December 31, 2016 with the cumulative total return of the S&P/TSX Composite Index and the S&P/TSX Paper & Forest Products Index for the same period.

	2016	2017	2018	2019	2020	2021
West Fraser Timber Co. Ltd.1, 2	100	162	143	123	178	265
S&P/TSX Composite Index1, 2	100	109	99	122	129	161
S&P/TSX Paper & Forest Products Index1, 2	100	143	120	108	160	222

Notes:

1. All returns are expressed on a total return basis (all cash and stock dividends reinvested in the index or security).

2. All information per Bloomberg.

We consider the S&P/TSX Paper & Forest Products Index to be an appropriate comparative measure. This is a capitalization-weighted index of leading forest products companies and includes Canfor Corporation, Interfor Corporation, Norbord (prior to the Norbord Acquisition), Stella-Jones Inc., Western Forest Products Inc., and West Fraser.

The following graph and table illustrates the relationship between the indexed TSR of our Common shares on the TSX from December 31, 2016 to the period ending December 31, 2021 considering a $100 investment versus total indexed direct compensation for the Company’s Named Executive Officers (2016 equals $100).

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	2016	2017	2018	2019	2020	2021
West Fraser Timber Co. Ltd.1	100	162	143	123	178	265
NEO total direct compensation2	100	116	114	82	104	1503

Notes:

1. All returns are expressed on a total return basis (all cash and stock dividends reinvested in the index or security).

2. Named Executive Officer direct compensation includes base salary, annual incentive (bonus) plan payments, share-based and Option-based awards measured using the Binomial valuation method.

3. Does not include severance entitlements paid to Mr. Wijnbergen in connection with his resignation and retirement on December 31, 2021 payable under the terms of the letter agreement entered into with Norbord on November 9, 2020.

Executive Compensation

Total compensation for Named Executive Officers, as described in the Summary Compensation Table set out below, reflects a gradual recovery from the significant downturn in the forest products industry that began in 2006. Annual incentive bonuses for Named Executive Officers will be earned in those years where the Company achieves a ROSE in excess of the minimum threshold, with payment occurring in the following year. The minimum ROSE threshold was not met in 2015 and no annual incentive bonuses were earned by the senior executives, including the Named Executive Officers. In 2016, 2017 and 2018 the minimum ROSE threshold was exceeded and annual incentive bonuses were earned, with payment occurring in each of the following years. The minimum ROSE threshold was not met in 2019 and no annual incentive bonuses were earned by the senior executives, including the Named Executive Officers. In 2020, the annual minimum ROSE threshold was exceeded and the maximum annual incentive bonuses were earned by the senior executives, including the Named Executive Officers, which were paid out in 2021. In 2021, the annual minimum ROSE threshold was exceeded and the maximum annual incentive bonuses were earned by the senior executives, including the Named Executive Officers, which were paid out in 2022. See also “Annual Incentive Bonus Plan”.

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The compensation of each of our Named Executive Officers for our three most recently completed financial years is set out below:

Summary Compensation Table

Name and principal position	Year	Salary ($)	Share- based awards1 ($)	Option- based awards2 ($)	Non-equity incentive plan compensation ($)		Pension value4 ($)	All other compensation5 ($)	Total compensation ($)
					Annual incentive plans3	Long-term incentive plans
Ray Ferris6 President and CEO	2021 2020 2019	984,375 758,020 703,750	1,151,505 834,895 568,675	1,152,452 835,100 568,730	1,650,000 1,093,750 Nil	Nil Nil Nil	2,702,300 653,100 1,781,900	Nil Nil Nil	7,640,632 4,174,865 3,623,055
Chris Virostek Vice- President, Finance and CFO	2021 2020 2019	491,460 440,000 423,750	287,677 260,935 231,005	288,280 260,985 230,940	530,000 455,000 Nil	Nil Nil Nil	428,000 257,700 280,500	Nil Nil Nil	2,025,417 1,674,620 1,166,195
Peter Wijnbergen7 President, Engineered Wood8	2021	693,750	599,692	600,277	775,000	Nil	47,678	Nil	2,716,397
Sean McLaren9 Chief Operating Officer	2021 2020 2019	508,713 468,304 453,367	243,388 173,395 169,920	242,516 173,345 170,025	563,400 478,559 Nil	Nil Nil Nil	1,340,700 54,800 724,100	Nil Nil Nil	2,898,717 1,348,403 1,517,412
Robin Lampard10 Senior Vice-President Finance	2021	433,835	234,610	235,335	482,000	Nil	26,360	Nil	1,412,140

1. For a description of the units see “Phantom Share Unit Plan”. Units are valued at the date of grant using the Towers Watson Binomial, method which was the method used by the HR&C Committee when granting the units. This method was applied consistently in its competitive market analysis.

2. Options have a term of ten years and vest as to 20% on each of the first through fifth anniversary dates of the grant date. Each Option was valued using the Towers Watson Binomial method for the same reason as described in footnote 1. Whether the executive will receive value under these Options will depend on the future market price of Common shares. A description of the current value of all Options held by each Named Executive Officer is set out in the charts under “Summary of Outstanding Options”.

3. Annual incentive (bonus) plan payments are included in the year earned and are paid in the following year.

4. Pension values for Mr. Ferris, Virostek, Wijnbergen and McLaren represent the change in the defined benefit pension liability related to the annual service cost, actual and assumed future compensation changes, including the retirement of Mr. Wijnbergen effective December 31, 2021 and the impact of plan changes, if any. The defined benefit pension value is calculated based on the Company’s best estimate of future events that affect pension liabilities, including assumptions about future salary adjustments and bonuses, and is reflected in the pension value for the Named Executive Officers. Defined benefit pension values will increase in those years where there has been a significant salary increase. Defined benefit pension values will also be affected by changes in future compensation assumptions and in particular in those years where such assumptions have been updated following periodic reviews of the underlying pension plans and their associated liabilities. Pension value for Ms. Lampard represents the Company’s basic and matching contributions under the defined contribution pension plan.

5. Perquisites and other personal benefits that exceed the lesser of $50,000 and 10% of total compensation for any of our Named Executive Officers.

6. Mr. Ferris was appointed President effective April 19, 2018, prior to which he was the Company’s Executive Vice-President and Chief Operating Officer, effective February 15, 2016. Mr. Ferris was appointed CEO, effective June 30, 2019, upon the retirement of Ted Seraphim from that role.

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7. Mr. Wijnbergen joined West Fraser on February 1, 2021 and was the President and CEO of Norbord until February 1, 2021. Mr. Wijnbergen’s 2019, 2020 and January 2021 compensation was earned at Norbord and not presented in the table.

8. Mr. Wijnbergen resigned and retired from his position as the President, Engineered Wood, effective December 31, 2021 and in connection with the letter agreement entered into with Norbord on November 9, 2020 was entitled to receive and was paid $3 million as severance entitlements thereunder.

9. Mr. McLaren was appointed as the Chief Operating Officer on December 7, 2021 and previously served as President, Solid Wood. During the three-year period reported in the table above, Mr. McLaren’s salary and annual incentive compensation was awarded in U.S. dollars. The exchange rate used to convert this U.S. dollar compensation was the Bank of Canada’s average US/CDN exchange rate for the fiscal year (2021 = 1.2520; 2020 = 1.3405; 2019 = 1.3268).

10. Ms. Lampard joined West Fraser on February 1, 2021 and was Senior Vice-President and CFO of Norbord until February 1, 2021. Ms. Lampard’s 2019, 2020 and January 2021 compensation was earned at Norbord and not presented in the table.

Option Grants

Description of West Fraser Stock Option Plan

Under the Stock Option Plan, the exercise price of an Option per Common share will not be less than the Closing Price on the last trading day before the Option is granted. The length of the term of Options will be fixed by the Board or the HR&C Committee at not more than ten years and, unless otherwise determined by the Board or the HR&C Committee, Options vest at the rate of 20% per year over the first five years of the term.

Under the Stock Option Plan, Options may not be exercised after a holder ceases to be an eligible participant, except that (a) an Option held on the death of an Option holder may be exercised by the personal representative of the holder during the period ending on the earlier of its expiry date and two years after the date of death, (b) an Option held on the retirement or total disability of an Option holder may be exercised during the period ending on the earlier of its expiry date and five years after the date of retirement or disability, and (c) a vested Option held in any other case may be exercised no later than the earlier of its expiry date and 30 days after the date the holder ceases to be an eligible participant. Options are not assignable, other than those that may be exercised by the personal representative of a deceased holder. We do not provide any financial assistance to holders of Options in connection with the exercise of Options.

The number of Common shares subject to an Option, the exercise price per Common share and the total number of Common shares that may be made subject to Options under the Stock Option Plan will be adjusted proportionately in the event of any subdivision or consolidation of Common shares or any dividend payable in Common shares and will be adjusted as determined by the Board in the event of certain other reorganizations or other events affecting the Common shares. Under the Stock Option Plan, Options granted that have not vested do not automatically vest on a change of control.

The Stock Option Plan permits outstanding vested Options to be surrendered by the holder to the Company in return for a cash payment under the Cash Value Alternative. The cash payment for a surrendered Option is equal to the amount by which the weighted average price per share at which the Common shares were traded on the TSX on the last trading day exceeds the exercise price per Common share applicable to the Option multiplied by the number of Common shares underlying the Option and the amount determined by the HR&C Committee as representative of the estimated costs avoided by the Option holder (such as trading commissions) by virtue of electing the Cash Value Alternative. Since implementation of the Cash Value Alternative in 2003, only 219,535 Common shares have been issued on the exercise of outstanding Options under the Stock Option Plan. Since February 1, 2021, an additional 73,452 Common shares have been issued on the exercise of outstanding Replacement Options. Our management believes that the Stock Option Plan, with the Cash Value Alternative, operates in a manner similar to the types of long-term incentive plans currently recommended by major institutional shareholder groups for public companies in North America.

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The Stock Option Plan restricts the Option holdings of insiders. It provides that: (a) annual grants of Options to insiders may not be for a number of Common shares that exceeds 1% of the total number of our outstanding voting securities (the “Issued Shares”); (b) no single insider may hold, at any time, Options to acquire a number of Common shares that, together with all other Common shares issuable to the insider under any other equity compensation arrangements then in place (“Other Arrangements”), would exceed 5% of the Issued Shares; (c) the total number of Options held, at any time, by insiders cannot allow them to acquire a number of Common shares that, together with all other Common shares issuable to insiders under any Other Arrangements, would exceed 10% of the Issued Shares; and (d) the number of Common shares that may be acquired by all insiders during any 12-month period by exercising Options, together with all other Common shares issuable to insiders under any Other Arrangements, may not exceed 10% of the Issued Shares.

The Board has the power, without Shareholder approval, to amend, suspend, terminate or discontinue the Stock Option Plan, provided that doing so will not adversely alter or impair any Option without the written consent of the holder. This power includes the right to make appropriate adjustments to outstanding Options in the event of certain corporate transactions, to add provisions requiring forfeiture of Options in certain circumstances, to specify practices with respect to applicable tax withholdings, and to enhance clarity or correct ambiguous provisions in the Stock Option Plan. Notwithstanding this power, the Stock Option Plan provides that the Board may not, without Shareholder approval, amend the Stock Option Plan or an Option to: (i) increase the number of Common shares that may be issued; (ii) reduce the subscription price of an outstanding Option; (iii) extend the term of any Option beyond its expiry date or allow for an expiry date to be greater than ten years; (iv) allow non-permitted assignments or exercises of Options; (v) expand the persons entitled to participate in the Stock Option Plan; or (vi) provide for other types of equity-based compensation.

In 2007, we obtained the approval of our Shareholders to make certain amendments to the Stock Option Plan which included, amending the amendment provision to specify the circumstances in which Shareholder approval is or is not required for an amendment to the Stock Option Plan. In 2008 and 2010, our Board made housekeeping amendments to the Stock Option Plan to (i) clarify provisions related to retirement, disability or death, and (ii) clarify provisions related to withholding taxes, respectively.

In 2016, we obtained approval of our Shareholders to amend the Stock Option Plan to increase by 750,000 the number of Common shares that may be issued under Options and to restrict other forms of amendment without Shareholder approval. At the special meeting of Shareholders held on January 19, 2021 to approve the Norbord Acquisition, the Shareholders approved a further increase of 1,000,000 Common shares to the maximum number of Common shares that may be issued on the exercise of Options under the Stock Option Plan.

On February 15, 2022, the Board amended the Stock Option Plan to provide that (a) cash value would be determined using the VWAP as at the trading day prior to the date of exercise; and (b) for Options granted to U.S. residents, Shares will be issued and cash settled in U.S. dollars with the fair market value on settlement referencing the VWAP on the NYSE.

A total of 171,975 Options were granted pursuant to the Stock Option Plan during the financial year ended December 31, 2021 and a total of 131,452 Options were exercised for Common shares during the year. During 2021, an additional 124,566 Options were granted pursuant to the Stock Option Plan in February of 2022.

In the financial year ended December 31, 2021, 411,950 outstanding Options and Replacement Options were surrendered for cash and 27,000 outstanding Options and Replacement Options were surrendered for Common shares, respectively, by the Named Executive Officers.

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Description of Replacement Option Plans

In addition, the Company has adopted replacement option plans (the “Replacement Option Plans”) in connection with the Norbord Acquisition. These Replacement Option Plans exist solely to administer the Replacement Options, and no new Options may be granted thereunder following the completion of the Norbord Acquisition. The adoption of these plans did not require Shareholder approval under the policies of the TSX, as the aggregate number of Common shares issuable under them is less than 2% of the number of Common shares issued and outstanding prior to the Norbord Acquisition. Upon the exercise or expiry of all Replacement Options, the Replacement Option Plans will be terminated.

As at December 31, 2021, 286,223 Common shares were issuable on the exercise of Replacement Options. Of that total 284,862 Common shares are issuable under what was previously the Norbord stock option plan (plus an additional 1,023 options that are subject to the UK Option Sub-Plan), the principal terms of which are set out below. An additional 338 Common shares are issuable pursuant to a legacy stock option plan that Norbord had previously inherited in connection with its 2015 acquisition of Ainsworth Lumber Co. Ltd., and which West Fraser subsequently adopted as part of the Norbord Acquisition. Given the immaterial number of options outstanding under this plan, a detailed summary has not been provided.

The exercise price of the Replacement Options was determined by multiplying the exercise price of the Norbord Options by the Exchange Ratio. The Replacement Options generally have a 10-year term and continue to vest under their original terms, being at an annual rate of 20% per year beginning on the first anniversary of the date of grant.

Unless otherwise determined by the Board, an option will expire immediately in the event of resignation or termination of employment with cause, within 90 days of termination of employment without cause, within six months of the death of an optionholder, and in accordance with its terms on retirement. Notwithstanding the foregoing, the outstanding Norbord Options held by certain optionholders will immediately vest in the event such optionholders are terminated without cause or constructively dismissed within 24 months of the completion of the Norbord Acquisition.

Certain of the Replacement Options are subject to a UK Option Sub-Plan, which provides for options up to £30,000 in value (based on grant price) to receive capital gains tax treatment for each UK option recipient. The UK Option Sub-Plan provides for the issuance of options under the more restricted terms required by HM Revenue and Customs (UK) to qualify the options for such treatment.

Shareholder approval is required in respect of any amendment to the Replacement Option Plans that would: (a) increase the maximum number of Common shares issuable under such plans (other than on a corporate reorganization); (b) reduce the exercise price of Replacement Options to less than the market price of the Common shares on the date of the option grant; (c) reduce the exercise price of Replacement Options; (d) extend the expiry date for the benefit of an insider; (e) increase the maximum number of Common shares issuable to insiders under the Replacement Option Plans; or (f) amend any of the foregoing limitations.

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Summary of Outstanding Options

The Options granted to each of the Named Executive Officers during the financial year ended December 31, 2021 pursuant to the Stock Option Plan were as follows:

Option Grants During 2021

Name	Securities Under Options Granted (#)	% of Total Options Granted to Employees in Financial Year	Exercise or Base Price ($/Security)	Market Value of Securities Underlying Options on the Date of Grant ($/Security)1	Expiration Date
Ray Ferris	34,500	20	92.79	3,201,255	February 17, 2031
Chris Virostek	8,630	5	92.79	800,778	February 17, 2031
Peter Wijnbergen	17,9702	10	92.79	1,667,436	February 17, 2031
Sean McLaren	7,260	4	92.79	673,655	February 17, 2031
Robin Lampard	7,045	4	92.79	653,706	February 17, 2031

1. As of February 17, 2021.

2. On Mr. Wijnbergen’s retirement on December 31, 2021, 14,376 of these Options were cancelled.

The outstanding Options held by each Named Executive Officer that vested during the financial year ended December 31, 2021 were as follows:

Options and Replacement Options Vested During 2021

Name	Number of Options	Value ($)1
Ray Ferris	23,707	745,220
Chris Virostek	8,544	221,704
Peter Wijnbergen2 3	137,700	7,771,464
Sean McLaren	8,751	290,884
Robin Lampard3	20,925	863,939

1. Based on the Closing Price as at the date of vesting. No value is attributed to Options that have an exercise price greater than the Closing Price at date of vesting.

2. Mr. Wijnbergen resigned and retired from his position as the President, Engineered Wood, effective December 31, 2021 and in connection with the letter agreement entered into with Norbord on November 9, 2020 all his Replacement Options vested and will be exercisable for 12 months following such date in accordance with the terms of such agreement.

3. Includes only Replacement Options.

The following tables provide particulars of Options and Replacement Options held by each of the Named Executive Officers as of March 2, 2022 with current value based on the Closing Price of $126.28:

Ray Ferris

Option Grant Date	Exercisable	Non-- Exercisable	Exercise Price ($)	Current Value of Exercisable Options ($)	Current Value of Non- Exercisable Options ($)	Expiry Date
February 17, 2014	14,350	Nil	53.96	1,037,792	Nil	February 17, 2024
February 23, 2015	12,385	Nil	73.99	647,612	Nil	February 23, 2025
February 15, 2016	22,435	Nil	40.97	1,913,930	Nil	February 15, 2026
February 20, 2017	17,225	Nil	52.95	1,263,109	Nil	February 20, 2027
February 16, 2018	8,272	2,068	85.40	338,159	84,540	February 16, 2028
February 15, 2019	14,340	9,560	72.11	776,798	517,865	February 15, 2029
February 14, 2020	17,854	26,781	64.50	1,103,020	1,654,530	February 14, 2030

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Option Grant Date	Exercisable	Non- Exercisable	Exercise Price ($)	Current Value of Exercisable Options ($)	Current Value of Non- Exercisable Options ($)	Expiry Date
February 17, 2021	6,900	27,600	92.79	231,081	924,324	February 17, 2031
February 18, 2022	Nil	28,857	123.63	Nil	76,471	February 18, 2032
Totals	113,761	94,866		7,311,501	3,257,730

Chris Virostek

Option Grant Date	Exercisable	Non- Exercisable	Exercise Price ($)	Current Value of Exercisable Options ($)	Current Value of Non- Exercisable Options ($)	Expiry Date
April 3, 2017	3,200	2,300	55.62	226,112	162,518	April 3, 2027
February 16, 2018	6,052	1,513	85.40	247,406	61,851	February 16, 2028
February 15, 2019	5,823	3,882	72.11	315,432	210,288	February 15, 2029
February 14, 2020	5,580	8,370	64.50	344,732	517,099	February 14, 2030
February 17, 2021	1,726	6,904	92.79	57,804	231,215	February 17, 2031
February 18, 2022	Nil	6,954	123.63	Nil	18,428	February 18, 2032
Totals	22,381	29,923		1,191,486	1,201,399

Peter Wijnbergen

Option Grant Date	Exercisable	Non- Exercisable	Exercise Price ($)	Current Value of Exercisable Options ($)	Current Value of Non- Exercisable Options ($)	Expiry Date
Not applicable	Nil	Nil	Nil	Nil	Nil	Not applicable
Totals	Nil	Nil	Nil	Nil	Nil

Sean McLaren

Option Grant Date	Exercisable	Non- Exercisable	Exercise Price ($)	Current Value of Exercisable Options ($)	Current Value of Non- Exercisable Options ($)	Expiry Date
February 17, 2014	4,775	Nil	53.96	345,328	Nil	February 17, 2024
February 23, 2015	7,555	Nil	73.99	395,051	Nil	February 23, 2025
February 15, 2016	12,240	Nil	40.97	1,044,194	Nil	February 15, 2026
February 20, 2017	9,400	Nil	52.95	689,302	Nil	February 20, 2027
February 16, 2018	4,560	1,140	85.40	186,413	46,603	February 16, 2028
February 15, 2019	4,287	2,858	72.11	232,227	154,818	February 15, 2029
February 14, 2020	3,708	5,562	64.50	229,080	343,620	February 14, 2030
February 17, 2021	1,452	5,808	92.79	48,627	194,510	February 17, 2031
February 18, 2022	Nil	5,900	US$97.32	Nil	170,864	February 18, 2032
Totals	49,977	21,268		3,170,222	910,415

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Robin Lampard

Option Grant Date	Exercisable	Non- Exercisable	Exercise Price ($)	Current Value of Exercisable Options ($)	Current Value of Non- Exercisable Options ($)	Expiry Date
February 9, 20181	Nil	4,050	68.67	Nil	233,321	February 9, 2028
November 12, 20181	Nil	13,500	54.17	Nil	973,485	November 12, 2028
November 11, 20191	Nil	16,200	56.00	Nil	1,138,536	November 11, 2029
February 17, 2021	Nil	5,636	92.97	Nil	188,750	February 17, 2031
February 18, 2022	Nil	5,272	123.63	Nil	13,971	February 18, 2032
Totals	Nil	44,658		Nil	2,548,063

1. Option Grant Date reflected represents the original grant date of the Norbord Options. The Replacement Options were issued under the Replacement Option Plans, which were adopted by the Company on closing of the Norbord Acquisition.

RS Units and PS Units

Beginning in 2010, our Board has approved annual grants of RS Units and PS Units (collectively, “Units”) to Named Executive Officers and other employees pursuant to the Phantom Share Unit Plan. The Phantom Share Unit Plan and Units are described in the Report on Executive Compensation under the heading “Phantom Share Unit Plan”.

The Units granted to each of the Named Executive Officers during the financial year ended December 31, 2021 were as follows:

Equity-Based Grants During 2021

	Number of Units Granted1	% of Total Units Granted to Employees in the Current Year	Aggregate Market Value of Units on Date of Grant ($)	Aggregate Market Value of Units at December 31, 2021 ($)
Name	PSUs2	PSUs	PSUs3	PSUs4
Ray Ferris	14,430	20	1,338,960	1,741,412
Chris Virostek	3,605	5	334,508	435,051
Peter Wijnbergen	7,515	10	697,317	Nil5
Sean McLaren	3,050	4	283,010	368,074
Robin Lampard	2,940	4	272,803	354,799

1. No RS Units were issued during 2021.

2. PS Units.

3. Based on the Closing Price of $92.79 on the date prior to February 17, 2021.

4. Based on the Closing Price of $120.68 on December 31, 2021.

5. On retirement of Mr. Wijnbergen effective December 31, 2021, the 7,515 PSUs granted in 2021 were cancelled.

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The following table provides particulars of Units held by each of the Named Executive Officers as of December 31, 2021:

	Vesting 20221	Vesting 20231	Vesting 20241	Value as at December 31, 20212 ($)
Name	PSUs	PSUs	PSUs	PSUs
Ray Ferris	9,170	15,055	14,430	4,664,885
Chris Virostek	3,725	4,705	3,605	1,452,384
Peter Wijnbergen3	Nil	Nil	Nil	Nil
Sean McLaren	2,740	3,125	3,050	1,075,862
Robin Lampard4	-	-	2,940	354,799

1. Does not include PSUs to be credited under the Phantom Share Unit Plan as a result of dividends on the Common shares.

2. Based on the Closing Price of $120.68 on December 31, 2021. No RS Units of the Company were issued for these years.

3. PSUs granted to Mr. Wijnbergen by the Company in February 2021 were cancelled on his retirement. See the Equity-Based Awards Vested during 2021 for a discussion of the Norbord RSUs held by Mr. Wijnbergen which vested in 2021.

4. Ms. Lampard also held an additional 13,404 Norbord RSUs, including all dividend entitlements as of December 31, 2021, that will vest 50% in each of 2022 and 2023, having an aggregate value as of December 31, 2021 of $1,617,595.

The Units held by each of the Named Executive Officers that vested during the financial year ended December 31, 2021 were as follows:

Equity-Based Awards Vested During 2021

	Number of units vested		Value paid2 ($)
Name	RSUs	PSUs1	RSUs2	PSUs2
Ray Ferris	2,119	2,119	179,642	328,744
Chris Virostek	1,558	1,558	132,090	241,724
Peter Wijnbergen3	53,143	Nil	5,553,019	Nil
Sean McLaren	1,174	1,174	99,507	182,099
Robin Lampard4	15,884	Nil	1,401,937	Nil

1. PS Units granted during 2018 plus additional Units credited under the Phantom Share Unit Plan as a result of dividends on the Common shares.

2. Except as noted for Mr. Wijnbergen and Ms. Lampard described in notes 3 and 4 of this table, the value paid in 2021 was based on 20-day volume weighted average trading price for the period immediately preceding February 16, 2021 of $84.78 per unit for RS Units and $84.78 per unit for PS Units and a performance multiplier of 1.83 for PS Units.

3. Includes 13,307 Norbord RSUs which vested on February 4, 2021 at a price of $86.56 per unit and 13,027 Norbord RSUs which vested on August 1, 2021 at a price of $89.49 per unit and 26,810 Norbord RSUs which vested early on December 31, 2021 at a price of $120.68 per unit in accordance with Mr. Wijnbergen’s retirement and the letter agreement entered into with Norbord on November 9, 2020. PS Units granted to Mr. Wijnbergen by the Company in February 2021 were cancelled on his retirement.

4. Includes 6,653 Norbord RSUs which vested on February 4, 2021 at a price of $86.56 per unit and 9,230 Norbord RSUs which vested on August 1, 2021 at a price of $89.49 per unit.

Pension Plans

The majority of our fulltime salaried employees are covered by non-contributory defined benefit pension plans.

For those salaried employees whose employment began before 2016, the plans provide a pension equal to 2% of the highest average compensation (which includes base salary and bonuses) of the employee for any consecutive 60-month period in that employee’s final 10 years with us, multiplied by the number of years of credited service with us. Normal retirement is at age 65. In accordance with applicable tax legislation, these plans allow for additional years of credited service until a continuing employee reaches age 71. Each of these pension plans allows for early retirement at age 55 with a minimum service requirement of two years. Benefits provided for early retirement are reduced by 4% per year for retirement between the ages of 55 and 57 and by 3% per year for retirement between the ages of 58 and 59. No reduction is made for retirement between the ages of 60 and 64.

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On January 1, 2016, we introduced a new non-contributory defined benefit pension plan for salaried employees whose employment begins on or after that date. Changes from the existing plans include a pension based on the employee’s average annual salary over the final 10 years with us, as well as the elimination of early retirement benefits so that full pension benefits are only achieved on retirement at age 65 or over. In accordance with applicable tax legislation, this new plan also allows for additional years of credited service until a continuing employee reaches age 71.

On January 1, 2022 the Canadian salaried defined benefit pension plans closed to new entrants. New salaried employees will be enrolled in a defined contribution pension plan with an 8% employer contribution along with 100% matching contributions for the first 3% of employee contributions. At the same time in the US, the 401(k) plan for salaried lumber employees, OSB corporate employees and non union hourly employees will provide a 3% non-elective retirement contribution, along with 100% matching employer contributions on the first 5% an employee contributes to the plan.

Defined Benefit Pension Plans

The estimated annual pension payable upon retirement under the defined benefit pension plans, assuming employment began before 2016, no reduction for early retirement and based on the standard form life annuity for a minimum of 60 months with no joint survivor pension, is as follows:

Estimated Annual Benefits Payable upon Retirement

Annual Compensation	Years of Service
	15 Years	20 Years	25 Years	30 Years
$400,000	$120,000	$160,000	$200,000	$240,000
$500,000	$150,000	$200,000	$250,000	$300,000
$600,000	$180,000	$240,000	$300,000	$360,000
$700,000	$210,000	$280,000	$350,000	$420,000
$800,000	$240,000	$320,000	$400,000	$480,000
$900,000	$270,000	$360,000	$450,000	$540,000
$1,000,000	$300,000	$400,000	$500,000	$600,000
$1,100,000	$330,000	$440,000	$550,000	$660,000
$1,200,000	$360,000	$480,000	$600,000	$720,000
$1,300,000	$390,000	$520,000	$650,000	$780,000
$1,400,000	$420,000	$560,000	$700,000	$840,000
$1,500,000	$450,000	$600,000	$750,000	$900,000

Compensation for the purposes of the pension plans, based on employment beginning before 2016, is defined as the average annual compensation, including salary and bonus, of the highest consecutive 60-month period in the last 10 years’ service with the Company.

The benefits listed in the table are not subject to any deduction for Canada Pension Plan or other offset amounts.

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The table below sets forth the accumulated defined benefit under our pension plans for each of the Named Executive Officers as at December 31, 2021:

Name	Number of years credited service (#)	Annual benefits payable1 ($)		Opening present value of defined benefit obligation2 ($)	Compensatory change3 ($)	Non- compensatory change4 ($)	Closing present value of defined benefit obligation2 ($)
		At year end	At age 65
Ray Ferris	20.3	513,900	651,300	8,685,100	2,702,300	(157,000)	11,230,400
Chris Virostek	4.7	64,600	284,500	1,043,500	428,000	(75,300)	1,396,200
Peter Wijnbergen	34.5	135,131	135,131	1,914,465	47,678	(47,256)	1,914,887
Sean McLaren	33.5	408,700	554,400	6,583,300	1,340,700	(301,000)	7,623,000
Robin Lampard	9.75	43,737	43,737	607,797	0	(2,126)	605,671

1. Represents the estimated annual pension, excluding any employee-paid ancillary benefits, where applicable, that would be received by the Named Executive Officer upon retirement at age 65 based on actual pensionable earnings at December 31, 2020. The annual pension payable at year end is based on actual credited service at December 31, 2021. The annual pension at age 65 is based on credited service projected to age 65. In accordance with applicable tax legislation, our pension plans allow for additional years of credited service until a continuing employee reaches age 71.

2. The present value is the estimated value of the pension obligation to the date indicated using the actuarial assumptions and methods that are consistent with those used in determining pension liabilities as disclosed in the consolidated financial statements.

3. Compensatory change represents the change in the pension liability related to the annual service cost, actual and assumed future compensation changes and the impact of plan changes, if any. The pension value is calculated based on the Company’s best estimate of future events that affect pension liabilities, including assumptions about future salary adjustments and bonuses, and is reflected in the pension value for the Named Executive Officers. Pension values will increase in those years where there has been a significant salary increase. Pension values will also be affected by changes in future compensation assumptions and in particular in those years where such assumptions have been updated following periodic reviews of the underlying pension plans and their associated liabilities.

4. Non-compensatory change includes items such as interest on the obligation and the impact of changes in the discount rate assumption.

The estimated years of credited service under the defined benefit pension plans at the normal retirement age of 65 for each Named Executive Officer is set out below. We have not granted on a discretionary basis any additional years of credited service to our Named Executive Officers in excess of their actual years of service.

Ray Ferris	27 years
Chris Virostek	22 years
Peter Wijnbergen	34 years1
Sean McLaren	46 years
Robin Lampard	10 years2

1. The years of credited service for Mr. Wijnbergen is as of the date of his retirement on December 31, 2021 and not at the normal retirement age of 65.

2. The years of credited service for Ms. Lampard reflect her accrued services in the defined benefit pension plan for Norbord. Ms. Lampard ceased participating in the Norbord defined benefit pension plan effective January 1, 2006 and her service in that plan is frozen at 10 years.

Defined Contribution Pension Plans

The following table shows the value of investments held by the NEOs participating in the Company’s defined contribution pension plans:

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Name	Accumulated Value at Dec. 31, 2020	Total Compensatory Change1	Accumulated Value at Dec. 31, 2021
Peter Wijnbergen2	$   197,762	–	$   218,723
Robin Lampard3	$1,124,884	$29,210	$1,350,149

1. These amounts represent employer contributions to the Company’s defined contribution pension plans.

2. Mr. Wijnbergen participates in a flex component of the defined benefit pension plan on a voluntary basis within prescribed limits. Flex contributions are deposited in a separate defined contribution account and enable participants to enhance their defined benefit pension on retirement.

3. Ms. Lampard, as a member accruing benefits under the defined contribution pension plan, is no longer eligible to contribute to the flex component of the defined benefit contribution pension plan, but has outstanding balances from her participation prior to 2006 that are included in the table.

Severance and Change of Control Agreements

On November 9, 2020, Norbord entered into letter agreements with Mr. Peter Wijnbergen and Ms. Robin Lampard, providing for severance entitlements in the event that (i) Norbord (or its successor) or any of its affiliates terminated their employment on a without cause basis or such individual resigns in circumstances constituting constructive dismissal within 24 months following the Norbord Acquisition or other change of control transaction, or (ii) in connection with the consummation of the Norbord Acquisition or other change of control transaction, Norbord (or its successor) or any of its affiliates does not offer such individual a comparable position. Upon such event, the individual is entitled to receive an amount equal to the product of (a) one month per full year of employment with Norbord, and (b) the sum of (i) 1/12th of the individual’s base salary at the rate in effect on the termination date, and (ii) 1/12th the average of the individual’s annual bonus earned in respect of the three most recently completed years prior to the termination date, less all applicable taxes, deductions and withholdings; provided that (a) is no less than 12 months or greater than 24 months. In addition, on November 9, 2020, Norbord entered into letter agreements with Mr. Peter Wijnbergen and Ms. Robin Lampard, providing that in the event that Norbord (or its successor) or any of its affiliates terminated their employment on a without cause basis or such individual resigns in circumstances constituting constructive dismissal within 24 months following the Norbord Acquisition or other change of control transaction, all the Replacement Options held by them would immediately vest and would be exercisable for 12 months after the termination date and all the Norbord RSUs held by them would also immediately vest and be settled within 30 days following the termination date. The Norbord Acquisition constituted a change of control of Norbord for the purposes of these agreements. Mr. Wijnbergen resigned and retired from the Company effective December 31, 2021 and in connection with his Norbord letter agreement was entitled to receive and was paid those amounts as described in the Summary Compensation Table and the notes thereto and all his Replacement Options vested and are exercisable and all his Norbord RSUs also vested and were settled in accordance with the terms of such agreements.

In addition, in connection with arrangements related to his resignation and retirement from the Company on December 31 2021, the Company provided Mr. Wijnbergen with the right to receive his annual bonus pursuant to the terms of the Company’s Bonus Plan in respect of his services and performance following the Norbord Acquisition and further agreed to permit the vesting of 20% of the stock options awarded to him after the Norbord Acquisition on the normal vesting schedule. Further, the Company has entered into a six-month consulting agreement under which Mr. Wijnbergen will provide certain transition and integration support services for six months following his retirement from the Company.

Other than as described above and pension and retirement benefits described elsewhere in this Circular, the Company has not entered into any agreements with its Named Executive Officers that provide for payments following or in connection with any termination (whether voluntary, involuntary or constructive) or a change in control of the Company.

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Directors’ Compensation and Holdings

For a description of retainers and fees payable to Directors, actual compensation paid during 2021 and securities held by Directors, see “Information regarding Nominees for Election as Directors-Director Compensation”.

Interest of Informed Persons in Material Transactions

No informed person of the Company (which includes our Directors and officers and persons who own or control securities carrying 10% or more of the voting rights attached to all of our voting securities) or any associate or affiliate of any informed person has had a material interest in any transaction since the commencement of the Company’s most recently completed financial year or has a material interest in any proposed transaction which has materially affected or would affect the Company or any of its subsidiaries.

Indebtedness of Directors, Officers and Employees

The following table sets out the aggregate indebtedness outstanding to us from our employees and former employees as at March 2, 2022. We do not make loans to our Directors or officers. During 2021, no loans were outstanding to persons who were Directors or officers during 2021 or to any of our former Directors or officers, or their associates.

AGGREGATE INDEBTEDNESS
Purpose	To the Company or its Subsidiaries	To Another Entity
Share purchases	Nil	Nil
Employee loans	USD$474,888	Nil

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Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information with respect to securities authorized for issuance under equity compensation plans that permit issuance from treasury as at December 31, 2021.

	Number of securities to be issued upon exercise of outstanding Options, warrants and rights	Weighted-average exercise price of outstanding Options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	(a)	(b)	(c)
Equity compensation plans approved by Shareholders	791,617	$70.40	1,025,337
Equity compensation plans not approved by Shareholders1	286,223	$56.22	Nil
Total	1,077,840	$66.64	1,025,337

1. In connection with the Norbord Acquisition, the Company adopted the Replacement Option Plans, pursuant to which the Company has issued Replacement Options. Upon the exercise or expiry of all such Replacement Options, the Replacement Option Plans will be terminated.

ADDITIONAL INFORMATION

Additional information (including financial information) relating to us can be found in our Annual Report, which includes our audited financial statements for the years ended December 31, 2021 and 2020 and the accompanying audit report and management’s discussion and analysis and in our Annual Information Form. The Annual Report and Annual Information Form are on our website at www.westfraser.com and can also be found on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml. Copies of the Annual Report and the relevant portion of any documents incorporated by reference in the Annual Report, the Annual Information Form, as well as additional copies of this Circular, may be obtained upon request to Robert B. Winslow, CFA, Director, Investor Relations & Corporate Development, Suite 501 – 858 Beatty Street, Vancouver, B.C., V6B 1C1 or by emailing to shareholder@westfraser.com.

DATED at Vancouver, B.C., March 8, 2022.

BY ORDER OF THE BOARD

Raymond Ferris

President and Chief Executive Officer

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SCHEDULE “A”

Amendment of Articles

NOTICES

88A.    In addition to any delivery method for a notice provided herein in these Articles, and unless the Business Corporations Act or these Articles provide otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by the Company to a member or director may be sent by any one of the following methods:

(a)        facsimile to the facsimile (fax) number provided by the intended recipient for the sending of that record or records of that class;

(b)        email to the email address provided by the intended recipient for the sending of that record or records of that class;

(c)        physical delivery to the intended recipient; or

(d)        as otherwise permitted by any securities legislation in any province or territory of Canada or in the federal jurisdiction of the United States or in any state in the United States that is applicable to the Company and all regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by securities commissions or similar authorities appointed under that legislation.

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SCHEDULE “B”

U.S. Employee Stock Purchase Plan

[Please see attached]

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WEST FRASER TIMBER CO. LTD.

(the “Corporation”)

U.S. EMPLOYEE STOCK PURCHASE PLAN

1.       Purpose. The purpose of the Employee Share Purchase Plan (the “Plan”) of the Corporation is to provide eligible Employees of Participating Subsidiaries with a means of acquiring an equity interest in the Corporation through payroll deductions or other contributions in order to enhance such employees’ sense of participation in the affairs of the Corporation.

This Plan includes two components:

(a) a component intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “423 Component”), the provisions of which shall be construed so as to extend and limit participation in a uniform and nondiscriminatory manner consistent with the requirements of Section 423 of the Code; and

(b) a component that does not qualify as an “employee stock purchase plan” under Section 423 of the Code (the “Non-423 Component”), under which options shall be granted pursuant to rules, procedures or sub-plans adopted by the Committee designed to achieve tax, securities laws or other objectives for eligible Employees, the Corporation and its Participating Subsidiaries.

Except as otherwise provided in this Plan, the Non-423 Component will operate and be administered in the same manner as the 423 Component.

West Fraser Timber Co. Ltd. also offers a wholly separate employee stock purchase plan for employees of designated Canadian subsidiaries of the Corporation (the “Canadian ESPP”). This Canadian ESPP is a separate, unrelated plan that (i) does not qualify as an “employee stock purchase plan” under Section 423 of the Code, and (ii) is not considered a Non-423 Component for purposes of this Plan. The designated Canadian subsidiaries under the Canadian ESPP are not Participating Subsidiaries for purposes of this Plan.

2.       Definitions. As used herein, the terms set forth below have the meanings assigned to them in this Section 2 and shall include the plural as well as the singular.

(a) “1933 Act” means the Securities Act of 1933, as amended;

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended;

(c) “Administrative Agent” means such trust company as may from time to time be appointed by the Board and with whom the Corporation enters into an Administration Agreement with respect hereto;

(d) “Administration Agreement” means the agreement with the Administrative Agent in respect of the Plan, as amended or replaced from time to time;

(e) “Blackout Period” means a blackout period contemplated in the Corporation’s Securities Trading Policy;

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(f) “Board” means the Board of Directors of West Fraser Timber Co. Ltd.;

(g) “Business Day” shall mean a day on which the NYSE is open for trading.

(h) “Code” means the Internal Revenue Code of 1986, as amended.

(i) “Committee” means the Human Resources & Compensation Committee of the Corporation, or the designee of the Human Resources & Compensation Committee;

(j) “Common Shares” means the Class B common shares, no par value, of the Corporation;

(k) “Corporation” means West Fraser Timber Co. Ltd.;

(l) “Compensation” means the base pay or base hourly rate pay received by a Participant and which, for clarity, does not include: (i) commissions, overtime and regular annual, quarterly and monthly cash bonuses and vacation, holiday and sick pay, (ii) income related to stock option awards, stock grants and other equity incentive awards, (iii) expense reimbursements, (iv) relocation-related payments, (v) benefit plan payments (including but not limited to short-term disability pay, long-term disability pay, maternity pay, military pay, tuition reimbursement and adoption assistance), (vi) accrued but unpaid compensation for a deceased Participant, (vii) income from non-cash and fringe benefits, (viii) severance payments, and (ix) other forms of compensation not specifically listed herein .

(m) “Employee” means any individual who is a common law employee of any of the Participating Subsidiaries. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Participating Subsidiary, as appropriate, and only to the extent permitted under Section 423 of the Code with respect to the 423 Component. For purposes of the Plan, an individual who performs services for a Participating Subsidiary pursuant to an agreement (written or oral) that classifies such individual’s relationship with the Participating Subsidiary as other than a common law employee shall not be considered an “employee” with respect to any period preceding the date on which a court or administrative agency issues a final determination that such individual is an “employee.”;

(n) “Enrollment Date” means the first Business Day of each Offering Period;

(o) “Exercise Date” means the last Business Day of each Offering Period (or, if determined by the Committee, the Purchase Period if different from the Offering Period);

(p) “Fair Market Value” on or as of any date means the weighted average purchase price for the Common Shares acquired on NYSE on the relevant date; or, if the Common Shares are no longer listed on NYSE, the weighted average purchase price for Common Shares acquired on such other exchange on which the Shares are listed;

(q) “Insider” means an “insider” as defined in the rules and policies of the TSX or as defined in the Securities Act (British Columbia), which will include any “associate” of such a person, as defined in the Securities Act (British Columbia).

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(r) “NYSE” means New York Stock Exchange;

(s) “Offering Period” means a period of three (3) months commencing on January 1, April 1, July 1 and October 1 of each calendar year or such other period designated by the Committee; provided that in no event shall an Offering Period exceed 27 months. The first Offering Period shall commence no earlier than July 1, 2021. Notwithstanding anything herein to the contrary, the Committee may establish an Offering Period with multiple Purchase Periods within such Offering Period;

(t) “Option” means an option granted under this Plan that entitles a Participant to purchase Common Shares;

(u) “Participant” means an Employee who satisfies the requirements of Sections 3 and 5 of the Plan;

(v) “Participating Subsidiary” means each Subsidiary of the Corporation designated by the Committee as a “Participating Subsidiary” and whose Employees will be entitled to participate in this Plan, which will include initially those Subsidiaries of the Corporation identified in Schedule A to this Plan;

(w) “Plan” means this U.S. Employee Stock Purchase Plan of the Corporation, as amended from time to time.

(x) “Purchase Account” means the account maintained for record keeping purposes by the Administrative Agent in the name of each Participant;

(y) “Purchase Period” means the period designated by the Committee during which payroll deductions or other contributions of the Participants are accumulated under the Plan. A Purchase Period may coincide with an entire Offering Period or there may be multiple Purchase Periods within an Offering Period, as determined by the Committee prior to the commencement of the applicable Offering Period;

(z) “Purchase Price” means with respect to an Offering Period an amount equal to 85% of the Fair Market Value of a Common Share on the Exercise Date;

(aa) “Purchased Shares” means the Common Shares purchased for the account of a Participant pursuant to the exercise of Options under the Plan;

(bb) “Subsidiary” means an entity, domestic or foreign, of which not less than 50% of the voting equity is held by the Corporation or a Subsidiary, whether or not such entity now exists or is hereafter organized or acquired by the Corporation or a Subsidiary; provided such entity is also a “subsidiary” within the meaning of Section 424 of the Code;

(cc) “Termination Date” means (i) the date on which a Participant terminates employment or on which the Participant ceases to provide services to a Subsidiary as an employee or (ii) subject to Section 423 of the Code with respect to the 423 Component, the date on which the Participant’s employment is determined to have been terminated for purposes of the Plan by the Committee. The Termination Date specifically does not include any period following that date which the Participant may be eligible for or in receipt of other

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payments from the Corporation including in lieu of notice or termination or severance pay or as wrongful dismissal damages;

(dd) “TSX” means the Toronto Stock Exchange; and

(ee) “Undisclosed Material Information” means any material information, as defined in the Corporation’s Disclosure Policy as it may be amended or supplemented from time to time, that has not been publicly disseminated by the Corporation.

3.       Eligibility. For each Option Period, any Employee of a Participating Subsidiary will be eligible to be granted Options under the Plan, provided that:

(a) Employees whose customary employment is for less than five (5) months in a calendar year are not eligible to participate in the Plan;

(b) Employees whose customary employment is 20 hours or less per week are not eligible to participate in the Plan; and

(c) the Committee may from time to time exclude Employees from the Section 423 component of the Plan where such exclusions are consistent with the permitted exclusions under Section 423(b) of the Code.

4.       Limitations on Option Grants. Notwithstanding the eligibility of an Employee to receive a grant of an Option under Section 3 of this Plan, no Employee shall be granted an Option under the 423 Component of the Plan if:

(a) immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Corporation or any of its Subsidiaries and/or hold outstanding Options or options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Corporation or any of their respective Subsidiaries;

(b) such Option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Corporation and its Subsidiaries to accrue at a rate that exceeds $15,000 of the Fair Market Value of such stock (determined at the time each such Option is granted) for each calendar year in which such Option is outstanding at any time.

(c) the grant of such Option would entitled the Employee to purchase more than 5,000 Common Shares during any Offering Period; and

(d) in no event may a Participant be granted an Option under the Plan following his or her Termination Date.

For purposes of paragraph (a), the rules of Section 424(d) of the Code shall apply in determining the stock ownership of an individual. The provisions of paragraph (b) shall be interpreted in accordance with Section 423(b)(8) of the Code.

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5.        Participation.

(a) An Employee shall be eligible to participate on the first Enrollment Date that occurs at least 1 year (or such other time determined by the Committee and consistent with Section 423 of the Code with respect to the 423 Component) after such Employee’s first date of employment with a Participating Subsidiary.

(b) Subject to paragraph (c) below, an Employee that is eligible under paragraph (a) may elect to become a Participant by properly completing and submitting a participation election form (a “Participation Election Form”) to a Participating Subsidiary or to the Administrative Agent, if directed by the Participating Subsidiary.

(c) Notwithstanding paragraph (b), no Employee will be entitled to deliver a Participant Election Form during a Blackout Period. The Participation Election Form will include the confirmation of the Employee that the Employee is not aware of any Undisclosed Material Information at the time of execution of the Participation Election Form.

(d) An Employee who does not become a Participant on the first Enrollment Date on which he or she is eligible may thereafter become a Participant on any subsequent Enrollment Date by properly completing and submitting a Participation Election Form.

(e) Payroll deductions for a Participant shall commence on the first payroll date following the Enrollment Date and shall end on the last payroll date in the Purchase Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 12 hereof.

6.        Payroll Deductions.

(a) A Participant shall elect to have payroll deductions made during a Purchase Period equal to no less than 1% of the Participant’s Compensation up to a maximum of 10% (or such greater amount as the Committee establishes from time to time). The election will be made on the Participant Election Form submitted by the Participant. The amount of such payroll deductions shall be in whole percentages.

(b) All payroll deductions made by a Participant shall be credited to his or her Purchase Account.

(c) A Participant may not make any additional payments into his or her Purchase Account. Notwithstanding the foregoing or any provisions to the contrary in the Plan, the Committee may allow participants to make other contributions under the Plan via cash, check, or other means instead of payroll deductions if payroll deductions are not permitted under applicable local law, and for any Offering Period under the 423 Component, administratively feasible and the Committee determines that such other contributions are permissible under Section 423 of the Code.

(d) Except as otherwise determined by the Committee prior to the commencement of an Offering Period, a Participant may not increase or decrease the rate of payroll deductions during an Offering Period. A Participant may change his or her payroll deduction percentage under subsection (a) above for any subsequent Offering Period

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by properly completing and submitting an election change form in accordance with the procedures prescribed by the Committee. The change in amount shall be effective as of the first Enrollment Date following the date of filing of the election change form. Unless otherwise determined by the Committee prior to the commencement of an Offering Period, a payroll deduction election will automatically apply to the next Offering Period, unless otherwise cancelled or changed by the Participant prior to the commencement of such Offering Period.

(e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 4(b) of this Plan, a Participant’s payroll deductions may be decreased to 0% at any time during an Offering Period. Payroll deductions shall recommence at the rate provided in such Participant’s election form at the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 13 hereof.

7.       Grant of Option. On the applicable Enrollment Date, each Participant in an Offering Period shall be granted an Option to purchase on the applicable Exercise Date a number of full and fractional Common Shares determined by dividing such Participant’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s Purchase Account as of the applicable Exercise Date by the applicable Purchase Price.

8.       Exercise of Option. A Participant’s Option for Common Shares shall be exercised automatically on the Exercise Date, and the maximum number of Shares subject to the Option shall be procured for such Participant at the applicable Purchase Price with the payroll deductions accumulated during the Purchase Period in his or her Purchase Account. The Corporation will satisfy the exercise of all Participant’s Options for Common Shares through either:

(a) the purchase of Common Shares on the NYSE on behalf of the applicable Participants on the open market through an independent broker retained by the Administrative Agent; or

(b) at any time following approval of this plan by the shareholders of the Corporation and by the TSX and NYSE in accordance with their rules and policies, the issuance of Common Shares to the credit of the Participant.

In the event of the purchase of Common Shares on the NYSE under paragraph (a), the number of Purchased Shares deliverable to the Participant on the Exercise Date will be credited to the Participant effective on the Exercise Date through the Participant’s Purchase Account with the Administrative Agent, which will include any fractional numbers of Purchased Shares that may be credited to the Participant.

In the event of the issuance of Common Shares by the Company under paragraph (b), the Common Shares will be issued in book entry form in the account of the Administrative Agent and be considered to be issued and outstanding to such Participant’s credit though the Participant’s Purchase Account as of the Exercise Date. Any issuance of Common Shares by the Company under paragraph (b) will be subject to the Insider participation limits set forth in Section 22(c) of this Plan.

9.       Purchase Accounts. The Administrative Agent shall establish a Purchase Account for each Participant and shall record in each Purchase Account (i) accumulated payroll deductions in the

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Participant’s Purchase Account, (iii) the number of Purchased Shares (including fractional shares) credited to the Participant’s Purchase Account upon each Option exercise, and (iii) the amount of any expenses, if any, allocated to such Purchase Account. The following will apply with respect to Common Shares held by the Administrative Agent under this Plan on behalf of a Participant:

(a) Common Shares (including fractional shares) purchased by or issued to the Administrative Agent under this Plan shall be registered in the name of the Administrative Agent or such other name as the Administrative Agent determines;

(b) whole Common Shares allocated to a Participant’s Purchase Account will be voted by the Administrative Agent in accordance with the directions, if any, of the Participant;

(c) a Participant’s Purchase Account will reflect any cash received by the Administrative Agent on account of dividends declared and paid by the Corporation on any Common Shares purchased by or issued to the Administrative Agent and held on behalf of the Participant in accordance with this Plan;

(d) the Committee may require that Shares be retained with such brokers or agents for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares, and may also impose a transaction fee with respect to a sale of Shares issued to a Participant’s credit and held by such a broker or agent; and

(e) the Committee may permit Shares purchased under the Plan to participate in any dividend reinvestment plan or program maintained by the Company and establish a default method for the payment of dividends

10.       Approval by Shareholders. Notwithstanding the above, the 423 Component of this Plan is expressly made subject to the approval of the shareholders of the Corporation within 12 months before or after the date the Plan is adopted by the Board. Such shareholder approval shall be obtained in the manner and to the degree required under applicable law. If the 423 Component of this Plan is not so approved by the shareholders within 12 months before or after the date the Plan is adopted by the Board, any Options granted hereunder will be deemed to have been granted under the Non-423 Component of this Plan.

11.       Administration.

(a) Powers and Duties of the Committee. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, Section 423 of the Code and the regulations thereunder with respect to the 423 Component, the Committee shall have the discretionary authority to determine the time and frequency of granting Options, the duration of Offering Periods and Purchase Periods, the terms and conditions of the Options and the number of Common Shares subject to each Option. The Committee shall also have the discretionary authority to do everything necessary and appropriate to administer the Plan, including, without limitation, interpreting the provisions of the Plan (but any such interpretation shall not be inconsistent with the provisions of Section 423 of the Code with respect to the 423 Component). All actions, decisions and determinations of, and interpretations by the Committee with respect to the Plan shall be final and binding upon all Participants and upon their executors, administrators,

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personal representatives, heirs and legatees. No member of the Board or the Committee shall be liable for any action, decision, determination or interpretation made in good faith with respect to the Plan or any Option granted hereunder. With respect to the 423 Component, an Offering Period shall be administered so as to ensure that all Participants have the same rights and privileges as provided by Section 423(b)(5) of the Code.

(b) Administrator. The Corporation, Board or the Committee may engage the services of a brokerage firm or financial institution to perform certain ministerial and procedural duties under the Plan including, but not limited to, mailing and receiving notices contemplated under the Plan, determining the number of Purchased Shares for each Participant, maintaining or causing to be maintained the Purchase Account, disbursing funds maintained in the Purchase Account or proceeds from the sale of Purchased Shares, and filing with the appropriate tax authorities proper tax returns and forms (including information returns) and providing to each Participant statements as required by law or regulation.

(c) Indemnification. Each person who is or shall have been (a) a member of the Board, (b) a member of the Committee, or (c) an officer or employee of the Corporation to whom authority was delegated in relation to this Plan, shall be indemnified and held harmless by the Corporation against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Corporation’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit or proceeding against him or her; provided, however, that he or she shall give the Corporation an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability or expense is a result of his or her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Corporation’s certificate of incorporation or bylaws, any contract with the Corporation, as a matter of law, or otherwise, or of any power that the Corporation may have to indemnify them or hold them harmless.

12.       Withdrawal. A Participant may withdraw from the Plan by properly completing and submitting to the Administrative Agent a withdrawal form in accordance with the procedures prescribed by the Committee, which must be submitted prior to the date specified by the Committee before the last day of the applicable Offering Period. Upon withdrawal from the Plan:

(a) any payroll deductions credited to the Participant’s Purchase Account prior to the effective date of the Participant’s withdrawal from the Plan will be returned to the Participant;

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(b) no further payroll deductions for the purchase of Shares will be made during subsequent Offering Periods, unless the Participant properly completes and submits a new Participation Election Form by the deadline prescribed by the Committee;

(c) all or a portion of the Purchased Shares held by the Administrative Agent for the Purchase Account of the Participant will be transferred to the Participant or an external account in the name of the Participant, as directed by Participant in the withdrawal form;

(d) all or any portion of the Purchased Shares not transferred to the Participant will be sold by the Administrative Agent and the net proceeds (after deduction of customary commissions and fees) will be distributed to the Participant, together with any cash held by the Administrative Agent in respect of any Purchased Shares held by the Administrative Agent in the Purchase Account of the Participant.

A Participant’s withdrawal from an offering will not have any effect upon his or her eligibility to participate in the Plan or in any similar plan that may hereafter be adopted by the Corporation. In the case of any instructions to sell all or any Purchased Shares, the Participant will confirm that the Participant is now aware of any Undisclosed Material Information at the time of such notice. No instructions to sell will be given during a Blackout Period.

The Committee may make additional rules and impose additional requirements regarding withdrawal, which rules and requirements may be administered by the Administrative Agreement under the Administration Agreement.

13.       Termination of Employment. On the Termination Date of a Participant for any reason prior to the applicable Exercise Date, whether voluntary or involuntary, and including termination of employment due to retirement, death or as a result of liquidation, dissolution, sale, merger or a similar event affecting the Corporation or a Participating Subsidiary, the corresponding payroll deductions credited to his or her Purchase Account will be used to purchase Shares on the next Exercise Date, unless the Participant (or in the case of death, the Participant’s estate) withdraws prior to such Exercise Date pursuant to Section 12.

14.         Interest. No interest shall accrue on the payroll contributions of a Participant in the Plan.

15.         Shares.

(a) The stock subject to Options shall be the Common Shares of the Corporation as traded on the NYSE

(b) Subject to adjustment upon changes in capitalization of the Corporation as provided in Section 18 hereof, the maximum number of Shares which may be purchased or issued under the Plan shall be 1,800,000 Shares. If, on a given Exercise Date, the number of Shares with respect to which Options are to be exercised exceeds the number of Shares then available under the Plan, the Committee shall make a pro rata allocation of the Shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

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(c) A Participant shall have no interest or voting right in Shares covered by his or her Option until such Option has been exercised and the Participant has become a holder of record of Shares acquired pursuant to such exercise.

16.     Designation of Beneficiary. The Committee may permit Participants to designate beneficiaries to receive any Purchased Shares or payroll deductions, if any, in the Participant’s accounts under the Plan in the event of such Participant’s death. Beneficiary designations shall be made in accordance with procedures prescribed by the Committee. If no properly designated beneficiary survives the Participant, the Purchased Shares and payroll deductions, if any, will be distributed to the Participant’s estate.

17.     Assignability of Options. Neither payroll deductions credited to a Participant’s Purchase Account nor any rights with regard to the exercise of an Option or to receive Common Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 16 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Corporation may treat such act as an election to withdraw from an Offering Period in accordance with Section 12 hereof.

18.     Adjustment of Number of Common Shares Subject to Options.

(a) Adjustment. Subject to any required action by the shareholders of the Corporation, the maximum number of securities available for purchase under the Plan, as well as the price per security and the number of securities covered by each Option under the Plan which has not yet been exercised shall be appropriately adjusted in the event of any a stock split, reverse stock split, stock dividend, combination or reclassification of the common stock of the Corporation, or any other increase or decrease in the number of Common Shares effected without receipt of consideration by the Corporation; provided, however, that conversion of any convertible securities of the Corporation shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board or the Committee, whose determination in that respect shall be final, binding and conclusive. If any such adjustment would result in a fractional security being available under the Plan, such fractional security shall be disregarded. Except as expressly provided herein, no issuance by the Corporation of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Common Shares subject to an Option. With respect to the 423 Component, the Options granted pursuant to the Plan shall not be adjusted in a manner that causes the Options to fail to qualify as options issued pursuant to an “employee stock purchase plan” within the meaning of Section 423 of the Code.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Corporation, any Offering Period then in progress will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board, and the Board may either provide for the purchase of Common Shares as of the date on which such Offering Period terminates or return to each Participant the payroll deductions credited to such Participant’s Purchase Account.

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(c) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Corporation, or the merger of the Corporation with or into another corporation, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a parent or subsidiary of the successor corporation, unless the Board determines, in the exercise of its sole discretion, that in lieu of such assumption or substitution to either terminate all outstanding Options and return to each Participant the payroll deductions credited to such Participant’s Purchase Account or to provide for the Offering Period in progress to end on a date prior to the consummation of such sale or merger.

19.     Amendments or Termination of the Plan.

(a) Subject to paragraph (b) below, the Board or the Committee may at any time and for any reason amend, modify, suspend, discontinue or terminate the Plan without notice; provided that no Participant’s existing rights in respect of existing Options are adversely affected thereby.

(b) Notwithstanding the authority of the Board or the Committee provided in paragraph (a) above, approval of the shareholders of the Company will be required to give effect to any of the following amendments to the Plan:

(i) any increase to the maximum number of Shares which may be purchased or issued under the Plan, as currently limited in Section 15(b) of this Plan, other than any increase resulting from the adjustment provisions set forth in Section 18 of this Plan;

(ii) any decrease to the Purchase Price at which a Participant is entitled to exercise any Option resulting in such Purchase Price being less than 85% of the Fair Market Value of a Common Share on any Exercise Date;

(iii) any amendment to this Plan that would increase the effective matching contribution amount provided by the Company to an amount greater than 15% of the Fair Market Value of a Common Share on any Exercise Date;

(iv) any modification to the eligibility requirements for participation in the Plan; and

(v) any amendment to delete or modify the amendments to the Plan that require shareholder approval pursuant to this Section 19(b).

In addition, to the extent necessary to comply with Section 423 of the Code (or any other applicable law, regulation or stock exchange rule), the Corporation shall obtain shareholder approval in such a manner and to such a degree as required.

(vi) Subject to the limitations in paragraph (b) above, without shareholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Board or the Committee shall be entitled to change the Offering Periods, Purchase Periods, eligibility requirements, limit or increase the frequency and/or number of changes in the amount withheld during a Purchase Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars,

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permit payroll withholding in an amount less than or greater than the amount designated by a Participant in order to adjust for delays or mistakes in the Corporation’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Board or the Committee determines in its sole discretion advisable which are consistent with the Plan; provided, however, that changes to (i) the Offering Period, (ii) the Purchase Period, (iii) the maximum percentage of Compensation that may be deducted pursuant to Section 6(a) or (iv) the maximum number of Common Shares that may be purchased in a Purchase Period, shall not be effective until communicated to Participants in a reasonable manner, with the determination of such reasonable manner in the sole discretion of the Board or the Committee.

20.     No Other Obligations. The receipt of an Option pursuant to the Plan shall impose no obligation upon the Participant to purchase any Common Shares covered by such Option. Nor shall the granting of an Option pursuant to the Plan constitute an agreement or an understanding, express or implied, on the part of the Corporation to employ the Participant for any specified period.

21.     Notices and Communication. Any notice or other form of communication which the Corporation or a Participant may be required or permitted to give to the other shall be provided through such means as designated by the Committee, including but not limited to any paper or electronic method.

22.     Condition upon Purchase of Common Shares.

(a) Common Shares shall not be issued, purchased or delivered with respect to an Option unless the exercise of such Option and the purchase and delivery of such Common Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the 1933 Act and the 1934 Act and the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Common Shares may then be listed, and shall be further subject to the approval of counsel for the Corporation with respect to such compliance.

(b) As a condition to the exercise of an Option, the Corporation may require the person exercising such Option to represent and warrant at the time of any such exercise that the Common Shares are being purchased only for investment and without any present intention to sell or distribute such Common Shares if, in the opinion of counsel for the Corporation, such a representation is required by any of the aforementioned applicable provisions of law.

(c) This Plan is subject to the following restrictions with respect to Insiders of the Corporation that may receive Options:

(i) the total number of Common Shares reserved for issuance at any time under Options held by any one Insider, when combined with all other Common Shares issuable to the Insider under any other equity compensation arrangements of the Corporation then in place, may not exceed 5% of the total number of issued and outstanding equity securities of the Corporation on a non-diluted basis;

B-14

(ii) the total number of Common Shares reserved for issuance at any time under Options granted, or that may be granted pursuant to the Plan, to Insiders, or when combined with all other Common Shares issuable to Insiders under any other equity compensation arrangements of the Corporation then in place, may not exceed 10% of the total number of issued and outstanding equity securities of the Corporation on a non-diluted basis;

(iii) the total number of Common Shares that may be issued to Insiders during any 12-month period under Options, or when combined with all other Common Shares issued to Insiders under any other equity compensation arrangements of the Corporation then in place, may not exceed 10% of the total number of issued and outstanding equity securities of the Corporation on a non-diluted basis; and

(iv) the total number of Common Shares that may be subject to Options granted to Insiders during any calendar year may not exceed 1% of the total number of issued and outstanding equity securities of the Corporation as at the beginning of the calendar year.

23.     General Compliance. The Plan will be administered, and Options will be exercised in compliance with the 1933 Act, 1934 Act and all other applicable securities laws and the Corporation policies, including without limitation, the Securities Trading Policy of the Corporation. All amounts withheld pursuant to the Plan, Common Shares issued hereunder and any payments pursuant to the Plan are subject to withholding of all applicable taxes and the Corporation and the Participating Subsidiaries shall have the right to withhold from any payment or distribution of shares or to collect as a condition of any payment or distribution under the Plan, as applicable, any taxes required by law to be withheld.

24.     Term of the Plan. The Plan shall become effective upon the earlier to occur of (i) its adoption by the Board and (ii) its approval by the shareholders of the Corporation (the earlier of such events, the “Effective Date”), and shall continue in effect until the earlier of (A) the termination of the Plan pursuant to Section 19 hereof and (B) the ten-year anniversary of the Effective Date, with no new Offering Periods commencing on or after such ten-year anniversary.

25.     Governing Law. The Plan and all Options granted hereunder shall be construed in accordance with and governed by the laws of the State of Delaware without reference to choice of law principles and subject in all cases to the Code and the regulations thereunder.

26.     Non-U.S. Participants. To the extent permitted under Section 423 of the Code, without the amendment of the Plan, the Corporation may provide for the participation in the Plan by Employees who are subject to the laws of foreign countries or jurisdictions on such terms and conditions different from those specified in the Plan as may in the judgment of the Corporation be necessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes the Corporation may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws of other countries or jurisdictions in which the Corporation or the Participating Subsidiaries operate or have employees. Each subplan shall constitute a separate “offering” under this Plan in accordance with Treas. Reg. §1.423-2(a) and, to the extent inconsistent with the requirements of Section 423, any such subplan shall be considered part of the Non-

B-15

423 Component, and rights granted thereunder shall not be required by the terms of the Plan to comply with Section 423 of the Code.

27.     Section 409A. The 423 Component is exempt from the application of Section 409A of the Code, and any ambiguities herein shall be interpreted to so be exempt from Section 409A of the Code. The Non-423 Component is intended to be exempt from the application of Section 409A of the Code under the short-term deferral exception and any ambiguities shall be construed and interpreted in accordance with such intent. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Committee determines that an option granted under the Plan may be subject to Section 409A of the Code or that any provision in the Plan would cause an option under the Plan to be subject to Section 409A, the Committee may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Committee determines is necessary or appropriate, in each case, without the participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with Section 409A of the Code, but only to the extent any such amendments or action by the Committee would not violate Section 409A of the Code. Notwithstanding the foregoing, the Corporation shall have no liability to a participant or any other party if the option under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee with respect thereto.

B-16

SCHEDULE A

List of Participating Subsidiaries

Name of Subsidiary

West Fraser, Inc.

West Fraser Wood Products, Inc.

West Fraser Southern Wholesale, Inc.

West Fraser Southeast, Inc.

Norbord Panels (USA) Inc.

Norbord South Carolina Inc.

Norbord Alabama Inc.

Norbord Mississippi LLC

Norbord Georgia LLC

Norbord Texas (Jefferson) Inc.

Norbord Texas (Nacogdoches) Inc.

Norbord Minnesota Inc.

Norbord Sales, Inc.

EX-99.3

Exhibit 99.3

	8th Floor, 100 University Avenue
	Toronto, Ontario M5J 2Y1 www.computershare.com

Security Class

Holder Account Number

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  Form of Proxy - Annual General and Special Meeting to be held on April 20, 2022

This Form of Proxy is solicited by and on behalf of Management. Notes to proxy 1. Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the Management Nominees whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse). 2. If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you may be required to provide documentation evidencing your power to sign this proxy with signing capacity stated. 3. This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy. 4. If a date is not inserted in the space provided on the reverse of this proxy, it will be deemed to bear the date on which it was mailed to the holder by Management. 5. The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, and the proxy appoints the Management Nominees listed on the reverse, this proxy will be voted as recommended by Management. 6. The securities represented by this proxy will be voted in favour, or withheld from voting, or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for. If you have specified a choice with respect to any matter to be acted on, the securities will be voted accordingly. 7. This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting and Management Information Circular or other matters that may properly come before the meeting or any adjournment or postponement thereof, unless prohibited by law.
8. This proxy should be read in conjunction with the accompanying documentation provided by Management.	Fold
Proxies submitted must be received by 11:30 a.m. (Vancouver Time) on April 18, 2022. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!

• Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683) Toll Free	• Go to the following web site: www.investorvote.com • Smartphone?   Scan the QR code to vote now.		• You can enroll to receive future securityholder communications electronically by visiting www.investorcentre.com.
If you vote by telephone or the Internet, DO NOT mail back this proxy. Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management Nominees named on the reverse of this proxy. Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy. To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below. CONTROL NUMBER                                              01SSOD

Appointment of Proxyholder
I/We being holder(s) of securities of West Fraser Timber Co. Ltd. (the “Company”) hereby appoint: Hank Ketcham, Chair of the Board, or failing this person, Ray Ferris, President and Chief Executive Officer of the Company (the “Management Nominees”)	OR	Print the name of the person you are appointing if this person is someone other than the Management Nominees listed herein.
		Note: If completing the appointment box above and you or your appointee intend on attending online YOU MUST go to http://www.computershare.com/WestFraserTimber and provide Computershare with the name and email address of the person you are appointing. Computershare will use this information ONLY to provide the appointee with a user name to ask questions at the meeting. If the appointee is attending the meeting in person, this step is NOT required.

as my/our proxyholder with full power of substitution and to attend, act and to vote for and on behalf of the holder in accordance with the following direction (or if no directions have been given, as the proxyholder sees fit) and on all other matters that may properly come before the Annual General and Special Meeting of shareholders of the Company to be held at 1250 Brownmiller Road, Quesnel, B.C. on April 20, 2022 at 11:30 a.m. (Vancouver Time) and at any adjournment or postponement thereof.

VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES.

							For	Against
1. Number of Directors
To set the number of Directors at 11.							☐	☐
2. Election of Directors	For	Withhold		For	Withhold		For	Withhold
01. Henry H. (Hank) Ketcham	☐	☐	02. Reid E. Carter	☐	☐	03. Raymond Ferris	☐	☐
04. John N. Floren	☐	☐	05. Ellis Ketcham Johnson	☐	☐	06. Brian G. Kenning	☐	☐
07. Marian Lawson	☐	☐	08. Colleen M. McMorrow	☐	☐	09. Robert L. Phillips	☐	☐
10. Janice G. Rennie	☐	☐	11. Gillian D. Winckler	☐	☐
				For	Withhold
To elect ALL nominees listed above (except as marked to the contrary)				☐	☐
							For	Withhold
3. Appointment of Auditor
To appoint PricewaterhouseCoopers LLP, as the Auditor of the Company for the ensuing year and to authorize the Directors to fix the Auditor’s remuneration.							☐	☐
							For	Against
4. Amendment of Corporate Articles
To pass the special resolution to amend the corporate Articles of the Company to increase the quorum requirements and to provide for additional methods for delivery of notices, all as more particularly described under “Amendment of the Corporate Articles” in the accompanying Information Circular.							☐	☐
5. U.S. Employee Stock Purchase Plan
To pass the ordinary resolution to ratify, confirm and approve adoption by the Board of Directors of the Company’s U.S. Employee Stock Purchase Plan for the purposes of Internal Revenue Code §423, as more particularly described under “Approval of the U.S. Employee Stock Purchase Plan” in the accompanying Information Circular.							☐	☐
6. Advisory “Say on Pay” Resolution
To pass the ordinary resolution being the advisory resolution to approve the Company’s approach to compensation paid by the Company to directors and Named Executive Officers, as more particularly described under “Advisory Resolution on the Company’s Approach to Executive Compensation (Say on Pay)” in the accompanying Information Circular.							☐	☐

Signature of Proxyholder Signature(s)                             Date

I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above, and the proxy appoints the Management Nominees, this Proxy will be voted as recommended by Management.

  Interim Financial Statements – Mark this box if you would like to receive Interim Financial Statements and accompanying Management’s Discussion and Analysis by mail.         ☐     Annual Financial Statements – Mark this box if you would like to receive the Annual Financial Statements and accompanying Management’s Discussion and Analysis by mail.         ☐  

If you are not mailing back your proxy, you may register online to receive the above financial report(s) by mail or electronically at www.computershare.com/mailinglist.    

	W X T Q	3 3 1 3 6 6	A R 1
	01SSPI

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EX-99.4

Exhibit 99.4

      Please return completed form to: Computershare 8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1         

	Interim Financial Statements		Annual Financial Statements
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Financial Statements Request Form

Under securities regulations, a reporting issuer must send annually a form to holders to request the Interim Financial Statements and MD&A and/or the Annual Financial Statements and MD&A. If you would like to receive the report(s), please make your selection and return to the address as noted or register online at www.computershare.com/mailinglist.

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Computershare will use the information collected solely for the mailing of such financial statements. You may view Computershare’s Privacy Code at www.computershare.com/privacy or by requesting that we mail you a copy.

You can enroll to receive future securityholder communications electronically by visiting www.investorcentre.com.

Please place my name on your financial statements mailing list.

 Name

 Apt.                               Street Number                         Street Name

 City                                                                                                                                                                                                                         Prov.                   Postal Code / Zip Code

   W X T Q             5 1 E T N N

                              01T1ID

EX-99.5

Exhibit 99.5

    Table of Contents

Operating Footprint on Two Continents	1
West Fraser Operations	1
Message from our Chief Executive Officer	2
Environmental, Social and Governance	6
Financial Performance	8

* Unless otherwise indicated, all financial references are in U.S. dollars.

2021 Annual Management’s Discussion & Analysis	10
2021 Audited Consolidated Financial Statements	71
Directors and Officers	113
Glossary of Key Terms	114
Corporate Information	115

2           WEST FRASER

Message from our

Chief Executive Officer

2021 was an exceptional year for West Fraser. Our long-term commitment to our values and business strategy guided significant growth, integration of our business and advancement of our sustainability goals, all during a period of significant change and transformation.         

What impressed me most was the energy, talent and commitment of our people this past year and is an excellent reminder of the incredible things we can accomplish when we work together.

From multiple disruptive weather events in our U.S., Canadian and European operating areas to dramatic fluctuations in commodity markets, we were challenged in many ways while continuing to operate during the COVID-19 pandemic. Yet our teams not only persevered, demonstrating their resilience, they delivered record safety and financial performance.

We completed the recent purchases of an OSB mill and a lumber mill in the U.S. South, as well as the major acquisition of Norbord earlier in the year, solidifying our position as a global leader of wood-based building product manufacturing. By year-end, integration had accelerated on all fronts thanks to the efforts of our combined team and we remain on track to achieve targeted annual synergies of $61 million by the end of 2022. Today, West Fraser is a leading lumber and OSB producer with significant capacity of other engineered wood products (such as LVL, MDF, plywood and particleboard) as well as pulp, newsprint, wood chips, other residuals and renewable energy.

OUR VALUES & STRATEGY

While we will continue to grow into new products and regions to best serve our customers, our long-held values and proven strategy remain at the forefront. From the beginning, our approach has been to strive to be low cost and/or high margin and we reinvest in our business, which in 2021 included investments in people, technology, and environmental performance, while maintaining a prudent and strong balance sheet.

IMPROVED SAFETY PERFORMANCE

Safety is a core value and business priority at West Fraser. In 2021, we achieved new milestones with the lowest recordable injury rate in our history, reflecting the integration of our safety cultures following the Norbord acquisition. We also achieved a 32% reduction in serious hand injuries and 20% fewer serious injuries across our facilities compared to 2020. Although these are important steps toward eliminating injuries in the workplace, there were also some serious incidents, including a fatality, which serve as stark reminders that we have much more work to do to achieve our goal of seeing everyone go home safely each day.

PROGRESSING OUR SUSTAINABILITY LEADERSHIP

A growing area of focus is the sustainability of our operations. As a Company, we are committed to leaving the world better than we found it by effectively managing the footprint of our operations and valuing the communities in which we live and operate.

West Fraser’s renewable building products have an integral role to play as part of the solution to address climate change. At West Fraser, sustainability is more than just a commitment; it is the central principle upon which our business is predicated. The wood products we make are renewable, third-party certified, and from sustainably managed forest resources. Forest products are truly a natural solution and we contend this is now more important than ever, as the world needs sustainable, renewable building materials that sequester carbon in the fight against climate change.

We reached an important milestone this past summer with the planting of our two billionth tree, reflecting a 65-year commitment to reforestation in Western Canada, where we directly manage public forest land. It’s part of our commitment to the environment and sustainably managed forests that we couldn’t have done without decades of support from our employees, contractors, local stakeholders and the communities in which we operate.

West Fraser believes in making positive contributions to the economic, social and environmental well-being of the communities where our employees live and work while advancing the value wood products can make to a more sustainable world. Over 2021, we invested more than $3.3 million in our community investment program, supporting a wide array of initiatives such as the development of recreational facilities and important health care infrastructure, removing barriers to education through scholarships, and helping address pressing environmental and social needs in communities.

Recently, we announced that West Fraser has committed to science-based targets and the Science Based Targets Initiative (SBTi). Over 2021, our team undertook the necessary work across the integrated organization to support a credible plan to make material reductions by 2030 across our operations. This is an important step in our sustainability leadership journey and ESG performance strategy, and signals our commitment to global climate action, aligning with the Paris Agreement goals to materially reduce greenhouse gas emissions across our operations by 2030.

PROMOTING DIVERSITY, EQUITY & INCLUSION

Our sustainability work includes a strong focus on people and company culture, as West Fraser believes inclusive, diverse teams build a more vibrant workforce, safer operations and a stronger company overall. As part of our ongoing commitment to Diversity, Equity and Inclusion, we strive to create workplaces and leadership teams that reflect the diverse communities where we live and work. Today, the representation of women on our Board of Directors has increased from 20% in 2020 to 40% in 2021. We understand we have more work to do to build on this and established the President’s Diversity Council in 2020 to help us seek further opportunities to advance Diversity, Equity and Inclusion across the organization. This will continue to be a priority for 2022 as creating a culture of belonging for all employees aligns with our other core values of teamwork, respect, humility, and integrity.

DRIVING SHAREHOLDER VALUE

We believe we offer an attractive value proposition for shareholders. As the world’s largest producer of renewable, wood-based building products, West Fraser:

· Offers financial resilience through a portfolio that is product and geographically diverse – We offer a wide range of home and building construction products across multiple markets with operations in five countries, helping us weather cyclicality while creating a great platform to serve our customers.

· Serves markets with strong fundamentals – We offer significant exposure to U.S. housing construction and repair and remodelling, and this is an area where we continue to be optimistic about supply and demand for our products. Fundamentals for housing are favourable entering 2022 and we continue to see signs of resilience in repair and remodelling demand in both our North American and European markets.

· Has a track record of disciplined and balanced capital allocation – We continue to invest in our business while maintaining financial flexibility and regularly returning excess capital to shareholders. In 2021, we invested $635 million in capital investments at our facilities, which included the asset purchase of a large-scale OSB mill that we expect to invest in for an eventual re-start, while returning a total of $1.3 billion to shareholders through share repurchases and $75 million through dividend payments.

· Has the scope, scale and expertise to unlock further growth opportunities, as our acquisition of Norbord and our recent mill acquisitions in both the lumber and OSB segments demonstrate.

· Is well positioned to benefit from strong ESG and sustainability fundamentals, and in particular the role of forest products as a natural solution to climate change.

· Has an attractive track record of creating shareholder value, in part owing to our culture, our values and our operating philosophy.

These actions have positioned us to create superior long-term value for our shareholders, and we have delivered an annualized total shareholder return of more than 12% since 2006.

OUR PATH FORWARD

Looking ahead, I am excited about our future. As we move past the integration phase of our transformative acquisition of a significant OSB producer, we are ready to execute on the combined strength of our company.

As part of our commitment to continuous improvement, our organization will continue to discover new, safer, and more efficient methods to conduct our business, which we believe improve our workplaces and long-term value creation. Therefore, we anticipate investing approximately $500 to $600 million in 2022. Our total capital budget consists primarily of various improvement projects and maintenance expenditures, projects focused on technology such as optimization and automation of the manufacturing process, and projects targeted to reduce greenhouse gas emissions, as well as strategic capital projects.

We also are investing in our people, furthering our commitment to being an employer-of-choice and creating an environment where employees can do their best work over the course of their career with us.

TEAMWORK IS KEY TO OUR SUCCESS

We have made tremendous progress in the past year while returning record safety and financial results along the way. On behalf of the entire executive team, we are grateful for the hard work, determination and resilience of our employees and what we were able to accomplish together in 2021.

I also recognize and appreciate the collaboration and cooperation of our customers and the communities in which we operate that are so vital. I am also grateful to our Board of Directors for their guidance and expertise in supporting our management team to build an even stronger West Fraser that is ready to embrace the future.

As we embark on 2022, I am proud of West Fraser’s position as a premier wood products company, committed to continuous improvement in all aspects of our business. We look forward to continuing to demonstrate our leading performance in the coming year.

Ray Ferris

President and Chief Executive Officer

8                     WEST FRASER

Financial Performance

FIVE-YEAR FINANCIAL REVIEW

(in millions of U.S. dollars, except where indicated)

	2021		2020		2019		2018		2017
Earnings
Sales		10,518		4,373		3,673		4,722		3,957
Cost of product sold		(4,645)		(2,559)		(2,750)		(2,789)		(2,408)
Freight and other distribution costs1		(846)		(529)		(538)		(565)		(488)
Export duties, net2		(146)		(57)		(122)		(156)		(37)
Amortization		(584)		(203)		(195)		(199)		(162)
Selling, general and administration1		(312)		(185)		(159)		(178)		(167)
Equity-based compensation		(40)		(9)		(4)		(5)		(25)
Restructuring and impairment charges		–		–		(25)		–		–
Operating earnings		3,945		831		(120)		830		671
Finance expense, net		(45)		(27)		(37)		(29)		(24)
Other		(2)		(14)		(8)		29		5
Tax (provision) recovery		(951)		(202)		52		(203)		(193)
Earnings		2,947		588		(113)		627		459
Adjusted EBITDA3		4,569		1,043		104		1,034		857
Cash flows from operating activities		3,552		968		87		702		695
Capital expenditures and acquisitions4		295		180		309		286		664
Financial position
Current assets		3,217		1,336		883		986		1,029
PPE and timber licenses		4,468		2,029		2,028		1,883		1,933
Goodwill and other intangibles		2,440		591		594		562		583
Export duty deposits5		242		178		61		55		29
Other assets		58		35		20		23		22
Deferred income tax assets		8		9		8		2		5
Total assets		10,433		4,178		3,594		3,511		3,601
Current liabilities		1,206		528		644		435		465
Long-term debt (including current portion)		499		500		500		508		507
Other liabilities		360		408		350		231		277
Deferred income tax liabilities		712		264		195		214		179
Shareholders’ equity		7,656		2,478		1,905		2,123		2,173
Total liabilities and equity		10,433		4,178		3,594		3,511		3,601

EPS	Adjusted EBITDA3	Cash flows from operating activities
per common share (dollars)	in millions of U.S. dollars	in millions of U.S. dollars

2021 ANNUAL REPORT           9

	2021		2020		2019		2018		2017
Per common share (dollars)
Basic EPS		27.03		8.56		(1.64)		8.42		5.88
TSX Price range:
High		124.74		86.5		80.13		97.99		83.50
Low		73.30		21.6		43.93		60.44		42.98
Close		120.68		81.78		57.28		67.44		77.57
NYSE Price range6:
High		97.59		n/a		n/a		n/a		n/a
Low		61.36		n/a		n/a		n/a		n/a
Close		95.36		n/a		n/a		n/a		n/a
Dividends declared per share		0.76		0.56		0.60		0.54		0.28
Shares outstanding at year-end (‘000s)		105,929		68,679		68,663		69,819		77,946
Ratios
Return on capital employed7		61%		25%		-4%		27%		24%
Net debt to capitalization8		-16%		2%		30%		17%		12%
Number of employees at year-end		10,928		8,115		8,200		8,570		8,600
Shipments
SPF Lumber (MMfbm)		3,176		3,214		3,363		3,790		3,714
SYP Lumber (MMfbm)		2,649		2,861		2,692		2,792		2,387
NA OSB (MMsf 3/8” basis)		5,674		–		–		–		–
EU OSB (MMsf 3/8” basis)		1,035		–		–		–		–
Pulp (Mtonnes)		1,033		1,132		1,173		1,138		1,167

1. For 2017, we reclassified approximately $15 million from freight and other distribution costs to selling, general and administration to conform to our current presentation.

2. Export duties for 2021 are net of a $55 million recovery related to the USDOC finalization of the duty rates for the AR2 POI dated January 1, 2019 to December 31, 2019. Export duties for 2020 are net of a $95 million recovery related to the USDOC finalization of the duty rates for the AR1 POI dated April 28, 2017 to December 31, 2018.

3. Adjusted EBITDA is a non-GAAP financial measure calculated as earnings before tax plus other, finance expense, amortization, equity-based compensation, and restructuring and impairment charges. Refer to the “Non-GAAP and Other Specified Financial Measures” section of our 2021 Management’s Discussion & Analysis for more information on this measure. Effective January 1, 2022, and for all comparative periods, export duties are no longer excluded from the definition of Adjusted EBITDA.

4. Capital expenditures and acquisitions is presented net of cash acquired. 2021 includes acquired cash and short-term investments of $642 million from the Norbord Acquisition. The Norbord Acquisition was a non-cash share consideration transaction, and therefore, only the acquired cash is included in the capital expenditure and acquisitions number.

5. Export duty deposits for 2021 include export duty receivable of $55 million related to the USDOC finalization of the duty rates for the AR2 POI dated January 1, 2019 to December 31, 2019. Export duty deposits for 2020 include export duty receivable of $95 million for the AR1 POI dated April 28, 2017 to December 31, 2018.

6. Our common shares began trading on the NYSE under the symbol WFG on February 1, 2021.

7. Return on capital employed is calculated as GAAP EBIT divided by total assets minus current liabilities.

8. Net debt to capitalization is a non-GAAP financial measure calculated as net debt divided by total capital, expressed as a percentage. Net debt is calculated as total debt less cash and cash equivalents. Total capital is defined as the sum of net debt plus total equity. Refer to the “Non-GAAP and Other Specified Financial Measures” section of our 2021 Annual MD&A for more information on this measure.

SPF Lumber shipments	SYP Lumber shipments	NA OSB shipments	EU OSB shipments
in MMfbm	in MMfbm	in MMsf 3/8” basis	in MMsf 3/8” basis

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MANAGEMENT’S DISCUSSION & ANALYSIS

INTRODUCTION

This discussion and analysis by management (“MD&A”) of West Fraser Timber Co. Ltd.’s (“West Fraser”, the “Company”, “we”, “us”, or “our”) financial performance for the year and three months ended December 31, 2021, should be read in conjunction with our annual audited consolidated financial statements and accompanying notes for the year ended December 31, 2021 (the “Annual Financial Statements”).

Unless otherwise indicated, the financial information contained in this MD&A is derived from our Annual Financial Statements, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). This MD&A uses various Non-GAAP and other specified financial measures, including “Adjusted EBITDA”, “Adjusted EBITDA by segment”, “available liquidity”, “total debt to capital ratio”, “net debt to capital ratio”, “expected capital expenditures”, and “expected potential synergies from Norbord acquisition”. An explanation with respect to the use of these Non-GAAP and other specified financial measures is set out in the section titled “Non-GAAP and Other Specified Financial Measures”.

This MD&A includes statements and information that constitute “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of United States securities laws (collectively, “forward-looking statements”). Please refer to the cautionary note entitled “Forward-Looking Statements” below for a discussion of these forward-looking statements and the risks that impact these forward-looking statements.

Dollar amounts are expressed in the United States (“U.S.”) currency unless otherwise indicated and reflect the change in our functional and reporting currency from the Canadian dollar to the U.S. dollar effective February 1, 2021. Select unaudited historical financial information in U.S. dollars is available on our website at www.westfraser.com. This historical financial information presents selected financial information derived from our historical financial statements, which had been presented in Canadian dollars for financial periods through to our year ended December 31, 2020.

This MD&A uses capitalized terms, abbreviations and acronyms that are defined under “Glossary of Key Terms”.

The information in this MD&A is as at February 15, 2022 unless otherwise indicated.

OUR BUSINESS AND STRATEGY

West Fraser is a diversified wood products company with facilities in Canada, the U.S., the U.K. and Europe, manufacturing, selling, marketing and distributing lumber, engineered wood products (OSB, LVL, MDF, plywood, particleboard), pulp, newsprint, wood chips and other residuals and renewable energy. As a result of the Norbord Acquisition, we are now a leading producer of OSB. In addition to OSB, Norbord manufactured particleboard, MDF and related value-added products. Our business is comprised of 34 lumber mills, 15 OSB facilities, six renewable energy facilities, five pulp and paper mills, three plywood facilities, three MDF facilities, two particleboard facilities, one LVL facility, one treated wood facility, and one veneer facility.

Our goal at West Fraser is to generate strong financial results through the business cycle, relying on our committed workforce, the quality of our assets and our well-established people and culture. This culture emphasizes cost control in all aspects of the business and operating in a responsible, sustainable, financially conservative and prudent manner.

The North American wood products industry is cyclical and periodically faces difficult market conditions and serious challenges. Our earnings are sensitive to changes in world economic conditions, primarily those in North America, Asia and Europe and particularly to the U.S. housing market for new construction and repair and renovation spending. Most of our revenues are from sales of commodities for which prices are sensitive to variations in supply and demand. As many of our costs are denominated in Canadian dollars, British pounds sterling and Euros, exchange rate fluctuations of the

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Canadian dollar, British pound sterling and Euro against the United States dollar can and are anticipated to be a significant source of earnings volatility for us.

West Fraser strives to make sustainability a central principle upon which our people operate, and we believe the Company’s sustainable, renewable building materials that sequester carbon are a truly natural solution in the fight against climate change. There are numerous government initiatives and proposals globally to address climate-related issues. Within the jurisdictions of West Fraser’s operations, some of these initiatives would regulate, and do regulate, and/or tax the production of carbon dioxide and other greenhouse gases to facilitate the reduction of carbon emissions, providing incentives to produce and use cleaner energy.

We believe that maintaining a strong balance sheet and liquidity profile, along with our investment-grade debt rating, enables us to execute a balanced capital allocation strategy. Our goal is to reinvest in our operations across all market cycles to strategically enhance productivity, product mix, and capacity and to maintain a leading cost position. We believe that a strong balance sheet also provides the financial flexibility to capitalize on growth opportunities, including the pursuit of opportunistic acquisitions and larger-scale strategic growth initiatives, and is a key tool in managing our business over the long term including returning capital to shareholders.

ACQUISITIONS

Norbord Acquisition

On February 1, 2021, we acquired all of the outstanding shares of Norbord. According to the terms of the acquisition, Norbord shareholders received 0.675 of a West Fraser Common share for each Norbord Common share held (the “Exchange Ratio”). The result was the issuance of 54,484,188 Common shares of West Fraser at a price of US$63.90 per share (CAD$81.94 per share) for $3,482 million. The price per Common share was based on the West Fraser Common share’s closing price as listed on the TSX on January 29, 2021, and a CAD-USD exchange rate of 0.7798.

The Norbord Acquisition included five OSB mills in Canada, seven OSB mills in the U.S., one OSB mill, one MDF plant, and two particleboard plants in the U.K., one OSB mill in Belgium, and their related corporate offices.

We have incorporated the North American operations of Norbord into our Panels segment and renamed that segment North America Engineered Wood Products (“NA EWP”). This segment includes the results from North American operations for OSB, plywood, MDF, and LVL. In addition, we have identified a Europe EWP segment, which includes the results from the U.K. and Belgium operations for the OSB, MDF and particleboard plants. The EWP segments have been separated due to differences in the operating region, customer base, profit margins and sales volumes. The EWP segments incorporate the operations and results of the Norbord operations from February 1, 2021.

The acquisition of Norbord by West Fraser has been accounted for as an acquisition of a business in accordance with IFRS 3, Business Combinations, with West Fraser as the acquirer. We have applied purchase price accounting to the acquisition resulting in a significant increase from the historical cost base of Norbord and $1,339 million of goodwill.

Factors contributing to goodwill include the Norbord workforce and assets that are geographically complementary to our existing facilities and offer close access to large markets and timber baskets. The Norbord Acquisition also provides increased scale and geographic diversification of manufacturing and markets. This was a rare opportunity to acquire an OSB producer with meaningful capacity, high-quality employees and facilities, and a complementary strategy and culture. Note 3 to our Annual Financial Statements provides details on the purchase price allocation.

The purchase price allocation has been finalized as at December 31, 2021. Purchase price accounting impacted the two EWP segments’ annual results, as discussed in the relevant sections below.

Angelina Acquisition

On December 1, 2021, we acquired the Angelina Forest Products lumber mill located in Lufkin, Texas for $302 million, net of cash acquired of $8 million. This acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3, Business Combinations. Note 3 to our Annual Financial Statements provides details on the preliminary purchase price allocation as at December 31, 2021, which attributed $78 million to goodwill.

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Financial Results

The following tables represent the actual results of Norbord and Angelina Forest Products included in our statement of earnings and the proforma results of operations for the year ended December 31, 2021. The proforma results assume the Norbord Acquisition and Angelina Acquisition occurred on January 1, 2021, and include proforma purchase price accounting for the acquisitions.

Results Attributable to Acquired Businesses   ($ millions)	Norbord Results for February 1 to December 31, 20211,3		Angelina Results for December 1 to December 31, 20212,3		Total
Sales	$	4,175	$	15	$	4,190
Operating earnings		1,915		1		1,916
Earnings		1,427		1		1,428

1. Represents the results of the Norbord operations since the acquisition date that are included in our results.

2. Represents the results of the Angelina Forest Products operations since the acquisition date that are included in our results.

3. Operating earnings and earnings include purchase price accounting impacts of $93 million expense and $2 million expense for the one-time inventory adjustments in cost of products sold relating to the Norbord Acquisition and Angelina Acquisition, respectively.

Proforma 2021 Results   ($ millions)	West Fraser Actual Results2 2021		Norbord Proforma Results1 Jan-21		Angelina Proforma Results1 Jan-21 to Nov-21		West Fraser Proforma Results1,2 2021
Sales	$	10,518	$	277	$	163	$	10,958
Operating earnings		3,945		115		61		4,121
Earnings		2,947		86		57		3,090

1. These unaudited proforma results have been provided as required per IFRS 3 - Business Combinations. West Fraser proforma YTD-21 presents West Fraser’s results as if the Norbord Acquisition and Angelina Acquisition were completed on January 1, 2021.

2. Operating earnings and earnings include purchase price accounting impacts of $93 million expense and $2 million expense for the one-time inventory adjustment in cost of products sold relating to the Norbord Acquisition and Angelina Acquisition, respectively.

South Carolina OSB Asset Acquisition

On December 6, 2021, we completed the asset purchase of an idled OSB mill near Allendale, South Carolina for $280 million including working capital. We anticipate investing an additional estimated $70 million in capital during 2022 to upgrade and optimize the facility in preparation for a restart, subject to market conditions and hiring the requisite employees.

CHANGE IN FUNCTIONAL AND REPORTING CURRENCY

On February 1, 2021, West Fraser determined that as a result of the Norbord Acquisition, the functional currency of our Canadian operations had changed from CAD to USD. Management considered various factors when making this decision, the most significant being an increase in the levels of sales made in U.S. dollars, a portion of operating expenses incurred in U.S. dollars, and increased levels of U.S. dollar financing.

Concurrent with the change in functional currency, we also changed our reporting currency from Canadian dollars to U.S. dollars. This change in reporting currency is to better reflect the Company’s business activities, following the increased presence in the U.S. as a result of the Norbord Acquisition and in connection with the listing of West Fraser’s Common shares on the NYSE on February 1, 2021.

A change in functional currency is applied prospectively and must be based on a change in economic facts, events and conditions. In contrast, a change in reporting currency requires retroactive restatement. Both changes have specific transition rules under the International Accounting Standard (“IAS”) 21, The Effects of Changes in Foreign Exchange Rates.

As at and for the year ended December 31, 2020, and for all prior periods, the functional and reporting currency of the Company was the CAD as described in our 2020 audited annual consolidated financial statements. The currency remeasurement of West Fraser results applied the IAS 21 transitional rules.

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To prepare our December 31, 2020 and January 1, 2020 consolidated balance sheets, all assets and liabilities were translated into U.S. dollars at the closing exchange rate on December 31, 2020, and December 31, 2019, respectively. Equity items were retroactively restated at historical exchange rates to give effect to the change in reporting currency. The accounting policy used to translate the equity items prior to 2020, was to use the annual average exchange rate for each equity transaction that occurred in the year. For 2020, equity items were translated quarterly using the average exchange rate for each quarter.

To prepare our 2019 and 2020 consolidated statement of earnings, all revenues and expenses were translated into U.S. dollars at the average exchange rate for each quarter, with no adjustments to the measurement of or accounting for previously reported results. To prepare our 2020 consolidated statement of cash flow, all items were translated into U.S. dollars at the average exchange rate for each quarter, with no adjustments to the measurement of or accounting for previously reported results.

RECENT DEVELOPMENTS

Markets

In North America, changes in new home construction activity in the U.S. are a significant driver of lumber and OSB demand. In the fourth quarter, industry supply chains for many building products remained challenged. These supply constraints continued to make it difficult for home builders to convert housing starts to completions, impacting short-term demand for our lumber and panel products. According to the U.S. Census Bureau, the seasonally adjusted annualized rate of U.S. housing starts averaged 1.70 million units in December 2021, with permits issued averaging 1.87 million units. U.S. housing starts were 1.60 million units for the full year, up 16% from 1.38 million units in 2020. In comparison, U.S. housing completions were 1.34 million units in 2021, up just 4% from the prior year. We believe low mortgage rates, low availability of homes for sale and changes in home ownership trends stemming from the COVID-19 pandemic continue to provide a supportive backdrop for home construction activity.

Demand for our products used in repair and remodelling applications had begun to improve late in the third quarter after lumber and OSB prices retreated from record highs earlier in the year. That recovery continued through the fourth quarter.

Severe Weather and Flooding in B.C.

In the fourth quarter of 2021, B.C. was impacted by heavy rain and flooding caused by one of the most extreme natural weather disasters to hit the province in a generation. The multiple weather systems prompted a state of emergency in the province, with severe precipitation causing significant damage to transportation infrastructure, resulting in multiple highway closures, disruptions of rail links, and limited access to ports for overseas shipments. While West Fraser is utilizing alternative transportation routes and methods to the extent they are available to continue servicing customers, these weather events have had an adverse impact on shipments.

As a result of the road and rail closures caused by the severe weather, our Q4-21 western Canadian lumber and pulp shipment volumes declined by approximately 15 to 20% compared to the rates in the first nine months of the year. We reduced operating schedules at multiple western Canadian locations to manage inventory levels, raw material supplies and our integrated fibre supply chain.

At the current time, it is not possible to estimate when full transportation services will resume or when the backlogs resulting from the interruptions will be cleared.

Second Administrative Review (“AR2”) Duty Rates

On November 24, 2021, the USDOC, issued its final duty rates for the AR2 POI for January 1, 2019 to December 31, 2019. The details on the final rates and the impact on our earnings are under the section “Discussion & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute”. The cash deposit rate for SPF lumber shipments from Canada to the U.S. on or after December 2, 2021 is a combined 11.12%, and on or after January 10, 2022 is a combined 11.14%. These are the cash deposit rates until the USDOC finalizes AR3 and AR4 for the POIs dated January 1, 2020 to December 31, 2020 and January 1, 2021 to December 31, 2021, respectively.

14           

B.C. Old-Growth Deferrals

In November 2021, the government of British Columbia announced its intention to defer logging in 2.6 million hectares of what it described as “old growth” forests. The deferrals were based on recommendations provided by a Technical Advisor Panel that the B.C. government had appointed. B.C. Indigenous Nations were given 30 days to respond to the deferrals, during which time most indicated they would engage in further discussion with the government over the coming months before rendering their decision. This process will likely continue through 2022. The impact on West Fraser’s timber supply is contingent on the outcomes of these discussions. Our preliminary estimate of the impact on the B.C. AAC is a reduction of up to 15%. The specific impact to us at this time is not determinable given ongoing negotiations with multiple stakeholders.

ANNUAL RESULTS

Summary Annual Results   ($ millions, except as otherwise indicated)	2021		2020		2019
Earnings
Sales	$	10,518	$	4,373	$	3,673
Cost of products sold		(4,645)		(2,559)		(2,750)
Freight and other distribution costs		(846)		(529)		(538)
Export duties, net		(146)		(57)		(122)
Amortization		(584)		(203)		(195)
Selling, general and administration		(312)		(185)		(159)
Equity-based compensation		(40)		(9)		(4)
Restructuring and impairment charges		—		—		(25)
Operating earnings		3,945		831		(120)
Finance expense, net		(45)		(27)		(37)
Other		(2)		(14)		(8)
Tax (provision) recovery		(951)		(202)		52
Earnings	$	2,947	$	588	$	(113)
Adjusted EBITDA1	$	4,569	$	1,043	$	104
Basic earnings per share ($)		27.03		8.56		(1.64)
Diluted earnings per share ($)		27.03		8.56		(1.76)
Cash dividends declared per share ($)2	$	0.76	$	0.59	$	0.60
Total assets		10,433		4,178		3,594
Long-term debt, non-current		499		500		500
Long-term debt, total		499		507		507

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

2. Cash dividends of CAD$0.80 per share were declared during the years ended December 31, 2020 and December 31, 2019. Cash dividends declared during the year ended December 31, 2021 were comprised of CAD$0.70 per share in aggregate for the first three quarters and USD$0.20 per share for the fourth quarter. The CAD amounts have been translated to USD for presentation purposes using the average exchange rate during the quarter that the dividends were declared.

Our 2021 annual results reflect the inclusion of the operations of Norbord from February 1, 2021. In 2021, our revenues increased to $10,518 million and we generated earnings of $2,947 million, or $27.03 per share. This compares with revenues of $4,373 million and earnings of $588 million, or $8.56 per share, in 2020, and revenues of $3,673 million and a loss of ($113) million, or ($1.64) per share in 2019. The increase in revenue and earnings over the three years relates primarily to increased pricing and demand for our products due to increased home construction and repair and remodelling activity in North America and the acquisition of Norbord on February 1, 2021. Western Canada log costs, particularly in B.C., increased significantly over the three years, offsetting some of the pricing gains.

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Discussion & Analysis of Annual Results by Product Segment

Lumber Segment

($ millions unless otherwise indicated)

	2021			2020
Lumber Segment Earnings
Sales
Lumber	$	4,520		$	2,983
Wood chips and other residuals		289			273
Logs and other		101			100
		4,910			3,356
Cost of products sold		(2,241	)		(1,871	)
Freight and other distribution costs		(404	)		(361	)
Export duties, net		(146	)		(57	)
Amortization		(164	)		(151	)
Selling, general and administration		(146	)		(128	)
Operating earnings		1,809			788
Finance expense, net		(17	)		(17	)
Other		2			(2	)
Earnings before tax	$	1,794		$	769
Adjusted EBITDA1, 2	$	1,973		$	939
Capital expenditures		146			149
SPF (MMfbm)
Production		3,182			3,157
Shipments		3,176			3,214
SYP (MMfbm)
Production		2,675			2,801
Shipments		2,649			2,861

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure. Q4-21 Adjusted EBITDA was decreased by a one-time charge of $2 million related to inventory purchase price accounting on the Angelina Acquisition.

2. Effective January 1, 2021, and for all comparative periods, export duties are no longer excluded from the definition of Adjusted EBITDA.

Sales and Shipments

Lumber sales for 2021 increased compared to 2020 due to higher product pricing, offset in part by lower shipments.

2021 was another year of significant lumber price variability, with lumber market pricing hitting highs in the second quarter before dropping in the third quarter and recovering in the fourth quarter. We believe the higher lumber market pricing in 2021 resulted from low inventory volumes in the supply chain, improved new home construction levels, and strong demand from repair and remodelling activity. The price variance resulted in an increase in earnings before tax and Adjusted EBITDA of $1,715 million compared to 2020.

Shipment volumes were lower for SPF and SYP in 2021 than in 2020. SPF shipment volumes were lower in 2021 due primarily to disruptions to rail and truck services due to wildfires in B.C. in the third quarter and severe weather and flooding in B.C. in the fourth quarter. This decrease in shipment volume was offset in part by improvements in product demand compared to 2020, which was impacted by COVID-19 related market conditions. SYP shipment volumes were lower in 2021 due primarily to disruptions to supply chain activity due to extreme winter weather conditions in the U.S. South in the first quarter and reduced production discussed further in the section below. The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $100 million compared to the previous year.

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SPF Sales by Destination

	2021				2020
	MMfbm		%		MMfbm		%
U.S.		2,098		66		1,975		61
Canada		753		24		678		21
China		189		6		419		14
Other		136		4		142		4
Total		3,176				3,214

We ship SPF to several export markets, while our SYP sales are almost entirely in the U.S. The proportion of shipments of SPF to China in 2021 was lower compared to 2020 due primarily to pricing differentials between the North America and overseas markets.

2021 wood chip and other residual sales were higher than 2020 due to higher pricing as the pricing formula follows the NBSK price, which increased in 2021, offset in part by decreases in SPF and SYP chip production. Chip production decreased in line with lumber production year over year.

Costs and Production

SPF production volumes were comparable between 2021 and 2020. 2021 production volumes were impacted by reductions in operating schedules at our B.C. SPF operations in response to disruptions to rail and truck services due to wildfires, flooding, and other severe weather, whereas 2020 production volumes were impacted by temporary production curtailments in response to COVID-19.

SYP production volumes decreased in 2021 compared to 2020 due to log shortages in certain operating areas in the second half of the year, market-related downtime in the third quarter, and the impact of extreme winter conditions in the U.S. South in the first quarter. These factors were partially offset by increases in production from removing temporary production curtailments in place in 2020 in response to COVID-19.

Costs of products sold were higher in 2021 compared to 2020 due to increased raw materials and manufacturing costs offset by decreases in shipment volumes.

SPF stumpage costs tied to the price of lumber increased significantly year over year. Most of our SPF log requirements are harvested from crown lands owned by the B.C. or Alberta provincial governments. B.C.’s stumpage system is tied to published lumber prices, with a time lag, and publicly auctioned timber harvesting rights. Alberta’s stumpage system is correlated to published lumber prices with a shorter time lag. B.C. fibre shortages, which increased competition for logs available through the B.C. Timber Sales log market, also increased B.C. SPF purchase log costs. Lumber results were also adversely impacted by the strengthening of the Canadian dollar compared to 2020. This increased the U.S. dollar equivalent of our SPF manufacturing and input costs, which are primarily incurred in Canadian dollars.

SYP log costs increased in 2021, but to a lesser degree than SPF log costs. Log supply was impacted by wet weather and supply chain disruptions. Compared to 2020, our U.S. South SYP operations had higher costs due primarily to input cost inflation and increased employee costs, including costs associated with managing through COVID-19 impacts and temporary curtailments.

Freight and other distribution costs generally increased in 2021 compared to 2020 as the transportation network adjusted to the post-COVID-19 demand levels. Higher costs resulted from truck and driver shortages in the U.S., and costs were also adversely impacted by transportation issues related to the wildfires and flooding in B.C. These increases were offset in part by reduced shipment volumes, including lower shipments to Asia.

Export duties for 2021 were higher than 2020. Export duties for 2021 are net of a $55 million recovery related to the USDOC finalization of the AR2 duty rates. In contrast, export duties for 2020 are net of a $95 million recovery related to the USDOC finalization of the AR1 duty rates. The effective duty expense for the period, as disclosed in the section “Softwood Lumber Dispute” below, was $201 million compared to $152 million in 2020. The increase in effective export duty expense was due to a higher value and volume of sales to the U.S.

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Amortization expense and finance expense for 2021 were comparable to the prior year.

Selling, general, and administration costs increased compared to 2020 due primarily to higher salaries and wages as a result of tightening labour markets. The strengthening of the Canadian dollar compared to 2020 also increased the U.S. dollar equivalent of salaries and wages and administration costs incurred in Canadian dollars.

Fluctuations in other income compared to 2020 were mostly due to foreign exchange revaluations on our Canadian operation’s Canadian dollar monetary assets and liabilities.

Earnings before tax for the Lumber Segment increased by $1,025 million compared to 2020 due to the reasons explained above.

Adjusted EBITDA for the Lumber Segment increased by $1,034 million compared to 2020. The following table shows the Adjusted EBITDA variance for the period.

Adjusted EBITDA ($ millions)	YTD-20 to YTD-21
Adjusted EBITDA - comparative period	$	939
Price		1,715
Volume		(100)
Changes in export duties		(89)
Changes in costs		(447)
Other		(45)
Adjusted EBITDA - current period	$	1,973

Softwood Lumber Dispute

On November 25, 2016, a coalition of U.S. lumber producers petitioned the USDOC and the USITC to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD duties against Canadian softwood lumber imports. The USDOC chose us as a “mandatory respondent” to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates.

Developments in CVD and ADD rates

We began paying CVD and ADD duties in 2017 based on the USDOC’s determination of duties payable. The CVD and ADD cash deposit rates are updated based on the USDOC’s AR for each POI, as summarized in the tables below. Following year-end, the USDOC amended the CVD cash deposit rate for ministerial errors from 5.06% to 5.08%, effective January 10, 2022.

The USDOC finalized the CVD and ADD duty expense rates for the AR1 and AR2 POIs in 2020 and 2021 respectively, as summarized in the tables below. Finalization of administrative reviews relating to active POIs are expected approximately two years after the POI in question.

AR3 (POI January 1 to December 31, 2020) commenced in April 2021, and the rates are expected to be finalized in August 2022. AR4 (POI January 1 to December 31, 2021) is expected to commence in 2022 with the results finalized in 2023. We have been selected as a mandatory respondent for AR3, which will result in West Fraser continuing to be subject to a company-specific rate.

On January 31, 2022, the USDOC released the preliminary results from AR3 POI covering the 2020 calendar year, which indicated a rate of 8.46% for CVD and 4.63% for ADD for West Fraser. The duty rates are subject to an appeal process, and we will record an adjustment once the rates are finalized. If the AR3 rates were to be confirmed, it would result in a U.S. dollar recovery of $43 million for the POI covered by AR3. This adjustment would be in addition to the amounts already recorded on our balance sheet. If these rates are finalized, our combined cash deposit rate would be revised to 13.09%.

The respective Cash Deposit Rates, the AR POI Final Rate, and the West Fraser Estimated ADD Rate for each period are as follows:

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Effective dates for CVD	Cash Deposit Rate			AR POI Final     Rate
AR1 POI
April 28, 2017 - August 24, 20171		24.12	%	6.76% 3
August 25, 2017 - December 27, 20171		—		—
December 28, 2017 - December 31, 20172		17.99	%	6.76% 3
January 1, 2018 - December 31, 2018		17.99	%	7.57% 3
AR2 POI
January 1, 2019 - December 31, 2019		17.99	%	5.08% 5
AR3 POI
January 1, 2020 - November 30, 2020		17.99	%	n/a 6
December 1, 2020 - December 31, 20204		7.57	%	n/a 6
AR4 POI
January 1, 2021 - December 1, 2021		7.57	%	n/a 7
December 2, 2021 - December 31, 20218		5.06	%	n/a 7

1. On April 24, 2017, the USDOC issued its preliminary rate in the CVD investigation. The requirement that we make cash deposits for CVD was suspended on August 24, 2017, until the USDOC published the Revised Rate.

2. On December 4, 2017, the USDOC revised our CVD Cash Deposit Rate effective December 28, 2017.

3. On February 3, 2020, the USDOC issued a preliminary CVD rate and, on November 24, 2020, a final CVD rate for the AR1 POI. This table only reflects the final rate.

4. On November 24, 2020, the USDOC revised our CVD Cash Deposit Rate effective December 1, 2020.

5. On May 20, 2021, the USDOC issued a preliminary CVD rate and, on November 24, 2021, a final CVD rate for the AR2 POI. Following year-end, the USDOC amended the final CVD rate for the AR2 POI from 5.06% to 5.08% for ministerial errors. This table only reflects the final rate.

6. The CVD rate for the AR3 POI will be adjusted when AR3 is complete, and the USDOC finalizes the rate, which is not expected until 2022.

7. The CVD rate for the AR4 POI will be adjusted when AR4 is complete, and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our CVD Cash Deposit Rate effective December 2, 2021. Following year-end, the USDOC amended the CVD cash deposit rate for ministerial errors from 5.06% to 5.08%, effective January 10, 2022.

Effective dates for ADD	Cash Deposit Rate		AR POI Final Rate			West Fraser     Estimated Rate
AR1 POI
June 30, 2017 - December 3, 20171		6.76%		1.40%	3	1.46%
December 4, 2017 - December 31, 20172		5.57%		1.40%	3	1.46%
January 1, 2018 - December 31, 2018		5.57%		1.40%	3	1.46%
AR2 POI
January 1, 2019 - December 31, 2019		5.57%		6.06%	5	4.65%
AR3 POI
January 1, 2020 - November 29, 2020		5.57%		n/a	6	3.40%
November 30, 2020 - December 31, 20204		1.40%		n/a	6	3.40%
AR4 POI
January 1, 2021 - December 1, 2021		1.40%		n/a	7	6.80%
December 2, 2021 - December 31, 20218		6.06%		n/a	7	6.80%

1. On June 26, 2017, the USDOC issued its preliminary rate in the ADD investigation effective June 30, 2017.

2. On December 4, 2017, the USDOC revised our ADD Cash Deposit Rate effective December 4, 2017.

3. On February 3, 2020, the USDOC issued a preliminary ADD Rate and, on November 24, 2020, a final ADD rate for the AR1 POI. This table only reflects the final rate.

4. On November 24, 2020, the USDOC revised our ADD Cash Deposit Rate effective November 30, 2020.

5. On May 20, 2021, the USDOC issued a preliminary ADD rate and, on November 24, 2021, a final ADD rate for the AR2 POI. This table only reflects the final rate.

6. The ADD rate for the AR3 POI will be adjusted when AR3 is complete, and the USDOC finalizes the rate, which is not expected until 2022.

7. The ADD rate for the AR4 POI will be adjusted when AR4 is complete, and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our ADD Cash Deposit Rate effective December 2, 2021.

Accounting policy for duties

The CVD and ADD rates apply retroactively for each POI. We record CVD as export duty expense at the cash deposit rate until an AR finalizes a new applicable rate for each POI. We record ADD as export duty expense by estimating the rate to

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be applied for each POI by using our actual results and the same calculation methodology as the USDOC and adjust when an AR finalizes a new applicable rate for each POI. The difference between the cash deposits and export duty expense is recorded on our balance sheet as export duty deposits receivable or other liabilities as applicable, along with any adjustments to finalized rates.

The difference between the cash deposit amount and the amount that would have been due based on the final AR rate will incur interest based on the U.S. federally published interest rate. We record interest income on our duty deposits receivable, net of any interest expense on our duty deposits payable, based on this rate.

Impact on results

The following table reconciles our cash deposits paid during the period to the amount recorded in our consolidated statement of earnings:

  ($ millions)

	2021			2020
Cash deposits paid1	$	(132	)	$	(161	)
Adjust to West Fraser Estimated ADD rate2		(69	)		9
Effective duty expense for period3		(201	)		(152	)
Duty recovery attributable to AR14		—			95
Duty recovery attributable to AR25		55			—
Duty expense		(146	)		(57	)
Interest income on duty deposits attributable to West Fraser		2			2
Estimated rate adjustments
Interest income on the AR1 and AR2 duty deposits receivable		7			11
Interest income on duty deposits	$	9		$	13

1. Represents combined CVD and ADD cash deposit rate of 23.56% from January 1, 2020 to November 29, 2020, 19.39% on November 30, 2020, 8.97% from December 1, 2020 to December 1, 2021, and 11.12% from December 2, 2021 to December 31, 2021.

2. Represents adjustment to West Fraser Estimated ADD rate of 6.80% for 2021 and 3.40% for 2020.

3. The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 21.39% from January 1 to November 30, 2020, 10.97% from December 1 to December 31, 2020, 14.37% for January 1 to December 1, 2021, and 11.86% for December 2 to December 31, 2021.

4. $95 million represents the duty recovery attributable to the finalization of AR1 duty rates for the 2017 and 2018 POI.

5. $55 million represents the duty recovery attributable to the finalization of AR2 duty rates for the 2019 POI.

As at December 31, 2021, export duties paid and payable on deposit with the USDOC were $662 million.

Appeals

On May 22, 2020, the North American Free Trade Agreement (“NAFTA”) panel issued its final decision on “Injury”. The NAFTA panel rejected the Canadian parties’ arguments and upheld the USITC’s remand determination in its entirety.

On August 28, 2020, the World Trade Organization’s (“WTO”) dispute-resolution panel ruled unanimously that U.S. countervailing duties against Canadian softwood lumber are inconsistent with the WTO obligations of the United States. The decision confirmed that Canada does not subsidize its softwood lumber industry. On September 28, 2020, the U.S. announced that it would appeal the WTO panel’s decision.

The softwood lumber case will continue to be subject to NAFTA or the new Canada-United States-Mexico Agreement (“CUSMA”) and WTO dispute resolution processes, and litigation in the U.S. In the past, long periods of litigation have led to negotiated settlements and duty deposit refunds. In the interim, duties remain subject to the USDOC AR process, which results in an annual adjustment of duty deposit rates.

Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.

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North America Engineered Wood Products Segment

($ millions unless otherwise indicated)
	2021		2020
NA EWP Segment Earnings
Sales
OSB	$	3,450	$	—
Plywood, LVL and MDF		796		458
Wood chips, logs and other		27		16
		4,273		474
Cost of products sold		(1,521)		(303)
Freight and other distribution costs		(262)		(42)
Amortization		(289)		(13)
Selling, general and administration		(76)		(22)
Operating earnings		2,125		94
Finance expense		(3)		(4)
Other		(1)		5
Earnings before tax	$	2,121	$	95
Adjusted EBITDA1	$	2,414	$	107
Capital expenditures2		424		10
OSB (MMsf 3/8” basis)
Production		5,654		—
Shipments		5,674		—
Plywood (MMsf 3/8” basis)
Production		763		762
Shipments		756		761
MDF (MMsf 3/4” basis)
Production		227		209
Shipments		228		206
LVL (Mcf)
Production		2,439		1,948
Shipments		2,416		2,021

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure. 2021 Adjusted EBITDA was decreased by a one-time charge of $86 million related to inventory purchase price accounting.

2. Includes $276 million relating to the acquisition of the idled OSB mill near Allendale, South Carolina.

Our NA EWP segment includes our North American OSB, plywood, MDF, and LVL operations. Our operations and financial results up to February 1, 2021 only reflect activities associated with West Fraser’s Panels segment without incorporating the pre-February 1, 2021 North American operations and results of Norbord. Subsequent to February 1, 2021, our operations and financial results reflect the consolidated activities and operations of West Fraser and Norbord, including incorporating the North American operations of Norbord into our NA EWP segment.

Our Adjusted EBITDA analysis reports OSB as one line, and the variances reported only represent changes for plywood, MDF, and LVL.

Sales and Shipments

Sales increased in 2021 compared to 2020 due primarily to the addition of our OSB operations from the date of the Norbord Acquisition and higher pricing for plywood, MDF, and LVL products in the current year.

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Our plywood production is sold primarily into Canada, and Canadian housing starts and the repair and remodelling market improved in the current year. Demand for MDF and LVL also recovered from COVID-19 related economic impacts in 2020. The price variance for plywood, MDF, and LVL products increased earnings before tax and adjusted EBITDA by $310 million compared to 2020.

Plywood shipment volumes were comparable to prior year. The 2020 volumes were impacted by temporary production curtailments from COVID-19 related market conditions in the spring of 2020 and the 2021 volumes were impacted by the weather-related railcar shortages. Substantially all of our plywood product is shipped eastward to Ontario and Quebec and southward to the U.S. As such, 2021 shipment volumes were not impacted materially by wildfires and severe weather and flooding in B.C., which primarily disrupted rail links and trucking between the B.C. interior and Lower Mainland.

Shipment volumes for our other panel products, in particular LVL, increased compared to the prior year as demand for these products increased due to improved demand from new home construction and repair and remodelling.

The shipment volume variance for plywood, MDF, and LVL products increased earnings before tax and adjusted EBITDA by $9 million compared to 2020.

Costs and Production

Production for plywood, MDF, and LVL products increased compared to 2020. Plywood production in 2020 was partially curtailed in the first half of 2020 in response to COVID-19 related market conditions. MDF and LVL production schedules were also reduced in 2020 to match demand. Production volumes increased as demand for these products recovered from COVID-19 related economic impacts in the prior year.

All of our operating expenses increased due to the addition of our OSB operations.

Purchase price accounting increased our OSB cost of products sold by $86 million and increased our amortization expense compared to pre-acquisition levels. Accounting standards require acquired inventory to be valued at fair value, which is represented by the estimated selling price, less the sum of (a) selling costs and (b) a reasonable profit allowance for the completing and selling effort, based on the profit for similar finished goods. Property, plant, and equipment assets were valued at depreciated replacement cost to represent fair value. The customer relationship intangible asset related to our North America operations will be amortized over 10 years and is based on a valuation model prepared by an independent valuation firm.

Plywood, MDF and LVL costs of products sold trended with shipment volume changes. Compared to 2020, their manufacturing costs were negatively impacted by increased wood costs in B.C. and Alberta, a stronger Canadian dollar relative to the U.S. dollar during the year, and higher additive and energy costs.

B.C. and Alberta stumpage costs increased due to higher fees tied to published product prices as discussed in the Lumber Segment, and B.C. purchased log costs increased due to fibre shortages.

A stronger Canadian dollar relative to the U.S. dollar during 2021 increased the U.S. dollar equivalent of our manufacturing and input costs at our Canadian locations, which are primarily incurred in Canadian dollars.

Freight and other distribution costs generally increased in 2021 compared to 2020 as the transportation network adjusted to the post-COVID demand levels. Higher costs also resulted from transportation issues related to the 2021 wildfires and flooding in B.C.

Selling, general, and administration costs increased compared to 2020 due primarily to the addition of OSB. The plywood, MDF, and LVL operations were also impacted by a stronger Canadian dollar relative to the U.S. dollar on administration costs incurred in Canadian dollars.

Finance expense and other income were comparable compared to 2020.

Earnings before tax for the NA EWP Segment increased by $2,026 million compared to 2020 primarily due to the addition of our OSB operations from the date of the Norbord Acquisition and the reasons explained above.

22

Adjusted EBITDA for the NA EWP Segment increased by $2,307 million compared to 2020. The following table shows the Adjusted EBITDA variance for the period. Our Adjusted EBITDA analysis reports OSB as one line, and the variances reported only represent changes for plywood, MDF, and LVL.

Adjusted EBITDA ($ millions)	YTD-20 to YTD-21
Adjusted EBITDA - comparative period	$	107
Price		310
OSB Adjusted EBITDA since the date of the Norbord Acquisition1		2,089
Volume		9
Changes in costs		(99)
Other		(2)
Adjusted EBITDA - current period	$	2,414

1. OSB Adjusted EBITDA since the date of the Norbord Acquisition is calculated as earnings determined for our North American OSB operations adding back: finance expense, tax provision or recovery, amortization, equity-based compensation, restructuring and impairment charges, and other.

Pulp & Paper Segment

($ millions unless otherwise indicated)
	2021		2020
Pulp & Paper Segment Earnings
Sales	$	727	$	648
Cost of products sold		(541)		(490)
Freight and other distribution costs		(137)		(126)
Amortization		(34)		(31)
Selling, general and administration		(34)		(33)
Operating earnings		(19)		(32)
Finance expense		(5)		(6)
Other		2		(8)
Earnings before tax	$	(22)	$	(46)
Adjusted EBITDA1	$	15	$	(1)
Capital expenditures		35		19
BCTMP (Mtonnes)
Production		623		662
Shipments		614		667
NBSK (Mtonnes)
Production		428		462
Shipments		419		465
Newsprint (Mtonnes)
Production		113		105
Shipments		113		109

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

The pulp & paper segment includes our NBSK, BCTMP and newsprint operations.

Sales and Shipments

Sales increased compared to 2020 due to higher BCTMP and NBSK pricing, offset in part by lower pulp shipment volumes. Despite a period of softer demand from China in the third quarter, overall demand for our pulp products increased in 2021, which positively affected pulp pricing.

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2021 pulp shipments were lower than prior year as a result of reduced production and disruptions to rail and truck services due to wildfires and severe weather and flooding in B.C.

Newsprint pricing and shipment volumes remained comparable to prior year.

The price variance resulted in an increase in earnings before tax and adjusted EBITDA of $132 million compared to 2020, and the volume variance resulted in a decrease in earnings before tax and adjusted EBITDA of $12 million compared to 2020.

Costs and Production

BCTMP and NBSK production volumes decreased compared to 2020.

BCTMP and NBSK production volumes, which are mostly destined for Asian markets, were significantly reduced in the fourth quarter of 2021 in response to the inability to transport products to or from the Lower Mainland and congestion at the ports that resulted from severe weather and flooding in B.C. The flooding blocked three of B.C.’s major highways and multiple rail lines for several weeks and the resulting backlog at the port has continued to impact export shipments into 2022.

NBSK production volumes were also impacted by planned and unplanned maintenance for our Cariboo and Hinton NBSK mills during the year. 2020 production was adversely impacted, although not to the same extent, by the temporary shutdown of our Cariboo NBSK pulp mill in 2020 in response to low fibre availability and to complete planned maintenance.

Newsprint production volumes were comparable to 2020.

Costs of products sold increased compared to 2020 due primarily to higher fibre costs, as chips used in the production of NBSK are tied to NBSK pricing, higher maintenance cost spending, and increased energy costs. Partially offsetting this impact was the reduction in shipment volumes.

Freight and other distribution costs increased in 2021, despite lower shipment volumes, due to international supply chain challenges as the transportation network adjusted to post-COVID demand levels in addition to increased trucking costs as rail service was impacted by B.C. wildfires in the third quarter of 2021 and all transportation methods by the flooding in B.C. in the fourth quarter of 2021.

Amortization, selling, general, and administration costs, and finance expense were comparable to prior year. Other for 2020 was negatively impacted by an accrual for a power purchase dispute.

Earnings before tax for the Pulp & Paper Segment increased by $24 million compared to 2020 due to the reasons explained above.

Adjusted EBITDA for the Pulp & Paper Segment increased by $16 million compared to 2020. The following table shows the Adjusted EBITDA variance for the period.

Adjusted EBITDA ($ millions)	YTD-20 to YTD-21
Adjusted EBITDA - comparative period	$	(1)
Price		132
Volume		(12)
Changes in costs		(93)
Other		(11)
Adjusted EBITDA - current period	$	15

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Europe Engineered Wood Products Segment

($ millions unless otherwise indicated)
	2021		2020
Europe EWP Segment Earnings
Sales	$	723	$	—
Cost of products sold		(457)		—
Freight and other distribution costs		(43)		—
Amortization		(88)		—
Selling, general and administration		(22)		—
Operating earnings		113		—
Finance expense		(1)		—
Earnings before tax	$	112	$	—
Adjusted EBITDA1	$	201	$	—
Capital expenditures		28		—
OSB (MMsf 3/8” basis)
Production		1,035		—
Shipments		1,010		—
MDF (MMsf 3/8” basis)
Production		299		—
Shipments		306		—
Particleboard (MMsf 3/8” basis)
Production		494		—
Shipments		464		—

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure. 2021 Adjusted EBITDA was decreased by a one-time charge of $7 million related to inventory purchase price accounting.

Our Europe EWP segment includes our U.K. and Belgium OSB, MDF, and particleboard operations effective from the February 1, 2021, acquisition date. This segment is new to our company for 2021 so we do not have comparative data in our results for 2020.

Sales prices for the OSB, MDF and particleboard in the European operations tend to be more stable than those in the North American market due to longer-term customer contract pricing. As such, the price increase realized in 2021 was not as high as in North America but was significant to the Europe segment results. Resin costs continued to increase throughout 2021 for these products.

Purchase price accounting increased our Europe EWP cost of products sold by $7 million and increased amortization expense compared to pre-acquisition levels. These accounting standards require acquired inventory to be valued at fair value, which is represented by the estimated selling price, less the sum of (a) selling costs and (b) a reasonable profit allowance for the completing and selling effort, based on the profit for similar finished goods. Property, plant, and equipment assets were valued at depreciated replacement cost to represent fair value. The customer relationship intangible asset related to our European operations will be amortized over 10 years and is based on a valuation model prepared by an independent valuation firm.

Discussion & Analysis of Non-Operational Items

Selling, general and administration

Corporate & Other selling, general and administration expense increased compared to prior year due to acquisition costs associated with the Norbord Acquisition, higher salaries and wages, including costs relating to our OSB corporate team, higher professional fees, and additional costs relating to IT integration. Selling, general and administration expenses related to our operating segments are discussed under “Discussion & Analysis of Annual Results by Product Segment”.

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Equity-based compensation

Our equity-based compensation includes our share purchase option, phantom share unit, and deferred share unit plans (collectively, the “Plans”), all of which had been partially hedged by an equity derivative contract. The equity derivative matured in December 2021 and was closed out. Our Plans and our equity derivative contract are fair valued at each period-end, and the resulting expense or recovery is recorded over the vesting period.

The Plans include those equity-based plans assumed from Norbord as part of the Norbord Acquisition. The assumed Norbord share purchase option plans (“Assumed Option Plans”) were fair valued at the Norbord Acquisition date. From February 1 to April 20, 2021, the Assumed Option Plans were accounted for as equity-settled plans. On April 20, 2021, our board of directors approved a change to allow the Assumed Option Plans holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. The change required us to fair value the Assumed Option Plan on April 20, 2021 and convert from equity-based accounting to cash-settled accounting for the Assumed Option Plans. Cash-settled accounting is consistent with the West Fraser option plan. Any changes in fair value from April 20, 2021 onwards will result in an expense or recovery over the vesting period in the same manner as the rest of our Plans. This change to the Assumed Option Plans did not in any way affect the value of the instruments to the holders.

Our valuation models consider various factors, with the most significant being the change in the market value of our shares from the beginning to the end of the relevant period. The expense or recovery does not necessarily represent the value that the holders of options and units will ultimately receive.

Equity-based compensation expense increased compared to prior year due to the impacts of the Assumed Option Plans and the increase in our share price during 2021.

Finance expense

Finance expense for 2021 was net of $9 million of interest income (2020 - $13 million) related to duty deposits receivable. Additional information regarding the interest income on duty deposits receivable is disclosed under “Discussion & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute”. Finance expense excluding the interest income related to export duty deposits was $54 million, which was $14 million higher than in 2020. Finance expense was higher due to the additional interest incurred on the Norbord Notes for the two months between the Norbord Acquisition and redemption of the notes, the additional make-whole premium paid to redeem the Norbord Notes, and the write-off of deferred financing costs related to prior credit facilities that were extinguished upon the execution of our $1 billion revolving credit facility.

Other

Effective February 1, 2021, our Canadian operations functional currency changed from Canadian dollars to U.S. dollars. From that date forward, any change in the value of the USD relative to the value of the CAD results in the revaluation of our CAD-denominated monetary assets and liabilities. The currency revaluations are recorded in other.

At the same time, we retroactively changed our reporting currency from Canadian dollars to U.S. dollars. The change of reporting currency resulted in a currency remeasurement of prior period results. Revenues and expenses for the year ended December 31, 2020 were translated into U.S. dollars at the average exchange rate, with no adjustments to the measurement of or accounting for previously reported results. Additional details on West Fraser’s conversion to U.S. dollars can be found under the title “Change in Functional and Reporting Currency.”

Other expense of $5 million was recorded for our Corporate segment in 2021 compared to an expense of $9 million in 2020. In 2021, we entered into annuity purchase agreements to settle $215 million of our defined benefit obligations by purchasing annuities using our plan assets. These agreements transferred the pension obligations of retired employees under certain pension plans to financial institutions. The difference between the cost of the annuity purchase and the liabilities held for these pension plans is reflected as a settlement cost of $12 million recorded under Other. This was offset in part by mark-to-market gains on our interest rate swap contracts.

The other expense in 2020 related primarily to foreign exchange losses and mark-to-market losses on our interest rate swap contracts.

Other related to our operating segments are discussed under “Discussion & Analysis of Annual Results by Product Segment”.

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Income tax

We recorded an income tax expense in 2021 of $951 million compared to $202 million in 2020. The effective tax rate was 24% compared to 26% in 2020. Note 18 to the Annual Financial Statements provides a reconciliation of income taxes calculated at the statutory rate to the income tax expense.

Other comprehensive earnings – translation of foreign operations

As part of the Norbord Acquisition, we acquired operations in the U.K. and Belgium, so any change in the value of the British pound sterling or Euro relative to the value of the USD results in the revaluation of our European EWP operations assets and liabilities. The revaluation of our European operations into U.S. dollars is reported in other comprehensive earnings.

Other comprehensive earnings for 2020 included a $32 million gain relating to the translation effect due to change in reporting currency. Additional details on West Fraser’s conversion to U.S. dollars can be found under the title “Change in Functional and Reporting Currency.”

Other comprehensive earnings – actuarial gains/losses on retirement benefits

The funded position of our defined benefit pension plans and other retirement benefit plans is estimated at the end of each period. The funded position, as shown in Note 13 to our Annual Financial Statements, is determined by subtracting the value of the plan assets from the plan obligations.

In 2021, we recorded in other comprehensive earnings an after-tax actuarial gain of $153 million (2020 -loss of $7 million). The current year gain reflected an increase in the discount rate used to calculate plan liabilities and higher returns on plan assets.

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FOURTH QUARTER RESULTS

Summary Fourth Quarter Results   ($ millions)	Q4-21			Q3-21			Q4-20
Earnings
Sales	$	2,038		$	2,358		$	1,294
Cost of products sold		(1,158	)		(1,213	)		(686	)
Freight and other distribution costs		(207	)		(220	)		(139	)
Export duties, net		30			(66	)		36
Amortization		(153	)		(147	)		(54	)
Selling, general and administration		(88	)		(73	)		(52	)
Equity-based compensation		(12	)		(9	)		(4	)
Operating earnings		450			630			395
Finance expense, net		(1	)		(11	)		3
Other		(11	)		5			(13	)
Tax provision		(104	)		(164	)		(103	)
Earnings	$	334		$	460		$	282
Adjusted EBITDA1	$	615		$	786		$	453

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

Selected Quarterly Results

($ millions, except EPS amounts which are in $)
	Q4-21		Q3-21		Q2-21		Q1-21		Q4-20		Q3-20		Q2-20		Q1-20
Sales	$	2,038	$	2,358	$	3,779	$	2,343	$	1,294	$	1,268	$	921	$	890
Earnings		334		460		1,488		665		282		262		35		9
Basic EPS		3.13		4.20		12.32		6.96		4.09		3.82		0.51		0.13
Diluted EPS		3.13		4.20		12.32		6.96		4.09		3.82		0.51		(0.09)

Earnings generally trended up in 2020 primarily due to increased pricing for our products as demand recovered from the impacts of COVID-19 throughout the year. The Norbord Acquisition led to incorporation of additional sales and earnings from our North America and Europe OSB operations, which are reflected in our 2021 results from February 1, 2021 onwards. Pricing for our products reached record highs in Q2-21 before moderating in Q3-21. Although pricing partially recovered in Q4-21, our Q4-21 results were impacted by disruptions to shipments of our Canadian lumber and pulp products as a result of severe weather and flooding in B.C. Western Canada log costs, particularly in B.C., increased significantly over the two years, offsetting some of the pricing gains.

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Discussion & Analysis of Fourth Quarter Results by Product Segment

Lumber Segment

($ millions unless otherwise indicated)
	Q4-21			Q3-21		Q4-20
Lumber segment earnings
Sales
Lumber	$	796		$	788	$	915
Wood chips and other residuals		70			69		69
Logs and other		22			26		26
		888			883		1,010
Cost of products sold		(546	)		(586)		(487)
Freight and other distribution costs		(93	)		(102)		(97)
Export duties, net		30			(66)		36
Amortization		(45	)		(41)		(40)
Selling, general and administration		(39	)		(36)		(37)
Operating earnings		195			52		385
Finance expense, net		1			(8)		6
Other		(2	)		7		(8)
Earnings before tax	$	194		$	51	$	383
Adjusted EBITDA1, 2	$	240		$	93	$	425
SPF (MMfbm)
Production		720			758		810
Shipments		673			805		840
SYP (MMfbm)
Production		659			643		692
Shipments		632			698		711

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure. Q4 2021 Adjusted EBITDA was decreased by a one-time charge of $2 million related to inventory purchase price accounting.

2. Effective January 1, 2021, and for all comparative periods, export duties are no longer excluded from the definition of Adjusted EBITDA.

Sales and Shipments

Lumber sales for the fourth quarter were impacted by lower shipments and higher product pricing. Lumber sales were higher than the previous quarter as higher product pricing more than offset lower shipment volumes. Lumber sales were lower than Q4-20 as product pricing was modestly higher and did not offset lower shipment volumes.

Shipment volumes were lower for both SPF and SYP in Q4-21 compared to the comparative quarters. SPF shipment volumes were lower in Q4-21 as severe weather and flooding in B.C. disrupted rail and truck services. This disruption was more severe than those relating to wildfires in the third quarter as the flooding blocked three of B.C.’s major highways and multiple rail lines for several weeks, whereas certain highway routes were still open to trucking during the wildfires. No significant transportation disruptions impacted Q4-20, and shipment volumes in Q4-20 were higher as shipments recovered from intermittent rail services issues in previous periods.

SYP shipment volumes trended lower in Q4-21. SYP production exceeded shipments in Q4-21, offsetting a drawdown in SYP inventory in Q3-21 as we over shipped production as demand for lumber improved. Shipment volumes decreased compared to Q4-20 due to reduced production levels, discussed further in the section below.

The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $38 million compared to the previous quarter and a decrease of $64 million compared to the fourth quarter of 2020.

29

Fourth-quarter lumber pricing was higher than Q3-21 and was also higher, although to a lesser extent, than Q4-20. Lumber supply and demand industry fundamentals tightened through the fourth quarter, which we believe was due to relatively low inventory volumes in the supply chain as a result of transportation and logistics disruptions, improved new home construction levels, and strong demand from repair and remodelling activity.

The price variance resulted in an increase in earnings before tax and Adjusted EBITDA of $130 million compared to the previous quarter and an increase of $30 million compared to the fourth quarter of 2020.

	Q4-21				Q3-21				Q4-20
SPF Sales by Destination	MMfbm		%		MMfbm		%		MMfbm	%
U.S.		461		68%		548		68%	567		67%
Canada		128		19%		204		25%	177		21%
China		60		9%		23		3%	64		8%
Other		24		4%		30		4%	32		4%
		673				805			840

We ship SPF to several export markets, while our SYP sales are almost entirely within the U.S. The relative proportion of shipments of SPF to China was higher compared to the previous quarter due to changes in pricing differentials between the North American and overseas markets. The relative proportion of shipments of SPF to China in Q4 2021 was comparable to the fourth quarter of 2020.

Wood chip and other residual sales in Q4-21 were consistent with both comparative quarters.

Costs and Production

SPF production volumes decreased versus comparable quarters due to reductions in operating schedules at our B.C. SPF operations in response to disruptions to rail and truck services caused by severe weather and flooding in B.C. in Q4-21. The decrease in production compared to Q4-20 is more significant than the decrease compared to Q3-21 as production in Q3-21 was impacted by reductions in operating schedules caused by wildfires in B.C.

SYP production was higher compared to the Q3-21 but lower compared to Q4-20. Production increased compared to the previous quarter as Q3-21 production was impacted by temporary market-related production curtailments and due to incremental production from the December 1, 2021 acquisition of the Angelina Forest Products lumber mill in Lufkin, Texas. Q4-21 production was lower compared to Q4-20 as production was adversely impacted by log shortages in certain operating areas, supply chain disruptions impacting procurement of certain manufacturing inputs, and COVID-19 impacts on the workforce.

Costs of products sold were lower than the previous quarter due primarily to lower shipment volumes offset in part by higher SPF and SYP log costs. Costs of products sold were higher as compared to the fourth quarter of 2020 due to increases in SPF and SYP log costs and manufacturing costs, offset in part by lower shipment volumes.

SPF log costs increased versus comparable quarters due to increased stumpage rates in B.C. and Alberta and purchased log costs in B.C. Both the third and fourth quarter of 2021 were negatively impacted by the B.C. SPF stumpage costs tied to the price of lumber, which with the time lag, increased as a result of high lumber prices in Q2-21. Fibre shortages in B.C. have increased competition and pricing for logs available through the B.C. Timber Sales log market. Q4-21 lumber results were also adversely impacted by the strengthening of the Canadian dollar compared to Q4-20. This increased the U.S. dollar equivalent of our SPF manufacturing and input costs, which are primarily incurred in Canadian dollars.

SYP log costs trended higher in the fourth quarter of 2021 compared to both comparative periods due to increased competition for logs as sawmill production increased in the region. The U.S. South continued to have higher input costs in the quarter due to inflation and increased employee costs associated with managing through COVID-19.

Freight and other distribution costs were lower compared to the previous quarter due to lower shipment volumes. The severe flooding in B.C. impacted volume as main highways and rail lines were closed for several weeks and the ports congested, making it challenging to move any of our products through B.C. Freight and other distribution costs generally

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increased in 2021 compared to 2020 as the transportation network adjusted to the post-COVID-19 demand levels, resulting in truck and driver shortages in the U.S.

An export duty recovery was recorded for the fourth quarter of 2021 compared to an export duty expense in the previous quarter as the Q4-21 balance is net of a recovery of $55 million related to the USDOC finalization of the AR2 duty rates. Further, as disclosed in the table below, the effective duty expense for the period was $25 million compared to $66 million in Q3-21. The decrease in effective export duty expense was due to lower volumes shipped to the U.S. in Q4-21, which more than offset increased pricing.

Export duty recovery for the fourth quarter of 2021 was lower than the fourth quarter of 2020. Export duties for 2021 were net of a recovery of $55 million related to the USDOC finalization of the AR2 duty rates, whereas export duties for 2020 were net of a $95 million recovery related to the USDOC finalization of the AR1 duty rates. As disclosed in the table below, the effective duty expense for the period was $25 million compared to $59 million in Q4-20. The decrease in effective export duty expense was due to lower estimated rates and a lower volume of softwood lumber shipped to the U.S. in Q4-21 compared to Q4-20, which more than offset increased pricing.

The following table reconciles our cash deposits paid during the period to the amount recorded in our earnings statement:

Duty impact on earnings ($ millions)	Q4-21		Q3-21		Q4-20
Cash deposits paid1	$	(20)	$	(27)	$	(54)
Adjust to West Fraser Estimated ADD rate2		(5)		(39)		(5)
Effective duty expense for period3		(25)		(66)		(59)
Duty recovery attributable to AR14		—		—		95
Duty recovery attributable to AR25		55		—		—
Duty recovery (expense)		30		(66)		36
Interest income on duty deposits attributable to West Fraser Estimated rate adjustments		1		1		—
Interest income on the AR1 and AR2 duty deposits receivable		6		1		11
Interest income on duty deposits	$	7	$	2	$	11

1. Represents combined CVD and ADD cash deposit rate of 23.56% from January 1 to November 29, 2020, 19.39% on November 30, 2020, and 8.97% from December 1, 2020 to December 31, 2021.

2. Represents adjustment to West Fraser Estimated ADD rate of 6.80% for 2021 and 3.40% for 2020.

3. The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 21.39% from January 1 to November 30, 2020, 10.97% from December 1 to December 31, 2020, 14.37% for January 1 to December 1, 2021, and 11.86% for December 2 to December 31, 2021.

4. $95 million represents the duty recovery attributable to the finalization of AR1 duty rates for the 2017 and 2018 POI.

5. $55 million represents the duty recovery attributable to the finalization of AR2 duty rates for the 2019 POI.

Amortization expense was comparable to both prior quarter comparatives.

Selling, general and administration costs were higher than both prior quarter comparatives due primarily to higher salaries and wages.

For the fourth quarter of 2021, a recovery was recorded in finance expense, net compared to an expense in the previous quarter as the Q4-21 balance is net of interest income of $6 million related to AR1 and AR2 duty deposits receivable. Q4-20 is net of interest income of $11 million related to AR1 duty deposits receivable.

Fluctuations in other income compared to both comparative quarters were mostly due to foreign exchange revaluations on the Canadian dollar monetary assets and liabilities held by our Canadian operations.

Earnings before tax for the Lumber Segment increased by $143 million compared to the previous quarter and decreased by $189 million compared to the fourth quarter of 2020 for the reasons explained above.

Adjusted EBITDA for the Lumber Segment increased by $147 million compared to the previous quarter and decreased by $185 million compared to the fourth quarter of 2020. The following table shows the Adjusted EBITDA variance for the period.

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Adjusted EBITDA ($ millions)	Q3-21 to Q4-21		Q4-20 to Q4-21
Adjusted EBITDA - comparative period	$	93	$	425
Price		130		30
Volume		(38)		(64)
Changes in export duties		96		(6)
Changes in costs		(24)		(125)
Other		(17)		(20)
Adjusted EBITDA - current period	$	240	$	240

North America Engineered Wood Products Segment

($ millions unless otherwise indicated)
	Q4-21		Q3-21		Q4-20
NA EWP Segment Earnings
Sales
OSB	$	666	$	888	$	—
Plywood, LVL and MDF		162		180		147
Wood chips, logs and other		6		9		4
		834		1,077		151
Cost of products sold		(398)		(375)		(86)
Freight and other distribution costs		(72)		(70)		(11)
Amortization		(73)		(73)		(4)
Selling, general and administration		(21)		(20)		(6)
Operating earnings		270		539		44
Finance expense		—		(1)		(1)
Other		(5)		4		(1)
Earnings before tax	$	265	$	542	$	42
Adjusted EBITDA1	$	343	$	612	$	48
OSB (MMsf 3/8” basis)
Production		1,469		1,526		—
Shipments		1,543		1,536		—
Plywood (MMsf 3/8” basis)
Production		175		177		200
Shipments		190		162		197
MDF (MMsf 3/4” basis)
Production		55		58		55
Shipments		54		58		52
LVL (Mcf)
Production		604		627		569
Shipments		573		644		573

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

Our NA EWP segment includes our North American OSB, plywood, MDF, and LVL operations. Our operations and financial results up to February 1, 2021 only reflect activities associated with West Fraser’s Panels segment without incorporating the pre-February 1, 2021 North American operations and results of Norbord. Subsequent to February 1, 2021, our operations and financial results reflect the consolidated activities and operations of West Fraser and Norbord, including incorporating the North American operations of Norbord into our NA EWP segment.

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Our Adjusted EBITDA analysis that compares Q4-21 to Q3-21 includes OSB, plywood, LVL and MDF, as the OSB results were included in both quarters. The Adjusted EBITDA analysis that compares our Q4-21 results to Q4-20 reports OSB as one line, and the variances reported only represent changes for plywood, LVL, and MDF.

Sales and Shipments

Sales in the current quarter decreased compared to the prior quarter due primarily to lower pricing for OSB and plywood products. Sales in the current quarter increased compared to the fourth quarter of 2020 due to the inclusion of the Norbord results post-acquisition and higher pricing for our panel products.

OSB shipment volumes for Q4-21 were comparable to the prior quarter. Plywood, MDF, and LVL shipment volumes were comparable to both comparative quarters.

The volume variance resulted in an increase in earnings before tax and Adjusted EBITDA of $5 million compared to the previous quarter and a decrease of $1 million compared to the fourth quarter of 2020.

The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $251 million compared to the previous quarter and an increase of $16 million compared to the fourth quarter of 2020.

Costs and Production

Production for OSB decreased compared to the prior quarter due primarily to seasonal maintenance shutdowns and unscheduled downtime at certain production locations. This was offset in part by improved productivity at some production locations, including the ramp-up of the Chambord OSB mill.

Plywood, MDF, and LVL production volumes were comparable to the prior quarter. Substantially all of our plywood product is shipped eastward to Ontario and Quebec and southward to the U.S., so shipment volumes were not impacted materially by wildfires and severe weather and flooding in B.C. in the third quarter and fourth quarter respectively, which primarily disrupted rail links and trucking between the B.C. interior and Lower Mainland. Q4-21 plywood production volumes were impacted by minor market production curtailments, whereas facilities operated near capacity in Q4-20.

All of our operating expenses increased compared to the prior year due to the addition of the OSB operations.

Our costs of products sold increased compared to comparative quarters due primarily to increased input costs, including increased wood costs in B.C. and Alberta as well as continued constraints on the availability of resins used in the manufacture of panel products and the cost of energy and other oil-based derivatives.

B.C., Ontario, and Alberta stumpage costs increased due to higher fees tied to published product prices, as discussed in the Lumber Segment, and B.C. purchased log costs increased due to fibre shortages.

A stronger Canadian dollar relative to the U.S. dollar during Q4-21 as compared to Q4-20 increased the U.S. dollar equivalent of our manufacturing and input costs at our Canadian locations, which are primarily incurred in Canadian dollars.

Freight and other distribution costs were comparable to the prior quarter. Freight and other distribution costs are generally higher compared to 2020 as the transportation network adjusted to post-COVID-19 demand levels.

Amortization expense and selling, general, and administration costs were comparable to the previous quarter and increased compared to the fourth quarter of 2020 due primarily to the addition of the OSB operations.

Finance expense and other income were comparable compared to 2020.

Earnings before tax for the NA EWP Segment decreased by $277 million compared to the previous quarter and increased by $223 million compared to the fourth quarter of 2020 due to the reasons explained above.

Adjusted EBITDA for the NA EWP Segment decreased by $269 million compared to the previous quarter and increased by $295 million compared to the fourth quarter of 2020. The following table shows the Adjusted EBITDA variance for the period. Our Adjusted EBITDA analysis that compares the Q4-21 to Q3-21 includes OSB, plywood, LVL and MDF, as the OSB

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results were included in both quarters. The Adjusted EBITDA analysis that compares our Q4-21 results to Q4-20 reports OSB as one line, and the variances reported only represent changes for plywood, LVL, and MDF.

Adjusted EBITDA ($ millions)	Q3-21 to Q4-21		Q4-20 to Q4-21
Adjusted EBITDA - comparative period	$	612	$	48
Price		(251)		16
OSB Adjusted EBITDA since the date of the Norbord Acquisition1		—		310
Volume		5		(1)
Changes in costs		(21)		(31)
Other		(2)		1
Adjusted EBITDA - current period	$	343	$	343

1. OSB Adjusted EBITDA since the date of the Norbord Acquisition is calculated as earnings determined for our North American OSB operations adding back: finance expense, tax provision or recovery, amortization, equity-based compensation, restructuring and impairment charges, and other.

Pulp & Paper Segment

($ millions unless otherwise indicated)
	Q4-21		Q3-21		Q4-20
Pulp & Paper Segment earnings
Sales	$	159	$	175	$	159
Cost of products sold		(132)		(140)		(139)
Freight and other distribution costs		(33)		(34)		(31)
Amortization		(9)		(8)		(8)
Selling, general and administration		(8)		(8)		(9)
Operating earnings		(23)		(15)		(28)
Finance expense		—		(2)		(2)
Other		(2)		1		(3)
Earnings before tax	$	(25)	$	(16)	$	(33)
Adjusted EBITDA1	$	(14)	$	(7)	$	(20)
BCTMP (Mtonnes)
Production		134		166		156
Shipments		143		153		167
NBSK (Mtonnes)
Production		92		96		103
Shipments		88		94		112
Newsprint (Mtonnes)
Production		28		30		29
Shipments		28		30		29

1. This is a non-GAAP financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

Sales and Shipments

Sales decreased compared to the previous quarter due to decreases in shipments and lower product pricing. Sales were comparable to the fourth quarter in 2020 as higher pulp pricing offset decreases in shipments.

Pulp shipments were adversely impacted by disruptions to rail and truck services due to severe weather and flooding in B.C. in the fourth quarter. This restricted access to ports in the Lower Mainland, where the majority of our products ship to offshore markets. Pulp shipments in the previous quarter were adversely impacted, although not to the same extent, by the impact of wildfires and planned and unplanned maintenance shutdowns for certain mills.

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Newsprint shipments were comparable to both comparative quarters.

The volume variance resulted in an increase in earnings before tax and Adjusted EBITDA of $1 million compared to the previous quarter and a decrease of $2 million compared to the fourth quarter of 2020.

Pulp market fundamentals began to improve as the fourth quarter progressed, with pulp prices showing signs of recovery late in the quarter.

The price variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $7 million compared to the previous quarter and an increase of $27 million compared to the fourth quarter of 2020.

Costs and Production

BCTMP and NBSK production declined compared to the previous quarter and fourth quarter of 2020. In the fourth quarter of 2021, disruptions to shipments resulting from severe weather and flooding in B.C. and limited storage space resulted in reduced production. These curtailments had a greater impact than the impact of wildfires and planned and unplanned maintenance shutdowns in both comparative quarters.

Newsprint production volumes were comparable to 2020.

Costs of products sold decreased compared to the preceding quarter due primarily to lower shipments. Costs of products sold decreased compared to Q4-20 due primarily to lower shipments, offset by higher manufacturing costs related to higher fibre and energy costs.

Freight and other distribution costs were comparable to both comparative periods due to lower shipments in Q4-21 offset by higher costs due to international supply chain challenges.

Amortization, selling, general, and administration costs, finance expense, and other were comparable compared to both comparative periods.

Earnings before tax for the Pulp & Paper Segment decreased by $9 million compared to the previous quarter and increased by $8 million compared to the fourth quarter of 2020 due to the reasons discussed above.

In addition, Adjusted EBITDA for the Pulp & Paper Segment decreased by $7 million compared to the previous quarter and increased by $6 million compared to the fourth quarter of 2020. The following table shows the Adjusted EBITDA variance for the period.

Adjusted EBITDA ($ millions)	Q3-21 to Q4-21		Q4-20 to Q4-21
Adjusted EBITDA - comparative period	$	(7)	$	(20)
Price		(7)		27
Volume		1		(2)
Changes in costs		3		(14)
Other		(4)		(5)
Adjusted EBITDA - current period	$	(14)	$	(14)

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Europe Engineered Wood Products Segment

($ millions unless otherwise indicated)
	Q4-21		Q3-21		Q4-20
Europe EWP Segment Earnings
Sales	$	184	$	249	$	—
Cost of products sold		(109)		(138)		—
Freight and other distribution costs		(9)		(14)		—
Amortization		(24)		(23)		—
Selling, general and administration		(5)		(7)		—
Operating earnings		37		67		—
Finance expense		(1)		1		—
Other		—		—		—
Earnings before tax	$	36	$	68	$	—
Adjusted EBITDA1	$	61	$	90	$	—
OSB (MMsf 3/8” basis)
Production		194		319		—
Shipments		178		299		—
MDF (MMsf 3/8” basis)
Production		70		76		—
Shipments		73		88		—
Particleboard (MMsf 3/8” basis)
Production		128		140		—
Shipments		113		110		—

1. This is a non-GAAP financial measure. Refer to the “ Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

Our Europe EWP segment includes our U.K. and Belgium OSB, MDF, and particleboard operations effective February 1, 2021. As such, this segment is new to our company for 2021 so we do not have comparative data in our results for 2020.

Sales and Shipments

Sales decreased compared to the previous quarter due to decreases in shipment volumes, partially offset by improved product pricing. European shipments declined compared to the previous quarter due to a more pronounced seasonal slowing of demand for OSB late in the quarter as customers managed-down inventory following very high levels of activity in the third quarter. Reductions in production due to a major capital project was also a contributing factor, as described further in the section below.

The volume variance resulted in a decrease in earnings before tax and Adjusted EBITDA of $47 million compared to the previous quarter. The price variance resulted in an increase in earnings before tax and Adjusted EBITDA of $13 million compared to the previous quarter.

Costs and Production

Production decreased compared to the previous quarter as we reduced production schedules to account for a seasonal slowdown in demand and due to a major maintenance shutdown at our Genk, Belgium location for the installation of a new dryer.

Costs of products sold decreased due to a reduction in shipments, offset in part by higher input costs. Freight and other distribution costs trended with changes in shipment volumes compared to the previous quarter.

Earnings before tax for the Europe EWP Segment decreased by $32 million and Adjusted EBITDA decreased by $29 million compared to the previous quarter for the reasons explained above. The following table shows the Adjusted EBITDA variance for the period.

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Adjusted EBITDA ($ millions)	Q3-21 to Q4-21		Q4-20 to Q4-21
Adjusted EBITDA - comparative period	$	90	$	—
Price		13		—
OSB Adjusted EBITDA since the date of the Norbord Acquisition1		—		61
Volume		(47)		—
Changes in costs		5		—
Adjusted EBITDA - current period	$	61	$	61

1. OSB Adjusted EBITDA since the date of the Norbord Acquisition is calculated as earnings determined for our European OSB operations adding back: finance expense, tax provision or recovery, amortization, equity-based compensation, restructuring and impairment charges, and other.

Discussion & Analysis of Non-Operational Items

Selling, general and administration

Compared to prior quarter, corporate selling and general and administration expense in the fourth quarter increased due to higher salaries and wages and higher professional and IT fees incurred related to integration activities. In addition to the aforementioned factors, Q4-21 corporate selling and general and administration expense increased compared to Q4-20 due to higher salaries and wages related to the addition of our OSB corporate team. Selling, general and administration expenses related to our operating segments are discussed under “Discussion & Analysis of Annual Results by Product Segment”.

Equity-based compensation

Equity-based compensation was comparable to the previous quarter. Equity-based compensation expense increased compared to prior year due primarily to the impacts of the Assumed Option Plans and the increase in our share price during Q4-21.

Finance expense

Finance expense for Q4-21 is net of $7 million of interest income (Q3-21 - $2 million; Q4-20 - $11 million) related to duty deposits receivable. Additional information regarding the interest income on duty deposits receivable is disclosed under “Discussion & Analysis of Annual Results by Product Segment - Lumber Segment - Softwood Lumber Dispute”. Finance expense excluding the duty interest income for Q4-21 was $8 million, Q3-21 $13 million and Q4-20 was $8 million.

Other

Other expense of $2 million was recorded for our Corporate segment in Q4-21 compared to an expense of $7 million in Q3-21 and an expense of $1 million in Q4-20. Other expense for Q4-21 related primarily to $12 million settlement cost relating to pension plan annuity purchase agreements for certain retired employees offset in part by foreign exchange gains recorded on our CAD-denominated monetary assets and liabilities and mark-to-market gains on our interest rate swap contracts. The other expense in the comparative periods related primarily to foreign exchange losses.

Other related to our operating segments are discussed under “Discussion & Analysis of Annual Results by Product Segment”.

Income tax

The current quarter results include an income tax expense of $104 million, compared to $164 million in the previous quarter and $103 million in the fourth quarter of 2020. The effective tax rate was 24% in the current quarter compared to 26% in the previous quarter and 27% in the fourth quarter of 2020.

Other comprehensive earnings – translation of foreign operations

As part of the Norbord Acquisition, we acquired operations in the U.K. and Belgium, so any change in the value of the British pound sterling or Euro relative to the value of the USD results in the revaluation of our European EWP operations assets and liabilities. The revaluation of our European operations into U.S. dollars is reported in other comprehensive earnings.

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Other comprehensive earnings for the fourth quarter of 2020 included a $72 million gain relating to the translation effect due to our change in reporting currency. Additional details on West Fraser’s conversion to U.S. dollars can be found under the title “Change in Functional and Reporting Currency.”

Other comprehensive earnings – actuarial gains/losses on retirement benefits

We recorded in other comprehensive earnings an after-tax actuarial gain of $8 million during the quarter compared to $60 million in the previous quarter and $25 million in the fourth quarter of 2020. The current quarter gain reflects higher returns on plan assets partially offset by a decrease in the discount rate used to calculate plan liabilities.

OUTLOOK AND OPERATIONS

Business Outlook

Markets

The most significant uses for our lumber, OSB and wood panel products are residential construction, repair and remodelling and industrial applications. Historically low mortgage rates, low volumes of homes available for resale and increased acceptance and practice of remote working appear to be positively influencing the demand for new home construction in North America. However, interest rates have been trending higher in early 2022 and should they continue to do so, housing affordability may be impacted, which would reduce demand for our wood building products. An aging housing stock and repair and renovation spending should also continue to support lumber, plywood and OSB demand. Over the medium to long term, growing market penetration of mass timber in industrial and commercial applications is also expected to support demand growth for wood building products.

The demand for our European products is expected to remain robust as demand for OSB as an alternative to plywood in Europe continues to grow. An aging European housing stock is also expected to drive repair and renovation spending, supporting growing demand for our wood building products.

Our BCTMP and NBSK pulp is primarily used in printing and writing paper, boxboard and tissue applications. Pulp demand is anticipated to grow over the longer term due to increasing boxboard and tissue production in Asia and greater substitution of single-use plastics that are subject to increasing risk from government restrictions. In the near-term, pulp exports are expected to be challenged by domestic and international transportation constraints.

Softwood lumber dispute

Canadian softwood lumber exports to the U.S. have been the subject of trade disputes and managed trade arrangements for several decades. Countervailing and antidumping duties have been in place since April of 2017, and we are required to make deposits in respect of these duties. Whether and to what extent we can realize a selling price to recover the impact of duties payable will largely depend on the strength of demand for softwood lumber. The USDOC published the final rates for AR2 in the fourth quarter of 2021. They also began AR3 in April of 2021, which are expected to be finalized in August 2022. Additional details can be found under the section “Discussion & Analysis by Product Segment – Lumber Segment – Softwood Lumber Dispute”.

Operations

Anticipated shipment levels assume continued strong demand, availability of sufficient logs within our economic return criteria, and no further temporary curtailments. Our operations and results could be negatively affected by softening demand, the availability of labour due to the continuing impacts of COVID-19, adverse weather conditions in our operating areas, intense competition for logs, elevated stumpage fees and production disruptions due to other uncontrollable factors, including the availability of transportation.

We expect lumber shipments in 2022 to improve from 2021 levels as we recapture production and shipments lost due to temporary curtailments in Western Canada, owing to the significant wildfires in the third quarter as well as the severe flooding in B.C. in the fourth quarter. We also expect growth in shipments as we realize the benefits of capital investments in recent years and as we integrate the recently acquired Angelina sawmill into our lumber portfolio. As a result, in 2022, we expect SPF shipments to be approximately 3.0 to 3.2 billion board feet, and in the U.S. South, we expect SYP shipments to be approximately 3.0 to 3.2 billion board feet. On January 1, 2022, stumpage rates decreased in

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B.C. due to the market-based adjustments related to lumber costs. However, given the current elevated commodity price environment, B.C. stumpage is at risk of increasing materially as the year unfolds. In Alberta, stumpage rates will remain elevated as long as SPF lumber prices are high, as they are closely linked to the price of lumber and respond rapidly to changes in lumber prices. We expect modest log cost inflation in the U.S. South in 2022.

In our NA EWP segment, we expect OSB shipments to increase in 2022 as we account for a full year of contribution from Norbord, recapture production and shipments lost due to temporary disruptions to our operations in 2021, and as we continue to ramp operations at our Chambord OSB mill. We do not expect the recently acquired (and currently idled) Allendale OSB mill to contribute materially to shipments in 2022. As a result, we expect OSB shipments this year to be approximately 6.1 to 6.4 billion square feet (3/8-inch basis). Input costs for the NA EWP business are expected to increase moderately.

We do not expect to increase our Pulp & Paper segment shipments in 2022.

In our Europe EWP segment, we expect OSB shipments to increase in 2022 as we account for a full year of contribution from Norbord and as we continue to ramp operations of the phase 2 investment at our Inverness OSB mill. As such, we expect OSB shipments in Europe to be approximately 1.1 to 1.3 billion square feet (3/8-inch basis) in 2022. Input costs for the Europe EWP business are expected to increase moderately.

Across much of our supply chain, we are experiencing greater than usual inflationary cost pressures and availability constraints for labour, transportation, raw materials such as resins and chemicals, and energy. We expect these cost pressures and availability constraints to remain elevated through 2022.

While infrastructure repairs to rail and truck routes resulting from the severe weather and flooding in late 2021 in B.C. are progressing, our ability to ship products in a timely manner remains challenged. Availability of rail service, adverse weather conditions, operator shortages and the backlog from disruptions in the fourth quarter have all negatively impacted our ability to ship our products. For the month of January 2022 our western Canadian SPF lumber and plywood shipments declined by approximately 20% compared to the prior year, and while our overall OSB shipments are trending in line with the prior year, we have been forced to take unscheduled downtime due to transportation constraints. In addition, our pulp shipments for the same period declined by approximately 30% compared to the prior year. Though we continue to seek out and utilize alternative transportation routes and methods to the extent they are available to continue servicing customers, the magnitude and duration of the impact from these multiple disruptions remains uncertain. The situation has also resulted in significant delays in shipments of orders. In light of these challenges, further reduction of operating schedules across our manufacturing network in order to manage inventory levels, raw material supplies and our integrated fibre supply chain may be required. At the current time, it is not possible to estimate when full transportation services will be available or when the backlogs resulting from the interruptions will be cleared and we will be able to return to operating a full schedule or clearing the backlog of delayed shipments.

Norbord Integration

The integration of the Norbord business continues to be a Company focus and is progressing well. We remain on track to achieve targeted annual synergies of $61 million by the end of 2022¹.

Cash Flows

Based on our current outlook, assuming no deterioration in market conditions during the year and that there is no additional lengthening of lead times for projects underway or planned, we anticipate we will invest approximately $500 to $600 million in 2022¹. Our total capital budget consists primarily of various improvement projects and maintenance expenditures, projects focused on optimization and automation of the manufacturing process, and projects targeted to reduce greenhouse gas emissions.

Expected capital expenditures in 2022 include the continuing activity in respect of the capital projects identified under our strategic capital program in 2021. Work on these projects is underway and will continue through 2023. This investment program will support safety, cost improvements and strategic growth initiatives as we continue our focus on capital execution and operational excellence. The average project payback period for this strategic capital program is expected to be three to four years.

1. This is a specified financial measure. Refer to the “ Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

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Expected capital expenditures in 2022 also includes approximately $70 million dedicated to preparing the Allendale OSB facility for its eventual re-start.

Ramp-up on our new lumber manufacturing complex in Dudley, Georgia continues and remains on track with our expectations. The new mill became fully operational in the second quarter of 2021 and as it ramps up over the next few years, it is expected to reach an annual capacity of 270 million board feet. The old Dudley mill had an annual capacity of 170 million board feet.

Our OSB mill in Chambord, Quebec, which restarted in the first quarter of 2021, continues to make progress ramping up towards its stated annual production capacity of 550 million square feet (3/8-inch basis), which typically takes 18-24 months.

We expect to maintain our investment grade rating and intend to preserve sufficient liquidity to be able to take advantage of strategic growth opportunities that may arise.

We have paid a dividend in every quarter since we became a public company in 1986. At the latest declared quarterly dividend rate of US$0.25 per share, the total anticipated cash payment of dividends in 2022 is $106 million based on the number of Common and Class B common shares outstanding on December 31, 2021.

We will continue to consider share repurchases with excess cash if we are satisfied that this will enhance shareholder value and does not compromise our financial flexibility.

Estimated Earnings Sensitivity to Key Variables

(based on annual shipment volumes - $ millions)
Factor	Variation	Change in pre-tax earnings1
Lumber price	$10 (per Mfbm)	$	51
NA OSB price	$10 (per Msf)		63
Europe OSB price	£10 (per Msf)		12
NBSK price	$10 (per tonne)		3
BCTMP price	$10 (per tonne)		6
Canadian - U.S. $exchange rate2	$0.01 (per CAD)		15

1. Each sensitivity has been calculated on the basis that all other variables remain constant and is based on changes in our realized sales prices.

2. Represents the impact on USD equivalent of net CAD revenues and expenses for the initial $0.01 change. Additional changes are substantially, but not exactly, linear.

  LIQUIDITY AND CAPITAL RESOURCES

Capital Management Framework

Our business is cyclical and is subject to significant changes in cash flow over the business cycle. In addition, financial performance can be materially influenced by changes in product prices and the relative values of the Canadian and U.S. dollars. Our objective in managing capital is to ensure adequate liquidity and financial flexibility at all times, particularly at the bottom of the business cycle.

Our main policy relating to capital management is to maintain a strong balance sheet and otherwise meet financial tests that rating agencies commonly apply for investment-grade issuers of public debt. Our debt is currently rated as investment-grade by three major rating agencies.

We monitor and assess our financial performance to ensure that debt levels are prudent, taking into account the anticipated direction of the business cycle. When financing acquisitions, we combine cash on hand, debt, and equity financing in a proportion that is intended to maintain an investment-grade rating for debt throughout the cycle. Debt repayments are arranged, where possible, on a staggered basis that takes into account the uneven nature of anticipated cash flows. We have established committed revolving lines of credit that provide liquidity and flexibility when capital markets are restricted.

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A strong balance sheet and liquidity profile are key elements of our goal to maintain a balanced capital allocation strategy. Priorities within this strategy include reinvesting in our operations across all market cycles to strategically enhance productivity, product mix, and capacity; maintain a leading cost position; maintain financial flexibility to capitalize on growth opportunities, including the pursuit of acquisitions and larger-scale strategic growth initiatives; and return capital to shareholders through dividends and share repurchases.

Liquidity and Capital Resource Measures

Our capital structure consists of Common share equity and long-term debt, and our liquidity includes our operating facilities.

Summary of Liquidity and Debt Ratios   ($ millions, except as otherwise indicated)	December 31, 2021		December 31, 2020
Available liquidity
Cash and short-term investments	$	1,568	$	461
Operating lines available (excluding newsprint operation)1		1,025		811
Available liquidity2		2,593		1,272
Debt
Current and long-term lease obligation		28		6
Current and long-term debt		501		509
Interest rate swaps3		1		6
Open letters of credit3		65		50
Total debt		595		571
Cash and short-term investments		(1,568)		(461)
Open letters of credit3		(65)		(50)
Interest rate swaps3		(1)		(6)
Net Debt		(1,039)		54
Shareholders’ equity		7,656		2,478
Total debt to total capital2,4		7%		19%
Net debt to total capital2,4		(16%)		2%

1. Excludes $6 million demand line of credit dedicated to our jointly-owned newsprint operation as West Fraser cannot draw on it. Operating lines available include a $25 million demand line of credit.

2. This is a specified financial measure. Refer to the “Non-GAAP and Other Specified Financial Measures” section of this document for more information on this measure.

3. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants’ total debt calculation.

4. Total capital is total debt or net debt plus shareholders’ equity.

Available liquidity on December 31, 2021, was $2,593 million (2020 - $1,272 million). Available liquidity includes cash and short-term investments, cheques issued in excess of funds on deposit, and amounts available on our operating loans, excluding the demand line of credit dedicated to our 50% jointly-owned newsprint operation.

Available liquidity increased due to an increase in cash and short-term investments on hand and an increase in available operating lines resulting from the various amendments to our credit facilities during the year. We anticipate approximately $325 million of our available liquidity is required for the final Canadian income tax payments relating to 2021.

Total debt increased due primarily to increases in open letters of credit and lease obligations. Net debt and net debt to total capital ratios decreased due primarily to increases in cash and short-term investments on hand and shareholders’ equity. Total debt to total capital ratios decreased primarily due to increased shareholder’s equity.

Credit Facilities

On February 1, 2021, concurrent with the closing of the Norbord Acquisition, we completed various administrative amendments to our CAD$850 million committed revolving credit facility and our US$200 million term loan. The CAD$150

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million committed revolving credit facility was also replaced with a US$450 million committed revolving credit facility due 2024 on substantially the same terms.

On July 28, 2021, we completed an amendment to our revolving credit facilities. Our CAD$850 million and US$450 million revolving credit facilities were combined into a single US$1 billion committed revolving credit facility with a five-year term. There were no other significant changes to the terms or conditions of the credit facilities.

As at December 31, 2021, our credit facilities consisted of a $1 billion committed revolving credit facility, a $25 million demand line of credit dedicated to our U.S. operations, and a $6 million (CAD$8 million) demand line of credit dedicated to our jointly-owned newsprint operation. As at December 31, 2021, the revolving facilities were undrawn.

We also have credit facilities totalling $137 million dedicated to the issuance of letters of credit. As at December 31, 2021, our letter of credit facilities supported $65 million open letters of credit.

All debt is unsecured except the jointly-owned newsprint operation demand line of credit, which is secured by that joint operation’s current assets.

As at December 31, 2021, we were in compliance with the requirements of our credit facilities.

Long-Term Debt

In October 2014, we issued US$300 million of fixed-rate senior unsecured notes, bearing interest at 4.35% and due October 2024, pursuant to a private placement in the U.S. The notes are redeemable, in whole or in part, at our option at any time as provided in the indenture governing the notes.

In August 2017, we were advanced a US$200 million 5-year term loan that, with the July 2019 extension, matures on August 25, 2024. Interest is payable at floating rates based on Base Rate Advances or London Inter-bank Offered Rate (“LIBOR”) Advances at our option. This loan is repayable at any time, in whole or in part, at our option and without penalty but cannot be redrawn after payment.

On March 15, 2019, we entered into an interest rate swap agreement, maturing in August 2022, with a US$100 million notional amount to limit our exposure to fluctuations in interest rates and fix interest rates on a portion of our long-term debt. On March 9, 2020, we extended the duration of our US$100 million notional interest rate swap from August 2022 to August 2024, resulting in a change to the fixed interest rate on the swap from 2.47% to 1.78% through August of 2024. On April 15, 2020, we entered into additional interest rate swaps for another notional amount of US$100 million, resulting in a fixed interest rate of 0.51% through August of 2024. These swap agreements fix the interest rate on the US$200 million 5-year term loan floating rate debt discussed above.

As part of the Norbord Acquisition, we assumed Norbord’s US$315 million senior notes due April 2023, bearing interest at 6.25% and US$350 million senior notes due July 2027, bearing interest at 5.75%. Norbord’s accounts receivable securitization facility and secured revolving credit facilities were terminated at closing, and the security related to all of Norbord’s debt was discharged as of February 1, 2021.

On March 2, 2021, we made a mandatory change of control offer for 2023 Notes and 2027 Notes, which expired on April 1, 2021. As a result of the change of control offer, $1 million of the 2023 Notes and $1 million of the 2027 Notes were redeemed and were repaid in the second quarter of 2021.

On April 6, 2021, we elected to redeem the remaining 2027 Notes, which redemption occurred on May 6, 2021. On May 6, 2021, we elected to redeem all of Norbord’s outstanding 2023 Notes on June 7, 2021.

Debt Ratings

We are considered investment grade by three leading rating agencies. In April 2020, both Moody’s and Standard & Poor’s revised our outlook from stable to negative, and Dominion Bond Rating Service from positive to stable. In November 2020, Standard & Poor’s revised its outlook from negative to stable. On February 1, 2021, Moody’s revised our outlook from negative to stable. On December 15, 2021, DBRS Morningstar upgraded our rating to BBB from BBB (low). The ratings in the table below are as at February 15, 2022.

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Agency	Rating	Outlook
DBRS	BBB	Stable
Moody’s	Baa3	Stable
Standard & Poor’s	BBB-	Stable

These ratings are not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agencies.

Shareholder’s Equity

Our outstanding Common share equity consists of 103,366,141 Common shares and 2,281,478 Class B Common shares for a total of 105,647,619 shares issued and outstanding as at February 15, 2022.

Our Class B Common shares are equal in all respects to our Common shares, including the right to dividends and the right to vote, and are exchangeable on a one-for-one basis for Common shares. Our Common shares are listed for trading on the TSX and NYSE, while our Class B Common shares are not. Certain circumstances or corporate transactions may require the approval of the holders of our Common shares and Class B Common shares on a separate class by class basis.

Concurrent with the Norbord Acquisition, the Common shares of West Fraser commenced trading on the NYSE on February 1, 2021, under the symbol WFG. The trading symbol for the Common shares on the TSX was also changed to WFG on February 1, 2021.

Share Repurchases

On February 17, 2021, we renewed our NCIB allowing us to acquire an additional 6,044,000 Common shares for cancellation until the expiry of the bid on February 16, 2022. On June 11, 2021, we amended our NCIB allowing us to acquire an additional 3,538,470 Common shares for an aggregate 9,582,470 Common shares.

On August 20, 2021, we completed a substantial issuer bid pursuant to which we purchased for cancellation a total of 10,309,278 common shares at a price of CAD$97.00 ($76.84) per Common share for an aggregate purchase price of CAD$1.0 billion.

The following table shows our purchases under our NCIB and SIB programs. There were no share repurchases in 2020.

Share repurchases  (number of common shares and price per share)	Common Shares		Average Price in CAD		Average Price  in USD
NCIB: February 17, 2021 to December 31, 2021		7,059,196	$	92.79	$	74.60
SIB: August 20, 2021		10,309,278	$	97.00	$	76.84

Share Options

As at February 15, 2022, there were 1,065,255 share purchase options outstanding with exercise prices ranging from CAD$31.77 to CAD$92.79 per Common share. This includes the share purchase options that are outstanding at February 15, 2022 that were assumed in the Norbord Acquisition, after applying the Exchange Ratio.

Cash Flow

Our cash requirements are primarily for operating purposes, interest payments, repayment of debt, additions to property, plant, equipment and timber, acquisitions, and dividends. In normal business cycles and in years without a major acquisition or debt repayment, cash on hand and cash provided by operations have typically been sufficient to meet these requirements.

We are exposed to commodity price changes. To manage our liquidity risk, we maintain adequate cash and short-term investment balances and by having appropriate lines of credit available. In addition, we regularly monitor and review both actual and forecasted cash flows. Refinancing risks are managed by extending maturities through regular renewals and refinancing when market conditions are supportive.

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Cash Flow Statement   ($ millions - cash provided by (used in))	2021		2020
Operating Activities
Earnings	$	2,947	$	588
Adjustments
Amortization		584		203
Finance expense, net		45		27
Export duty deposits		(55)		(104)
Export duties payable		69		—
Retirement expense		111		74
Contributions to retirement plans		(77)		(49)
Tax provision		951		202
Income taxes (paid) received		(946)		41
Other		(8)		4
Changes in non-cash working capital
Changes in accounts receivable		5		(78)
Changes in inventories		(139)		(14)
Changes in prepaid expenses		(14)		(5)
Changes in payables and accrued liabilities		79		79
		3,552		968
Financing Activities
Repayment of operating loans		—		(280)
Repayment of long-term debt		(667)		—
Financing fees paid		(4)		—
Make-whole premium paid		(60)		—
Finance expense paid		(37)		(30)
Repurchase of Common Shares for cancellation		(1,319)		—
Issuance of Common shares		7		—
Dividends		(75)		(41)
Other		(9)		(2)
		(2,164)		(353)
Investing Activities
Acquired cash and short-term investments from the Norbord Acquisition1		642		—
Angelina Acquisition, net of cash acquired		(302)		—
Additions to capital assets2		(635)		(180)
Other		9		14
		(286)		(166)
Change in cash	$	1,102	$	449

1. The Norbord Acquisition was a non-cash share consideration transaction, and therefore, only the acquired cash is included in the above cash flow statement. Changes in Norbord’s cash position subsequent to February 1, 2021 are incorporated into our cash flow statement.

2. Capital assets comprise property, plant and equipment, timber licenses, and intangible assets. Additions to capital assets include $276 million relating to the asset acquisition of the idled OSB mill near Allendale, South Carolina.

Operating Activities

The table above shows the main components of cash flows used for or provided by operating activities for each period. The significant factors affecting the comparison were higher earnings, income tax payments, and inventory.

Income tax payments were higher in 2021, reflecting higher taxable earnings estimates for both Canada and the U.S. As minimum tax instalments for Canada are based on prior year’s earnings, a significant income tax payment has accumulated in respect of 2021 results. The U.S. requires installments to be made based on current year earnings

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estimates. We made income tax payments of $946 million in 2021, of which $216 million was the final Canadian income tax payment for 2020. The 2020 net refund of $41 million included the Canadian tax refund from a loss carry-back request to 2019 and was net of the required 2020 installments for both countries.

Inventory increased due primarily to higher per unit costs driven primarily from increased stumpage costs and higher volumes of log inventory on-hand due to transportation disruptions resulting from severe weather and flooding in B.C.

Financing Activities

Cash used in financing activities increased in 2021 compared to 2020 due primarily to additional common share repurchases and higher repayments of debt.

In 2021, we returned a total of $1,319 million to our shareholders through Common shares repurchased under our NCIB and SIB programs. No repurchases took place in 2020.

We completed the early redemption of Norbord’s 2023 and 2027 Notes in 2021, totalling $667 million excluding financing fees and the $60 million make-whole premium paid. In 2020, we repaid our operating loan for $280 million.

We also returned a total of $75 million to our shareholders through dividend payments, which was higher than the $41 million paid in 2020 due primarily to an increase in the dividend amount per share and additional shares issued in relation to the Norbord Acquisition.

Investing Activities

The Norbord Acquisition was a non-cash share consideration transaction and therefore only the acquired cash is included in investing activities.

Cash payments of $302 million, which represents the cash consideration transferred net of acquired cash, were made in relation to the Angelina Acquisition.

Capital Expenditures ($ millions)
Segment	Profit Improvement2		Maintenance of Business1		Safety		Total
Lumber	$	66	$	70	$	10	$	146
North America EWP		352		54		18		424
Pulp & Paper		2		30		3		35
Europe EWP		14		12		2		28
Corporate		—		2		—		2
Total	$	434	$	168	$	33	$	635

1. Maintenance of business includes expenditures for roads, bridges, mobile equipment and major maintenance shutdowns.

2. North America EWP profit improvement capital expenditures includes $276 million relating to the acquisition of the idled OSB mill near Allendale, South Carolina.

Capital expenditures of $635 million in 2021 (2020 - $180 million) reflect our philosophy of continued reinvestment in our mills. The increase in capital expenditures relates primarily to the acquisition of the idled OSB mill near Allendale, South Carolina and the inclusion of capital expenditures relating to our OSB operations following the Norbord Acquisition.

Contractual Obligations

The estimated cash payments due in respect of contractual and legal obligations as at December 31, 2021, including debt and interest payments and major capital improvements are summarized as follows. Contractual obligations do not include energy purchases under various agreements, non-defined benefit post-retirement contributions payable, equity-based compensation including equity hedges, or contingent amounts payable.

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Contractual Obligations   (at December 31, 2021, in $ millions)	Total		2022		2023		2024		2025		Thereafter
Long-term debt	$	501	$	—	$	—	$	501	$	—	$	—
Interest on long-term debt1		52		19		19		14		—		—
Lease obligations		29		11		6		5		2		5
Contributions to defined benefit pension plans2		141		47		47		47		—		—
Payables and accrued liabilities		848		848		—		—		—		—
Purchase commitments		81		81		—		—		—		—
Reforestation and decommissioning obligations		131		45		27		10		8		41
Total2	$	1,783	$	1,051	$	99	$	577	$	10	$	46

1. Assumes debt remains at December 31, 2021 levels and includes the impact of interest rate swaps terminating August 2024.

2. Contributions to the defined benefit pension plans are based on the most recent actuarial valuation. Future contributions will be determined at the next actuarial valuation date.

Financial Instruments

Our financial instruments, their accounting classification, and associated risks are described in Note 22 to our Annual Financial Statements.

ACCOUNTING MATTERS

Critical Accounting Estimates and Judgments

The preparation of financial statements in conformity with IFRS requires management to make estimates, assumptions, and judgments that affect the amounts reported. Our significant accounting policies are disclosed in our Financial Statements.

In determining our critical accounting estimates, we consider trends, commitments, events or uncertainties that we reasonably expect to materially affect our methodology or assumptions. Our statements in this MD&A regarding such considerations are made subject to the “Forward-Looking Statements” section.

We have outlined below information about judgments, assumptions, and other sources of estimation uncertainty as at December 31, 2021 that have the most significant impact on the amounts recognized in our financial statements. The discussion of each critical accounting estimate does not differ between our reportable segments unless explicitly noted.

Fair Value of PPE and Intangible Assets Acquired in Business Combinations

On February 1, 2021, we acquired all of the outstanding shares of Norbord Inc. (“Norbord”) for consideration of $3,506 million, consisting primarily of the issuance of 54 million Common shares of West Fraser. Included in the acquisition are five OSB mills in Canada, seven OSB mills in the U.S., one OSB mill, one MDF plant and two particleboard plants in the U.K., one OSB mill in Belgium, and their related corporate offices.

On December 1, 2021, we acquired the Angelina Forest Products lumber mill located in Lufkin, Texas for preliminary cash consideration of $310 million, comprising the base purchase price of $300 million plus $10 million in acquired cash and preliminary working capital adjustments.

We recognize and measure the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date. Any excess of the purchase consideration compared to the fair value of the net assets acquired is recorded as goodwill.

A significant amount of judgment is involved in estimating the fair values of property, plant and equipment and intangible assets acquired in a business combination. The Norbord acquisition resulted in the recognition of PPE and customer relationship intangible assets in our North America EWP and Europe EWP segments, and the Angelina Forest Products acquisition resulted in the recognition of PPE in our Lumber segment.

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We use all relevant information to make these fair value determinations and engage an independent valuation specialist to assist for material acquisitions.

We applied the market comparison technique and cost technique in determining the fair value of property, plant, and equipment acquired. We considered market prices for similar assets when they were available, and depreciated replacement cost in other circumstances. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. The key assumptions used in the estimation of depreciated replacement cost were the assets’ estimated replacement cost at the time of acquisition and estimated useful life.

We applied the multi-period excess earnings method in determining the fair value of customer relationship intangible assets. The multi-period excess earnings method considers the present value of incremental after-tax cash flows expected to be generated by the customer relationship after deducting contributory asset charges. The key assumptions used in applying the valuation technique include: the forecasted revenues relating to the acquiree’s existing customers at the time of acquisition, the forecasted attrition rates relating to these customers, forecasted operating margins, and the discount rate.

There is a material degree of uncertainty with respect to the estimates of fair value of PPE and intangible assets given the necessity of making economic assumptions about the future. If our estimates of the acquisition-date fair value of property, plant and equipment and intangible assets acquired in business combinations were incorrect, we could experience increased or decreased charges for depreciation or amortization in the future. If the future were to differ adversely from our best estimate of key economic assumptions and associated cash flows were to materially decrease, we could potentially experience future impairment charges in respect to our PPE, intangible assets, or goodwill.

Recoverability of PPE

We assess property, plant and equipment, timber licences, and other definite-lived intangibles for indicators of impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We conduct a review of external and internal sources of information to assess for any impairment indicators. Examples of such triggering events related to our long-lived assets include, but are not limited to: a significant adverse change in the extent or manner in which the asset is being used or in its physical condition; a change in management’s intention or strategy for the asset, including a plan to dispose of the asset or idle the asset for a significant period of time; a significant adverse change in our long-term price assumption or in the price or availability of inputs required for manufacturing; a significant adverse change in legal factors or in the business climate that could affect the asset’s value; or a current period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the asset’s use.

When a triggering event is identified, recoverability of long-lived assets is assessed by comparing the carrying value of an asset or cash-generating unit to the estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal or its value in use.

Key assumptions used in estimating recoverable amount are based on industry sources as well as management estimates. Key assumptions include production volume, product pricing, raw material input cost, production cost, and discount rate.

An impairment write down is recorded if the carrying value exceeds the estimated recoverable amount.

No impairments were recorded for 2021 or 2020. The assessment for impairment indicators requires the exercise of judgment given the necessity of making key economic and operating assumptions about the future. If the future were to differ adversely from our best estimate and associated cash flows were to materially decrease, we could potentially experience future impairment charges in respect of our PPE.

Recoverability of Goodwill

Goodwill is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination from which it arose. Goodwill exists in relation to our Lumber, North America EWP, and Europe EWP reporting segments. Goodwill increased during 2021 as a result of our acquisitions of Norbord and Angelina Forest Products.

Goodwill is tested annually for impairment, or more frequently if an indicator of impairment is identified.

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Recoverability of goodwill is assessed by comparing the carrying value of the CGU or group of CGUs associated with the goodwill balance to its estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal or its value in use.

Key assumptions used in estimated recoverable amount are based on industry sources as well as management estimates. Key assumptions include production volume, product pricing, raw material input cost, production cost, and discount rate.

An impairment write down is recorded if the carrying value exceeds the estimated recoverable amount.

We assessed the recoverability of goodwill as at December 31, 2021 and December 31, 2020 and concluded there were no impairment losses.

The estimates and assumptions regarding expected cash flows and the appropriate discount rates require considerable judgment and are based upon historical experience, approved financial forecasts and industry trends and conditions.

There is a material degree of uncertainty with respect to the estimates of the recoverable amounts of the cash-generating units, given the necessity of making key economic assumptions about the future. If the future were to differ adversely from our best estimate and associated cash flows were to materially decrease, we could potentially experience future impairment charges in respect of our goodwill balances.

Defined Benefit Pension Plan Assumptions

We maintain defined benefit pension plans for many of our employees. We use independent actuarial specialists to perform actuarial valuations of our defined benefit pension plan.

Key assumptions used in determining defined benefit pension costs and accrued pension benefit obligations include assumed rates of increase for employee compensation and discount rate. Note 13 to the Annual Financial Statements provides the sensitivity of our post-retirement obligations to changes in these key assumptions.

If the future were to adversely differ from our best estimate of assumptions used in determining our post-retirement obligations, we could experience future increased defined benefit pension expense, financing costs and charges to other comprehensive earnings.

CVD and ADD Duty Rates

On November 25, 2016, a coalition of U.S. lumber producers petitioned the USDOC and the USITC to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD against Canadian softwood lumber imports. The USDOC chose us as a “mandatory respondent” to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates.

Details can be found under the section “Discussion & Analysis of Annual Results by Product Segment - Lumber - Softwood Lumber Dispute.”

The CVD and ADD rates are subject to adjustment by the USDOC through an AR of POI. The CVD and ADD rates apply retroactively for each POI. We record CVD as export duty expense at the cash deposit rate until an AR finalizes a new applicable rate for each POI. We record ADD as export duty expense by estimating the rate to be applied for each POI by using our actual results and a similar calculation methodology as the USDOC and adjust when an AR finalizes a new applicable rate for each POI. The difference between the cash deposits and export duty expense is recorded on our balance sheet as export duty deposits receivable, along with any true-up adjustments to finalized rates.

The softwood lumber case will continue to be subject to NAFTA or the new CUSMA and WTO dispute resolution processes, and litigation in the U.S. In the past, long periods of litigation have led to negotiated settlements and duty deposit refunds.

In the interim, duties remain subject to the USDOC AR process, which results in an annual adjustment of duty deposit rates. Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.

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If the future were to adversely differ from our best estimate of the duty deposit rate, we could experience material adjustments to duty expense and such adjustments could result in an increase of cash outflows.

Reforestation and Decommissioning Obligations

We recognize provisions for various statutory, contractual or legal obligations. In Canada, provincial regulations require timber quota holders to carry out reforestation to ensure re-establishment of the forest after harvesting. Reforested areas must be tended for a period sufficient to ensure that they are well established. The time needed to meet regulatory requirements depends on a variety of factors.

In our operating areas, the time to meet reforestation standards usually spans 12 to 15 years from the time of harvest. We record a liability for the estimated cost of the future reforestation activities when the harvesting takes place, discounted at an appropriate rate. The liability is accreted over time through charges to finance expense and reduced by silviculture expenditures.

We record the best estimate of the expenditure to be incurred to settle decommissioning obligations, such as landfill closures. This liability is determined using estimated closure costs discounted using an appropriate discount rate. On initial recognition, the carrying value of the liability is added to the carrying amount of the associated asset and amortized over its useful life or expensed when there is no related asset. The liability is accreted over time through charges to finance expense and reduced by actual costs of settlement.

On an annual basis, at a minimum, assumptions underlying the reforestation and decommissioning obligations are reviewed and adjusted as appropriate. Key assumptions include the timing and the amount of forecasted expenditures and discount rate.

Material changes in financial position can arise as the actual costs incurred at the time of silviculture activities or decommissioning may differ from the estimates used in determining the year-end liability. If the provisions for reforestation and decommissioning obligations were to be inadequate, we could experience an increase to operating expenses in the future. A charge for an inadequate reforestation and decommissioning obligation provision would result in an increase of cash outflows proximate to the time that the asset retirement obligation is satisfied.

Accounting Policy Developments

Please refer to Note 2 of our Financial Statements for a description of current and future changes in accounting policies, including: (1) initial application of standards, interpretations and amendments to standards and interpretations in the reporting period, and (2) standards, interpretations and amendments to standards and interpretations in the reporting period not yet effective and not yet applied.

 RISKS AND UNCERTAINTIES

Our business is subject to a number of risks and uncertainties that can significantly affect our operations, financial condition and future performance. We have a comprehensive process to identify, manage, and mitigate risk, wherever possible. The risks and uncertainties described below are not necessarily the only risks we face. Additional risks and uncertainties that are presently unknown to us or deemed immaterial by us may adversely affect our business.

Product Demand and Price Fluctuations

Our revenues and financial results are primarily dependent on the demand for, and selling prices of, our products, which are subject to significant fluctuations. The demand and prices for lumber, plywood, OSB, particleboard, MDF, LVL, pulp, newsprint, wood chips and other wood products are highly volatile and are affected by factors such as:

· global economic conditions including the strength of the U.S., Canadian, Chinese, Japanese, European and other international economies, particularly U.S. and Canadian housing markets and their mix of single and multifamily construction, repair, renovation and remodelling spending;

· alternative products to lumber or panels;

· construction and home building disruptor technologies that may reduce the use of lumber or panels;

· changes in industry production capacity;

· changes in world inventory levels;

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· increased competition from other consumers of logs and producers of lumber or panels; and

· regulatory regimes setting a price on carbon that would increase the price of energy or fuel affecting the manufacturing cost of our products;

· other factors beyond our control.

In addition, unemployment levels, interest rates, the availability of mortgage credit and the rate of mortgage foreclosures have a significant effect on residential construction and renovation activity, which in turn influences the demand for, and price of, building materials such as lumber and panel products. Declines in demand, and corresponding reductions in prices, for our products may adversely affect our financial condition and results of operations.

Our business is highly exposed to fluctuations in demand for and pricing of our wood products. Our sensitivity to commodity product pricing may result in a high degree of sales and earnings volatility. In the past, we have been negatively affected by declines in product pricing and have taken production downtime or indefinite curtailments to manage working capital and minimize cash losses. Severe and prolonged weakness in the markets for our wood products could seriously harm our financial position, operating results and cash flows.

We cannot predict with any reasonable accuracy future market conditions, demand or pricing for any of our products due to factors outside our control. Prolonged or severe weakness in the market for any of our principal products would adversely affect our financial condition. Future demand could also be impacted by the perceived sustainability of our wood products in contrast with competing alternatives.

Competition

We compete with global producers, some of which may have greater financial resources and lower production costs than we do. Currency devaluations can have the effect of reducing our competitors’ costs and making our products less competitive in certain markets. In addition, European lumber producers and South American panel producers may enter the North American market during periods of peak prices. Markets for our products are highly competitive. Our ability to maintain or improve the cost of producing and delivering products to those markets is crucial. Factors such as cost and availability of raw materials, energy and labour, the ability to maintain high operating rates and low per unit manufacturing costs, and the quality of our final products and our customer service all affect our earnings. Some of our products are also particularly sensitive to other factors including innovation, quality and service, with varying emphasis on these factors depending on the product. To the extent that one or more of our competitors become more successful with respect to any key competitive factor, our ability to attract and retain customers could be materially adversely affected. If we are unable to compete effectively, such failure could have a material adverse effect on our business, financial condition and results of operations.

Our products may compete with non-fibre based alternatives or with alternative products in certain market segments. For example, steel, engineered wood products, plastic, wood/plastic or composite materials may be used by builders as alternatives to the products produced by our wood products businesses such as lumber, plywood, OSB, LVL, particleboard and MDF products. Changes in prices for oil, chemicals and wood-based fibre can change the competitive position of our products relative to available alternatives and could increase substitution of those products for our products. In addition, our customers or potential customers may factor in environmental and sustainability factors in assessing whether to purchase our wood products. As the use of these alternatives grows, demand for our products may further decline.

Because commodity products have few distinguishing properties from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand and competition from substitute products. Prices for our products are affected by many factors outside of our control, and we have no influence over the timing and extent of price changes, which often are volatile. Accordingly, our revenues may be negatively affected by pricing decisions made by our competitors and by decisions of our customers to purchase products from our competitors.

In addition, continued consolidation in the retail and construction industries could expose us to increased concentration of customer dependence and increase customers’ ability to exert pricing pressure on us and our products. In addition, concentration of our business with fewer customers as a result of consolidation could expose us to risks associated with the loss of key customers. For example, the loss of a significant customer, any significant customer order cancellations or bad debts could negatively affect our sales and earnings.

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Availability of Fibre

Canada

A significant majority of our Canadian log requirements are harvested from lands owned by a provincial government. Provincial governments control the volumes that can be harvested under provincially-granted tenures and otherwise regulate the availability of Crown timber for harvest. Provincial governments also control the renewal or replacement of provincially-granted tenures, the issuance of operating permits to harvest timber under such tenures and the ability to transfer or acquire such tenures. Determinations by provincial governments to reduce the volume of timber, to issue or not issue operating permits to harvest timber, the areas that may be harvested under timber tenures, to restrict the transfer or acquisition of timber tenures or to regulate the processing of timber or use of harvesting contractors, including to protect the environment or endangered species, species at risk and critical habitat or as a result of forest fires or in response to jurisprudence or government policies respecting Indigenous rights and title or reconciliation efforts or to restrict log processing to local or appurtenant sawmills or to mandate amounts of work to be provided or rates to be paid to harvesting contractors, may reduce our ability to secure log or residual fibre supply and may increase our log purchase and residual fibre costs and may impact our lumber, OSB, plywood, LVL, pulp and MDF operations. Specifically, the AAC for our Canadian timber operations may be reduced as a result of the impact of wildfires, pine beetle infestation and the amount of non-pine species available for harvest and caribou conservation plans in British Columbia and Alberta, and the full effect of these reductions on our operations cannot be determined at this time. In addition, government environmental regulation focused on climate change or future extreme weather events could result in reductions to the AAC for our Canadian timber operations.

The long term effect of the mountain pine beetle infestation in British Columbia and Alberta and the 2017, 2018 and 2021 wildfire outbreaks in B.C. on our Canadian operations is uncertain. The potential effects include a reduction of future AAC levels to below current and preinfestation AAC levels and the extent of any reductions are not determinable at this time. Many of our B.C. operations are experiencing a diminished grade and volume of lumber recovered from beetle-killed and fire-damaged logs as well as increased production costs. These effects are also present in some of our Alberta operations where the mountain pine beetle infestation has expanded and as has the processing of fire-damaged logs from wildfire activity. The timing and extent of the future impact on our future AAC, timber supply, lumber grade and recovery, and production costs will depend on a variety of factors and at this time cannot be reasonably determined. The effects of the deterioration of beetle-killed and fire damaged logs could include increased costs, reduced operating rates due to shortages of commercially merchantable timber and mill closures. In addition, future wildfires or other insect devastations, whether associated with climate change or not, may impact on government decisions as to AAC levels.

Our timber supply in B.C. may be adversely impacted by the recent amendments to the Forest Act (B.C.) and the Forest and Range Practices Act (B.C.), as these amendments may result in government regulation or actions that reallocates harvesting rights to Indigenous Nations or communities or otherwise reduces the available timber supply from our B.C. licensed lands.

In addition, our timber supply in B.C. may also be negatively impacted by the announced intention of the Government of B.C. to defer logging in 2.6 million hectares of forests described as “old growth” forests. While the scope of the actions to be taken by the Government of B.C. under these amended forestry statutes and “old growth” deferral proposals cannot be determined at this time, these actions could have a material impact on both the amount of our AAC forest tenures and the amount of timber that we are able to harvest from these tenures.

In addition, provincial governments prescribe the methodologies that determine the amounts of stumpage fees that are charged in respect of harvesting on Crown lands. Determinations by provincial governments to change stumpage fee methodologies or rates could increase our log costs.

We rely on third party independent contractors to harvest timber in areas over which we hold timber tenures. Increases in rates charged by these independent contractors or the limited availability of these independent contractors or new regulations on the work to be provided and rates to be paid to these contractors may increase our timber harvesting costs.

We also rely on the purchase of logs through open market purchases and private supply agreements and increased competition for logs, or shortages of logs may result in increases in our log purchase costs.

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United States

We rely on log supply agreements in the U.S. which are subject to log availability and based on market prices. The majority of the aggregate log requirements for our U.S. mills is purchased on the open market. Open market purchases come from timber real estate investment trusts, timberland investment management organizations and private land owners. Changes in the log markets in which we operate may reduce the supply of logs available to us and may increase the costs of log purchases, each of which could adversely affect our results. In addition, changes in the market for residuals may reduce the demand and selling price for the residuals produced by our operations and increase the disposal costs, which could adversely affect our results.

Europe

Wood fibre for our European OSB, particleboard and MDF operations is purchased from government and private landowners. Changes in the log markets in which we operate may reduce the supply of logs available to us and may increase the costs of log purchases, each of which could adversely affect our results.

Additional Risks to Availability of Fibre

When timber, wood chips, other residual fibre and wood recycled materials are purchased on the open market, we are in competition with other uses of such resources, where prices and the availability of supply are influenced by factors beyond our control. Fibre supply can also be influenced by natural events, such as forest fires, severe weather conditions, insect epidemics and other natural disasters, which may increase wood fibre costs, restrict access to wood fibre or force production curtailments.

Transportation Requirements

Our business depends on our ability to transport a high volume of products and raw materials to and from our production facilities and on to both domestic and international markets. We rely primarily on third-party transportation providers for both the delivery of raw materials to our production facilities and the transportation of our products to market. These third-party transportation providers include truckers, bulk and container shippers and railways. Our ability to obtain transportation services from these transportation service providers is subject to risks which include, without limitation, availability of equipment and operators, disruptions due to weather, natural disasters and labour disputes. We experienced significant transportation disruptions in British Columbia in the fourth quarter of 2021 as a result of severe weather and flooding in British Columbia which materially impacted our ability to ship lumber from British Columbia. To the extent that climate change results in more frequent severe weather occurrences, we may experience increased frequency of transportation disruptions in future years which may again result in a disruption of our ability to delivery our ability to ship lumber and other products that we manufacture. In addition, the potential of increased frequency of severe weather events may ultimately result in increased transportation costs as transportation providers, including railways, undertake capital expenditures to improve the ability of the transportation infrastructure to withstand severe weather events or to repair damage from severe weather events in order to maintain services.

Transportation services may also be impacted by seasonal factors, which could impact the timely delivery of raw materials and distribution of products to customers. As a result of rail capacity constraints, access to adequate transportation capacity has at times been strained and could affect our ability to transport our products to markets and could result in increased product inventories. Any failure of third-party transportation providers to deliver finished goods or raw materials in a timely manner, including failure caused by adverse weather conditions or work stoppages, could harm our reputation, negatively affect customer relationships or disrupt production at our mills. Transportation costs are also subject to risks that include, without limitation, increased rates due to competition, increased fuel costs and increased capital expenditures related to repair, maintenance and upgrading of transportation infrastructure. Increases in transportation costs will increase our operating costs and adversely impact our profitability. If we are unable to obtain transportation services or if our transportation costs increase, our revenues may decrease due to our inability to deliver products to market and our operating expenses may increase, each of which would adversely affect our results of operations.

Trade Restrictions

A substantial portion of our products that are manufactured in Canada are exported for sale. Our financial results are dependent on continued access to the export markets and tariffs, quotas and other trade barriers that restrict or prevent access represent a continuing risk to us. Canadian softwood lumber exports to the U.S. have been the subject of trade

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disputes and managed trade arrangements for the last several decades. During the period from October 2006 through October 2015 these exports were subject to a trade agreement between the U.S. and Canada and on the expiry of that agreement, a one-year moratorium on trade sanctions by the U.S. came into place. That moratorium has expired and in November 2016 a group of U.S. lumber producers petitioned the USDOC and the USITC to impose trade sanctions against Canadian softwood lumber exports to the U.S. In 2017 duties were imposed on Canadian softwood lumber exports to the U.S. The current duties are likely to remain in place until and unless some form of trade agreement can be reached between the U.S. and Canada (which trade agreement could include other tariffs or duties or quotas that restrict lumber exports) or a final, binding determination is made as a result of litigation. Unless the additional costs imposed by duties can be passed along to lumber consumers, the duties will increase costs for Canadian producers and, in certain cases, could result in some Canadian production becoming unprofitable. Whether and to what extent duties can be passed along to consumers will largely depend on the strength of demand for softwood lumber, which is significantly influenced by the levels of new residential construction in the U.S. If duties can be passed through to consumers in whole or in part the price of Canadian softwood lumber will increase (although the increase will not necessarily be for the benefit of Canadian producers) which in turn could cause the price of SYP lumber, which would not be subject to the duty, to increase as well.

While the USDOC has issued its final duty rates for 2019, the duty rates for 2020 and 2021 periods of investigation have not been finalized, and there is no assurance that the final rates for antidumping duty and countervailing duty will not differ materially from the cash deposit rates in place for those years.

The application of U.S. trade laws could, in certain circumstances, create significant burdens on us. We are a mandatory respondent in current investigations being conducted by the USDOC into alleged subsidies and dumping of Canadian softwood lumber. In addition, the current trade dispute between the U.S. and China could negatively impact either or both the U.S. and Chinese economies which could have an adverse effect on the demand for our products and could adversely affect our financial results. Further, the current diplomatic and trade issues between Canada and China could result in tariffs and other trade barriers that restrict access to the market in China for our products.

The future performance of our business is dependent upon international trade and, in particular, cross border trade between Canada and the U.S. and between the United Kingdom (“UK”) and European Union. Access to markets in the U.S., the European Union and other countries may be affected from time to time by various trade-related events. The financial condition and results of operations of our business could be materially adversely affected by trade rulings, the failure to reach or adopt trade agreements, the imposition of customs duties or other tariffs, or an increase in trade restrictions in the future.

Environment

We are subject to regulation by federal, provincial, state, municipal and local environmental authorities, including, among other matters, environmental regulations relating to air emissions and pollutants, wastewater (effluent) discharges, solid and hazardous waste, landfill operations, forestry practices, permitting obligations, site remediation and the protection of threatened or endangered species and critical habitat. Concerns over climate change, carbon emissions, water and land-use practices and the protection of threatened or endangered species and critical habitat could also lead governments to enact additional or more stringent environmental laws and regulations that may require us to incur significant capital expenditures, pay higher taxes or fees, including carbon related taxes or otherwise could adversely affect our operations or financial conditions.

We have incurred, and will continue to incur, capital expenditures and operating costs to comply with environmental laws and regulations, including the U.S. Environmental Protection Agency’s Boiler MACT (maximum achievable control technology) regulations. These regulations include environmental laws and regulations relating to air emissions, wastewater discharges, solid and hazardous waste management, plant and wildlife protection and site remediation, as well as workplace safety. In addition, changes in the regulatory environment respecting climate change have and may lead governments and regulatory bodies to enact additional or more stringent laws and regulations and impose operational restrictions or incremental levies and taxes applicable to our Company which could require us to incur increased capital expenditures or result in increased operating expenses. In addition, we anticipate incurring additional capital expenditures in connection with capital projects that we plan to undertake in order to achieve our targeted greenhouse gas emission objectives. These capital expenditures may be greater than initially projected, and changes in environmental laws could impose more stringent requirements than our targeted objectives and result in increased capital expenditures or acceleration of the time for completion of the capital projects.

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No assurance can be given that changes in these laws and regulations or their application will not have a material adverse effect on our business, operations, financial condition and operational results. Similarly, no assurance can be given that capital expenditures necessary for future compliance with existing and new environmental laws and regulations could be financed from our available cash flow. Failure to comply with applicable laws and regulations could result in fines, penalties or other enforcement actions that could impact our production capacity or increase our production costs. In addition, laws and regulations could become more stringent or subject to different interpretation in the future.

We may discover currently unknown environmental problems, contamination, or conditions relating to our past or present operations. This or any failure to comply with environmental laws and regulations may require site or other remediation costs or result in governmental or private claims for damage to person, property, natural resources or the environmental or governmental sanctions, including fines or the curtailment or suspension of our operations, which could have a material adverse effect on our business, financial condition and operational results.

We are currently involved in investigation and remediation activities and maintain accruals for certain environmental matters or obligations, as set out in the notes to our Annual Financial Statements. Changing weather patterns and climatic conditions due to natural and man-made causes, including temperature shifts and changes to seasonal norms for winter and summer, can adversely impact our ability to meet our reforestation obligations and the expected cost to settle these liabilities. There can be no assurance that any costs associated with such obligations or other environmental matters will not exceed our accruals.

Our Canadian woodland operations, and the harvesting operations of our many key U.S. log and European wood fibre suppliers, in addition to being subject to various environmental protection laws, are subject to third-party certification as to compliance with internationally recognized, sustainable forest management standards. Demand for our products may be reduced if we are unable to achieve compliance or are perceived by the public as failing to comply, with these applicable environmental protection laws and sustainable forest management standards, or if our customers require compliance with alternate forest management standards for which our operations are not certified. In addition, changes in sustainable forest management standards or our determination to seek certification for compliance with alternate sustainable forest management standards may increase our costs of wood fibre and operations.

Climate Change, Environmental and Social Risks

We face direct risks associated with climate change and the environment, as well as indirect risks resulting from the growing international concern regarding climate change, environmental and social matters. Specifically, there has been a significant increase in focus on the timing and ability of organizations to transition to a lower-carbon economy and to demonstrate a commitment to environmental, social and governance issues. Governments, financial institutions, insurance companies, environmental and governance organizations, institutional investors, social and environmental activists, and individuals, are increasingly seeking to implement, among other things, regulatory developments, policy changes and investment patterns, which, individually and collectively may have financial implications for both us and our stakeholders (i.e., customers, suppliers, shareholders).

Our business operations face risks associated with climate change and the environment, as identified and discussed in this Risk and Uncertainties section of this MD&A. In addition, climate change and its associated impacts may increase our exposure to, and magnitude of, other risks identified in this Risk and Uncertainties section of this MD&A.

Overall, we are not able to estimate at this time the degree to which climate change related regulatory, climatic conditions, and climate-related transition risks could impact our financial and operating results. Our business, financial condition, results of operations, cash flows, reputation, access to capital, access to insurance, cost of borrowing, access to liquidity, ability to fund dividend payments and/or business plans may, in particular, without limitation, be adversely impacted as a result of climate change and its associated impacts.

We also face potential strategic, reputational, business, legal and regulatory risks relating to our actual or perceived actions, or inaction, in relation to climate change and other environmental and social risk issues, progress against its environmental or social commitments, or our disclosures on these matters. Investors and stakeholders increasingly compare companies based on climate-related performance and a perception among financial institutions and investors that our ESG initiatives, including the forestry industry’s sustainability initiatives, are insufficient, could adversely affect our reputation and ability to attract investors and capital. We will be adopting certain greenhouse gas emissions reduction targets as part of our overall sustainability and ESG initiatives, which will include the adoption of science-based targets to achieve significant reductions to GHG emissions targeted by 2030. There is a risk that we will not meet our GHG

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emissions reduction targets, that some or all of the expected benefits and opportunities of achieving our various GHG and sustainability targets may fail to materialize, and that achieving the targets may cost more to achieve than projected or may not occur within anticipated time periods. Our failure to achieve our GHG or our sustainability targets, or a perception by key stakeholders, including our customers and our investors, that our GHG targets or other ESG initiatives are insufficient, could adversely affect our reputation and our ability to attract investors, capital and insurance coverage. Further, actions taken by us to meet our GHG targets and achieve our sustainability objectives may ultimately increase our projected capital expenditures and our costs of operations. In addition, our ability to access capital or the costs of available capital may be adversely affected in the event that financial institutions, investors, rating agencies and/or lenders adopt more restrictive sustainability policies than we have committed to.

Indigenous Groups

Issues relating to Indigenous groups, including Indigenous Nations, Métis and others, have the potential for an impact on resource companies operating in Canada including West Fraser. Risks include potential delays or effects of governmental decisions relating to Canadian Crown timber harvesting rights (including their grant, renewal or transfer or authorization to harvest) in light of the government’s duty to consult and accommodate Indigenous groups in respect of Aboriginal rights or treaty rights, agreements governments may choose to enter into with Indigenous groups or steps governments may take in favour of Indigenous groups even if not required by law, related terms and conditions of authorizations and potential findings of Aboriginal title over land.

We participate, as requested by the government, in the consultation process in support of the government fulfilling its duty to consult. We also seek to develop and maintain good relationships and, where possible, agreements with Aboriginal groups that may be affected by our business activities. However, as the jurisprudence and government policies respecting Indigenous rights and title and the consultation process continue to evolve, as treaty and non-treaty negotiations continue, and as governments continue to announce and implement further policy and legislative changes to Indigenous interests (including, but not limited to the British Columbia Declaration of the Rights of Indigenous Peoples Act and the federal United Nations Declaration on the Rights of Indigenous Peoples Act, we cannot assure that Indigenous claims will not in the future have a material adverse effect on our timber harvesting rights or our ability to exercise or renew them or secure other timber harvesting rights.

In addition, if the Government of British Columbia implements its plan to defer logging in “old growth” forest areas, our ability to secure timber supply from affected areas may be impacted by our ability to foster and maintain good relations with Indigenous Nations in the impacted areas, and their willingness to approve or consent to logging of portions of our forest licenses that are considered “old growth” forests. The unwillingness of Indigenous Nations to approve or consent to logging in areas impacted by the deferral could reduce the amount of timber supply available to us.

Contagious Disease

The continuing COVID-19 pandemic could cause interruptions to our business and operations and otherwise have an adverse effect on our business, financial condition and/or results of operations including as a result of the effects on: (i) global economic activity, (ii) the business, operations, financial condition, and solvency of our customers caused by operating shutdowns or disruptions or financial or liquidity issues, (iii) the demand for and price of our products, (iv) the health of our employees and the impact on their ability to work or travel, (v) our ability to operate our manufacturing facilities, (vi) our supply chain and the ability of third party suppliers, service providers and/or transportation carriers to supply goods or services on which we rely on to transport our products to market, and (vii) our revenues, cash flow, liquidity and ability to maintain compliance with the covenants in our credit agreements. Specifically, the current escalation of the highly transmissible Omicron variant or future variants may result in our inability to fully staff our manufacturing facilities, with the result that we may be forced to temporarily close facilities or reduce production rates during periods. In addition, our future business may be impacted local, regional, national or international outbreak or escalation of other contagious diseases, viruses or other illnesses, including future COVID-19 variants, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu or any other similar illness, or fear of the foregoing,

Demand and prices for our products may be adversely affected by such outbreaks and pandemics that affect levels of economic activity, and we are unable to predict or estimate the timing or extent of the impact of such outbreaks and pandemics. Governmental measures or restrictions, including those requiring the closures of businesses, restrictions on travel, country, provincial or state and city-wide isolation orders, and physical distancing requirements, may directly affect our operations and employees and those of our customers, suppliers and service providers, and the demand for

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and pricing of our products. The spread of such viruses among our employees or those of our suppliers or service providers could result in lower production and sales, higher costs, and supply and transportation constraints. Accordingly, our production, costs, and sales may be negatively affected, which could have a material adverse effect on our business, financial condition and/or results of operation.

Given the ongoing and dynamic nature of the COVID-19 outbreak, it is challenging to predict the impact on the Company’s business. The extent of such impact will depend on future developments, which are highly uncertain, including the resurgence of COVID-19 as restrictions are eased or lifted, new information that may emerge concerning the spread and severity of COVID-19, and actions taken to address its impact, among others. It is difficult to predict how this virus may affect our business in the future, including its effect (positive or negative; long or short term) on the demand and price for our products. It is possible that COVID-19, particularly if it has a prolonged duration, could have a material adverse effect on our supply chain, market pricing and customer demand, and distribution networks. These factors may further impact our operating plans, business, financial condition, liquidity, the valuation of long-lived assets, and operating results.

Regulatory

Our operations are subject to extensive general and industry specific federal, provincial, state, municipal and other local laws and regulations and other requirements, including those governing forestry, exports, taxes (including, but not limited to, income, sales and carbon taxes), employees, labour standards, occupational health and safety, waste disposal, environmental protection and remediation, protection of endangered and protected species and land use and expropriation. We are required to obtain approvals, permits and licences for our operations, which may require advance consultation with potentially affected stakeholders including Indigenous groups and impose conditions that must be complied with. If we are unable to obtain, maintain, extend or renew, or are delayed in extending or renewing, a material approval, permit or license, our operations or financial condition could be adversely affected. There is no assurance that these laws, regulations or government requirements, or the administrative interpretation or enforcement of existing laws and regulations, will not change in the future in a manner that may require us to incur significant capital expenditures, pay higher taxes or otherwise could adversely affect our operations or financial condition. Failure to comply with applicable laws or regulations, including approvals, permits and licences, could result in fines, penalties or enforcement actions, including orders suspending or curtailing our operations or requiring corrective measures or remedial actions.

Natural and Man-Made Disasters and Climate Change Adaptation

Our operations are subject to adverse natural or man-made events such as forest fires, flooding, hurricanes and other severe weather conditions, climate change, timber diseases and insect infestations including those that may be associated with warmer climate conditions, and earthquake activity. Over the past several years, changing weather patterns and climatic conditions due to natural and man-made causes, including temperature shifts and changes to seasonal norms for winter and summer, have added to the unpredictability and frequency of natural events such as severe weather, hurricanes, flooding, hailstorms, wildfires, snow, ice storms, and the spread of disease and insect infestations. Trends towards heavier precipitation patterns, changes to water quality and water storage on the land base can result in the overall degradation of water quality and reduced water supply levels. These events could damage or destroy or adversely affect the operations at our physical facilities or the cost, availability, and quality of our timber supply, and similar events could also affect the facilities of our suppliers or customers. Any such damage or destruction could adversely affect our financial results as a result of the reduced availability of timber, decreased production output, increased operating costs or the reduced availability of transportation. Although we believe we have reasonable insurance arrangements in place to cover certain of such incidents related to damage or destruction, there can be no assurance that these arrangements will be sufficient to fully protect us against such losses. As is common in the industry, we do not insure loss of standing timber for any cause.

In addition, government action to address climate change, carbon emissions, water and land use and the protection of threatened or endangered species and critical habitat may result in the enactment of additional or more stringent laws and regulations that may require us to incur significant capital expenditures, pay higher taxes or fees, including carbon related taxes, or otherwise could adversely affect our operations or financial conditions.

Information Technology and Cyber Security

We are reliant on our information and operations technology systems to operate our manufacturing facilities, access fibre, communicate internally and with suppliers and customers, to sell our products and to process payments and payroll

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as well as for other corporate purposes and financial reporting. An interruption or failure or unsuccessful implementation and integration of our information and operations technology systems could result in a material adverse effect on our operations, business, financial condition and results of operations.

In order to optimize performance, we regularly implement business process improvement initiatives and invest capital to upgrade our information technology infrastructure. These initiatives may involve risks to the operations and we may experience difficulties during the transition to these new or upgraded systems and processes. Difficulties in implementing new or upgraded information systems or significant system failures could disrupt operations and have a material adverse effect on the business.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, proprietary business and confidential financial information and identifiable personal information of our employees. We rely on industry accepted security measures and technology to protect our information systems and confidential and proprietary information.

However, our information and operations technology systems, including process control systems, are still subject to cyber security risks and are vulnerable to natural disasters, fires, power outages, vandalism, attacks by hackers or others or breaches due to employee error or other disruptions. Any such attack on or breach of our systems including through exposure to potential computer viruses or malware could compromise our systems and stored information may be accessed, publicly disclosed, lost or compromised, which could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruptions to our operations, decreased performance and production, increased costs, and damage to our reputation, which could have a material adverse effect on our business, financial condition and results of operations. As cyber security threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities. However, our exposure to these risks cannot be fully mitigated due to the nature of these threats. Further, disruptions resulting from cyber security breaches could expose us to potential liability or other proceedings by affected individuals, business partners and/or regulators. As a result, we could face increased costs if any future claims exceed our insurance coverage.

Product Liability and Legal Proceedings

We produce a variety of wood-based panels that are used in new home construction, repair and remodelling of existing homes, furniture and fixtures, and industrial applications. In the normal course of business, the end users of our products have in the past made, and could in the future make, claims with respect to the fitness for use of its products or claims related to product quality or performance issues. In addition, we have been in the past and may in the future be involved in legal proceedings related to antitrust, negligence, personal injury, property damage, environmental matters, and labour and other claims against us or our predecessors. We could face increased costs if any future claims exceed purchased insurance coverage.

Capital Intensity

Our business and the production of wood-based panels is capital intensive. There can be no assurance that key manufacturing facilities and pieces of equipment will not need to be updated, modernized, repaired or replaced, or that operation of our manufacturing facilities could not otherwise be disrupted unexpectedly, for example by adverse weather, labour disputes, information technology disruptions, power outages, fire, explosion or other hazards including combustible wood dust. In certain circumstances, the costs of repairing or replacing equipment, and the associated downtime of the affected production line, may not be insurable.

We are required to review our long-lived assets for indicators that their carrying values will not be recovered. Indicators could include high raw material costs, energy cost, changes in demand for our products, declines in product pricing, changes in technology, prolonged negative results or operational curtailments, and may result in non-cash impairment or accelerated depreciation charges in the future and therefore have a negative impact to earnings in the period when these charges are recorded.

Tax Exposures

In the normal course of business, we take various positions in the filing of our tax returns, and there can be no assurance that tax authorities will not challenge such filing positions. In addition, we are subject to further uncertainties concerning

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the interpretation and application of tax laws in various operating jurisdictions. We provide for known estimated tax exposures in all jurisdictions. These exposures are settled primarily through the closure of audits with the jurisdictional taxing authorities. However, future settlements could differ materially from our estimated liabilities.

Potential Future Changes in Tax Laws, including Tax Rates

Our corporate structure is based on prevailing taxation law, regulations and practice in the local jurisdictions in which we operate. We are aware that new taxation rules could be enacted or that existing rules could be applied in a manner that subjects our profits to additional taxation or otherwise has a material adverse effect on our profitability, results of operations, deferred tax assets and liabilities, financial condition or the trading price of its securities. Our management is continually monitoring changes in tax policy, tax legislation (including in relation to taxation rates), and the interpretation of tax policy or legislation or practice that could have such an effect. At any given time, we may face tax exposures arising out of changes in tax or transfer pricing laws, tax reassessments or otherwise. Governments around the world are increasingly seeking to regulate multinational companies and their use of differential tax rates between jurisdictions. This effort includes a greater emphasis by various nations to coordinate and share information regarding companies and the taxes they pay. Changes in governmental taxation policies and practices could adversely affect us or result in negative media coverage and, depending on the nature of such policies and practices, could have a greater impact on the Company than on other companies.

Foreign Currency Exchange Rates

Our Canadian operations sell the majority of their products at prices denominated in U.S. dollars or based on prevailing U.S. dollar prices while a significant portion of their operational costs and expenses are incurred in Canadian dollars. Upon closing of the Norbord Acquisition, we have changed the functional currency and presentation currency of our Canadian operations, with the exception of our Canadian newsprint operation, from Canadian dollars to United States dollars. Our United Kingdom operations sell a portion of their products at prices denominated in Euros while the majority of their costs are incurred in British Pounds Sterling.

Accordingly, exchange rate fluctuations will result in exchange gains or losses recorded in earnings and other comprehensive earnings. This results in significant earnings sensitivity to changes in the relative value of the United States dollar in comparison to the value of the Canadian dollar, British pound sterling and Euro. These exchange rates are affected by a broad range of factors which makes future rates difficult to accurately predict. Significant fluctuations in relative currency values may also negatively affect the cost competitiveness of our facilities, the value of our foreign investments, the results of our operations and our financial position.

Financial

Capital Plans

Our capital plans will include, from time to time, expansion, productivity improvement, technology upgrades, operating efficiency optimization and maintenance, repair or replacement of our existing facilities and equipment. In addition, we will from time to time undertake the acquisition of facilities or the rebuilding or modernization of existing facilities, including the rebuilding and modernization of existing and newly acquired facilities. We may also in the future be required to undertake capital projects to (i) address or mitigate the impacts of climate change and extreme weather events at our facilities, (ii) comply with new government regulation directed at reducing the impacts of climate change; (iii) reduce the carbon intensity or footprint of our existing operations by reducing or eliminating fossil fuel usage, or (iii) comply with new government regulation directed at improving environmental protection. If the capital expenditures associated with these capital projects are greater than we have projected or if construction timelines are longer than anticipated, or if we fail to achieve the intended efficiencies, our financial condition, results of operations and cash flows may be adversely affected. In addition, our ability to expand production and improve operational efficiencies will be contingent on our ability to execute on our capital plans. Our capital plans and our ability to execute on such plans may be adversely affected by availability of, and competition for, qualified workers and contractors, machinery and equipment lead times, changes in government regulations, unexpected delays and increases in costs of completing capital projects including due to increased materials, machinery and equipment costs resulting from trade disputes and increased tariffs and duties.

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Capital Resources

We believe our capital resources will be adequate to meet our current projected operating needs, capital expenditures and other cash requirements. Factors that could adversely affect our capital resources include prolonged and sustained declines in the demand and prices for our products, unanticipated significant increases in our operating expenses and unanticipated capital expenditures. If for any reason we are unable to provide for our operating needs, capital expenditures and other cash requirements on commercially reasonable terms, we could experience a material adverse effect to our business, financial condition, results of operations and cash flows.

Availability of Credit

We rely on long term borrowings and access to revolving credit in order to finance our ongoing operations. Our ability to refinance or renew such facilities will be dependent upon our financial condition, profitability and credit ratings and prevailing financial market conditions. Any change in availability of credit in the market, as could happen during an economic downturn, could affect our ability to access credit markets on commercially reasonable terms. In the future we may need to access public or private debt markets to issue new debt. Deteriorations or volatility in the credit markets could also adversely affect:

· our ability to secure financing to proceed with capital expenditures for the repair, replacement or expansion of our existing facilities and equipment;

· our ability to comply with covenants under our existing credit or debt agreements;

· the ability of our customers to purchase our products; and

· our ability to take advantage of growth, expansion or acquisition opportunities.

In addition, deteriorations or volatility in the credit market could result in increases in the interest rates that we pay on our outstanding non-fixed rate debt, which would increase our costs of borrowing and adversely affect our results.

We have notes maturing in 2024 and a term loan maturing in 2024. There is no assurance that financing will be available to us when required or may not be available to us on commercially favourable or otherwise satisfactory terms in the future to re-finance these notes and term loan when they become due.

Credit Ratings

Credit rating agencies rate our debt securities based on factors that include our operating results, actions that we take, their view of the general outlook for our industry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading the current rating or placing us on a watch list for possible future downgrading. Downgrading the credit rating of our debt securities or placing us on a watch list for possible future downgrading could limit our access to the credit markets, increase our cost of financing and have an adverse effect on our financial condition.

Costs of Materials and Energy

We rely heavily on certain raw materials, including logs, wood chips and other fibre sources, chemicals, and energy sources, including natural gas and electricity, in our manufacturing processes. Competition from our industry and other industries may result in increased demand and costs for these raw materials and energy sources. Increases in the costs of these raw materials and energy sources will increase our operating costs and will reduce our operating margins. There is no assurance that we will be able to fully offset the effects of higher raw material or energy costs through hedging arrangements, price increases, productivity improvements or cost-reduction programs.

Operational Curtailments

From time to time, we suspend or curtail operations at one or more of our facilities in response to market conditions, environmental risks, or other operational issues, including, but not limited to scheduled and unscheduled maintenance, temporary periods of high electricity prices, power failures, equipment breakdowns, adverse weather conditions, labour disruptions, unavailability of staff due to COVID-19, fire hazards, and the availability or cost of raw materials including logs and wood chips. In addition, the potential increased frequency of extreme weather events associated with climate change may result in operational curtailments becoming more frequent than we have experienced historically.

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In addition, our ability to operate at full capacity may be affected by ongoing capital projects. As a result, our facilities may from time to time operate at less than full capacity. These operational suspensions could have a material adverse effect on our financial condition as a result of decreased revenues and lower operating margins.

In Canada, a substantial portion of the wood chip requirements of our Canadian pulp and paper operations are provided by our Canadian sawmills and plywood and LVL plants. If wood chip production is reduced because of production curtailments, improved manufacturing efficiencies or any other reason, our pulp and paper operations may incur additional costs to acquire or produce additional wood chips or be forced to reduce production. Conversely, pulp and paper mill production curtailments may require our sawmills and panel mills to find other ways to dispose of residual wood fibre and may result in curtailment or suspension of lumber, plywood or LVL production and increased costs.

Labour and Services

Our operations rely on experienced local and regional management and both skilled and unskilled workers as well as third party services such as logging and transportation and services for our capital projects. Because our operations are generally located away from major urban centers, we often face strong competition from our industry and others such as oil and gas production, mining and manufacturing for labour and services, particularly skilled trades. Shortages of key services or shortages of management leaders or skilled or unskilled workers, including those caused by a failure to attract and retain a sufficient number of qualified employees and other personnel or high employee turnover could impair our operations by reducing production or increasing costs or the ability to execute on our capital projects including timing and costs.

We employ a unionized workforce in a number of our operations. Walkouts or strikes by employees could result in lost production and sales, higher costs, supply constraints and litigation that could have a material adverse effect on our business. In addition, disputes with the unions that represent our employees may lead to litigation, the result of which may adversely impact cash flow and profitability of certain of our operations. Also, we depend on a variety of third parties that employ unionized workers to provide critical services to us. Labour disputes experienced by these third parties could lead to disruptions at our facilities.

Approximately 35% of our employees are covered by collective agreements. There were no expired collective agreements remaining as at December 31, 2021, other than the collective agreement with respect to our Hinton facilities. All of our UK and Belgian union contracts are evergreen. Union agreements representing approximately 9% and 30% of our unionized employees expire in 2022 and 2023, respectively. In the event that we are unable to renew these collective agreements upon their expiry, we could experience strikes or labour stoppages at the impacted facilities which could result in lost production and sales, higher costs and/or supply constraints.

Wood Dust

Our operations generate wood dust which has been recognized for many years as a potential health and safety hazard and operational issue. The potential risks associated with wood dust have been increased in those of our B.C. and Alberta facilities that have been processing mountain pine beetle-killed logs and fire damaged logs as the wood dust generated from these logs tends to be drier, lighter and finer than wood dust typically generated. We have adopted a variety of measures to reduce or eliminate the risks and operational challenges posed by the presence of wood dust in our facilities and we continue to work with industry and regulators to develop and adopt best mitigation practices. Any explosion or similar event at any of our facilities or any third-party facility could result in significant loss, increases in expenses and disruption of operations, each of which would have a material adverse effect on our business.

Pension Plan Funding

We are the sponsor of several defined benefit pension plans, including plans of Norbord which we assumed as part of the Norbord Acquisition, which exposes us to market risks related to plan assets and liabilities. Funding requirements for these plans are based on actuarial assumptions concerning expected return on plan assets, future salary increases, life expectancy and interest rates. If any of these assumptions differs from actual outcomes such that a funding deficiency occurs or increases, we would be required to increase cash funding contributions which would in turn reduce the availability of capital for other purposes. We are also subject to regulatory changes regarding these plans which may increase the funding requirements which would in turn reduce the availability of capital for other purposes.

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International Sales

A portion of our products are exported to customers in China, Japan and in developing markets. International sales present a number of risks and challenges, including but not limited to the effective marketing of our products in foreign countries, collectability of accounts receivable, tariffs and other barriers to trade and recessionary environments in foreign economies.

Strategic Initiatives

Our future success may in part be dependent on the performance of strategic initiatives, which could include growth in certain segments or markets and acquisitions. There can be no assurance that we will be able to successfully implement important strategic initiatives in accordance with our expectations, which may adversely affect our business, financial results and future growth prospects.

Acquisitions

We may evaluate and complete potential acquisitions from time to time and have in the past grown through acquisitions. However, there is no assurance that we in the future will be able to successfully identify potential acquisitions or efficiently and cost-effectively integrate any assets or business that we acquire without disrupting existing operations.

Acquisitions are subject to a range of inherent risks, including the assumption of incremental regulatory/compliance, pricing, labour relations, litigation, environmental, tax and other risks. Further, we may not be able to successfully integrate or achieve anticipated synergies from those acquisitions which we do complete and/or such acquisitions may be dilutive in the short to medium term. Any of these adverse outcomes could result in us not achieving the financial benefits of prospective acquisitions and have a material adverse effect on our profitability

We May Not Achieve the Anticipated Benefits from the Acquisition of Norbord

Our ability to realize the anticipated benefits and synergies of our acquisition of Norbord will depend in part on our successfully consolidating Norbord’s business and integrating Norbord’s operations, procedures and personnel in a timely and efficient manner, as well as on our ability to realize the anticipated growth opportunities and synergies, efficiencies and cost savings from the combined business. There is no assurance that the targeted annual synergies will be achieved.

Return of Capital to Shareholders

We have returned capital to our shareholders in 2021 through a combination of dividends and share repurchases, both through our normal course issuer bid and our substantial issuer bid. There is no assurance that we will continue to return capital to shareholders in future years, or as to the amount of capital that will be returned. Further, decisions to return capital to shareholders remain at the discretion of our board of directors and shareholders may not agree with the manner and the amounts of capital that are returned to shareholders. The declaration and payment of cash dividends remains within the discretion of our board of directors. Historically, cash dividends have been declared on a quarterly basis payable after the end of each quarter. There is no assurance that our board of directors will continue to maintain our dividend at the current rate. Our board of directors has the power to declare dividends in its discretion and in any manner and at any time as it may deem necessary or appropriate in the future. For these reasons, as well as others, there can be no assurance that dividends that we pay in the future will be equal or similar to the dividends historically paid by West Fraser or that our board of directors will not decide to suspend or discontinue the payment of cash dividends in the future.

Risks Associated with the NYSE Listing and Litigation

We have listed the West Fraser Shares on the NYSE in connection with our completion of the Norbord Acquisition. Our continued listing on the NYSE may expose us to additional regulatory proceedings, litigation (including class actions), mediation, and/or arbitration from time to time, which could adversely affect our business, financial condition and operations. Monitoring and defending against legal actions, with or without merit, can be time-consuming, may divert management’s attention and resources and can cause us to incur significant expenses. In addition, legal fees and costs incurred in connection with such activities may be significant and we may, in the future, be subject to judgments or enter into settlements of claims for significant monetary damages. While we have insurance that may cover the costs and awards of certain types of litigation, the amount of insurance may not be sufficient to cover any costs or awards.

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Substantial litigation costs or an adverse result in any litigation may adversely impact our business, financial condition, or operations. Litigation, and any decision resulting therefrom, may also create a negative perception of West Fraser.

Risk Associated with Internal Controls

We are required to maintain and evaluate the effectiveness of our internal controls over financial reporting under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings in Canada and under the Exchange Act in the United States. Effective internal controls are required for us to accurately and reliably report our financial results and other financial information. There is no assurance that we will be able to achieve and maintain the adequacy of our internal controls over financial reporting as such standards are modified, supplemented, or amended from time to time, and we may not be able to ensure that we can conclude on an ongoing basis that our internal controls over financial reporting is effective. Our failure to establish and maintain effective internal controls over financial reporting could result in our inability to meet our reporting obligations, our inability to prevent fraud and our ability to detect material misstatements. As a result, any failure to maintain effective internal controls over financial reporting may result in investors losing confidence in our ability to report timely, accurate and reliable financial and other information, may expose us to legal or regulatory actions and may adversely impact the market value of our Common shares.

In addition, under Section 404 of the Sarbanes-Oxley Act, we will be required to design, document and test the effectiveness of our internal controls over financial reporting. There is no assurance that our efforts to develop and maintain our internal controls will be successful or sufficient to meet our obligations under SOX or that our auditors will deliver their attestation report confirming their opinion that our internal controls over financial reporting are effective as at December 31, 2022.

Our Common Shares May be Subject to Trading Volatility

Our Common Shares will be subject to material fluctuations in trading prices and volumes which may increase or decrease in response to a number of events and factors, which will include:

· changes in the market price of the commodities that we sell and purchase;

· current events affecting the economic situation in North America, Europe and the international markets in which our products are sold;

· trends in the lumber and OSB industries and other industries in which we operate;

· regulatory and/or government actions;

· changes in financial estimates and recommendations by securities analysts;

· future acquisitions and financings;

· the economics of current and future projects undertaken by us;

· variations in our operating results, financial condition or dividend policies;

· the operating and share price performance of other companies, including those that investors may deem comparable to West Fraser;

· the issuance of additional equity securities by us; and

· the occurrence of any of the risks and uncertainties described above.

In addition to factors directly affecting West Fraser, our Common shares may also experience volatility that is attributable to the overall state of the stock markets in which wide price swings may occur as a result of a variety of financial, economic and market perception factors. This overall market volatility may adversely affect the price of our Common shares, regardless of our own relative operating performance.

CONTROLS AND PROCEDURES

West Fraser is responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting, each as defined in NI 52-109.

Limitations on Scope of Design of DC&P and ICFR

In accordance with the provisions of NI 52-109, our management has limited the scope of its design of West Fraser’s disclosure controls and procedures and internal control over financial reporting to exclude controls, policies and procedures of Angelina Forest Products LLC, which was acquired on December 1, 2021.

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Angelina’s contribution to our consolidated financial statements for the year ended December 31, 2021 was $15 million of sales, representing approximately 0.1% of consolidated sales, and $1 million of earnings, representing a nominal percentage of consolidated earnings. Additionally, assets attributed to Angelina’s assets were $322 million, representing approximately 3.1% of our total assets as at December 31, 2021.

Disclosure Controls and Procedures

We have designed our disclosure controls and procedures to provide reasonable assurance that information that is required to be disclosed by us in our annual filings, interim filings and other reports that we file or submit under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. These include controls and procedures designed to ensure that information that we are required to disclose under securities legislation is accumulated and communicated to our management, including our President and Chief Executive Officer and the Vice-President, Finance and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our CEO and CFO, has conducted an evaluation of our disclosure controls and procedures as of December 31, 2021. Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective as of December 31, 2021.

Internal Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with IFRS.

Our management, under the supervision of the CEO and CFO, is required under NI 52-109 to evaluate the effectiveness of our internal controls over financial reporting as of December 31, 2021. Our management completed this evaluation using the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework (2013). Based on this evaluation, our CEO and CFO have concluded that our internal controls over financial reporting were effective as of December 31, 2021.

There has been no change in our internal controls over financial reporting that occurred during the year ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting, other than changes in our internal controls over financial reporting resulting from the acquisition and integration of Norbord.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Additionally, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

DEFINITIONS, RECONCILIATIONS, AND OTHER INFORMATION

Transactions Between Related Parties

The Company undertakes transactions with key management personnel, consisting of our directors and officers. These individuals have the authority and responsibility for overseeing, planning, directing, and controlling our activities. Total compensation expense for key management personnel was $55 million in 2021, compared to $25 million in 2020. The increase in compensation expense was due primarily to the increased number of directors and officers resulting from the Norbord Acquisition and higher equity-based compensation driven by the impact of the Assumed Option Plans and an increase in our share price during 2021 See Note 19 of our Annual Financial Statements for additional details.

Non-GAAP and Other Specified Financial Measures

Throughout this MD&A, we make reference to (1) certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA by segment (our “Non-GAAP Financial Measures”), (ii) certain capital management measures, including available liquidity, total debt to capital ratio, and net debt to capital ratio (our “Capital Management Measures”), and (iii) certain supplementary financial measures, including our expected capital expenditures and expected potential synergies

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from the Norbord Acquisition (our “Supplementary Financial Measures”). We believe that these Non-GAAP Financial Measures, Capital Management Measures, and Supplementary Financial Measures (collectively, our “Non-GAAP and other specified financial measures”) are useful performance indicators for investors with regard to operating and financial performance and our financial condition. These Non-GAAP and other specified financial measures are not generally accepted financial measures under IFRS and do not have standardized meanings prescribed by IFRS. Investors are cautioned that none of our Non-GAAP Financial Measures should be considered as an alternative to earnings or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these Non-GAAP and other specified financial measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these Non-GAAP and other specified financial measures may not be directly comparable to similarly titled measures used by other entities. Accordingly, these Non-GAAP and other specified financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The reconciliation of the Non-GAAP measures used and presented by the Company to the most directly comparable IFRS measures is provided in the tables set forth below.

Adjusted EBITDA and Adjusted EBITDA by Segment

Adjusted EBITDA is defined as earnings determined in accordance with IFRS adding back the following line items from the consolidated statements of earnings and comprehensive earnings: finance expense, tax provision or recovery, amortization, equity-based compensation, restructuring and impairment charges, and other.

Adjusted EBITDA by segment is defined as earnings before tax determined for each reportable segment in accordance with IFRS adding back the following line items from the consolidated statements of earnings and comprehensive earnings for that reportable segment: finance expense, amortization, equity-based compensation, restructuring and impairment charges, and other.

EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company’s operating performance, ability to incur and service debt, and as a valuation metric. We calculate Adjusted EBITDA and Adjusted EBITDA by segment to exclude items of an unusual nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should not be included in an assessment of our ability to service or incur debt.

We believe that disclosing these measures assists readers in measuring performance relative to other entities that operate in similar industries and understanding the ongoing cash generating potential of our business to provide liquidity to fund working capital needs, service outstanding debt, fund future capital expenditures and investment opportunities, and pay dividends. Adjusted EBITDA is used as an additional measure to evaluate the operating and financial performance of our reportable segments.

The following tables reconcile Adjusted EBITDA to the most directly comparable IFRS measure, earnings.

See Note 17 of the Annual Financial Statements for a breakdown of the items making up Other. Other is comprised primarily of foreign exchange gain/loss and fair value adjustments on interest rate swap contracts and for Q4-21, $12 million of settlement cost relating to pension plan annuity purchase agreements for certain retired employees.

Effective January 1, 2021, and for all comparative periods, export duties are no longer excluded from the definition of Adjusted EBITDA.

Annual Adjusted EBITDA

($ millions)
	2021		2020		2019
Earnings	$	2,947	$	588	$	(113	)
Finance expense, net		45		27		37
Tax provision (recovery)		951		202		(52	)
Amortization		584		203		195
Equity-based compensation		40		9		4
Restructuring and impairment charges		—		—		25
Other		2		14		8
Adjusted EBITDA	$	4,569	$	1,043	$	104

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Quarterly Adjusted EBITDA

($ millions)
	Q4-21		Q3-21			Q4-20
Earnings	$	334	$	460		$	282
Finance expense, net		1		11			(3	)
Tax provision (recovery)		104		164			103
Amortization		153		147			54
Equity-based compensation		12		9			4
Other		11		(5	)		13
Adjusted EBITDA	$	615	$	786		$	453

The following tables reconcile Adjusted EBITDA by segment to the most directly comparable IFRS measures for each of our reportable segments. We consider that earnings before tax is the most directly comparable measure for Adjusted EBITDA by segment, given we do not allocate consolidated tax amounts across our reportable segments.

Please refer to the “Adjusted EBITDA” section above for additional details concerning the composition of this measure and how it provides useful information to readers.

Annual Adjusted EBITDA by segment

($ millions)
2021	Lumber			North     America     EWP		Pulp & Paper			Europe EWP		Corporate & Other			Total
Earnings before tax	$	1,794		$	2,121	$	(22	)	$	112	$	(107	)	$	3,898
Finance expense, net		17			3		5			1		19			45
Amortization		164			289		34			88		9			584
Equity-based compensation		—			—		—			—		40			40
Other		(2	)		1		(2	)		—		5			2
Adjusted EBITDA by segment	$	1,973		$	2,414	$	15		$	201	$	(34	)	$	4,569

2020	Lumber		North     America     EWP			Pulp & Paper			Europe EWP		Corporate & Other			Total
Earnings before tax	$	769	$	95		$	(46	)	$	—	$	(28	)	$	790
Finance expense, net		17		4			6			—		—			27
Amortization		151		13			31			—		8			203
Equity-based compensation		—		—			—			—		9			9
Other		2		(5	)		8			—		9			14
Adjusted EBITDA by segment	$	939	$	107		$	(1	)	$	—	$	(2	)	$	1,043

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Quarterly Adjusted EBITDA by segment

($ millions)
Q4-21	Lumber			North     America     EWP		Pulp & Paper			Europe EWP		Corporate & Other			Total
Earnings before tax	$	194		$	265	$	(25	)	$	36	$	(32	)	$	438
Finance expense, net		(1	)		—		—			1		1			1
Amortization		45			73		9			24		2			153
Equity-based compensation		—			—		—			—		12			12
Other		2			5		2			—		2			11
Adjusted EBITDA by segment	$	240		$	343	$	(14	)	$	61	$	(15	)	$	615

Q3-21	Lumber			North     America     EWP			Pulp & Paper			Europe EWP			Corporate & Other			Total
Earnings before tax	$	51		$	542		$	(16	)	$	68		$	(21	)	$	624
Finance expense, net		8			1			2			(1	)		1			11
Amortization		41			73			8			23			2			147
Equity-based compensation		—			—			—			—			9			9
Other		(7	)		(4	)		(1	)		—			7			(5	)
Adjusted EBITDA by segment	$	93		$	612		$	(7	)	$	90		$	(2	)	$	786

Q4-20	Lumber			North     America     EWP		Pulp & Paper			Europe EWP		Corporate & Other			Total
Earnings before tax	$	383		$	42	$	(33	)	$	—	$	(7	)	$	385
Finance expense, net		(6	)		1		2			—		—			(3	)
Amortization		40			4		8			—		2			54
Equity-based compensation		—			—		—			—		4			4
Other		8			1		3			—		1			13
Adjusted EBITDA by segment	$	425		$	48	$	(20	)	$	—	$	—		$	453

Available liquidity

Available liquidity is the sum of our cash and short-term investments and funds available under our committed and uncommitted bank credit facilities. We believe disclosing this measure assists readers in understanding our ability to meet uses of cash resulting from contractual obligations and other commitments at a point in time.

($ millions)
	December 31, 2021		December 31, 2020
Available liquidity
Cash and short-term investments	$	1,568	$	461
Operating lines available (excluding newsprint operation)1		1,025		811
		2,593		1,272
Cheques issued in excess of funds on deposit		—		—
Borrowings on operating lines		—		—
Available liquidity	$	2,593	$	1,272

1. Excludes demand line of credit dedicated to our jointly-owned newsprint operation as West Fraser cannot draw on it.

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Total debt to total capital ratio

Total debt to total capital ratio is total debt divided by total capital, expressed as a percentage. Total capital is defined as the sum of total debt plus total equity. This calculation is defined in certain of our bank covenant agreements. We believe disclosing this measure assists readers in understanding our capital structure, financial solvency, and degree of leverage at a point in time.

The following table outlines the composition of the measure.

($ millions)
	December 31, 2021			December 31, 2020
Debt
Operating loans	$	—		$	—
Current and long-term lease obligation		28			6
Current and long-term debt		501			509
Interest rate swaps1		1			6
Open letters of credit1		65			50
Total debt		595			571
Shareholders’ equity		7,656			2,478
Total Capital	$	8,251		$	3,049
Total debt to capital		7	%		19	%

1. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants’ total debt calculation.

Net debt to capital ratio

Net debt to capital ratio is net debt divided by total capital, expressed as a percentage. Net debt is calculated as total debt less cash and cash equivalents. Total capital is defined as the sum of net debt plus total equity. We believe disclosing this measure assists readers in understanding our capital structure, financial solvency, and degree of leverage at a point in time. We believe that using net debt in the calculation is helpful because net debt represents the amount of debt obligations that are not covered by available cash and short-term investments.

The following table outlines the composition of the measure.

  ($ millions)

	December 31, 2021			December 31, 2020
Debt
Operating loans	$	—		$	—
Current and long-term lease obligation		28			6
Current and long-term debt		501			509
Interest rate swaps1		1			6
Open letters of credit1		65			50
Total debt		595			571
Cash and short-term investments		(1,568	)		(461	)
Open letters of credit1		(65	)		(50	)
Interest rate swaps1		(1	)		(6	)
Cheques issued in excess of funds on deposit		—			—
Net Debt		(1,039	)		54
Shareholders’ equity		7,656			2,478
Total Capital	$	6,617		$	2,532
Net debt to capital		(16	)%		2	%

1. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants’ total debt calculation.

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Expected capital expenditures

This measure represents our best estimate of the amount of cash outflows relating to additions to capital assets for the upcoming year based on our current outlook. This amount is comprised primarily of various improvement projects and maintenance-of-business expenditures, projects focused on optimization and automation of the manufacturing process, and projects targeted to reduce greenhouse gas emissions. This measure assumes no deterioration in market conditions during the year and that we are able to proceed with our plans on time and on budget. This estimate is subject to the risks and uncertainties identified in this MD&A.

Expected synergies from the Norbord Acquisition

This measure represents our best estimate of the expected revenue and cost synergies from integrating our operations with Norbord. Synergies are being realized from reduced corporate overhead costs, the optimization of sales and transportation, procurement savings and the sharing of operational best practices. This measure assumes we are able to realize the aforementioned anticipated revenue and cost synergies from integrating our operations with Norbord. This estimate is subject to the risks and uncertainties identified in this MD&A.

Glossary of Key Terms

We use the following terms in this MD&A:

Term	Description
2023 Notes	Norbord’s 6.25% senior notes due April 2023
2027 Notes	Norbord’s 5.75% senior notes due July 2027
AAC	Annual allowable cut
ADD	Antidumping duty
Angelina	Angelina Forest Products LLC
Angelina Acquisition	Acquisition of Angelina Forest Products LLC on December 1, 2021
AR	Administrative Review by the USDOC
B.C.	British Columbia
BCTMP	bleached chemithermomechanical pulp
CAD or CAD$	Canadian dollars
CEO	President and Chief Executive Officer
CFO	Vice-President, Finance and Chief Financial Officer
CGU	Cash generating unit
COSO	Committee of Sponsoring Organizations of the Treadway Commission
Crown timber	Timber harvested from lands owned by a provincial government
CVD	Countervailing duty
EDGAR	Electronic Data Gathering, Analysis and Retrieval System
ESG	Environmental, social and governance
EWP	Engineered wood products
GHG	Greenhouse gas
IFRS	International Financial Reporting Standards as issued by the International Accounting Standards Board
LVL	Laminated veneer lumber
MDF	Medium-density fibreboard
NA	North America
NA EWP	North America engineered wood products
NBSK	Northern bleached softwood kraft pulp
NCIB	Normal course issuer bid
NI 52-109	National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings
Norbord	Norbord Inc.
Norbord Acquisition	Acquisition of Norbord completed February 1, 2021
Norbord Notes	2023 Notes and 2027 Notes

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NYSE	New York Stock Exchange
OSB	Oriented strand board
POI	Period of investigation in respect of an USDOC administrative review
PPE	Property, plant, and equipment
Q1-21 or Q1-20	three months ended March 31, 2021 or 2020 and for balance sheet amounts as at March 31, 2021 or 2020
Q2-21 or Q2-20	three months ended June 30, 2021 or 2020 and for balance sheet amounts as at June 30, 2021 or 2020
Q3-21 or Q3-20	three months ended September 30, 2021 or 2020 and for balance sheet amounts as at September 30, 2021 or 2020
Q4-21 or Q4-20	three months ended December 31, 2021 or 2020 and for balance sheet amounts as at December 31, 2021 or 2020
SEDAR	System for Electronic Document Analysis and Retrieval
SIB	Our substantial Issuer bid completed in August 2021
SOX	Section 404 of the Sarbanes-Oxley Act
SPF	Spruce/pine/balsam fir lumber
SYP	Southern yellow pine lumber
TSX	Toronto Stock Exchange
U.K.	United Kingdom
U.S.	United States
USD or $ or US$	United States Dollars
USDOC	United States Department of Commerce
USITC	United States International Trade Commission
YTD-20	Year to date for year ended December 31, 2020
YTD-21	Year to date for year ended December 31, 2021

Forward-Looking Statements

This MD&A includes statements and information that constitutes “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of United States securities laws (collectively, “forward-looking statements”). Forward-looking statements include statements that are forward-looking or predictive in nature and are dependent upon or refer to future events or conditions. We use words such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could” to identify these forward-looking statements. These forward-looking statements generally include statements which reflect management’s expectations regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of West Fraser and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods.

Forward-looking statements included in this MD&A include references to:

Discussion	Forward-Looking Statements
Corporate Strategy	our corporate strategy and objectives to maintain a strong balance sheet and liquidity profile, to maintain a leading cost position and to return capital to shareholders
Recent Developments – Severe Weather and Flooding in B.C.	the timing of when full transportation services will resume or when the backlogs resulting from the interruptions will be cleared
Recent Developments – B.C. Old- Growth Deferrals	the impact of the “old growth” logging deferral in British Columbia
Discussion & Analysis of Annual Results by Product Segment - Lumber Segment-Softwood Lumber Dispute	administrative review commencement, adjustment of export duty rates and proceedings related to duty rates
Business Outlook – Markets	market conditions, demand for our products, impacts of interest rates and transportation constraints

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Business Outlook – Operations	production levels, projected lumber shipments, including the ability to recapture lost 2021 production and shipments in 2022, projected OSB shipments, operating costs, expected synergies from Norbord integration, and the timing for resumption of full transportation services
Business Outlook – Cash Flows	projected cash flows in connection with capital expenditures, Dudley and Chambord ramp ups, dividends and share repurchases
Estimated Earnings Sensitivity to Key Variables	impact of changes in prices and foreign exchange rate on the impact of our earnings
Capital Expenditures	expected production for Dudley plant, Chambord plant, expected capital expenditures, including investment in Allendale OSB plant, and expected project paybacks
Liquidity and Capital Resource Measures	continued access to our available liquidity and credit facilities and anticipated income tax payments relating to 2021
Critical Accounting Estimates and Judgments	estimates and judgements as to administrative review commencement, adjustment of export duty rates and proceedings related to duty rates

By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts, and other forward-looking statements will not occur. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to:

· assumptions in connection with the economic and financial conditions in the U.S., Canada, U.K., Europe and globally and consequential demand for our products;

· risks inherent to product concentration and cyclicality;

· effects of competition and product pricing pressures, including continued access to log supply and fibre resources at competitive prices and the impact of third-party certification standards;

· effects of variations in the price and availability of manufacturing inputs, including continued access to fibre resources at competitive prices and the impact of third-party certification standards;

· availability of transportation services, including truck and rail services, and port facilities, and impacts on transportation services from wildfires and severe weather events;

· various events that could disrupt operations, including natural, man-made or catastrophic events including wildfires and any state of emergency and/or evacuation orders issued by governments and ongoing relations with employees;

· risks inherent to customer dependence;

· impact of future cross border trade rulings or agreements;

· implementation of important strategic initiatives and identification, completion and integration of acquisitions;

· impact of changes to, or non-compliance with, environmental or other regulations;

· the impact of the COVID-19 pandemic on our operations and on customer demand, supply and distribution and other factors

· government restrictions, standards or regulations intended to reduce greenhouse gas emissions;

· changes in government policy and regulation, including against taken by the Government of British Columbia pursuant to recent amendments to forestry legislation and initiatives to defer logging of forests deemed “old growth” and the impact of these actions on our timber supply;

· impact of weather and climate change on our operations or the operations or demand of its suppliers and customers;

· ability to implement new or upgraded information technology infrastructure;

· impact of information technology service disruptions or failures;

· impact of any product liability claims in excess of insurance coverage;

· risks inherent to a capital intensive industry;

· impact of future outcomes of tax exposures;

· potential future changes in tax laws, including tax rates;

· effects of currency exposures and exchange rate fluctuations;

· future operating costs;

· availability of financing, bank lines, securitization programs and/or other means of liquidity;

· continued integration of the Norbord business;

· continued access to timber supply in the traditional territories of Indigenous Nations;

· the risks and uncertainties described above in this MD&A; and

· other risks detailed from time-to-time in our annual information forms, annual reports, MD&A, quarterly reports and material change reports filed with and furnished to securities regulators

In addition, actual outcomes and results of these statements will depend on a number of factors including those matters described under “Risks and Uncertainties” and may differ materially from those anticipated or projected. This list of

70

important factors affecting forward-looking statements is not exhaustive and reference should be made to the other factors discussed in public filings with securities regulatory authorities. Accordingly, readers should exercise caution in relying upon forward-looking statements and we undertake no obligation to publicly update or revise any forward-looking statements, whether written or oral, to reflect subsequent events or circumstances except as required by applicable securities laws.

Additional Information

Additional information on West Fraser, including our Annual Information Form and other publicly filed documents, is available on the Company’s website at www.westfraser.com, on SEDAR at www.sedar.com and on the EDGAR section of the SEC website at www.sec.gov/edgar.shtml.

Where this MD&A includes information from third parties, we believe that such information (including information from industry and general publications and surveys) is generally reliable. However, we have not independently verified any such third-party information and cannot assure you of its accuracy or completeness.

71

West Fraser Timber Co. Ltd.

Consolidated Financial Statements

December 31, 2021 and 2020

72

RESPONSIBILITY OF MANAGEMENT

The management of West Fraser Timber Co. Ltd. (“West Fraser”, “we”, “us” or “our”) is responsible for the preparation, integrity, objectivity and reliability of the consolidated financial statements. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and necessarily include amounts that represent the best estimates and judgments of management.

We maintain a system of internal controls over financial reporting that encompasses policies, procedures and controls to provide reasonable assurance that assets are safeguarded against loss or unauthorized use, transactions are executed and recorded with appropriate authorization and financial records are accurate and reliable.

Our independent auditor, which is appointed by the shareholders upon the recommendation of the Audit Committee and the Board of Directors, has completed its audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and its report follows.

The Board of Directors provides oversight to the financial reporting process through its Audit Committee, which is comprised of five Directors, none of whom is an officer or employee of West Fraser. The Audit Committee meets regularly with representatives of management and of the auditor to review the consolidated financial statements and matters relating to the audit. The auditor has full and free access to the Audit Committee. The Audit Committee reports its findings to the Board of Directors for consideration in approving the consolidated financial statements for issuance to the shareholders.

/s/ Raymond Ferris	/s/ Chris Virostek
Raymond Ferris	Chris Virostek
President and Chief Executive Officer	Vice-President, Finance and Chief Financial Officer
February 15, 2022

73

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of West Fraser Timber Co. Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of West Fraser Timber Co. Ltd. and its subsidiaries (together, the Company) as of December 31, 2021 and 2020 and January 1, 2020, and the related consolidated statements of earnings and comprehensive earnings, changes in shareholders’ equity and cash flows for the years ended December 31, 2021 and 2020, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 and January 1, 2020, and its financial performance and its cash flows for the years ended December 31, 2021 and 2020 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Change in Accounting Principle

As discussed in Note 2 of the consolidated financial statements, during 2021, the Company changed its presentation currency from Canadian dollars to United States dollars.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of acquired customer relationship intangible and property, plant and equipment as a result of the acquisition of Norbord Inc.

As described in Note 3 to the consolidated financial statements, the Company acquired all the outstanding shares of Norbord Inc. (“Norbord”) for total consideration of $3.5 billion on February 1, 2021. Management accounted for the acquisition as a business combination using the acquisition method. Under this method, identifiable assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. As a result, management recorded $470 million and $2.1 billion related to the fair values of the acquired customer relationship intangible and property, plant and equipment, respectively. To determine the fair values, management used the multi-period excess

74

earnings method for the customer relationship intangible and a combination of the market comparison and cost techniques for the property, plant and equipment. Management applied significant judgment in estimating the fair value of the customer relationship intangible when applying the multi-period excess earnings method, which involved the use of key assumptions with respect to forecasted revenues, customer attrition rates, operating margins, and the discount rate. Management also applied significant judgment in estimating the fair value of property, plant and equipment when applying the cost technique, which involved the use of key assumptions with respect to the property, plant and equipment’s estimated useful lives and their replacement cost, which includes adjustments for physical deterioration and functional and economic obsolescence at the date of acquisition.

The principal considerations for our determination that performing procedures relating to the valuation of the customer relationship intangible and property, plant and equipment as a result of the acquisition of Norbord is a critical audit matter are (i) a high degree of auditor judgment and subjectivity in performing procedures relating to the fair value measurement of the customer relationship intangible and property, plant and equipment acquired due to the significant judgment required by management when developing these estimates; (ii) the significant audit effort in evaluating the key assumptions related to forecasted revenues, customer attrition rates, operating margins and the discount rate in relation to the customer relationship intangible, as well as the property, plant and equipment’s estimated useful lives and their replacement cost, which includes adjustments for physical deterioration and functional and economic obsolescence at the date of acquisition; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) reading the purchase agreement and (ii) testing management’s processes for estimating the fair values of the customer relationship intangible and property, plant and equipment. Testing management’s processes included evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of data used in the models and evaluating the reasonableness of the key assumptions used by management in determining these fair values. Evaluating the reasonableness of forecasted revenues, customer attrition rates and operating margins involved considering the past performance of Norbord, as well as economic and industry forecasts. Professionals with specialized skill and knowledge were also used to assist in the evaluation of management’s use of the multi-period excess earnings method and certain key assumptions, including customer attrition rates and the discount rate in relation to the customer relationship intangible. We also used professionals with specialized skill and knowledge to assist in the evaluation of management’s use of the market comparison and cost techniques and certain key assumptions including the property, plant and equipment’s estimated useful lives and their replacement cost including the adjustments for physical deterioration and functional and economic obsolescence used by management when applying the cost technique.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants

Vancouver, British Columbia, Canada

February 15, 2022

We have served as the Company’s auditor since 1973.

75

West Fraser Timber Co. Ltd.

Consolidated Balance Sheets

As at December 31, 2021 and 2020 and January 1, 2020

(in millions of United States dollars, except where indicated)

				Currency remeasurement			Currency   remeasurement
	2021			2020			January 1, 2020
Assets
Current assets
Cash and short-term investments (note 4)	$	1,568		$	461		$	12
Receivables (note 22)		508			277			199
Income taxes receivable		42			8			104
Inventories (note 5)		1,061			578			561
Prepaid expenses		38			12			7
		3,217			1,336			883
Property, plant and equipment (note 6)		4,100			1,657			1,648
Timber licences (note 7)		368			372			380
Goodwill and other intangible assets (note 8)		2,440			591			594
Export duty deposits (note 25)		242			178			61
Other assets (note 9)		58			35			20
Deferred income tax assets (note 18)		8			9			8
	$	10,433		$	4,178		$	3,594
Liabilities
Current liabilities
Cheques issued in excess of funds on deposit	$	—		$	—		$	12
Operating loans (note 12)		—			—			288
Payables and accrued liabilities (note 10)		848			389			305
Current portion of long-term debt (note 12)		—			7			7
Current portion of reforestation and decommissioning obligations (note 11)		46			34			32
Income taxes payable		312			98			—
		1,206			528			644
Long-term debt (note 12)		499			500			500
Other liabilities (note 11)		360			408			350
Deferred income tax liabilities (note 18)		712			264			195
		2,777			1,700			1,689
Shareholders’ Equity
Share capital (note 14)		3,402			481			480
Retained earnings		4,503			2,237			1,697
Accumulated other comprehensive earnings		(249	)		(240	)		(272	)
		7,656			2,478			1,905
	$	10,433		$	4,178		$	3,594

Approved by the Board of Directors

/s/ Reid Carter	/s/ Robert L. Phillips
Reid Carter	Robert L. Phillips
Director	Lead Director

76

West Fraser Timber Co. Ltd.

Consolidated Statements of Earnings and Comprehensive Earnings

For the years ended December 31, 2021 and 2020

(in millions of United States dollars, except where indicated)

				Currency  remeasurement
	2021			2020
Sales	$	10,518		$	4,373
Costs and expenses
Cost of products sold		4,645			2,559
Freight and other distribution costs		846			529
Export duties, net (note 25)		146			57
Amortization		584			203
Selling, general and administration		312			185
Equity-based compensation (note 15)		40			9
		6,573			3,542
Operating earnings		3,945			831
Finance expense, net (note 16)		(45	)		(27	)
Other (note 17)		(2	)		(14	)
Earnings before tax		3,898			790
Tax provision (note 18)		(951	)		(202	)
Earnings	$	2,947		$	588
Earnings per share (dollars) (note 20)
Basic	$	27.03		$	8.56
Diluted	$	27.03		$	8.56
Comprehensive earnings
Earnings	$	2,947		$	588
Other comprehensive earnings
Items that may be reclassified to earnings
Translation loss on operations with different functional currency		(9	)		—
Items that will not be reclassified to earnings
Translation effect on change in reporting currency		—			32
Actuarial gain (loss) on retirement benefits, net of tax (note 13)		153			(7	)
		144			25
Comprehensive earnings	$	3,091		$	613

77

West Fraser Timber Co. Ltd.

Consolidated Statements of Changes in Shareholders’ Equity

For the years ended December 31, 2021 and 2020

(in millions of United States dollars, except where indicated)

	Share Capital								Accumulated
									Other
	Number of				Contributed		Retained		Comprehensive		Total
	shares		Amount		Surplus		Earnings		Earnings		Equity
Balance at January 1, 2020 (currency remeasurement)		68,662,767	$	480	$	—	$	1,697	$	(272)	$	1,905
Earnings for the year		—		—		—		588		—		588
Other comprehensive earnings:
Translation effect on change in reporting currency		—		—		—		—		32		32
Actuarial loss on retirement benefits, net of tax		—		—		—		(7)		—		(7)
Issuance of Common shares (note 14)		15,855		1		—		—		—		1
Dividends declared1		—		—		—		(41)		—		(41)
Balance at December 31, 2020 (currency remeasurement)		68,678,622	$	481	$	—	$	2,237	$	(240)	$	2,478
Earnings for the year		—		—		—		2,947		—		2,947
Other comprehensive earnings:
Translation loss on operations with different functional currency		—		—		—		—		(9)		(9)
Actuarial gain on retirement benefits, net of tax		—		—		—		153		—		153
Acquired equity-settled share option plan (note 15)		—		—		14		—		—		14
Equity-settled share option expense		—		—		1		—		—		1
Conversion of equity-settled share option plan to cash-settled (note 15)		—		—		(15)		—		—		(15)
Issuance of Common shares (note 14)		54,618,586		3,491		—		—		—		3,491
Repurchase of Common shares for cancellation		(17,368,474)		(570)		—		(749)		—		(1,319)
Dividends declared1		—		—		—		(85)		—		(85)
Balance at December 31, 2021		105,928,734	$	3,402	$	—	$	4,503	$	(249)	$	7,656

1. Represents cash dividends declared of CAD$0.80 per share during the year ended December 31, 2020. Cash dividends declared during the year ended December 31, 2021 comprised of CAD$0.70 per share in aggregate for the first three quarters and USD$0.20 per share for the fourth quarter.

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West Fraser Timber Co. Ltd.

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(in millions of United States dollars, except where indicated)

				Currency remeasurement
	2021			2020
Cash provided by operations
Earnings	$	2,947		$	588
Adjustments
Amortization		584			203
Finance expense		45			27
Export duty deposits (note 25)		(55	)		(104	)
Export duty payable (note 25)		69			—
Retirement benefit expense		111			74
Contributions to retirement benefit plans		(77	)		(49	)
Tax provision		951			202
Income taxes (paid) received		(946	)		41
Other		(8	)		4
Changes in non-cash working capital
Receivables		5			(78	)
Inventories		(139	)		(14	)
Prepaid expenses		(14	)		(5	)
Payables and accrued liabilities		79			79
		3,552			968
Cash used for financing
Repayment of long-term debt (note 12)		(667	)		—
Repayment of operating loans		—			(280	)
Finance expense paid		(37	)		(30	)
Make-whole premium paid (note 12)		(60	)		—
Financing fees paid		(4	)		—
Repurchase of Common shares for cancellation (note 14)		(1,319	)		—
Issuance of Common shares (note 14)		7			—
Dividends paid		(75	)		(41	)
Other		(9	)		(2	)
		(2,164	)		(353	)
Cash used for investing
Acquired cash and short-term investments from Norbord Acquisition1		642			—
Angelina Acquisition, net of cash acquired (note 3)		(302	)		—
Additions to capital assets2		(635	)		(180	)
Other		9			14
		(286	)		(166	)
Change in cash		1,102			449
Foreign exchange effect on cash		5			12
Cash - beginning of year		461			—
Cash - end of year	$	1,568		$	461

1. The Norbord Acquisition (note 3) was a non-cash share consideration transaction, and therefore, only the acquired cash is included in the above cash flow. Changes in Norbord’s cash position incurred subsequent to February 1, 2021 are incorporated into our cash flow results.

2. Capital assets are comprised of property, plant and equipment, timber licenses, and intangible assets. Additions to capital assets include $276 million relating to the asset acquisition of the idled OSB mill near Allendale, South Carolina.    

79

West Fraser Timber Co. Ltd.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(figures are in millions of United States dollars, except where indicated)

1. Nature of operations

West Fraser Timber Co. Ltd. (“West Fraser”, the “Company”, “we”, “us” or “our”) is a diversified wood products company with more than 60 facilities in Canada, the United States (“U.S.”), the United Kingdom (“U.K.”), and Europe. From responsibly sourced and sustainably managed forest resources, the Company produces lumber, engineered wood products (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy. West Fraser’s products are used in home construction, repair and remodelling, industrial applications, papers, tissue, and box materials. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange (“TSX”) and on the New York Stock Exchange (“NYSE”) under the symbol WFG.

2. Basis of presentation

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and were approved by our Board of Directors on February 15, 2022.

Our consolidated financial statements have been prepared under the historical cost basis, except for certain items as discussed in the applicable accounting policies.

Change in functional and reporting currency

Determination of functional currency may involve certain judgments to determine the primary economic environment. We reconsider the functional currency of our entities if there is a change in events and conditions which determine the primary economic environment. We have determined that, as a result of the acquisition of Norbord Inc. (the “Norbord Acquisition”), the functional currency of our Canadian operations has changed from Canadian dollars (“CAD” or “CAD$”) to United States dollars (“USD” or “US$”). We considered a variety of factors when making this decision, the most significant being an increase in the level of sales made in USD, a portion of operating expenses being incurred in USD, and increased levels of USD financing.

Concurrent with the change in functional currency, we also changed our reporting currency from CAD to USD. This change in reporting currency is to better reflect our business activities, following the increased presence in the U.S. as a result of the Norbord Acquisition and in connection with the listing of West Fraser’s common shares on the NYSE on February 1, 2021.

A change in functional currency is applied prospectively and must be based on a change in economic facts, events and conditions. In contrast, a change in reporting currency requires retroactive restatement. Both changes have specific transition rules under IAS 21, The Effects of Changes in Foreign Exchange Rates (“IAS 21”).

As at and for the year ended December 31, 2020 and all prior periods, our functional and reporting currency was CAD as described in our audited annual consolidated financial statements. The currency remeasurement of our results applied the IAS 21 transitional rules.

To prepare our December 31, 2020 and January 1, 2020 consolidated balance sheets, all assets and liabilities were translated into USD at the closing exchange rate on December 31, 2020 and December 31, 2019 respectively, as listed below. Equity items were retroactively restated at historical exchange rates to give effect to the change in reporting currency. The accounting policy used to translate the equity items prior to 2020 was to use the annual average exchange rate for each equity transaction that occurred in the year. For 2020, equity items were translated quarterly using the average exchange rate for each quarter.

To prepare our 2020 consolidated statement of earnings, all revenues and expenses were translated into USD at the average exchange rate for each quarter, with no adjustments to the measurement of or accounting for previously reported results. To prepare our 2020 consolidated statement of cash flow, all items were translated into USD at the average exchange rate for each quarter, with no adjustments to the measurement of or accounting for previously reported results.

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The exchange rates used to reflect the change in reporting currency were as follows:

CAD - USD exchange rate	Q1-20	Q2-20	Q3-20	Q4-20	Q4-19
Closing rate	0.7049	0.7338	0.7497	0.7854	0.7699
Average rate	0.7443	0.7221	0.7508	0.7676	n/a

Accounting policies

Accounting policies that relate to the consolidated financial statements as a whole are incorporated in this note. Where an accounting policy is applicable to a specific note disclosure, the policy is described within the respective note.

Basis of consolidation

These consolidated financial statements include the accounts of West Fraser and its wholly-owned subsidiaries after the elimination of intercompany transactions and balances.

Our material subsidiaries are West Fraser Mills Ltd. and Norbord Inc. Our 50%-owned joint operations, Alberta Newsprint Company and Cariboo Pulp & Paper Company, are accounted for by recognizing our share of the assets, liabilities, revenues, and expenses related to these joint operations.

Use of estimates and judgments

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual amounts could differ materially from these and other estimates, the impact of which would be recorded in future periods. Management is also required to exercise judgment in the process of applying accounting policies. Information about the significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes:

· Note 2 – Determination of functional currency

· Note 3 – Fair value of PPE and intangible assets acquired in business combinations

· Note 5 – Valuation of inventories

· Note 6 – Recoverability of PPE

· Note 6 – Estimated useful lives of PPE

· Note 8 – Recoverability of goodwill

· Note 11 – Reforestation and decommissioning obligations

· Note 13 – Defined benefit pension plans

· Note 15 – Equity-based compensation

· Note 18 – Income taxes

· Note 25 – CVD and ADD duty dispute

Revenue recognition

Revenue is derived primarily from product sales and is recognized when a customer obtains control over the goods. The timing of transfer of control to customers varies depending on individual terms of the sales contract. For most of our sales, control is obtained by the customer when the product is loaded on a common carrier at our mill. Some of our revenue is recognized when the product is delivered to the customer or when it is loaded on an ocean carrier. The amount of revenue recognized is net of our estimate for early payment discounts and volume rebates.

Revenue includes charges for freight and handling. The costs related to these revenues are recorded in freight and other distribution costs.

Foreign currency translation effective from February 1, 2021

The consolidated financial statements are presented in USD, which was determined to be the functional currency of our U.S. operations, and the majority of our Canadian operations.

For these entities, all transactions not denominated in our U.S. functional currency are considered to be foreign currency transactions. Foreign currency-denominated monetary assets and liabilities are translated using the rate of exchange prevailing at the reporting date. Gains or losses on translation of these items are included in earnings and reported as

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Other. Foreign currency denominated non-monetary assets and liabilities, measured at historic cost, are translated at the rate of exchange at the transaction date.

Our European operations have British pound sterling and Euro functional currencies and our Canadian newsprint operation has a Canadian dollar functional currency. Assets and liabilities of these entities are translated at the rate of exchange prevailing at the reporting date, and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of shareholders’ equity in accumulated other comprehensive earnings.

Impairment of capital assets

We assess property, plant and equipment, timber licences, and other definite-lived intangibles for indicators of impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment testing is applied to individual assets or cash generating units (“CGUs”), the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets. We have identified each of our mills as a CGU for impairment testing unless there is economic interdependence of CGUs, in which case they are grouped for impairment testing.

When a triggering event is identified, recoverability of long-lived assets is assessed by comparing the carrying amount of the asset or CGU to the estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal or its value in use.

Fair value less costs of disposal is determined by ascertaining the price that would be received to sell an asset in an orderly transaction between market participants under current market conditions, less incremental costs directly attributable to the disposal. Value in use is determined by measuring the pre-tax cash flows expected to be generated from the asset over its estimated useful life discounted by a pre-tax discount rate.

Where an impairment loss for long-lived assets subsequently reverses, the carrying amount of the asset or CGU is increased to the lesser of the revised estimate of its recoverable amount and the carrying amount that would have been recorded had no impairment loss been previously recognized.

Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurement are observable and the significance of the inputs. Our fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value.

The three levels of the fair value hierarchy are:

Level 1

Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2

Values based on inputs other than quoted prices that are observable for the asset or liability, directly or indirectly.

Level 3

Values based on valuation techniques that require inputs which are both unobservable and significant to the overall fair value measurement.

Accounting standards, amendments and interpretations issued but not yet applied

There are no standards or amendments or interpretations to existing standards issued but not yet effective which are expected to have a material impact on our consolidated financial statements.

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3. Business acquisitions

Accounting policies

Business combinations are accounted for using the acquisition method. We measure goodwill at the acquisition date as the fair value of the consideration transferred less the fair value of the identifiable assets acquired and liabilities assumed. The determination of the fair value of the assets acquired and liabilities assumed requires management to use estimates that contain uncertainty and critical judgments. Transaction costs in connection with business combinations are expensed as incurred.

Valuation techniques utilized

We engaged a valuations expert to assist with the determination of estimated fair value for acquired working capital, property, plant and equipment, and intangible assets.

We applied the market comparison technique and cost technique in determining the fair value of acquired property, plant, and equipment. We considered market prices for similar assets when they were available, and depreciated replacement cost in other circumstances. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. The key assumptions used in the estimation of depreciated replacement cost are the asset’s estimated replacement cost at the time of acquisition and estimated useful life.

We applied the multi-period excess earnings method in determining the fair value of the customer relationship intangible recognized in the Norbord Acquisition. The multi-period excess earnings method considers the present value of incremental after-tax cash flows expected to be generated by the customer relationship after deducting contributory asset charges. The key assumptions used in applying the valuation technique include: the forecasted revenues relating to Norbord’s existing customers at the time of acquisition, the forecasted attrition rates relating to these customers, forecasted operating margins, and the discount rate.

Supporting Information

Norbord acquisition

On February 1, 2021, we acquired all of the outstanding shares of Norbord Inc. (“Norbord”). According to the terms of the Norbord Acquisition, Norbord shareholders received 0.675 of a West Fraser share for each Norbord share held. The result was the issuance of 54,484,188 Common shares of West Fraser at a price of US$63.90 per share (CAD$81.94 per share) for $3,482 million. The price per share was based on the West Fraser Common shares’ closing price as listed on the TSX on January 29, 2021, and a CAD-USD exchange rate of 0.7798.

Included in the Norbord Acquisition are five OSB mills in Canada, seven OSB mills in the U.S., one OSB mill, one MDF plant and two particleboard plants in the U.K., one OSB mill in Belgium, and their related corporate offices.

We have incorporated the North American operations of Norbord into our Panels segment and renamed that segment North America (“NA”) Engineered Wood Products (“EWP”). This segment includes the results from North American operations for OSB, plywood, MDF, and LVL. In addition, we have identified a Europe EWP segment, which includes the results from the U.K. and Belgium operations for OSB, MDF and particleboard. The EWP segments have been separated due to differences in the operating region, customer base, profit margins and sales volumes.

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The Norbord Acquisition has been accounted for as an acquisition of a business in accordance with IFRS 3, Business Combinations. We have allocated the purchase price based on our estimated fair value of the assets acquired and the liabilities assumed as follows:

West Fraser purchase consideration:
Fair value of West Fraser shares issued	$	3,482
Fair value of equity-based compensation instruments		24
	$	3,506
Fair value of net assets acquired:
Cash and short-term investments	$	642
Accounts receivable		232
Inventories		334
Prepaid expenses		12
Property, plant and equipment		2,088
Timber licenses		10
Other non-current assets		6
Other intangibles		17
Customer relationship intangible		470
Goodwill		1,339
Payables and accrued liabilities		(301)
Income tax payable		(155)
Current portion of reforestation and decommissioning obligations		(2)
Long-term debt		(720)
Other non-current liabilities		(36)
Deferred income tax liabilities		(430)
	$	3,506

Balances that required significant fair value adjustments for purchase price accounting included inventory, property, plant and equipment, and customer relationship intangibles. The resulting goodwill and deferred income tax liabilities were also significant.

Factors contributing to goodwill include the Norbord workforce and assets that are geographically complementary to our existing facilities and offer close access to large markets and timber baskets. The Norbord Acquisition also provides increased scale and geographic diversification of manufacturing and markets. The goodwill of $1,339 million is not deductible for tax purposes.

Acquisition costs of $17 million have been expensed in selling, general and administration.

Angelina Forest Products acquisition

On December 1, 2021, we acquired the Angelina Forest Products (“Angelina Acquisition” or “Angelina”) lumber mill located in Lufkin, Texas for preliminary cash consideration of $310 million. This acquisition has been accounted for as an

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acquisition of a business in accordance with IFRS 3, Business Combinations. We have allocated the purchase price based on our preliminary estimated fair value of the assets acquired and the liabilities assumed as follows:

West Fraser purchase consideration:
Cash consideration1	$	310
Preliminary fair value of net assets acquired:
Cash	$	8
Accounts receivable		7
Inventories		11
Property, plant and equipment		213
Goodwill		78
Payables and accrued liabilities		(7)
	$	310

1. A net outflow comprising the cash consideration of $310 million net of cash acquired of $8 million is presented in the consolidated statements of cash flows.

Purchase consideration is preliminary as at December 31, 2021, subject to finalization of certain post-close working capital adjustments. Our valuation of property, plant and equipment and intangibles remains preliminary as at December 31, 2021.

Factors contributing to goodwill include the Angelina workforce and assets that are geographically complementary to our existing facilities and offer close access to large markets and timber baskets. The goodwill of $78 million is deductible for tax purposes.

We have incorporated the mill into our Lumber segment. Acquisition costs were nominal and have been expensed in selling, general, and administration.

Financial Results

The following tables represent the actual results of Norbord and Angelina included in our statement of earnings and the proforma results of operations for the year ended December 31, 2021. The proforma results assume the Norbord Acquisition and the Angelina Acquisition occurred on January 1, 2021, and that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on January 1, 2021.

	Norbord Results for		Angelina Results for
Results Attributable to Acquired Businesses	February 1 to		December 1 to
($ millions)	December 31, 20211,3		December 31, 20212,3		Total
Sales	$	4,175	$	15	$	4,190
Operating earnings		1,915		1		1,916
Earnings		1,427		1		1,428

1. Represents the results of the Norbord operations since the acquisition date that are included in our results.

2. Represents the results of the Angelina operations since the acquisition date that are included in our results.

3. Operating earnings and earnings Include purchase price accounting impacts of $93 million expense and $2 million expense for the one-time inventory adjustments in cost of products sold relating to the Norbord Acquisition and Angelina Acquisition, respectively.

	West Fraser Actual		Norbord Proforma		Angelina Proforma		West Fraser
Proforma 2021 Results	Results2		Results1		Results1		Proforma Results1,2
($ millions)	2021		Jan-21		Jan-21 to Nov-21		2021
Sales	$	10,518	$	277	$	163	$	10,958
Operating earnings		3,945		115		61		4,121
Earnings		2,947		86		57		3,090

1. These unaudited proforma results have been provided as required per IFRS 3 - Business Combinations. West Fraser proforma YTD-21 presents West Fraser’s results as if the Norbord Acquisition and Angelina Acquisition were completed on January 1, 2021.

2. Operating earnings and earnings include purchase price accounting impacts of $93 million expense and $2 million expense for the one-time inventory adjustments in cost of products sold relating to the Norbord Acquisition and Angelina Acquisition, respectively.

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4. Cash and short-term investments

Accounting policies

Cash and short-term investments consist of cash on deposit and short-term interest-bearing securities maturing within three months of the date of purchase.

Supporting information

			Currency		Currency
			remeasurement		remeasurement
	2021		2020		January 1, 2020
Cash	$	847	$	434	$	10
Short-term investments		721		27		2
	$	1,568	$	461	$	12

5. Inventories

Accounting policies

Inventories are valued at the lower of cost and net realizable value, with cost determined on an average cost basis. The cost of finished goods inventories includes direct material, direct labour, and an allocation of overhead.

Supporting information

			Currency		Currency
			remeasurement		remeasurement
	2021		2020		January 1, 2020
Manufactured products	$	448	$	270	$	263
Logs and other raw materials		403		189		173
Processing materials and supplies		210		119		125
	$	1,061	$	578	$	561

Inventories at December 31, 2021 were subject to a valuation reserve of $6 million (December 31, 2020 - $2 million; January 1, 2020 - $30 million) to reflect net realizable value being lower than cost.

The carrying amount of inventory recorded at net realizable value was $42 million at December 31, 2021 (December 31, 2020 - $21 million; January 1, 2020 - $140 million), with the remaining inventory recorded at cost.

6. Property, plant and equipment

Accounting policies

Property, plant and equipment are recorded at historical cost, less accumulated amortization and impairment losses. Expenditures for additions and improvements are capitalized. Borrowing costs are capitalized when the asset construction period exceeds 12 months and the borrowing costs are directly attributable to the asset. Expenditures for maintenance and repairs are charged to earnings. Upon retirement, disposal, or destruction of an asset, the cost and related amortization are derecognized and any resulting gain or loss is included in earnings.

Property, plant and equipment are amortized on a straight-line basis over their estimated useful lives as follows:

Buildings	10 - 30 years
Manufacturing plant, equipment and machinery	6 - 25 years
Fixtures, mobile and other equipment	2 - 10 years
Roads and bridges	Not exceeding 40 years
Major maintenance shutdowns	1 - 2 years

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Construction-in-progress includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for its intended use. Construction-in-progress is not depreciated. Once the asset is complete and available for use, the construction-in-progress balance is transferred to the appropriate category of property, plant and equipment, and depreciation commences.

Supporting Information

	Manufacturing plant, equipment and machinery			Construction- in-progress			Roads and     bridges			Other			Total
As at January 1, 2020 (currency remeasurement)	$	1,435		$	141		$	39		$	33		$	1,648
Additions		117			47			10			—			174
Amortization1		(165	)		—			(13	)		—			(178	)
Foreign exchange		13			—			1			—			14
Disposals		(1	)		—			—			—			(1	)
Transfers		50			(50	)		—			—			—
As at December 31, 2020 (currency remeasurement)	$	1,449		$	138		$	37		$	33		$	1,657
As at December 31, 2020 (currency remeasurement)
Cost	$	3,738		$	138		$	132		$	39		$	4,047
Accumulated amortization		(2,289	)		—			(95	)		(6	)		(2,390	)
Net	$	1,449		$	138		$	37		$	33		$	1,657
As at December 31, 2020 (currency remeasurement)	$	1,449		$	138		$	37		$	33		$	1,657
Acquisitions (note 3)		2,163			118			—			20			2,301
Additions2		472			173			17			3			665
Amortization1		(497	)		—			(13	)		—			(510	)
Foreign exchange		(8	)		(1	)		—			—			(9	)
Disposals		(4	)		—			—			—			(4	)
Transfers		176			(176	)		—			—			—
As at December 31, 2021	$	3,751		$	252		$	41		$	56		$	4,100
As at December 31, 2021
Cost	$	6,500		$	252		$	140		$	62		$	6,954
Accumulated amortization		(2,749	)		—			(99	)		(6	)		(2,854	)
Net	$	3,751		$	252		$	41		$	56		$	4,100

1. Amortization of $506 million relates to cost of products sold and $4 million relates to selling, general and administration expense (2020 - $175 million and $3 million, respectively).

2. Manufacturing plant, equipment and machinery includes $276 million relating to the acquisition of the idled OSB mill near Allendale, South Carolina.

7. Timber licences

Accounting policies

Timber licences, which are renewable or replaceable, are recorded at historical cost, less accumulated amortization and impairment losses. Timber licenses are amortized on a straight-line basis over their estimated useful lives of 40 years.

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Supporting information

	Timber licences
As at January 1, 2020 (currency remeasurement)	$	380
Am Amortization1		(15	)
Foreign exchange		7
As at December 31, 2020 (currency remeasurement)	$	372
As at December 31, 2020 (currency remeasurement)
Cost	$	629
Accumulated amortization		(257	)
Net	$	372
As at December 31, 2020 (currency remeasurement)	$	372
Acquisitions (note 3)		10
Additions		2
Amortization1		(16	)
As at December 31, 2021	$	368
As at December 31, 2021
Cost	$	641
Accumulated amortization		(273	)
Net	$	368

1. Amortization relates to cost of products sold.

8. Goodwill and other intangibles

Accounting policies

Goodwill represents the excess purchase price paid for a business acquisition over the fair value of the net assets acquired. Goodwill is tested annually for impairment, or more frequently if an indicator of impairment is identified.

The customer relationship intangible asset relates to the Norbord Acquisition and is amortized straight-line over 10 years.

Other intangibles are recorded at historical cost less accumulated amortization and impairments. Other intangibles include software which is amortized over periods of up to five years and non-replaceable finite term timber rights which are amortized as the related timber volumes are logged.

Goodwill is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the business combination from which it arose. The allocation is based on the lowest level at which goodwill is monitored internally.

Recoverability of goodwill is assessed by comparing the carrying value of the CGU or group of CGUs associated with the goodwill balance to its estimated recoverable amount, which is the higher of its estimated fair value less costs of disposal or its value in use.

An impairment write down is recorded if the carrying value exceeds the estimated recoverable amount. Goodwill impairment losses cannot be reversed.

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Supporting information

	Goodwill		Customer Relationship Intangible		Other		Total
As at January 1, 2020 (currency remeasurement)	$	554	$	—	$	40	$	594
Additions		—		—		2		2
Amortization1		—		—		(10)		(10)
Foreign exchange		5		—		—		5
As at December 31, 2020 (currency remeasurement)	$	559	$	—	$	32	$	591
As at December 31, 2020 (currency remeasurement)
Cost	$	559	$	—	$	62	$	621
Accumulated amortization		—		—		(30)		(30)
Net	$	559	$	—	$	32	$	591
As at December 31, 2020 (currency remeasurement)	$	559	$	—	$	32	$	591
Acquisitions (note 3)		1,417		470		17		1,904
Additions		—		—		7		7
Amortization1		—		(43)		(15)		(58)
Foreign exchange		(1)		(1)		—		(2)
Disposals		—		—		(2)		(2)
As at December 31, 2021	$	1,975	$	426	$	39	$	2,440
As at December 31, 2021
Cost	$	1,975	$	469	$	79	$	2,523
Accumulated amortization		—		(43)		(40)		(83)
Net	$	1,975	$	426	$	39	$	2,440

1. Amortization of $1 million relates to cost of products sold and $57 million relates to selling, general and administration expense (2020 - $2 million and $8 million, respectively).

Goodwill

For the purposes of impairment testing, goodwill has been allocated to the following CGU groups:

			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Canadian lumber	$	171	$	171	$	167
US lumber		429		352		352
North America EWP1		1,280		36		35
Europe EWP		95		—		—
Total	$	1,975	$	559	$	554

1. Prior to the Norbord Acquisition, the goodwill balances related to a CGU group comprised of our plywood and LVL operations.

The recoverable amounts of the above CGU groups were determined based on their value in use. Cash flow forecasts were based on internal estimates for 2022 and estimated mid-cycle earnings for subsequent years. Key assumptions include production volume, product pricing, raw material input cost, production cost, and discount rate. Key assumptions were determined using external sources and historical data from internal sources. Specifically, product pricing has been estimated by reference to average historical prices as well as third-party analyst projections of long-term product pricing. Pre-tax discount rates used ranged from 11.3% to 13.1%.

The estimated recoverable amounts of the CGU groups exceeded their respective carrying amounts and as such, no impairment losses were recognized for the year ended December 31, 2021 (2020 - nil).

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9. Other assets

			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Retirement assets (note 13)	$	27	$	5	$	4
Other		31		30		16
	$	58	$	35	$	20

10. Payables and accrued liabilities

			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Trade accounts	$	411	$	198	$	160
Accruals on capital spending		52		15		19
Customer rebates accruals		51		3		5
Equity-based compensation (note 15)		69		52		25
Compensation		172		61		42
Export duties (note 25)		11		13		14
Dividends		21		11		11
Interest		4		4		4
Lease obligation -current portion		11		2		—
Accrued sales and city taxes		26		10		8
Other		20		20		17
	$	848	$	389	$	305

11. Other liabilities

			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Retirement liabilities (note 13)	$	168	$	295	$	242
Long-term portion of reforestation		59		58		57
Long-term portion of decommissioning		25		24		24
Export duties (note 25)		69		—		—
Interest swap contracts (note 12)		1		6		2
Other		38		25		25
	$	360	$	408	$	350

Reforestation and decommissioning obligations

Reforestation and decommissioning obligations relate to our responsibility for reforestation under various timber licences and our obligations related to landfill closure and other site remediation costs.

Accounting policies

Reforestation obligations are measured at the present value of the expenditures expected to be required to settle the obligations and are accrued and charged to earnings when timber is harvested. The reforestation obligation is accreted over time through charges to finance expense and reduced by silviculture expenditures. The reforestation obligation is reviewed at least annually, and changes to estimates are credited or charged to earnings.

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We record a liability for decommissioning obligations, such as landfill closures, in the period a reasonable estimate can be made. The liability is determined using estimated closure costs and discounted using an appropriate discount rate. On initial recognition, the carrying value of the liability is added to the carrying amount of the associated asset and amortized over its useful life or expensed when there is no related asset. The liability is accreted over time through charges to finance expense and reduced by actual costs of settlement. Decommissioning obligations are reviewed annually and changes to estimates result in an adjustment of the carrying amount of the associated asset or, where there is no asset, they are credited or charged to earnings.

Reforestation and decommissioning obligations are discounted at the risk-free rate at the balance sheet date and accreted over time through periodic charges to earnings. The liabilities are reduced by actual costs of settlement.

Supporting information

	Reforestation				Decommissioning
			Currency remeasurement				Currency remeasurement
	2021		2020		2021		2020
Beginning of year	$	88	$	88	$	28	$	24
Norbord Acquisition (note 3)		5		—		—		—
Liabilities recognized		39		40		—		2
Liabilities settled		(49)		(43)		(1)		(2)
Change in estimates		14		1		5		4
Foreign exchange		—		2		1		—
End of year		97		88		33		28
Less: current portion		(38)		(30)		(8)		(4)
	$	59	$	58	$	25	$	24

The total undiscounted amount of the estimated cash flows required to satisfy these obligations is $133 million (December 31, 2020 - $119 million; January 1, 2020 - $122 million). The cash flows have been discounted using interest rates ranging from 0.95% to 1.25% (2020 - 0.20% to 0.39%).

The timing of the reforestation payments is based on the estimated period required to attain free to grow status in a given area, which is generally between 12 to 15 years. Payments relating to landfill closures and site remediation are expected to occur over periods ranging up to 50 years.

12. Operating loans and long-term debt

Accounting policies

Transaction costs related to debt financing or refinancing are deferred and amortized over the life of the associated debt. When our operating loan is undrawn, the related deferred financing costs are recorded in other assets.

Supporting information

Operating loans

On February 1, 2021, concurrent with the closing of the Norbord Acquisition, we completed various administrative amendments to our CAD$850 million committed revolving credit facility and our US$200 million term loan. The CAD$150 million committed revolving credit facility was also replaced with a US$450 million committed revolving credit facility due April 2024 on substantially the same terms.

On July 28, 2021, we completed an amendment to our revolving credit facilities. Our CAD$850 million and US$450 million revolving credit facilities were combined into a single US$1 billion committed revolving credit facility with a five-year term. There were no other significant changes to the terms or conditions of the credit facilities.

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As at December 31, 2021, our credit facilities consisted of a $1 billion committed revolving credit facility which matures July 2026, a $25 million demand line of credit dedicated to our U.S. operations and a $6 million (CAD$8 million) demand line of credit dedicated to our jointly-owned newsprint operation.

As at December 31, 2021, our revolving credit facilities were undrawn (December 31, 2020 - undrawn) and the associated deferred financing costs of $1 million (December 31, 2020 - $2 million) were recorded in other assets. Interest on the facilities is payable at floating rates based on Prime, Base Rate Advances, Bankers’ Acceptances, or London Inter-Bank Offered Rate (“LIBOR”) Advances at our option. At January 1, 2020, $288 million (net of deferred financing costs of $2 million) was drawn under our revolving credit facilities.

In addition, we have credit facilities totalling $137 million (December 31, 2020 - $101 million; January 1, 2020 - $69 million) dedicated to letters of credit. Letters of credit in the amount of $65 million (December 31, 2020 - $50 million; January 1, 2020 - $47 million) were supported by these facilities.

All debt is unsecured except the $6 million (CAD$8 million) jointly-owned newsprint operation demand line of credit, which is secured by that joint operation’s current assets.

As at December 31, 2021, we were in compliance with the requirements of our credit facilities.

Long-term debt

			Currency		Currency
			remeasurement		remeasurement
	2021		2020		January 1, 2020
Senior notes due October 2024; interest at 4.35%	$	300	$	300	$	300
Term loan due August 2024; floating interest rate		200		200		200
Note payable due March 2021; interest at 2%		—		7		7
Notes payable		1		2		3
		501		509		510
Less: deferred financing costs		(2)		(2)		(3)
Less: current portion		—		(7)		(7)
	$	499	$	500	$	500

As part of the Norbord Acquisition, we assumed Norbord’s $315 million senior notes due April 2023 (the “2023 Notes”), bearing interest at 6.25% and $350 million senior notes due July 2027 (the “2027 Notes”), bearing interest at 5.75%. The purchase price fair value adjustment resulted in an increase of $55 million for these notes. On March 2, 2021, we made a mandatory change of control offer for 2023 Notes and 2027 Notes, which expired on April 1, 2021. As a result of the change of control offer, $1 million of the 2023 Notes and $1 million of the 2027 Notes were redeemed and were repaid in the second quarter of 2021. On April 6, 2021, we elected to redeem the remaining 2027 Notes, which redemption occurred on May 6, 2021. On May 6, 2021, we elected to redeem the remaining 2023 Notes, which redemption occurred on June 7, 2021. After the completion of the redemptions of the 2023 Notes and the 2027 Notes, the principal value of long-term debt was reduced by $665 million from the date of the Norbord Acquisition. An additional make-whole premium of $60 million was paid on redemption resulting in a $5 million loss on settlement of the debt recorded within finance expense as the carrying value of $720 million was derecognized.

Required principal repayments are disclosed in note 22.

Interest rate swap contracts

At December 31, 2021, we had interest rate swap contracts to pay fixed interest rates (weighted average interest rate of 1.14%) and receive variable interest rates equal to 3-month LIBOR on $200 million notional principal amount of indebtedness. These interest rate swap agreements fix the interest rate on the $200 million term loan floating rate debt disclosed in the long-term debt table above. These agreements terminate in August 2024.

The interest rate swap contracts are accounted for as a derivative, with the related changes in the fair value included in Other. The fair value of the interest rate swap contracts at December 31, 2021 was a liability of $1 million (December 31,

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2020 - liability of $6 million; January 1, 2020 - liability of $2 million). The 2021 impact of the change in fair value of these contracts was a $6 million gain (2020 - $4 million loss).

13. Retirement benefits

We maintain defined benefit and defined contribution pension plans covering most of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.

The defined benefit pension plans are operated in Canada, the U.S., and Europe under broadly similar regulatory frameworks. The majority are funded arrangements where benefit payments are made from plan assets that are held in trust. Responsibility for the governance of the plans, including investment and contribution decisions, resides with our Retirement Committees which report to the Human Resources & Compensation Committee of the Board of Directors. For the registered defined benefit pension plans, regulations set minimum requirements for contributions for benefit accruals and the funding of deficits.

Starting January 1, 2022, defined benefit pension plans for certain employee groups were closed to new entrants and were replaced by a defined contribution scheme.

Accounting policies

We record a retirement asset or liability for our employee defined benefit pension and other retirement benefit plans by netting our plan assets with our plan obligations, on a plan-by-plan basis.

The cost of defined benefit pensions and other retirement benefits earned by employees is actuarially determined using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yields from high quality corporate bonds with cash flows that approximate expected benefit payments at the balance sheet date. Plan assets are valued at fair value at each balance sheet date.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity through other comprehensive earnings in the period in which they arise.

Past service costs arising from plan amendments are recognized immediately. The finance amount on net retirement balances is classified as finance expense.

A gain or loss on settlement is recognized in earnings, calculated as the difference between the present value of the defined benefit obligation being settled, as determined on the date of settlement, and the settlement amount.

For defined contribution plans, pension expense is the amount of contributions we are required to make in respect of services rendered by employees.

Supporting information

The actual return on plan assets for 2021 was a gain of $132 million (2020 - $69 million). The total pension expense for the defined benefit pension plans was $89 million (2020 - $68 million). In 2021, we made contributions to our defined benefit pension plans of $46 million (2020 - $35 million). We expect to make cash contributions of approximately $47 million to our defined benefit pension plans during 2022 based on the most recent valuation report for each pension plan. We also provide group life insurance, medical and extended health benefits to certain employee groups, for which we contributed $1 million in 2021 (2020 - $1 million).

In 2021, we entered into annuity purchase agreements to settle $215 million of our defined benefit obligations by purchasing annuities using our plan assets. These agreements transferred the pension obligations of retired employees under certain pension plans to financial institutions. The difference between the cost of the annuity purchase and the liabilities held for these pension plans was reflected as a settlement cost in Other.

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The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:

	Defined benefit				Other retirement
	pension plans				benefit plans
			Currency				Currency
			remeasurement				remeasurement
	2021		2020		2021		2020
Accrued benefit obligations
Benefit obligations - opening	$	1,443	$	1,277	$	28	$	27
Norbord Acquisition (note 3)		165		—		1		—
Service cost		68		59		—		—
Finance cost on obligation		43		38		1		1
Benefits paid		(54)		(38)		(1)		(1)
Actuarial (gain) loss due to change in financial assumptions		(101)		47		(2)		1
Actuarial (gain) loss due to demography/experience		(2)		(1)		(4)		—
Settlement		(215)		1		—		—
Foreign exchange1		8		60		—		—
Benefit obligations - ending	$	1,355	$	1,443	$	23	$	28
Plan assets
Plan assets - opening	$	1,181	$	1,067	$	—	$	—
Norbord Acquisition (note 3)		155		—		—		—
Finance income on plan assets		36		31		—		—
Actual return on plan assets, net of finance income		96		38		—		—
Employer contributions		46		35		1		1
Benefits paid		(54)		(38)		(1)		(1)
Settlement		(227)		—		—		—
Other		(3)		—		—		—
Foreign exchange1		9		48		—		—
Plan assets - ending	$	1,239	$	1,181	$	—	$	—
Funded status2
Retirement assets	$	29	$	5	$	—	$	—
Impact of minimum funding requirement3		(2)		—		—		—
Retirement assets (note 9)	$	27	$	5	$	—	$	—
Retirement liabilities (note 11)		(145)		(267)		(23)		(28)
	$	(118)	$	(262)	$	(23)	$	(28)

1. Foreign currency translation relates to the foreign exchange impact of translating assets and liabilities of certain plans from their functional currencies to U.S. dollars.

2. Plans in a surplus position are presented as assets and plans in a deficit position are presented as liabilities on the consolidated balance sheets. Other retirement benefit plans continue to be unfunded.

3. Certain of our plans have a surplus that is not recognized on the basis that future economic benefits may not be available to us in the form of a reduction in future contributions or a cash refund.

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	Defined benefit pension plans				Other retirement benefit plans
			Currency remeasurement				Currency   remeasurement
	2021		2020		2021		2020
Expense
Service cost	$	68	$	59	$	—	$	—
Administration fees		2		1		—		—
Settlement		12		1		—		—
Net finance expense		7		7		1		1
	$	89	$	68	$	1	$	1

Assumptions and sensitivities

At December 31, 2021, the weighted average duration of the defined benefit pension obligations is 20 years (December 31, 2020 - 19 years). The projected future benefit payments for the defined benefit pension plans at December 31, 2021 are as follows:

	2022		2023		2024 to 2026		Thereafter		Total
Defined benefit pension plans	$	40	$	39	$	130	$	2,159	$	2,368

Key assumptions used in determining defined benefit pension and other retirement pension benefit obligations include assumed rates of increase for future employee compensation and discount rates. These estimates are determined with the assistance of independent actuarial specialists.

The significant actuarial assumptions used to determine our balance sheet date retirement assets and liabilities and our retirement benefit plan expenses are as follows:

	Defined benefit pension plans				Other retirement benefit plans
	2021		2020		2021		2020
Benefit obligations:
Discount rate		3.03%		2.69%		3.08%		2.70%
Future compensation rate increase		3.60%		3.65%		n/a		n/a
Benefit expense:
Discount rate - beginning of year		2.69%		3.00%		2.70%		3.00%
Future compensation rate increase		3.65%		3.50%		n/a		n/a

Health-care benefit costs, shown under other retirement benefit plans, are funded on a pay-as-you-go basis. The actuarial assumptions for extended health-care costs are estimated to increase 6.25% in year one, grading down by 0.25% per year for years two to seven, to 4.50% per year thereafter.

The impact of a change in these assumptions on our retirement obligations as at December 31, 2021 is as follows:

	Increase		Decrease
Discount rate - 0.50% change	$	(123)	$	140
Compensation rate - 0.50% change	$	27	$	(22)

The sensitivities have been calculated on the basis that all other variables remain constant. When calculating the sensitivity of the defined benefit obligation, the same methodology is applied as was used to determine the retirement assets and liabilities.

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Plan Assets

The assets of the defined benefit pension plans are invested predominantly in a diversified range of equities, pooled funds and bonds. The weighted average asset allocations of the defined benefit plans at December 31, by asset category, are as follows:

	Target range	2021	2020
Canadian equities	2% - 30%	16%	22%
Foreign equities	15% - 57%	39%	38%
Fixed income investments	20% - 55%	33%	33%
Other investments	0% - 34%	12%	7%
		100%	100%

Risk management practices

We are exposed to various risks related to our defined benefit pension and other retirement benefit plans:

· Uncertainty in benefit payments: The value of the liability for retirement benefits will ultimately depend on the amount of benefits paid and this in turn will depend on the level of future compensation increase and life expectancy.

· Volatility in asset value: We are exposed to changes in the market value of pension plan investments which are required to fund future benefit payments.

· Uncertainty in cash funding: Movement in the value of the assets and obligations may result in increased levels of cash funding, although changes in the level of cash funding required can be spread over several years. We are also exposed to changes in pension regulation and legislation.

Our Retirement Committees manage these risks in accordance with a Statement of Investment Policies and Procedures for each pension plan or group of plans administered under master trust agreements. The following are some specific risk management practices employed:

· Retaining and monitoring professional advisors including an outsourced chief investment officer (“OCIO”).

· Monitoring our OCIO’s adherence to asset allocation guidelines and permitted categories of investments.

· Monitoring investment decisions and performance of the OCIO and asset performance against benchmarks.

Defined contribution plans

The total pension expense and funding contributions for the defined contribution pension plans for 2021 was $29 million (2020 - $13 million).

14.    Share capital

Authorized

400,000,000 Common shares, without par value

20,000,000 Class B Common shares, without par value

10,000,000 Preferred shares, issuable in series, without par value

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Issued

	2021				2020				January 1, 2020
							Currency     remeasurement				Currency     remeasurement
	Number		Amount		Number		Amount		Number		Amount
Common		103,647,256	$	3,402		66,397,144	$	481		66,381,289	$	480
Class B Common		2,281,478		—		2,281,478		—		2,281,478		—
Total Common		105,928,734	$	3,402		68,678,622	$	481		68,662,767	$	480

As part of the Norbord Acquisition, we issued 54,484,188 Common shares of West Fraser at a price of US$63.90 per share (CAD$81.94 per share) for $3,482 million. The price per share was based on the West Fraser Common shares’ closing price as listed on the TSX on January 29, 2021, and a CAD-USD exchange rate of 0.7798.

For the year ended December 31, 2021, we issued 131,452 Common shares under our share option plans (2020 - 1,000 Common shares) and 2,946 Common shares under our employee share purchase plan (2020 - 14,855 Common shares).

Rights and restrictions of Common shares

Our Class B Common shares are equal in all respects to our Common shares, including the right to dividends and the right to vote, and are exchangeable on a one-for-one basis for Common shares. Our Common shares are listed for trading on the TSX and NYSE, while our Class B Common shares are not. Certain circumstances or corporate transactions may require the approval of the holders of our Common shares and Class B Common shares on a separate class by class basis.

On February 1, 2021, West Fraser listed its Common shares on the NYSE and began trading under the symbol WFG. At the same time, the symbol on the TSX was also changed to WFG.

Share repurchases

On February 17, 2021, we renewed our normal course issuer bid (“NCIB”) allowing us to acquire an additional 6,044,000 Common shares for cancellation until the expiry of the bid on February 16, 2022. On June 11, 2021, we amended our NCIB, allowing us to acquire an additional 3,538,470 Common shares for an aggregate of 9,582,470 Common shares. For the year ended December 31, 2021, we repurchased 7,059,196 Common shares at an average price of US$74.60 (CAD$92.79) per share under this NCIB.

On August 20, 2021, we completed a substantial issuer bid pursuant to which we purchased for cancellation a total of 10,309,278 common shares at a price of CAD$97.00 (US$76.84) per Common share for an aggregate purchase price of CAD$1.0 billion.

15. Equity-based compensation

We have share option, phantom share unit (“PSU”) and directors’ deferred share unit (“DSU”) plans. We have partially hedged our exposure under these plans with an equity derivative contract. The equity derivative contract matured in December 2021 and was closed out. The equity-based compensation expense included in the consolidated statement of earnings for the year ended December 31, 2021 was $40 million (2020 - $9 million).

Accounting policies

We estimate the fair value of outstanding share options using the Black-Scholes valuation model and the fair value of our PSU plan and directors’ DSU plan using an intrinsic valuation model at each balance sheet date. We record the resulting expense or recovery, over the related vesting period, through a charge or recovery to earnings.

From time to time, we enter into equity derivative contracts to provide a partial offset to our exposure to fluctuations in equity-based compensation from our stock option, PSU and DSU plans. These derivatives are fair valued at each balance sheet date using an intrinsic valuation model and the resulting expense or recovery is offset against the related equity-based compensation. If a share option holder elects to acquire Common shares, both the exercise price and the accrued liability are credited to shareholders’ equity.

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Supporting information

Share option plan

Under our share option plan, officers and employees may be granted options to purchase up to 8,295,940 Common shares, of which 1,025,337 remain available for issuance. This includes the 1,000,000 increase in Common shares that may be issued on the exercise of options that was approved by our shareholders on January 19, 2021.

Our share option plans include equity-based plans assumed from Norbord as part of the Norbord Acquisition. The assumed Norbord share purchase option plans (“Assumed Option Plans”) were fair valued at the Norbord Acquisition date. From February 1 to April 20, 2021, the Assumed Option Plans were accounted for as equity-settled plans. On April 20, 2021, our board of directors approved a change to allow the Assumed Option Plans holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. The change required us to fair value the Assumed Option Plan on April 20, 2021 and convert from equity-based accounting to cash-settled accounting for the Assumed Option Plans. Cash-settled accounting is consistent with the West Fraser option plan. Any changes in fair value from April 20, 2021 onwards resulted in an expense or recovery over the vesting period in the same manner as the rest of our option plans. This change to the Assumed Option Plans did not in any way affect the value of the instruments to the holders. No additional options may be offered under the Assumed Option Plans.

The exercise price of a share option is the closing price of a Common share on the trading day immediately preceding the grant date. Our share option plans give the share option holders the right to elect to receive a cash payment in lieu of exercising an option to purchase Common shares. Options vest at the earlier of the date of retirement or death and 20% per year from the grant date and expire after 10 years. The Assumed Option Plans are similar except the options do not vest upon retirement and instead continue to vest at 20% per year.

In 2021, we have recorded an expense of $47 million (2020 – expense of $20 million) related to the share option plans. The liability associated with the share option plan is tracked in Canadian dollars and is based on prices published by the TSX. A summary of the activity in the share option plans based on Canadian dollar prices is presented below:

	2021				2020
	Number		Weighted   average price		Number		Weighted average price
			(CAD$)				(CAD$)
Outstanding - beginning of year		1,316,994	$	53.64		1,211,137	$	51.78
Assumed in Norbord Acquisition (note 3)		887,961		51.85		—		—
Granted		171,975		92.79		160,410		64.53
Exercised		(1,284,284)		46.43		(49,689)		43.45
Expired / Cancelled		(14,806)		92.79		(4,864)		55.74
Outstanding - end of year		1,077,840	$	66.64		1,316,994	$	53.64
Exercisable - end of year		563,102	$	61.50		991,119	$	49.58

The following table summarizes information about the share options outstanding and exercisable at December 31, 2021 in Canadian dollars:

Exercise price range	Number of outstanding options		Weighted average remaining contractual life	Weighted average exercise price		Number of exercisable options		Weighted average exercise price
(CAD$)	(number)		(years)	(CAD$)		(number)		(CAD$)
$32.00 - $45.00		105,391	3.7	$	40.86		105,391	$	40.86
$46.00 - $60.00		344,640	6.0		54.18		200,703		53.90
$61.00 - $75.00		373,454	6.6		68.97		173,956		70.99
$76.00 - $93.00		254,355	8.0		89.97		83,052		86.21
		1,077,840	6.4	$	66.64		563,102	$	61.50

The weighted average share price at the date of exercise for share options exercised during the year was CAD$100.85 per share (2020 - CAD$69.73 per share).

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The accrued liability related to the share option plan based on a Black-Scholes valuation model was $44 million at December 31, 2021 (December 31, 2020 - $37 million; January 1, 2020 - $17 million). The weighted average fair value of the options used in the calculation was CAD$52.29 per option at December 31, 2021 (December 31, 2020 - CAD$35.74 per option).

The inputs to the option model are as follows:

	2021		2020
Share price on balance sheet date		CAD$120.68		CAD$81.72
Weighted average exercise price		CAD$66.64		CAD$53.64
Expected dividend		CAD$1.01		CAD$0.80
Expected volatility		42.94%		44.52%
Weighted average interest rate		1.11%		0.26%
Weighted average expected remaining life in years		6.44		2.81

The expected dividend on our shares was based on the annualized dividend rate at each period end. Expected volatility was based on five years of historical data. The interest rate for the life of the options was based on the implied yield available on government bonds with an equivalent remaining term at each period-end. Historical data was used to estimate the expected life of the options and forfeiture rates.

The intrinsic value of options issued under the share option plan at December 31, 2021 was CAD$33 million (December 31, 2020 - CAD$37 million; January 1, 2020 - CAD$14 million). The intrinsic value is determined based on the difference between the period end share price and the exercise price, multiplied by the sum of the related vested options.

Phantom share unit plan

Our PSU plan is intended to supplement, in whole or in part, or replace the granting of share options as long-term incentives for officers and employees. The plan provides for two types of units which vest on the third anniversary of the grant date. A restricted share unit pays out based on the Common share price over the 20 trading days immediately preceding its vesting date (the “vesting date value”). A performance share unit pays out at a value between 0% and 200% of its vesting date value contingent upon our performance relative to a peer group of companies over the three-year performance period. Officers and employees granted units under the plan are also entitled to additional units to reflect cash dividends paid on Common shares from the applicable grant date until payout.

We have recorded an expense of $11 million (2020 - $5 million) related to the PSU plan. The number of units outstanding as at December 31, 2021 was 169,385 (December 31, 2020 – 111,262), including performance share units totalling 90,813 (December 31, 2020 – 81,825).

Directors’ deferred share unit plan

We have a DSU plan which provides a structure for directors, who are not employees of the Company, to accumulate an equity-like holding in West Fraser. The DSU plan allows directors to participate in the growth of West Fraser by providing a deferred payment based on the five-day weighted average Common share price at the time of redemption. Each director receives deferred share units in payment of an annual equity retainer until a minimum equity holding is reached and may elect to receive units in payment of up to 100% of other fees earned. After a minimum equity holding is reached, directors may elect to receive the equity retainer in units or cash. The units are issued based on our five-day weighted average Common share price at the time of issue. Additional units are issued to take into account the value of dividends paid on Common shares from the date of issue to the date of redemption. Units are redeemable only after a director retires, resigns or otherwise leaves the board. The redemption value is equal to the five-day weighted average Common share price at the date of redemption. A holder of units may elect to redeem units in cash or receive Common shares having an equivalent value.

We have recorded an expense of $5 million (2020 - $2 million) related to the DSU plan. The number of units outstanding as at December 31, 2021 was 92,120 (December 31, 2020 - 87,294).

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Equity-based compensation hedge

Our equity derivative contract provided an offset for 1,000,000 Common share equivalents against our exposure to fluctuations in equity-based compensation expense from our stock option, PSU and DSU plans. A recovery of $23 million (2020 – recovery of $18 million) is included in equity-based compensation expense related to our equity derivative contract. The equity derivative contract matured in December 2021 and was closed out.

16. Finance expense, net

			Currency remeasurement
	2021		2020
Interest expense		$          (48)	$	(32)
Interest income on short-term investments (note 4)		2		1
Interest income on duty deposits receivable (note 25)		9		13
Finance expense on employee future benefits		(8)		(9)
		$          (45)	$	(27)
17.  Other
			Currency remeasurement
	2021		2020
Foreign exchange loss		$            (5)	$	(4)
Settlement loss on defined benefit pension plan annuity purchase (note 13)		(12)		—
Gain (loss) on interest rate swap contracts (note 12)		6		(4)
Other		9		(6)
		$            (2)	$	(14	)

18. Tax provision

Accounting policies

Tax expense for the period is comprised of current and deferred tax. Tax expense is recognized in the consolidated statement of earnings, except to the extent that it relates to items recognized in other comprehensive earnings in which case it is recognized in other comprehensive earnings.

Deferred taxes are provided for using the liability method. Under this method, deferred taxes are recognized for temporary differences between the tax and financial statement basis of assets, liabilities and certain carry-forward items.

Deferred tax assets are recognized only to the extent that it is probable that they will be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of substantive enactment.

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Supporting information

The major components of income tax included in comprehensive earnings are as follows:

			Currency       remeasurement
	2021		2020
Earnings:
Current tax		$             (977)	$	(134	)
Deferred tax		26		(68	)
Tax provision on earnings		$             (951)	$	(202	)
Other comprehensive earnings:
Deferred tax (provision) recovery on retirement benefit actuarial gain (loss)		$               (52)	$	2
Tax provision on comprehensive earnings		$          (1,003)	$	(200	)

The tax provision differs from the amount that would have resulted from applying the B.C. statutory income tax rate to earnings before tax is as follows:

							Currency     remeasurement
				2021			2020
Income tax expense at statutory rate of 27%				$	(1,052	)	$	(213	)
Non-taxable amounts					(4	)		(5	)
Rate differentials between jurisdictions and on specified activities					116			21
Other					(11	)		(5	)
Tax provision				$	(951	)	$	(202	)
Deferred income tax liabilities (assets) are made up of the following components:
				Currency remeasurement			Currency     remeasurement
	2021			2020			January 1, 2020
Property, plant, equipment and intangibles	$	781		$	347		$	309
Reforestation and decommissioning obligations		(30	)		(28	)		(26	)
Employee benefits		(64	)		(87	)		(67	)
Export duty deposits		44			46			15
Tax loss carry-forwards1		(10	)		(14	)		(41	)
Other		(17	)		(9	)		(3	)
	$	704		$	255		$	187
Represented by:
Deferred income tax assets	$	(8	)	$	(9	)	$	(8	)
Deferred income tax liabilities		712			264			195
	$	704		$	255		$	187

1. Includes $68 million for net operating loss carry-forwards in various jurisdictions and $409 million for U.S. state net operating loss carry-forwards. A portion of these losses expire over various periods starting in 2022. Deferred tax assets for net operating losses and other carry-forward attributes totaling $75 million have not be recognized as at December 31, 2021.

19. Employee compensation

Our employee compensation expense includes salaries and wages, employee future benefits, termination costs and bonuses. Total compensation expense is $1,070 million (2020 - $699 million).

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Key management includes directors and officers, and their compensation expense and balance sheet date payables are as follows:

			Currency     remeasurement
	2021		2020
Expense
Salary and short-term employee benefits	$	17	$	7
Retirement benefits		2		1
Equity-based compensation1		36		17
	$	55	$	25

1.  Amounts do not necessarily represent the actual value which will ultimately be paid.
			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Payables and accrued liabilities
Compensation	$	7	$	3	$	—
Equity-based compensation1		46		32		16
	$	53	$	35	$	16

1. Amounts do not necessarily represent the actual value which will ultimately be paid.

20. Earnings per share

Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.

Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity-settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share.

				Currency     remeasurement
	2021			2020
Earnings
Basic	$	2,947		$	588
Share option expense		47			20
Equity-settled share option adjustment		(5	)		(2	)
Diluted	$	2,989		$	606
Weighted average number of shares (thousands)
Basic		109,021			68,672
Share options		539			191
Diluted		109,560			68,863
Earnings per share (dollars)
Basic	$	27.03		$	8.56
Diluted	$	27.03		$	8.56

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21. Government assistance

Accounting policies

Government assistance received that relates to the construction of manufacturing assets is applied to reduce the cost of those assets. Government assistance received that relates to operational expenses is applied to reduce the amount charged to earnings for the operating item. Government assistance is recognized when there is reasonable assurance that the amount will be collected and that all the conditions will be complied with.

Supporting information

Government assistance of $5 million (2020 - $3 million) was recorded as a reduction to property, plant and equipment.

Government assistance of $8 million (2020 - $5 million) was recorded as a reduction to cost of products sold and $7 million (2020 - nil) to Other. The government assistance related primarily to research and development, apprenticeship tax credits, renewable heat incentives and a U.S. federal new market tax credit.

22. Financial instruments

Accounting policies

All financial assets and liabilities, except for derivatives, are initially measured at fair value and subsequently measured at amortized cost using the effective interest rate method. Derivatives are measured at fair value through profit or loss (“FVTPL”).

Supporting information

The following tables provide the carrying and fair values of our financial instruments by category, as well as the associated fair value hierarchy levels as defined in note 2 under “Fair value measurements”. The carrying amount is a reasonable approximation of fair value for cash and short-term investments, receivables, and payables and accrued liabilities. The carrying values of long-term debt include any current portions and exclude deferred financing costs.

2021	Level		Financial assets at amortized cost		Financial assets or financial liabilities at FVTPL		Financial liabilities at amortized cost		Carrying value		Fair value
Financial assets
Cash and short-term investments		2	$	1,568	$	—	$	—	$	1,568	$	1,568
Receivables		3		508		—		—		508		508
			$	2,076	$	—	$	—	$	2,076	$	2,076
Financial liabilities
Payables and accrued liabilities		3	$	—	$	—	$	848	$	848	$	848
Long-term debt (note 12)1		2		—		—		501		501		513
Interest rate swaps (note 11 & 12)2		2		—		1		—		1		1
			$	—	$	1	$	1,349	$	1,350	$	1,362

1. The fair value of long-term debt is based on rates available to us at December 31, 2021 for long-term debt with similar terms and remaining maturities.

2. The interest rate swap contracts are included in other liabilities in our consolidated balance sheets.

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2020  (currency remeasurement)	Level		Financial assets at amortized cost		Financial assets or financial liabilities at FVTPL		Financial liabilities at amortized cost		Carrying value		Fair value
Financial assets
Cash and short-term investments		2	$	461	$	—	$	—	$	461	$	461
Receivables		3		277		—		—		277		277
			$	738	$	—	$	—	$	738	$	738
Financial liabilities
Payables and accrued liabilities1		3	$	—	$	2	$	387	$	389	$	389
Long-term debt (note 12)2		2		—		—		509		509		524
Interest rate swaps (note 11 & 12)3		2		—		6		—		6		6
			$	—	$	8	$	896	$	904	$	919

1. Payables and accrued liabilities include our equity derivative payable of $2 million

2. The fair value of long-term debt is based on rates available to us at December 31, 2020 for long-term debt with similar terms and remaining maturities.

3. The interest rate swap contracts are included in other liabilities in our consolidated balance sheets.

January 1, 2020  (currency remeasurement)	Level		Financial assets at amortized cost		Financial assets or financial liabilities at FVTPL		Financial liabilities at amortized cost		Carrying value		Fair value
Financial assets
Cash and short-term investments		2	$	12	$	—	$	—	$	12	$	12
Receivables1		3		197		2		—		199		199
			$	209	$	2	$	—	$	211	$	211
Financial liabilities
Cheques issued in excess of funds on deposit		2	$	—	$	—	$	12	$	12	$	12
Operating loans		2		—		—		290		290		290
Payables and accrued liabilities		3		—		—		305		305		305
Long-term debt (note 12)2		2		—		—		510		510		521
Interest rate swaps (note 11 & 12)3		2		—		2		—		2		2
			$	—	$	2	$	1,117	$	1,119	$	1,130

1. Receivables include our equity derivative receivable of $2 million.

2. The fair value of long-term debt is based on rates available to us at January 1, 2020 for long-term debt with similar terms and remaining maturities.

3. The interest rate swap contracts are included in other liabilities in our consolidated balance sheets.

Financial risk management

Our activities result in exposure to a variety of financial risks, and the main objectives of our risk management process are to ensure risks are properly identified and analyzed and establish appropriate risk limits and controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and our activities. We are exposed to credit risk, liquidity risk and market risk. A description of these risks and policies for managing these risks are summarized below.

The sensitivities provided in this section give the effect of possible changes in the relevant prices and rates on earnings. The sensitivities are hypothetical and should not be considered to be predictive of future performance or earnings. Changes in fair values or cash flows based on market variable fluctuations cannot be extrapolated since the relationship between the change in the market variable and the change in fair value or cash flows may not be linear.

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Credit risk

Credit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. We are exposed to credit risk with respect to cash and short-term investments and accounts receivable from our customers. The carrying amounts of these accounts represent the maximum credit exposure. We manage credit risk by holding cash and short-term investments with major banks of high creditworthiness. Credit risk for trade and other receivables is managed through established credit monitoring activities such as:

· Establishing and monitoring customer credit limits;

· Performing ongoing evaluations of key customer financial conditions; and

· In certain market areas, undertaking additional measures to reduce credit risk including credit insurance, letters of credit and prepayments. At December 31, 2021, approximately 35% of trade accounts receivable was covered by at least some of these additional measures. (December 31, 2020 - 24%, January 1, 2020 - 40%).

Given our credit monitoring activities, the low percentage of overdue accounts and our history of minimal customer defaults, we consider the credit quality of the trade accounts receivable at December 31, 2021 to be high and have recorded nominal expected credit losses on our trade accounts receivable. The aging analysis of trade accounts receivable is presented below:

			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Trade accounts receivable
Current	$	403	$	220	$	150
Past due 1 to 30 days		30		22		9
Past due 31 to 60 days		3		1		—
Past due over 60 days		5		1		—
Trade accounts receivable	$	441	$	244	$	159
Insurance receivable		6		—		9
Government assistance		1		5		5
Sales taxes receivable		28		11		8
Other		32		17		18
Receivables	$	508	$	277	$	199

Liquidity risk

Liquidity risk is the risk we will encounter difficulty in meeting obligations associated with financial liabilities. We manage liquidity risk by maintaining adequate cash and short-term investment balances and having lines of credit available. In addition, we regularly monitor forecasted and actual cash flows. Refinancing risks are managed by extending maturities through regular renewals and refinancing when market conditions are supportive.

The following table summarizes the maturity profile of our financial liabilities based on contractual undiscounted payments:

(at December 31, 2021, in $ millions)	Carrying value		Total		2022		2023		2024		2025		Thereafter
Long-term debt	$	499	$	501	$	—	$	—	$	501	$	—	$	—
Interest on long-term debt1		—		52		19		19		14		—		—
Lease obligations		28		29		11		6		5		2		5
Payables and accrued liabilities		848		848		848		—		—		—		—
Total	$	1,375	$	1,430	$	878	$	25	$	520	$	2	$	5

1. Assumes debt remains at December 31, 2021 levels and includes the impact of interest rate swaps terminating August 2024.

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Market risk

Market risk is the risk of loss that might arise from changes in market factors such as interest rates, foreign exchange rates, and commodity prices. We aim to manage market risk acceptable parameters and may, from time to time, use derivatives to manage market risk. No energy related derivatives, lumber futures, or foreign exchange contracts were outstanding at December 31, 2021 or 2020.

Interest rates

Interest rate risk relates mainly to floating interest rate debt. By maintaining a mix of fixed and floating rate debt along with interest rate swap contracts, we mitigate the exposure to interest rate changes.

As at December 31, 2021, we had the following floating rate financial instruments:

Financial instrument	Carrying       value
Term loan	$	199
Interest rate swap contracts	$	1

We maintain a five-year term $200 million term loan due August 2024 where the interest on the facilities is payable at floating rates based on Prime, Base Rate Advances, Bankers’ Acceptances or LIBOR Advances at our option.

We also have interest rate swap agreements terminating August 2024 to pay fixed interest rates and receive variable interest rates equal to 3-month LIBOR on $200 million notional principal amount of indebtedness. These swap agreements fix the interest rate on the $200 million five-year term loan floating rate debt.

At December 31, 2021, the impact of a 100-basis point change in interest rate affecting our floating rate debt would not result in a change in annual interest expense.

We initially adopted Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) (“The Phase 2 Amendments”) effective January 1, 2021. The Phase 2 Amendments provide practical relief from certain requirements in IFRS Standards relating to the modification of financial instruments, lease contracts, or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate.

At December 31, 2021, these amendments did not affect our financial statements as we have not yet transitioned any agreements that are exposed to LIBOR or to an alternative benchmark interest rate.

The above financial instruments are based on LIBOR settings that are currently scheduled to cease publication after June 30, 2023. We are working with the lenders associated with the term loan and the counterparties associated with the interest rate swap to assess the potential alternatives to the use of LIBOR. We will continue to monitor developments on alternative benchmark interest rates and expect to transition to alternative rates as widespread market practice is established.

Currency risk

On February 1, 2021, West Fraser determined that as a result of the Norbord Acquisition, the functional currency of our Canadian operations had changed from CAD to USD.

We are exposed to foreign currency risk because our Canadian operations incur a portion of their operating expenses in Canadian dollars. Therefore, an increase in the value of the CAD relative to the USD increases the value of expenses in USD terms incurred by our Canadian operations, which reduces operating margin and the cash flow available to fund operations.

In addition, foreign currency exposure arises from our net investment in our European operations, which have British pound sterling and Euro functional currencies, and our Canadian newsprint operation, which has a Canadian dollar functional currency. The risk arises from the fluctuation in spot rates between these currencies and the U.S. dollar, which causes the amount of the net investment to vary with the resulting translation gains or losses being reported in other comprehensive earnings.

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The following table summarizes quantitative data about our exposure to currency risk:    

		2021
Net Canadian dollar monetary asset (liability)	CAD millions	$	(665	)
Net investment in newsprint operations	CAD millions		46
Net investment in European operations	GBP millions		308
Net investment in European operations	EUR millions		45

A $0.01 strengthening (weakening) of the USD against the CAD would increase (decrease) the earnings by approximately $3 million. A $0.01 strengthening (weakening) of the USD against the CAD, British pound and Euro would result in an approximate $6 million translation loss (gain) on operations with different functional currency included in other comprehensive earnings. These sensitivities assume that all other variables remain constant and ignores any impact of forecast sales and purchases.

23. Capital disclosures

Our business is cyclical and is subject to significant changes in cash flow over the business cycle. In addition, financial performance can be materially influenced by changes in product prices and the relative values of the Canadian and U.S. dollars. Our objective in managing capital is to ensure adequate liquidity and financial flexibility at all times, particularly at the bottom of the business cycle.

Our main policy relating to capital management is to maintain a strong balance sheet and otherwise meet financial tests that rating agencies commonly apply for investment-grade issuers of public debt. Our debt is currently rated as investment-grade by three major rating agencies.

We monitor and assess our financial performance to ensure that debt levels are prudent, taking into account the anticipated direction of the business cycle. When financing acquisitions, we combine cash on hand, debt, and equity financing in a proportion that is intended to maintain an investment-grade rating for debt throughout the cycle. Debt repayments are arranged, where possible, on a staggered basis that takes into account the uneven nature of anticipated cash flows. We have established committed revolving lines of credit that provide liquidity and flexibility when capital markets are restricted.

A strong balance sheet and liquidity profile are key elements of our goal to maintain a balanced capital allocation strategy. Priorities within this strategy include reinvesting in our operations across all market cycles to strategically enhance productivity, product mix, and capacity; maintain a leading cost position; maintain financial flexibility to capitalize on growth opportunities, including the pursuit of acquisitions and larger-scale strategic growth initiatives; and return capital to shareholders through dividends and share repurchases.

Two key measurements used to monitor our capital position is total debt to total capital and net debt to total capital, calculated as follows at December 31:

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			Currency remeasurement		Currency remeasurement
	2021		2020		January 1, 2020
Debt
Operating loans, excluding deferred financing costs	$	—	$	—	$	290
Current and long-term lease obligation		28		6		8
Long-term debt, excluding deferred financing costs		501		509		510
Interest rate swaps1		1		6		2
Open letters of credit1		65		50		47
Total debt		595		571		857
Shareholders’ equity		7,656		2,478		1,905
Total capital		8,251		3,049		2,762
Total debt to total capital		7%		19%		31%
Total debt		595		571		857
Cash and short-term investments		(1,568)		(461)		(12)
Open letters of credit1		(65)		(50)		(47)
Interest rate swaps1		(1)		(6)		(2)
Cheques issued in excess of funds on deposit		—		—		12
Net debt	$	(1,039)	$	54	$	808
Shareholders’ equity	$	7,656	$	2,478	$	1,905
Total capital, net of cash		6,617		2,532		2,713
Net debt to total capital		(16%)		2%		30%

1. Letters of credit facilities and the fair value of interest rate swaps are part of our bank covenants’ total debt calculation.

24. Segment and geographical information

The segmentation of manufacturing operations into lumber, NA EWP, pulp and paper and Europe EWP is based on a number of factors, including similarities in products, production processes and economic characteristics. The EWP segments have been separated due to differences in the operating region, customer base, profit margins and sales volumes. Transactions between segments are at market prices and on standard business terms. The segments follow the accounting policies described in these consolidated financial statement notes, where applicable, and earnings before tax has been identified as the measure of segment profit and loss.

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January 1, 2021 to December 31, 2021	Lumber		NA EWP		Pulp &     Paper		Europe     EWP		Corporate  & Other		Total
Sales
To external customers	$	4,804	$	4,264	$	727	$	723	$	—	$	10,518
To other segments		106		9		—		—		(115)		—
	$	4,910	$	4,273	$	727	$	723	$	(115)	$	10,518
Cost of products sold		(2,241)		(1,521)		(541)		(457)		115		(4,645)
Freight and other distribution costs		(404)		(262)		(137)		(43)		—		(846)
Export duties, net		(146)		—		—		—		—		(146)
Amortization		(164)		(289)		(34)		(88)		(9)		(584)
Selling, general and administration		(146)		(76)		(34)		(22)		(34)		(312)
Equity-based compensation		—		—		—		—		(40)		(40)
Operating earnings	$	1,809	$	2,125	$	(19)	$	113	$	(83)	$	3,945
Finance expense, net		(17)		(3)		(5)		(1)		(19)		(45)
Other		2		(1)		2		—		(5)		(2)
Earnings before tax	$	1,794	$	2,121	$	(22)	$	112	$	(107)	$	3,898
Total assets	$	3,557	$	4,154	$	448	$	953	$	1,321	$	10,433
Total liabilities	$	668	$	552	$	99	$	223	$	1,235	$	2,777
Capital expenditures1	$	146	$	424	$	35	$	28	$	2	$	635

1. NA EWP capital expenditures includes $276 million relating to the asset acquisition of the idled OSB mill near Allendale, South Carolina.

January 1, 2020 to December 31, 2020  (currency remeasurement)	Lumber		NA EWP		Pulp &     Paper		Europe     EWP		Corporate  & Other		Total
Sales
To external customers	$	3,258	$	467	$	648	$	—	$	—	$	4,373
To other segments		98		7		—		—		(105)		—
	$	3,356	$	474	$	648	$	—	$	(105)	$	4,373
Cost of products sold		(1,871)		(303)		(490)		—		105		(2,559)
Freight and other distribution costs		(361)		(42)		(126)		—		—		(529)
Export duties, net		(57)		—		—		—		—		(57)
Amortization		(151)		(13)		(31)		—		(8)		(203)
Selling, general and administration		(128)		(22)		(33)		—		(2)		(185)
Equity-based compensation		—		—		—		—		(9)		(9)
Operating earnings	$	788	$	94	$	(32)	$	—	$	(19)	$	831
Finance expense, net		(17)		(4)		(6)		—		—		(27)
Other		(2)		5		(8)		—		(9)		(14)
Earnings before tax	$	769	$	95	$	(46)	$	—	$	(28)	$	790
Total assets	$	3,138	$	249	$	432	$	—	$	359	$	4,178
Total liabilities	$	520	$	45	$	130	$	—	$	1,005	$	1,700
Capital expenditures	$	149	$	10	$	19	$	—	$	2	$	180

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The geographic distribution of non-current assets and external sales is as follows:

			Non-current assets				Sales by geographic area1
			Currency remeasurement		Currency remeasurement				Currency remeasurement
	2021		2020		January 1, 2020		2021		2020
Canada	$	3,825	$	1,654	$	1,577	$	1,682	$	853
United States		2,838		1,188		1,134		7,286		2,860
China		—		—		—		465		467
Other Asia		—		—		—		341		174
Europe2,3		553		—		—		737		17
Other		—		—		—		7		2
	$	7,216	$	2,842	$	2,711	$	10,518	$	4,373

1. Sales distribution is based on the location of product delivery.

2. 2021 non-current assets balance includes non-current assets located in the U.K. and Belgium.

3. Sales balances includes sales to the U.K.

25. Countervailing (“CVD”) and antidumping (“ADD”) duty dispute

On November 25, 2016, a coalition of U.S. lumber producers petitioned the U.S. Department of Commerce (“USDOC”) and the U.S. International Trade Commission (“USITC”) to investigate alleged subsidies to Canadian softwood lumber producers and levy CVD and ADD duties against Canadian softwood lumber imports. The USDOC chose us as a “mandatory respondent” to both the countervailing and antidumping investigations, and as a result, we have received unique company-specific rates.

Accounting policy

The CVD and ADD rates apply retroactively for each POI. We record CVD as export duty expense at the cash deposit rate until an AR finalizes a new applicable rate for each period of investigation (“POI”). We record ADD as export duty expense by estimating the rate to be applied for each POI by using our actual results and a similar calculation methodology as the USDOC and adjust when an AR finalizes a new applicable rate for each POI. The difference between the cash deposits and export duty expense is recorded on our balance sheet as export duty deposits receivable or other liabilities as applicable, along with any adjustments to finalized rates.

The difference between the cash deposit amount and the amount that would have been due based on the final AR rate will incur interest based on the U.S. federally published interest rate. We record interest income on our duty deposits receivable, net of any interest expense on our duty deposits payable, based on this rate.

Developments in CVD and ADD rates

We began paying CVD and ADD duties in 2017 based on the USDOC’s determination of duties payable. The CVD and ADD cash deposit rates are updated based on the USDOC’s AR for each POI, as summarized in the tables below. Following year-end, the USDOC amended the CVD cash deposit rate for ministerial errors from 5.06% to 5.08%, effective January 10, 2022.

The USDOC finalized the CVD and ADD duty expense rates for the AR1 and AR2 POIs in 2020 and 2021 respectively, as summarized in the tables below. Finalization of administrative reviews relating to active POIs are expected approximately two years after the POI in question.

AR3 (POI January 1 to December 31, 2020) commenced in April 2021, and the rates are expected to be finalized in August 2022. AR4 (POI January 1 to December 31, 2021) is expected to commence in 2022 with the results finalized in 2023. We have been selected as a mandatory respondent for AR3, which will result in West Fraser continuing to be subject to a company-specific rate.

On January 31, 2022, the USDOC released the preliminary results from AR3 POI covering the 2020 calendar year, which indicated a rate of 8.46% for CVD and 4.63% for ADD for West Fraser. The duty rates are subject to an appeal process, and we will record an adjustment once the rates are finalized. If the AR3 rates were to be confirmed, it would result in a U.S. dollar recovery of $43 million for the POI covered by AR3. This adjustment would be in addition to the amounts

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already recorded on our balance sheet. If these rates are finalized, our combined cash deposit rate would be revised to 13.09%.

The respective Cash Deposit Rates, the AR POI Final Rate, and the West Fraser Estimated ADD Rate for each period are as follows:

Effective dates for CVD	Cash Deposit Rate		AR POI Final Rate
AR1 POI
April 28, 2017 - August 24, 20171		24.12%		6.76% 3
August 25, 2017 - December 27, 20171		—		—
December 28, 2017 - December 31, 20172		17.99%		6.76% 3
January 1, 2018 - December 31, 2018		17.99%		7.57% 3
AR2 POI
January 1, 2019 - December 31, 2019		17.99%		5.08% 5
AR3 POI
January 1, 2020 - November 30, 2020		17.99%		n/a 6
December 1, 2020 - December 31, 20204		7.57%		n/a 6
AR4 POI
January 1, 2021 - December 1, 2021		7.57%		n/a 7
December 2, 2021 - December 31, 20218		5.06%		n/a 7

1. On April 24, 2017, the USDOC issued its preliminary rate in the CVD investigation. The requirement that we make cash deposits for CVD was suspended on August 24, 2017, until the USDOC published the Revised Rate.

2. On December 4, 2017, the USDOC revised our CVD Cash Deposit Rate effective December 28, 2017.

3. On February 3, 2020, the USDOC issued a preliminary CVD rate and, on November 24, 2020, a final CVD rate for the AR1 POI. This table only reflects the final rate.

4. On November 24, 2020, the USDOC revised our CVD Cash Deposit Rate effective December 1, 2020.

5. On May 20, 2021, the USDOC issued a preliminary CVD rate and, on November 24, 2021, a final CVD rate for the AR2 POI. Following year-end, the USDOC amended the final CVD rate for the AR2 POI from 5.06% to 5.08% for ministerial errors. This table only reflects the final rate.

6. The CVD rate for the AR3 POI will be adjusted when AR3 is complete, and the USDOC finalizes the rate, which is not expected until 2022.

7. The CVD rate for the AR4 POI will be adjusted when AR4 is complete, and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our CVD Cash Deposit Rate effective December 2, 2021. Following year-end, the USDOC amended the CVD cash deposit rate for ministerial errors from 5.06% to 5.08%, effective January 10, 2022.

Effective dates for ADD	Cash Deposit    Rate		AR POI Final     Rate		West Fraser    Estimated    Rate
AR1 POI
June 30, 2017 - December 3, 20171		6.76%		1.40% 3		1.46%
December 4, 2017 - December 31, 20172		5.57%		1.40% 3		1.46%
January 1, 2018 - December 31, 2018		5.57%		1.40% 3		1.46%
AR2 POI
January 1, 2019 - December 31, 2019		5.57%		6.06% 5		4.65%
AR3 POI
January 1, 2020 - November 29, 2020		5.57%		n/a 6		3.40%
November 30, 2020 - December 31, 20204		1.40%		n/a 6		3.40%
AR4 POI
January 1, 2021 - December 1, 2021		1.40%		n/a 7		6.80%
December 2, 2021 - December 31, 20218		6.06%		n/a 7		6.80%

1. On June 26, 2017, the USDOC issued its preliminary rate in the ADD investigation effective June 30, 2017.

2. On December 4, 2017, the USDOC revised our ADD Cash Deposit Rate effective December 4, 2017.

3. On February 3, 2020, the USDOC issued a preliminary ADD Rate and, on November 24, 2020, a final ADD rate for the AR1 POI. This table only reflects the final rate.

4. On November 24, 2020, the USDOC revised our ADD Cash Deposit Rate effective November 30, 2020

5. On May 20, 2021, the USDOC issued a preliminary ADD rate and, on November 24, 2021, a final ADD rate for the AR2 POI. This table only reflects the final rate.

6. The ADD rate for the AR3 POI will be adjusted when AR3 is complete, and the USDOC finalizes the rate, which is not expected until 2022.

7. The ADD rate for the AR4 POI will be adjusted when AR4 is complete, and the USDOC finalizes the rate, which is not expected until 2023.

8. On November 24, 2021, the USDOC revised our ADD Cash Deposit Rate effective December 2, 2021.

111

Impact on results

The following table reconciles our cash deposits paid during the period to the amount recorded in our earnings statement:

			Currency remeasurement
($ millions)	2021		2020
Cash deposits paid1	$	(132)	$	(161)
Adjust to West Fraser Estimated ADD rate2		(69)		9
Effective duty expense for period3		(201)		(152)
Duty recovery attributable to AR14		—		95
Duty recovery attributable to AR25		55		—
Duty expense		(146)		(57)
Interest income on duty deposits attributable to West Fraser Estimated rate adjustments		2		2
Interest income on the AR1 and AR2 duty deposits receivable		7		11
Interest income on duty deposits	$	9	$	13

1. Represents combined CVD and ADD cash deposit rate of 23.56% from January 1 to November 29, 2020, 19.39% on November 30, 2020, 8.97% from December 1, 2020 to December 1, 2021, and 11.12% from December 2 to December 31, 2021.

2. Represents adjustment to West Fraser Estimated ADD rate of 6.80% for 2021 and 3.40% for 2020.

3. The total represents the combined CVD cash deposit rate and West Fraser Estimated ADD rate of 21.39% from January 1 to November 30, 2020, 10.97% from December 1 to December 31, 2020, 14.37% for January 1 to December 1, 2021, and 11.86% for December 2 to December 31, 2021.

4. $95 million represents the duty recovery attributable to the finalization of AR1 duty rates for the 2017 and 2018 POI.

5. $55 million represents the duty recovery attributable to the finalization of AR2 duty rates for the 2019 POI.

As of December 31, 2021, export duties paid and payable on deposit with the USDOC were $662 million.

Impact on balance sheet

Each POI is subject to independent administrative review by the USDOC, and the results of each POI may not be offset.

Export duty deposits receivable is represented by:

			Currency remeasurement
Export duty deposits receivable	2021		2020
Beginning of year	$	178	$	61
Export duties recognized as duty deposits receivable		55		104
Interest recognized on duty deposits receivable		9		13
End of year	$	242	$	178

For AR4, we have recorded a duty payable related to ADD for the difference between the Cash Deposit Rate and our West Fraser Estimated Rate of 6.80%.

Export duties payable is represented by:

Export duties payable	2021
Beginning of year	$	—
Export duties payable related to AR4		(69)
End of year	$	(69)

112

Appeals

On May 22, 2020, the North American Free Trade Agreement (“NAFTA”) panel issued its final decision on “Injury”. The NAFTA panel rejected the Canadian parties’ arguments and upheld the USITC remand determination in its entirety.

On August 28, 2020, the World Trade Organization’s (“WTO”) dispute-resolution panel ruled unanimously that U.S. countervailing duties against Canadian softwood lumber are inconsistent with the WTO obligations of the United States. The decision confirmed that Canada does not subsidize its softwood lumber industry. On September 28, 2020, the U.S. announced that it would appeal the WTO panel’s decision.

The softwood lumber case will continue to be subject to NAFTA or the new Canada-United States-Mexico Agreement (“CUSMA”) and WTO dispute resolution processes, and litigation in the U.S. In the past, long periods of litigation have led to negotiated settlements and duty deposit refunds. In the interim, duties remain subject to the USDOC AR process, which results in an annual adjustment of duty deposit rates.

Notwithstanding the deposit rates assigned under the investigations, our final liability for CVD and ADD will not be determined until each annual administrative review process is complete and related appeal processes are concluded.

2021 ANNUAL REPORT              113

Directors and Officers

Effective February 15, 2022

DIRECTORS

	Principal Occupation
Henry H. Ketcham	Chairman of the Board
Reid E. Carter	Corporate Director
Raymond W. Ferris	President and Chief Executive Officer
John N. Floren	President and Chief Executive Officer, Methanex Corporation
Brian G. Kenning	Corporate Director
Ellis Ketcham Johnson	President, Private Philanthropic Foundation
Marian Lawson	Corporate Director
Colleen M. McMorrow	Corporate Director
Gerald J. Miller	Corporate Director
Robert L. Phillips	Corporate Director
Janice G. Rennie	Corporate Director
Gillian D. Winckler	Corporate Director
SENIOR EXECUTIVE OFFICERS
	Office Held
Raymond W. Ferris	President and Chief Executive Officer
Christopher A. Virostek	Vice-President, Finance and Chief Financial Officer
Sean P. McLaren	Chief Operating Officer
Kevin J. Burke	Senior Vice-President, Wood Products
Keith D. Carter	Senior Vice-President, Western Canada
Robin A. Lampard	Senior Vice-President, Finance
Christopher D. McIver	Senior Vice-President, Marketing and Corporate Development
Alan G. McMeekin	Senior Vice-President, Europe
James W. Gorman	Vice-President, Corporate and Government Relations

114                   WEST FRASER

Glossary of Key Terms

2023 Notes

Norbord’s 6.25% senior notes due April 2023

2027 Notes

Norbord’s 5.75% senior notes due July 2027

AAC

Annual allowable cut. The volume of timber that may be harvested annually from a specific timber tenure.

ADD

Antidumping duties

Angelina

Angelina Forest Products LLC

Angelina Acquisition

Acquisition of Angelina Forest Products LLC on December 1, 2021

AR

Administrative Review by the USDOC

B.C.

British Columbia

BCTMP

Bleached chemithermomechanical pulp

CAD or CAD$

Canadian dollars

Crown timber

Timber harvested from lands owned by a provincial government

CVD

Countervailing duties

Dimension Lumber

Standard commodity lumber ranging in sizes from 1 x 3’s to 4 x 12’s, in various lengths

EDGAR

Electronic Data Gathering, Analysis and Retrieval System

ESG

Environmental, social and governance

EU

Europe

EU EWP

Europe engineered wood products

EWP

Engineered wood products

GHG

Greenhouse gas

LVL

Laminated veneer lumber. Large sheets of veneer bonded together with resin then cut to lumber equivalent sizes.

m³

A solid cubic metre. A unit of measure for timber, equal to approximately 35 cubic feet.

Mcf

One thousand cubic feet. A unit of measure for laminated veneer lumber.

MDF

Medium-density fibreboard. A panelboard produced by chemically bonding highly refined wood fibres of uniform size under heat and pressure.

Mfbm

One thousand board feet (equivalent to one thousand square feet of lumber, one inch thick)

MMfbm

One million board feet (equivalent to one million square feet of lumber, one inch thick)

MMBTU

Million British Thermal Units

Msf

One thousand square feet. A unit of measure for Panel products (such as OSB, MDF and plywood) equal to one thousand square feet on a 3/4-inch basis for MDF, on a 3/8-inch basis for plywood and on either a 3/8-inch or 7/16-inch thick basis for OSB.

MMsf

One million square feet

Mtonne

One thousand tonnes

NA

North America

NA EWP

North America engineered wood products

NBSK

Northern bleached softwood kraft pulp

NCIB

Normal course issuer bid

Norbord

Norbord Inc.

Norbord Acquisition

Acquisition of Norbord completed February 1, 2021

NYSE

New York Stock Exchange

OSB

Oriented strand board. An engineered structural wood panel produced by chemically bonding wood strands in a uniform direction under heat and pressure.

Panelboard

Oriented strand board, particleboard, medium-density fibreboard and plywood

Particleboard

A panelboard produced by chemically bonding clean sawdust, small wood particles and recycled wood fibre under heat and pressure

Plywood

A panelboard produced by chemically bonding thin layers of solid wood veneers

SEDAR

System for Electronic Document Analysis and Retrieval

SPF

Spruce/pine/balsam fir lumber

SPF Dimension

Lumber produced from spruce/ pine/balsam fir species

SYP

Southern yellow pine lumber

SYP Dimension

Lumber produced from southern yellow pine species

Ton

A unit of weight equal to 2,000 pounds, generally known as a U.S. ton

Tonne

A unit of weight in the metric system equal to one thousand kilograms or approximately 2,204 pounds

TSX

Toronto Stock Exchange

U.K.

United Kingdom

U.S.

United States

USD or $ or US$

United States Dollars

USDOC

United States Department of Commerce

USITC

United States International Trade Commission

2021 ANNUAL REPORT           115

Corporate Information

Effective February 15, 2022

ANNUAL GENERAL MEETING

The Annual General Meeting of the shareholders of the Company will be held on Wednesday, April 20, 2022

at 11:30 a.m. PT at Quesnel,

British Columbia, Canada.

AUDITORS

PricewaterhouseCoopers

LLP

Vancouver, British

Columbia, Canada

LEGAL COUNSEL

McMillan LLP

Vancouver, British

Columbia, Canada

TRANSFER AGENT

Computershare Investor

Services Inc.

Tel: 1 (800) 564-6253

Canada/USA

(514) 982-7555

International

FILINGS

www.sedar.com

www.sec.gov/edgar.shtml

Shares are listed on the Toronto Stock Exchange & New York Stock Exchange under the symbol: WFG

INVESTOR CONTACT

Robert B. Winslow, CFA

Director, Investor

Relations & Corporate

Development

Tel: (416) 777-4426

E:

shareholder@westfraser.com

WEBSITE

www.westfraser.com

CORPORATE OFFICE

858 Beatty Street, Suite 501

Vancouver, British Columbia

Canada V6B 1C1

Tel: (604) 895-2700

SALES OFFICES

SPF Lumber,

Plywood, MDF, LVL

1250 Brownmiller Road

Quesnel, British Columbia

Canada V2J 6P5

Tel: (250) 992-9254

Fax: (250) 992-3034

SPF Export Lumber

858 Beatty Street, Suite 501

Vancouver, British Columbia

Canada V6B 1C1

Tel: (604) 895-2700

Fax: (604) 895-2976

SYP Lumber

1900 Exeter Road, Suite 105

Germantown, Tennessee

USA 38138

Tel: (901) 620-4200

Fax: (901) 620-4204

2900 Saint Marys Road

St. Marys, Georgia

USA 31558

Tel: (912) 576-0300

Fax: (912) 576-0322

OSB

1 Toronto Street, Suite 600

Toronto, Ontario

Canada M5C 2W4

Tel: (416) 365-0705

Pulp

858 Beatty Street, Suite 501

Vancouver, British Columbia

Canada V6B 1C1

Tel: (604) 895-2700

E: 

pulpsales@westfraser.com

Newsprint

2900-650 W Georgia Street

Vancouver, British Columbia

Canada V6B 4N8

Tel: (604) 681-8817

OPERATIONS

Lumber, Plywood and LVL Canadian Operations

1250 Brownmiller Road

Quesnel, British Columbia

Canada V2J 6P5

Tel: (250) 992-9244

Fax: (250) 992-9233

US Operations

1900 Exeter Road, Suite 105

Germantown, Tennessee

USA 38138

Tel: (901) 620-4200

Fax: (901) 620-4204

OSB Operations

1 Toronto Street, Suite 600

Toronto, Ontario

Canada M5C 2W4

Tel: (416) 365-0705

European Operations

Cowie, Stirlingshire, Scotland

Station Road, Cowie

Stirlingshire FK7 7BQ

Tel: +44 (0) 1786 812921

MDF

WestPine MDF

300 Carradice Road

Quesnel, British Columbia

Canada V2J 5Z7

Tel: (250) 991-7100

Fax: (250) 991-7115

Ranger Board

P.O. Box 6

Blue Ridge, Alberta

Canada T0E 0B0

Tel: (780) 648-6333

Fax: (780) 648-6397

Pulp & Paper

Cariboo Pulp & Paper

P.O. Box 7500

50 North Star Road

Quesnel, British Columbia

Canada V2J 3J6

Tel: (250) 992-0200

Fax: (250) 992-2164

Quesnel River Pulp

1000 Finning Road

Quesnel, British Columbia

Canada V2J 6A1

Tel: (250) 992-8919

Fax: (250) 992-2612

Hinton Pulp

760 Switzer Drive

Hinton, Alberta

Canada T7V 1V7

Tel: (780) 865-2251

Slave Lake Pulp

P.O. Box 1790

Slave Lake, Alberta

Canada T0G 2A0

Tel: (780) 849-7777

Fax: (780) 849-7725

Alberta Newsprint Company

Postal Bag 9000

Whitecourt, Alberta

Canada T7S 1P9

Tel: (780) 778-7000

Fax: (780) 778-7070

116                   WEST FRASER

Manufacturing Wood Products for Home Builders

We are committed to helping builders build better, faster and with greater efficiency.

* Non-GAAP Financial Information: This Annual Report uses various Non-GAAP and other specified financial measures, including “Adjusted EBITDA”, “net debt to capital”, expected synergies from the Norbord acquisition and expected capital expenditures. Additional information relating to the use of these Non-GAAP and other specified financial measures, including required reconciliations, is set out in the section of our 2021 Annual MD&A entitled “Non-GAAP and Other Specified Financial Measures”.

** Forward-Looking Statements: This Annual Report includes statements and information that constitutes “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of United States securities laws (collectively, “forward-looking statements”). Please refer to the cautionary note entitled “Forward-Looking Statements” in our 2021 Annual MD&A for a discussion of these forward-looking statements and the risks that impact these forward-looking statements.

        West Fraser Timber Co. Ltd. Tel: (604) 895-2700 www.westfraser.com