UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No.             )

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Filed by a Party other than the Registrant    ☐

Check the appropriate box:

☐    Preliminary Proxy Statement

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

☒    Definitive Proxy Statement

☐    Definitive Additional Materials

☐    Soliciting Material Pursuant to §240.14a-12

DOMTAR CORPORATION

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

		Domtar Corporation 234 Kingsley Park Drive Fort Mill, SC, 29715

April 8, 2019

Dear Fellow Stockholders:

You are cordially invited to attend the 2019 Annual Meeting of Stockholders of Domtar Corporation. The meeting this year will be held on May 8, 2019 at Domtar Corporation, 234 Kingsley Park Drive, Fort Mill, South Carolina, 29715, starting at 7:45 a.m. (ET). Whether or not you are able to attend in person, we invite you to read this year’s proxy statement and accompanying materials that highlight many of our key activities and accomplishments in 2018 and present the matters for which we are seeking your vote at the 2019 Annual Meeting.

As we approach the 2019 Annual Meeting, Domtar remains well-positioned to create long-term value as a leading innovative fiber-based products, technologies and services company. With a legacy of 170 years, Domtar continues to execute a clear strategy – remaining the supplier of choice to paper customers, while building new businesses in growing markets.

While focused on financial performance, we continue to pursue sustainable business practices. This is evidenced by our progress in key areas such as forest certification, environmental performance, and the beneficial reuse of manufacturing byproducts, as well as by the respect we show towards our employees and host communities. Our track record in environmental and social responsibility differentiates us in the eyes of our customers and contributes to our financial results.

Strong governance at all levels also contributes to our performance. This includes the composition of our Board of Directors, the leadership of our Management Committee, and the culture of integrity and ethical behavior that is embedded throughout our organization.

2018 Financial Performance

Domtar achieved solid results in 2018, led by strong performance in paper, higher contribution from our growing market pulp operations, and continued productivity improvements. We generated $386 million of operating income compared to a loss of $328 million in 2017 and $725 million of EBITDA before items⁽¹⁾, which was $156 million more than in 2017. In 2018, cash flow from operating activities amounted to $554 million and free cash flow⁽¹⁾ to $359 million, both significantly above prior year results. The results and progress achieved in 2018 demonstrate that we are well-positioned to create value in the years ahead.

Operating income in our Pulp and Paper segment amounted to $438 million in 2018, an increase of $201 million, when compared to operating income of $237 million in 2017. Sales in our Pulp and Paper segment increased by $307 million, or 7%, when compared to sales in 2017. The increase in Paper sales is mostly due to higher average selling prices as well as a 3% increase in our paper sales volume as a result of strong market conditions and improved demand from our customers. Several of Domtar’s communication paper mills achieved records in slush pulp and paper production in 2018. Paper productivity and daily production of slush pulp – wood fiber that is ready for making paper or market pulp – both exceeded our annual targets. Paper production was 3% higher than in the prior year. Strong global demand as well as rising prices resulted in one of our strongest performances in market pulp.

Sales in 2018 in our Personal Care segment increased by $4 million, remaining relatively flat when compared to sales in 2017. However, significant increases in input costs and intense pricing pressure have compressed margins in our Personal Care business in 2018.

Long-Term Strategy

Maintain leadership in paper. The North American paper market reached a positive inflection point in 2018, driven by improved demand and permanent supply curtailments in the industry. We were able to capitalize on the favorable market dynamics because of our long-standing commitment to be the leading North American supplier of uncoated freesheet. In line with our long-term strategy, we will continue to focus on extending the cash flow runway in paper by leveraging our low-cost position, flexible service model and customer relationships.

Build positions in growing markets. We confirmed the potential of market pulp as a major source of cash flow for Domtar in 2018 by more than doubling our EBITDA in this growing market. Market pulp now accounts for over 20% of our consolidated sales, resulting in part from our investments in paper mill conversions over many years. Domtar is one of the world’s largest market pulp producers with customers in over 40 countries.

Although our billion-dollar personal care division has not been providing the returns we expected, the long-term value of this business is underpinned by attractive demographic and market trends, as well as our strong manufacturing platform. In 2018, we initiated a margin improvement plan across the division to strengthen our financial performance and competitive positioning in this attractive market.

Deploy capital efficiently. We continue to reward stockholders while maintaining financial flexibility. In 2018, we returned $108 million in dividends. We are proud to deliver on our promise to return the majority of cash to our stockholders; since 2011, we returned $1.6 billion of capital through share buybacks and a growing dividend.

2018 Stockholder Engagement

Our relationship with our stockholders is an integral part of Domtar’s success. We have benefited over the years from your feedback on our business strategy, executive compensation program, corporate governance, and sustainability initiatives. We believe that our programs and policies provide a solid foundation for our strategic journey, and place us in a leading position with respect to prevalent market practices.

As in previous years, in addition to regular engagements by our Investor Relations team, and in line with our commitment to effectively engage with our stockholders on an ongoing basis, we reached out to our investors seeking their feedback. Specifically, we contacted our 40 largest stockholders representing approximately 70% of our outstanding shares. Some of these stockholders chose not to have discussions with us, but the discussions we did hold reflected broad-based support for our programs and initiatives.

Our Board of Directors and its Human Resources Committee have carefully considered the engagement feedback, in light of the solid alignment of Domtar’s executive compensation program with its business strategy and market practices. They concluded that the lower level of support for our 2018 “say-on-pay” proposal – 74% rather than the traditional 90+% – was likely due to the one-time non-cash goodwill impairment charge to our Personal Care business, which contributed substantially to the net loss we reported for 2017, and the resulting impact on the performance component score used in certain models. Given that there were no such one-time items occurring in 2018 and the fact that the plans are aligned with performance, only a few changes were made to our executive compensation program in 2019; we eliminated stock options in view of the small percentage allocated to them, and simplified the short-term incentive plan by reducing the number of metrics and focusing more on earnings-related measures.

Sustainability

At Domtar, sustainability is a core value rooted in responsibility, efficiency and engagement. It drives us to foster innovation, reduce risks, enhance brand reputation, maximize business success and grow stockholder value.

We operate responsibly and share best safety and sustainability practices across the company. We are pleased that we realized the safest year on record for Domtar in 2018, thanks to our caring employees. Everyone benefits from this commitment to world class safety performance.

Because our future is rooted in sustainable forestry, we partner with NGO’s, such as World Wildlife Fund and the Rainforest Alliance, to conserve biodiversity and to ensure transparency in our sustainability progress and goals. We empower landowners to ensure the health of forestlands through sustainable forest management, and we align supply chain operations to our sustainability priorities.

We strive to continually minimize the environmental impact of our activities by reducing waste, water use, and greenhouse gas emissions. We couple that with efficient utilization of renewable energy resources to power our mills, and we reuse or recycle byproducts from the manufacture of our fiber-based products.

Additionally, we invest in our communities to enhance health, literacy and employee development, specifically by engaging employees in meaningful volunteer opportunities.

Domtar’s sustainability culture is reinforced through the guidance of our cross-functional Sustainability Committee, which reports to our Board of Directors. This committee brings together leaders from research and development, manufacturing, marketing, supply chain, finance and human resources to develop a longer-term view of how our operations and products are connected to emerging opportunities and risks in the world around us.

Conclusion

We value your support and are committed to keeping an open dialogue with our stockholders. Please reach out with any questions on the above matters to c/o Domtar Corporate Secretary, at the following email address: razvan.theodoru@domtar.com.

Sincerely,

Robert E. Apple		John D. Williams
Chairman of the Board		President and Chief Executive Officer

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF DOMTAR CORPORATION

By Order of the Board of Directors

Razvan L. Theodoru

Vice-President, Corporate Law and Secretary

Fort Mill, South Carolina

April 8, 2019

NOTE: If you plan to attend the annual meeting, please note that registration and seating will begin at 7:00 a.m. Each stockholder will be asked to sign an admittance card and may be asked to present valid picture identification. Stockholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the March 15, 2019 record date. Cameras and recording devices will not be permitted at the meeting.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 8, 2019:

The Proxy Statement and our 2018 Annual Report on Form 10-K are available at www.edocumentview.com/ufs.

TABLE

OF CONTENTS

PROXY SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider and you should read the entire proxy statement before voting. For more complete information regarding the Corporation’s 2018 performance, please review the Corporation’s Annual Report on Form 10-K.

2019 Annual Meeting of Stockholders

Voting Matters and Board Recommendations

Important Dates for 2020 Annual Meeting of Stockholders

Stockholder proposals submitted for inclusion in our 2020 proxy statement pursuant to SEC Rule 14a-8 must be received by us by December 7, 2019.

Notice of stockholder proposals to be raised from the floor of the 2020 Annual Meeting of Stockholders outside of SEC Rule 14a-8 must be received by us by February 7, 2020.

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IMPORTANT INFORMATION ABOUT

ANNUAL MEETING AND PROXY PROCEDURES

The Board of Directors is soliciting proxies to be used at the annual meeting of stockholders to be held on Wednesday, May 8, 2019, beginning at 7:45 a.m. (ET) at Domtar, 234 Kingsley Park Drive, Fort Mill, South Carolina, 29715. This proxy statement and the accompanying materials are being mailed to stockholders beginning on or about April 8, 2019. We will bear the costs of the preparation, printing and distribution of the proxy statement and the accompanying materials.

Unless the context otherwise requires, in this proxy statement (i) “Corporation”, “Company”, “Domtar”, “we”, “us” and “our”, mean Domtar Corporation, a Delaware corporation, and, unless the context requires otherwise, its subsidiaries; (ii) “our Board” or “the Board” means the Board of Directors of the Corporation; (iii) “our common stock” means the common stock of the Corporation; (iv) “stockholders” means holders of our common stock; and (v) all references herein are to U.S. dollars, unless otherwise indicated.

The only securities eligible to be voted at the annual meeting are the Corporation’s common stock. You may vote all of the shares of our common stock that you owned on the record date. Each share of our common stock entitles you to one vote on each of the 9 director nominees and one vote on all other matters presented at the meeting. On the record date, we had 63,099,722 shares of common stock outstanding.

The Corporation’s senior management also will answer questions from stockholders.

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With respect to Item 1, generally director nominees must receive a majority of the votes cast (the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee) in order to be elected or they will be subject to the resignation process described below.

The adoption of Item 2 “Advisory Vote to Approve Named Executive Compensation” and Item 3 “Ratification of Appointment of Independent Registered Public Accounting Firm” requires the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy.

Submitting a proxy card or voting instruction card. Each stockholder may grant a proxy to have his or her shares voted at the annual meeting by submitting the proxy card(s) or voting instruction card(s) provided to him or her. When you return a proxy card or voting instruction card that is properly signed and completed, the shares of common stock represented by that card will be voted as specified by you.

Submitting a proxy by telephone or through the internet. If you are a stockholder of record, you may also submit a proxy by telephone or through the internet. Please see the proxy card(s) provided to you for instruction on how to access the telephone and internet systems. If your shares are held in street name for your account, your broker or other nominee will advise you whether you may submit a proxy by telephone or through the internet. A number of banks and brokerage firms participate in programs that permit stockholders to submit a proxy by telephone or through the internet. If your shares are held by such a bank or brokerage firm, you may submit a proxy to have these shares voted at the annual meeting by telephone or internet by following the instructions on the voting instruction form accompanying this proxy statement.

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Stockholder proposals not included in next year’s proxy statement still may be brought before the 2020 annual meeting of stockholders by a stockholder of the Corporation who is entitled to vote at the meeting, has given a written notice to the

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Secretary of the Corporation containing certain information specified in the by-laws and was a stockholder of record at the time such notice was given. Such notice must be delivered to or mailed and received at the address in the preceding paragraph no earlier than January 8, 2020 and no later than February 7, 2020, except that if the 2020 annual meeting of stockholders is held before April 8, 2020 or after July 7, 2020 such notice must be delivered at the address in the preceding paragraph no earlier than 120 days prior to the new date of such annual meeting and not later than the 90th day prior to the new date of such annual meeting. In the event that less than 100 calendar days’ notice or prior public disclosure by the Corporation of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public announcement was made by the Corporation, whichever occurs first.

Requests for print copies of any of the above-listed documents should be addressed to Domtar Corporation, 395 de Maisonneuve Blvd. West, Montreal, Quebec, Canada, H3A 1L6, Attention: Director, Corporate Law and Assistant Secretary.

For further information, you may also contact the Corporation’s Investor Relations Department at the following address: Domtar Corporation, 395 de Maisonneuve Blvd. West, Montreal, Quebec, Canada, H3A 1L6.

This proxy statement may contain forward-looking statements relating to expectations concerning matters that are not historical facts including but not limited to performance goals. These forward-looking statements are generally denoted by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “aim,” “target,” “plan,” “continue,” “estimate,” “project,” “may,” “will,” “should” and similar expressions. These forward-looking statements are subject to certain risks and uncertainties, including but not limited to the factors described in our 2018 Annual Report on Form 10-K under the heading “Item 1 –Business – Forward-Looking Statements,” that could cause actual results to differ materially from historical results or those anticipated. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any occurs, what effect they will have on Domtar Corporation’s results of operations or financial condition. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

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PROXY STATEMENT

ITEM 1 — ELECTION OF DIRECTORS

Election

Pursuant to our by-laws, our Board of Directors has set the size of our Board at nine members and has approved the nomination of the persons named in this proxy statement for election at this year’s annual meeting, by unanimous vote.

The nine nominees for election as directors are listed below. If elected, the nominees for election as directors will serve for a term of one year that will expire at our 2020 annual meeting or until their successors are elected and qualify.

Unless you instruct us via proxy to vote differently, we will vote valid proxies FOR the election of such nominees. If for any reason any nominee cannot or will not serve as a director, we may vote such proxies for the election of a substitute nominee designated by the Board of Directors.

Please note that if you hold your shares in street name, your broker is not able to vote on your behalf with respect to the election of directors without specific voting instructions from you. As a result, if you are a stockholder in street name it is important that you provide instructions to your broker or vote your shares as provided in this proxy statement.

Selection of Nominees for Election to the Board and Diversity Initiatives

The Board believes that in order to fulfill its overall stewardship responsibility to the Corporation and its stockholders, the Board must function effectively as a team and that the experience, qualifications and skills of each Board member must complement those of the others. The Nominating and Corporate Governance Committee (“NCGC” or “Committee”) reviews and updates a Board skills matrix on an ongoing basis in light of current business conditions and the evolving trends and challenges of both the industry and the Corporation. The comments that follow reflect the process and factors taken into account by the NCGC in recommending to the Board the Board nominees described in this proxy statement, in light of both the Corporation’s Corporate Governance Guidelines and the skills matrix.

The NCGC considers potential nominees for Board membership suggested by its members and other Board members, by members of management and stockholders, as well as by recruitment consultants who may be retained by the Committee to source potential candidates meeting the nomination criteria. As noted above, the NCGC evaluates prospective nominees against the skills matrix as well as the personal and other qualifications set out in the Corporation’s Corporate Governance Guidelines.

In seeking to maintain an engaged, independent Board with broad experience and judgment that is committed to representing the long-term interests of our stockholders, the Committee considers the need for the Board, as a whole, to consist of a diverse group of individuals:

In assessing Board composition and selecting and recruiting director candidates, the Committee believes it is important for the Board to be diverse in the broadest sense, and to have a balance between experienced directors with a deep institutional knowledge of the Corporation and directors with knowledge relevant to the Corporation’s strategic goals and challenges who can bring a renewed perspective in the boardroom. In this regard, the Committee has recruited and recommended for election to the Board four new directors over the last seven years. The NCGC makes recommendations to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after considering the reports and recommendations of the NCGC.

Consistently with its ongoing initiatives to promote diversity in the workplace, Domtar joined in 2015 The 30% Club, a global not-for-profit organization promoting diversity in the boardroom. Domtar shares The 30% Club’s vision that gender balance on boards not only encourages better leadership and governance, but that diversity further contributes to better all-round board performance, and ultimately increased corporate performance for both companies and their shareholders. Women represent 33% of our Board of Directors.

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The NCGC will consider director candidates recommended by stockholders in accordance with the procedures set forth in the Corporation’s by-laws, available on the Company’s website at www.domtar.com.

Proxy Access

In 2016, we voluntarily amended our by-laws to include so-called “proxy access.” Under our by-laws, an “eligible holder” – generally a person or group of up to 20 persons that has continually held 3% or more of the Corporation’s common stock for three or more years – may nominate up to 20% of the total number of directors. The notice and other procedures set forth in the by-laws in order to nominate a director candidate must be strictly complied with, and stockholders are encouraged to review those procedures carefully if they are interested in utilizing that process. Where a candidate has been properly nominated, the Corporation will include his or her name and biography in the proxy statement and on the proxy card for the annual meeting.

Nominees

Our by-laws provide a majority vote standard for uncontested elections of directors. The majority vote standard means that the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee, and, if they do not, the Board will consider whether to accept the nominee’s resignation. There are no other nominees competing for these seats on the Board of Directors, which means that we have uncontested elections.

Following is certain information about each director nominee, including information regarding each nominee’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he or she should serve as a director.

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The Board of Directors unanimously recommends a vote FOR the election of each of the nine director nominees.

Director Compensation

Process and Objectives

The Board of Directors, on the recommendation of the NCGC, is responsible for setting director compensation. Management is not involved in the process, and directors who are Domtar Corporation employees do not receive compensation for their service as directors.

The objectives of the NCGC and the Board in setting director compensation are to:

Components of Director Compensation

Our non-employee directors receive an annual cash retainer fee of $107,500 and annual equity-based compensation of equal value. The Chairman receives an annual cash retainer of $182,500 and annual equity-based compensation of equal value. Members of the Audit Committee are paid an additional cash retainer of $10,000. The Chair of the Audit Committee receives an additional cash retainer of $30,000, and the Chair of the Human Resources Committee receives an additional cash retainer of $25,000. Each other committee Chair receives an additional cash retainer of $20,000. The Chairman is not eligible for any of the committee retainers described above.

There will generally be no Board or committee meeting fees; however, if more than 10 Board meetings are held in a calendar year, directors may be paid Board meeting fees of $1,500 per additional meeting attended. In addition, each non-executive director traveling over three or more time zones from his or her residence in connection with his or her duties as a Board member is entitled to an annual travel fee of $15,000 to compensate him or her for substantial additional travel time.

The equity portion of the directors’ fees is paid in deferred share units granted under the Corporation’s Omnibus Incentive Plan (“Omnibus Plan”). The value of equity incentive awards made pursuant to the Omnibus Plan is limited to $500,000 by director, for any given year. A non-employee director may elect to defer receipt of the cash portion of his or her annual retainer fee into deferred share units, subject to

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compliance with applicable tax requirements and rules established by the Human Resources Committee (“HRC”). Deferred share units are paid quarterly in arrears, with the number of deferred share units to be paid to be determined by dividing the dollar amount of the portion of that quarter’s retainer fees to be paid in deferred share units by the closing market price of a share of Domtar common stock on the last day of the quarter. Dividends, when declared, on Domtar’s common stock are notionally invested in additional deferred share units based on the closing share price on the dividend payment date. Deferred share units are generally settled in cash or shares of our common stock, as determined by the director, upon termination of his or her Board service as an eligible Director.

Directors who have achieved 100% of their stock ownership requirements may elect to receive the equity component of their annual retainer in deferred share units that may be settled in either cash or stock one year after the grant date. The grants of this category of deferred share units are made at the same time as the other deferred share units, and generally subject to the same terms and conditions pursuant to the Corporation’s Omnibus Plan.

Every two years, the NCGC completes a review of directors’ compensation and makes recommendations to the whole Board of Directors, as appropriate. The NCGC retained Hugessen Consulting Inc. (“Hugessen”) as its independent compensation advisor to assist with the assessment of the competitiveness of the Corporation’s director compensation programs. The last review took place in 2017, and no changes to the directors’ compensation were recommended at that time. The next review will take place in 2019.

The NCGC assessed the independence of its compensation advisor, Hugessen, including the potential for conflicts of interest in light of the NYSE listing standards. Based on its assessment, the NCGC concluded that its advisor was appropriately independent and free from potential conflicts of interest.

Director Stock Ownership Requirements

In order to align the long-term financial interest of our directors with those of our stockholders, directors are required to own a significant equity stake in the Corporation having a value of at least $537,500, which is equivalent to five times the annual cash retainer, valued at the greater of cost or market value. Directors must meet this requirement within five years of becoming a director. All shares owned outright, as well as all deferred share units, are taken into consideration in determining compliance with these ownership guidelines. As of the date of this proxy statement, all current directors who joined our Board before 2015 have reached the stock ownership requirements.

Director Compensation Table

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The following table sets forth, by grant date, the number of deferred share units credited to each director and the grant date fair value of each award with respect to service as a director in 2018. All deferred share units were vested upon grant.

Equity Awards for Service as a Director of Domtar Corporation

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND OFFICERS

Domtar Corporation had a total of 63,099,722 shares of common stock issued and outstanding as of March 15, 2019. Based upon Schedule 13D or 13G filings with the SEC, as of March 8, 2019 there were three beneficial owners of more than 5% of the common stock of the Corporation:

BlackRock, Inc., 55 East 52nd Street, New York, NY 10055, beneficially owns 8,205,102 shares or 13% of the Corporation’s common stock.

The Vanguard Group, Inc., 100 Vanguard Blvd., Malvern, PA 19355, beneficially owns 7,081,145 shares or 11.25% of the Corporation’s common stock.

Dimensional Fund Advisors, L.P. Building One, 6300 Bee Cave Road, Austin, Texas, 78746, beneficially owns 5,163,540 shares or 8.21% of the Corporation’s common stock.

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has less than 100%, or even no, economic interest.

The following table sets forth the number of shares of the Corporation’s common stock beneficially owned by each of the Corporation’s directors and executive officers, and all directors and executive officers as a group based upon information available to the Corporation as at March 15, 2019. None of the shares indicated below are subject to hedging or pledge. The mailing address of each of these individuals is c/o Domtar Corporation, 234 Kingsley Park Drive, Fort Mill, SC, 29715.

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GOVERNANCE OF THE CORPORATION

Corporate Governance Highlights

We are committed to the highest standards of corporate governance and believe that sound corporate governance is critical to the Corporation’s long-term success and the protection of the interest of its many stakeholders. The following table sets forth our key governance practices, which are detailed in this Governance section:

Board Governance

Our Board has adopted written Corporate Governance Guidelines that comply with the listing standards of the NYSE (the “Guidelines”). The Guidelines set forth requirements relating to director responsibilities, director qualification standards, including director independence, director compensation, our director resignation policy with respect to majority voting in uncontested elections, director retirement age, director orientation and continuing education, CEO succession planning, and assessment of the Board’s performance, among other matters.

Copies of our Corporate Governance Guidelines are available without charge on the corporate governance portion of our website at www.domtar.com or upon request in writing to Domtar Corporation, 395 de Maisonneuve Blvd. West, Montreal (Quebec) Canada, H3A 1L6, Attention: Director, Corporate Law and Assistant Secretary. The Corporation also complies with the listing standards of the TSX.

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Current Members of Our Board of Directors

The members of the Board on the date of this proxy statement, and the committees of the Board on which they serve, are identified below.

Board and Committee Meetings

During 2018, our Board held 7 meetings and the committees of the Board held 26 meetings. Each of our directors attended 90% or more of the aggregate of the total number of meetings of the Board and the Board committees on which the director served.

Board Committees

As of the date of this Proxy Statement, the Board has five standing committees: Audit; Human Resources; Nominating and Corporate Governance; Environmental, Health, Safety and Sustainability; and Finance.

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Board of Directors Leadership Structure

In accordance with our Corporate Governance Guidelines, the positions of Chairman of the Board and Chief Executive Officer are separate and distinct. We believe that this structure recognizes the time and effort that our CEO is required to devote to his position, while facilitating the independent functioning of the Board, thus enhancing the fulfillment of its oversight responsibilities, and setting the tone for the Board in fostering ethical and responsible decision-making and sound corporate governance practices.

Currently, the position of Chairman of the Board is held by Mr. Robert E. Apple, and the position of CEO is held by Mr. John D. Williams. Separating these positions allows our CEO to focus on the management of the Corporation, while allowing our Chairman to lead the Board in its role of providing advice to, and independent oversight of, management.

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Charter of the Chairman of the Board

The Board has a charter outlining the qualifications and key responsibilities of the Chairman of the Board that include board management, board independence and governance, interactions with the President and Chief Executive Officer and management, and stockholder relations. The charter is available on the Corporation’s website at www.domtar.com.

Board of Directors’ Role in Risk Oversight

Our Corporate Governance Guidelines explicitly recognize that it is the responsibility of the Board to assess risks facing the Corporation and to review strategies for risk mitigation. Areas of material risk to the Corporation include economic and strategic factors (such as those related to making the right strategic choices, innovation in product and process development, customer demand, and competition), operational matters (such as project management, cost control, cybersecurity, and protection infrastructure), and regulatory matters (such as those relating to environment, and workplace health and safety).

Our Board committees assist the Board in fulfilling its risk oversight responsibilities in certain areas of risk, including the following:

Our Board committees fulfill these duties through their regularly scheduled and special meetings with members of management (and other parties as appropriate) responsible for specific areas of risk, including in the case of the Audit Committee, the internal auditors and the independent auditors, and the committees regularly report back to the Board.

Our Board and our Audit Committee work closely with management to oversee the Corporation’s ERM process, and to identify and prioritize key risks faced by the Corporation. As part of its ongoing risk oversight duties, the Board implemented the Corporation’s ERM Governance Policy which establishes the fundamental principles of risk accountability and risk management as integral parts of our enterprise culture and day-to-day business activities. In addition, the Board performs detailed periodic reviews of key identified risks as part of its regular meeting agenda. It is the policy of the Corporation to pursue the opportunities to achieve its strategic, business and operational objectives in a manner that involves an acceptable level of risk.

The Board has also formally adopted the Corporation’s Compliance Program, centralizing in a single source of reference a program statement and a framework for oversight of key compliance policies covering the various areas of the Corporation’s activities, intending to reflect best practices in the context of the Corporation’s particular circumstances and needs. The Program requires the Board of Directors, management and employees to act in a consistently ethical and legal manner and, as a consequence, to minimize the risk that conduct by employees will provide the basis for legal actions, civil penalties or criminal sanctions against them or the Corporation, or damage the Corporation’s reputation, and takes into account the principles and criteria developed by the U.S. Federal Sentencing Guidelines for the implementation of effective compliance and ethics programs. The Program is integrated with the Corporation’s ERM program.

Board Oversight of Sustainability

Sustainability at Domtar is our endeavor to take a long-term view of creating and preserving value for our stockholders, customers, employees and communities. One of the responsibilities of the Board’s Environmental, Health, Safety and Sustainability Committee is to oversee Domtar’s sustainability efforts. These efforts range from working to ensure that Domtar has sustainable sources of fiber for its mills to decreasing the environmental footprint of its production facilities and other operations. Domtar’s focus includes, among other things, promoting sustainable harvesting, reducing waste, water usage and greenhouse gas emissions, utilization of renewable energy resources, and recycling of byproducts. During 2018 management met regularly with the Committee and reported on these and related

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topics. As part of this process, the Committee considered both the risks and opportunities related to Domtar’s sustainability efforts, including the role of sustainability in Domtar’s business strategy.

Board Oversight of the Corporation’s Strategy

Our Board is actively involved in the development and implementation of Domtar’s long-term strategy. The strategic plan is developed through interactive dialogue between directors and management, and the Board exercises regular oversight on key strategic choices. The Board and management hold an annual strategic planning retreat to develop/re-calibrate the long-term strategic plan. Strategic updates are reviewed and discussed with the Board at each meeting.

Director Independence and Other Determinations

Pursuant to the Corporation’s Corporate Governance Guidelines, the Board undertook its annual review of director independence in February 2019. During annual reviews, the Board considers any transactions and relationships between each director or any member of his or her immediate family and the Corporation. The Board also examines any transactions and relationships between directors or their affiliates and members of the Corporation’s senior management or their affiliates. The purpose of this review is to determine whether any such relationships or transactions were inconsistent with a determination that a director is independent.

In connection with the 2019 annual review of director independence, the Board considered the business services and products supplied to, or purchased from, the Corporation in the ordinary course by companies where Mses. Strobel and Winston and Mr. Levitt serve as directors, and Mr. Turcotte as director or managing partner. The Board concluded that these transactions do not affect the independence of any of these directors, and, therefore, upon recommendation by the NCGC, has affirmatively determined that each of our directors, other than Mr. John D. Williams, who is the President and Chief Executive Officer of the Corporation, has no material relationship with us, and is independent under the independence requirements of the listing standards of the NYSE and TSX, the Corporation’s Corporate Governance Guidelines, and our Director Independence Standards that are available on the Corporation’s website at www.domtar.com.

In addition, the Board, upon recommendation of the NCGC, considered and affirmatively determined that Ms. Winston and Messrs. Illingworth and Maffucci meet the independence requirements of the SEC and the NYSE rules for Audit Committee members, and that the members of the Human Resources Committee, Mses. Strobel and Alvarez and Messrs. Levitt and Turcotte, meet the independence requirements of the SEC, of the NYSE rules and the Internal Revenue Code for compensation committee members.

Board Refreshment and Evaluation Process

Our Board believes it is important to have a balance between experienced directors with a deep institutional knowledge of the Corporation and directors with knowledge relevant to the Corporation’s strategic goals and challenges who can bring a renewed perspective in the boardroom. In this regard, the Committee has recruited and recommended for election to the Board four new directors over the last seven years. The average director tenure is 8.5 years. The Corporate Governance Guidelines also provide for mandatory retirement of directors at age 75.

The Board and NCGC also believe that a robust and constructive evaluation process is an essential component of good corporate governance, and encourages refreshment. Through this annual process, directors provide feedback and assess Board, committee and director performance, including areas where the board believes it is functioning effectively and areas where the Board believes it can improve.

Evaluation Components:

The findings are discussed at the February meetings of the NCGC and the Board, and matters that have been identified as requiring a follow-up are dealt with accordingly.

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Board Oversight of Succession Planning

The Nominating and Corporate Governance Committee and the Human Resources Committee oversee the succession planning for the President and CEO and the other members of the Management Committee of the Corporation, and regularly report to the Board.

Code of Business Conduct and Ethics

The Corporation has adopted a Code of Business Conduct and Ethics that is applicable to its directors and all employees, including the principal executive officer, the principal financial officer and the principal accounting officer, and which is available on the Corporation’s website at www.domtar.com. Directors and employees are required to complete annually a mandatory online training program that includes a certification attesting of their adherence to the Code. Copies of the Code will be provided without charge to any stockholder who requests it in writing.

Related Person Transaction Policy

Our Board has also adopted written Procedures for Review of Related Person Transactions. These procedures cover transactions in which the Corporation or any subsidiary was or is to be a participant, the amount exceeds $120,000, and a “related person”, as defined in Item 404(a) of Regulation S-K under the Exchange Act, has or will have a direct or indirect material interest. Each director, director nominee and executive officer of the Corporation must notify the Vice-President, Corporate Law and Secretary in writing of any such related person transaction. The Vice-President, Corporate Law and Secretary provides a copy of the notice to the Audit Committee, which reviews such transaction and approves it if the Audit Committee determines the transaction is fair and reasonable to the Corporation and consistent with the Corporation’s best interest. No such transactions were identified in 2018.

Stakeholders Communications with the Board

Stockholders and other interested parties who wish to contact the Chairman of the Board, our non-management directors as a group or any committee chairperson may send written correspondence, in care of the Vice-President, Corporate Law and Secretary, to Domtar Corporation, 234 Kingsley Park Drive, Fort Mill, SC, 29715. The procedures for the submission of such communications, including any complaints or concerns regarding accounting issues or other compliance matters, are contained in our Policy on Stakeholders Communications with the Board of Directors, which is available on the Corporation’s website at www.domtar.com.

Communications addressed to directors that discuss business or other matters relevant to the activities of our Board will be preliminarily reviewed by the Office of the Secretary and then distributed either in summary form or by delivering a copy of the communication. Communications will be distributed to the director, or group of directors, to whom they are addressed. Other correspondence received by the Corporation that is addressed to one or more directors, such as subscription offers, conference invitations, media inquiries and requests for contributions, will be directed to the Office of the Secretary and treated according to our Policy on Stakeholders Communications with the Board of Directors.

Exemption from Toronto Stock Exchange (TSX) Rules

In reliance on Section 401.1 of the TSX Company Manual, the Corporation has sought and been granted an exemption from the requirements of Section 461.4 of the TSX Company Manual, the effect of which is that the Corporation will not have to issue a news release announcing the results of the vote following the stockholders meeting. The Corporation will publish final results of the vote in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) within four business days following the meeting.

The Corporation sought the exemption on the basis that (i) the Corporation’s primary listing is the New York Stock Exchange; (ii) the Corporation is incorporated in the State of Delaware; and (iii) less than 25% of trading volume in the Corporation’s shares was on Canadian marketplaces. The Corporation will be required to notify the TSX of its continued reliance on the exemption before each successive annual meeting of stockholders.

Board Attendance at Stockholder Meetings

The Corporation expects its directors to attend the annual meeting of stockholders.

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COMPENSATION DISCUSSION

AND ANALYSIS (“CD&A”)

Executive Summary

2018 Business Highlights

Our financial performance in the Pulp and Paper segment improved when compared to 2017, driven mostly by higher average selling prices and volume in paper and higher average selling prices in pulp. Our manufactured paper shipments outperformed the North American uncoated freesheet market, increasing 3% compared to prior year. Our pulp shipments decreased 11%, primarily due to reliability and weather related issues at some of our facilities. When compared to last year, our paper and market pulp prices increased $51 per ton and $128 per air-dry metric ton, respectively.

Significant increases in input costs and intense pricing pressure have compressed margins in our Personal Care business in 2018. We have responded with an aggressive plan, which includes streamlining SG&A, cost reductions across our operations, SKU rationalization, and the optimization of our manufacturing footprint in order to drive margin improvement and enhance our competitive position.

Our net earnings amounted to $87 million ($1.38 per share on a diluted basis) while cash flow from operating activities amounted to $554 million for 2018. In addition, EBITDA before items⁽¹⁾ and free cash flow⁽¹⁾ amounted to $725 million and $359 million, respectively, while net debt-to-total capitalization ratio stood at 23% at December 31, 2018.

Our 2018 accomplishments include:

Driving value in the Pulp and Paper business:

Repurposing roadmap:

Improving margins in Personal Care:

Cash generation and returning capital to stockholders:

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2018 CEO Compensation

The only structural change to our CEO’s compensation in 2018 was an increase to his target Long-Term Incentive Program (“LTIP”) award from 295% to 310% of base salary. After reviewing Domtar’s 2018 performance and the results of our Annual Incentive Plan (“AIP”) scorecard, the Human Resources Committee (“HRC”) approved an AIP payout to our CEO of 158.22% of target (or $2.2 million), resulting in total cash compensation of $3.5 million for the year. Further, based on performance against our goals, the HRC approved a payout to our CEO under the Performance Share Unit cycle for 2016 – 2018 of 85.27% of target ($2,839,618 on the vesting date).

To illustrate the real effect of our executive compensation plans as they relate to the performance of the Company, we have included a realizable pay analysis on page 28 to provide an enhanced perspective on the amounts reported in the Summary Compensation Table. We believe that this analysis reflects our ongoing commitment to our pay-for-performance philosophy. Note that while our CEO’s target pay in 2018 was $6.33 million, his realizable pay at the end of 2018 was $6.41 million.

Philosophy and Goals of Executive Compensation Programs

Our executive compensation program is designed to attract, retain and motivate talented key executives who are critical to Domtar’s success over the long term, consistent with the interests of our stockholders in driving both short and long-term performance of our company. Our program is built around the following principles:

Summary of our Executive Compensation Practices

The following discussion details the key executive compensation practices that we believe drive performance and are in the interests of our stockholders. It also lists practices we have not adopted because we believe they would not support our goals and are not in our stockholders’ interests.

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Key Compensation Decisions for 2018

The HRC reviews the compensation plans on an ongoing basis to ensure our plans are aligned with the overall strategy of the Corporation and the long-term interests of its stockholders. In light of the business transformation that is underway, our goal is to make sure that the plans provide the right incentives for our key management team and align their interests with those of our stockholders in maximizing earnings and cash flow in all of our businesses. The metrics for participants in the 2018 corporate AIP were weighted 70% on corporate performance and 30% on divisional performance, with the divisional performance weighted equally between Pulp & Paper and Personal Care metrics. This did not change from 2017 and continues to balance our two operational divisions.

2018 Compensation Results

For 2018, our Named Executive Officers (“NEOs”) are:

Annual incentive awards as a percentage of target earned by our Named Executive Officers (“NEOs”) based on our business results are summarized below:

The status of the Long-Term Incentive Plan Performance Share Units (PSUs) based on performance results are summarized below:

For additional details, please see the “Performance-Based Annual Bonuses” and the “Long-Term Equity Incentives” sections on pages 32 and 35, respectively.

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Additional Information on Executive Compensation Program

Compensation Decisions for 2018 – CEO Details

The tables and charts below show target total direct compensation for the CEO and reflect pay decisions made for 2018, as well as the competitive positioning as compared to the size-adjusted median of the proxy peer group as described on page 31.

The HRC increased the target LTIP dollar value for Mr. Williams by 5%, to bring the portion of his total compensation paid in the form of long- term incentive closer to the market.

John D. Williams: CEO – Target Total Direct Compensation

The following graph shows a comparison of our CEO’s target total compensation against peers.

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CEO – Realizable Pay Analysis

Compensation levels reported in the Summary Compensation Table (“SCT”) on page 44 for each of the Named Executive Officers represent a combination of actual cash compensation earned during the year (base salary paid plus actual bonuses earned) and equity compensation granted during the year valued at grant date, assuming targeted performance achieved. The compensation actually realizable, or realized, by the individual may be considerably more or less based on Company operating and stock price performance. The information below provides a depiction of the actual compensation realizable by our CEO, reflecting both company performance and stock price movement over the last three years.

Domtar Performance and Impact on Variable Pay

Realizable pay for Domtar’s CEO is impacted by the following:

The table below outlines the realizable compensation for the CEO for the last three years in contrast to the targeted values for each of the three years. This table illustrates the pay-for-performance nature of our executive compensation program.

CEO Targeted Pay⁽¹⁾ vs. Realizable Pay⁽²⁾

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