<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TERRA INDUSTRIES INC.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
TERRA INDUSTRIES INC.
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - - --------------------------------------------------------------------------------
(3) Filing party:
- - - --------------------------------------------------------------------------------
(4) Date filed:
- - - --------------------------------------------------------------------------------
- - - ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[TERRA LOGO] Terra Industries Inc.
Terra Centre
600 Fourth Street
Sioux City, IA 51101
Telephone: (712) 277-1340
March 25, 1994
DEAR STOCKHOLDER:
It is a pleasure for us to extend to you a cordial invitation to attend
the Annual Meeting of Stockholders of the Corporation to be held at 9:00 a.m.
on Tuesday, May 3, 1994, in Rooms 6 and 7 at the Sioux City Convention Center,
801 Fourth Street, Sioux City, Iowa.
The accompanying Notice of Meeting and Proxy Statement describe the
matters to be considered and voted upon at the Meeting. In addition to
consideration of these matters, there will be a report to stockholders on the
affairs of the Corporation, and stockholders will have an opportunity to
discuss matters of interest concerning the Corporation.
We hope all stockholders of the Corporation will be able to attend this
Meeting. If you plan to attend, please check the appropriate box on your proxy
card.
Whether or not you plan to attend the Meeting personally, it is
important that you be represented. To ensure that your vote will be received
and counted, please promptly complete, date and return your proxy card in the
enclosed return envelope.
On behalf of the Board of Directors and management, we would like to
express our appreciation for your support during 1993. We look forward to
seeing you at the Meeting.
Burton M. Joyce Reuben F. Richards
BURTON M. JOYCE REUBEN F. RICHARDS
President and Chief Executive Officer Chairman of the Board
<PAGE> 3
[TERRA LOGO]
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
---------------------------------------------
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Terra Industries Inc. (the
"Corporation") will be held in Rooms 6 and 7 at the Sioux City Convention
Center, 801 Fourth Street, Sioux City, Iowa, on Tuesday, May 3, 1994, at 9:00
a.m., central daylight time, for the following purposes:
(a) to elect directors of the Corporation;
(b) to consider and vote upon the following proposal described in the
attached Proxy Statement:
(1) Proposal 1 to ratify the selection by the Board of Directors
of the firm of Deloitte & Touche as independent accountants
for the Corporation for 1994.
(c) to transact such other business as may properly come before the
Meeting.
Only stockholders of record of the Corporation's Common Shares at the
close of business on March 11, 1994 are entitled to notice of, and to vote at,
the Meeting.
George H. Valentine
George H. Valentine
Vice President, General Counsel
and Corporate Secretary
March 25, 1994
<PAGE> 4
PROXY STATEMENT
GENERAL
The Annual Meeting of Stockholders of Terra Industries Inc. (the
"Corporation") will be held in Rooms 6 and 7 at the Sioux City Convention
Center, 801 Fourth Street, Sioux City, Iowa, on Tuesday, May 3, 1994, at 9:00
a.m., central daylight time.
The mailing address of the principal executive offices of the
Corporation is Terra Centre, 600 Fourth Street, P.O. Box 6000, Sioux City,
Iowa, 51102-6000. This Proxy Statement and the accompanying proxy are first
being sent or given to stockholders on or about March 25, 1994.
The accompanying proxy is solicited by the Board of Directors of the
Corporation. It may be revoked by written notice given to the Corporate
Secretary of the Corporation at any time before being voted. Proxies in this
form, properly executed, duly returned to the Corporation and not revoked, will
be voted for the election of directors (except to the extent that authority
therefor is withheld), and on the Proposal described in this Proxy Statement,
in accordance with the instructions in the proxy. The Board of Directors is
not aware on the date hereof of any matter proposed to be presented at the
Meeting other than the election of directors and Proposal 1. If any other
matter is properly presented, the persons named in the accompanying form of
proxy will have discretionary authority to vote thereon according to their best
judgment. Presence at the Meeting does not of itself revoke the proxy.
SECURITIES ENTITLED TO VOTE
The only securities entitled to be voted at the Meeting are the
Corporation's Common Shares, and only holders of record on the close of
business on March 11, 1994 (the "record date"), are entitled to vote. The
Common Shares are each entitled to one vote per share, all voting together as a
single class.
On March 11, 1994, 69,597,352 Common Shares were issued and outstanding.
VOTE REQUIRED
In the election of directors, the holders of Common Shares are entitled
to one vote for each Share held on the record date for each director being
elected (with no cumulative voting permitted), and on all other matters to one
vote for each Share held. Under Maryland law and the Corporation's Restated
Articles of Incorporation and Bylaws, the affirmative vote of a plurality of
the combined votes cast by the holders of the Common Shares is necessary to
elect a director. On other matters, the aggregate number of votes cast, i.e.,
those stockholders voting "for" or "against" the matter, but not those
abstaining from voting, will be counted for purposes of determining the minimum
number of affirmative votes required for approval of the matter, and the total
number of votes cast "for" will be counted for purposes of determining whether
sufficient affirmative votes have been cast to approve the matter. An
abstention from voting on the matter by a stockholder at the Annual Meeting, as
well as broker non-votes will be considered for purposes of determining the
number of Common Shares present at the Meeting; however, such abstentions and
broker non-votes will not be considered a vote "for" or "against" the matter,
and will therefore not be considered in determining whether or not the proposal
passed.
Minorco (U.S.A.) Inc. ("Minorco USA"), the Corporation's majority
stockholder, has advised the Corporation that it intends to vote its Common
Shares for the election of each of the directors set forth in this Proxy
Statement and for Proposal 1 set forth herein, thereby ensuring the election of
each of the directors and the approval of Proposal 1.
-2-
<PAGE> 5
ELECTION OF DIRECTORS
NOMINEES
The Board of Directors consists of eight members who are elected to hold
office until the next Annual Meeting or until their successors are duly elected
and qualified. The affirmative vote of a plurality of the combined votes cast
by the holders of Common Shares voting thereon is necessary to elect a
director. If no contrary indication is made, proxies in the accompanying form
are to be voted for the nominees named below or, in the event any such nominee
is not a candidate or is unable to serve as a director at the time of the
election (which is not now expected), for any nominee who shall be designated
by the Board of Directors to fill such vacancy. All nominees named below are
incumbent members of the Board of Directors. Set forth below opposite the name
and age of each nominee are his or her present positions and offices with the
Corporation, his or her principal occupations during the past five years, and
the year in which he or she was first elected a director of the Corporation.
<TABLE>
<CAPTION>
Year first
Present positions and offices with the Corporation and elected
Name and Age principal occupations and positions during the past five years Director
------------ -------------------------------------------------------------- --------
<S> <C> <C>
Carol L. Brookins (50) Founder, President and Chief Executive Officer of World 1993
Perspectives, Incorporated (an information, analysis and
consulting firm specializing in agricultural policies, markets
and issues) since 1980.
Edward M. Carson (64) Chairman of the Board and Chief Executive Officer of First 1983
Interstate Bancorp since June 1990 and President thereof from
January 1985 to May 1990.
David E. Fisher (51) Finance Director of Minorco since January 1990; Vice President 1993
and Secretary of Minorco prior thereto.
Basil T. A. Hone (67) Retired; Vice President, Metals Division of Union Carbide 1986
Corporation (chemical, industrial gases and specialty products)
until 1984.
Burton M. Joyce (52) President and Chief Executive Officer of the Corporation since 1986
May 1991; Executive Vice President and Chief Operating Officer
thereof from February 1988 to May 1991.
John R. Norton III (64) Chairman and Chief Executive Officer of J. R. Norton Company 1993
(agricultural production) since 1972. Between May 1985 and
February 1986, Mr. Norton served as a U.S. Deputy Secretary of
Agriculture and was not an officer of J. R. Norton Company
during that period.
Reuben F. Richards (64) Chairman of the Board of the Corporation since December 1982; 1982
Chief Executive Officer thereof from December 1982 to May 1991
and President thereof from July 1983 to May 1991; Chairman of
the Board of Engelhard Corporation since May 1985 and Chairman
of the Board of Minorco USA since May 1990 and Chief Executive
Officer and President thereof since February 1994.
Henry R. Slack (44) Chief Executive of Minorco since December 1992 and President 1983
thereof since September 1985.
</TABLE>
-3-
<PAGE> 6
In addition, several directors of the Corporation are also directors of
other companies that are subject to the reporting requirements of the U.S.
federal securities laws. Mr. Carson is a director of Aztar Corporation and
First Interstate Bancorp; Mr. Joyce is a director of Yuba WestGold, Inc. and
IPSCO Inc.; Mr. Norton is a director of Aztar Corporation, America West
Airlines, Suncor, Inc., Pinnacle West Capital Corporation and Arizona Public
Service Company; Mr. Richards is a director of Ecolab Inc., Engelhard
Corporation, Santa Fe Energy Resources, Inc. and Potlatch Corporation; and Mr.
Slack is a director of Engelhard Corporation.
BOARD OF DIRECTORS AND COMMITTEES
During the Corporation's last fiscal year, its Board of Directors held
five meetings. During periods that each incumbent member of the Board of
Directors of the Corporation served during the Corporation's last fiscal year,
each member attended at least 75% of the aggregate of all meetings of the Board
of Directors and all meetings of committees of the Board of Directors of which
he or she was a member, except that Mr. Slack did not attend two meetings of
the Board of Directors and two meetings of the Personnel Committee, and Mr.
Norton did not attend one of two meetings of the Audit Committee held after his
election to the Board of Directors.
The Board of Directors of the Corporation has an Audit Committee, an
Executive Committee and a Personnel Committee. The Board of Directors does not
have a nominating committee. The Audit Committee, which met four times in
1993, is currently comprised of Messrs. Norton and Hone and Ms. Brookins. The
Audit Committee's functions include reviewing the Corporation's procedures for
reporting financial information to the public, recommending annually to the
Board of Directors a firm of independent accountants to audit and review the
Corporation's books and records and approving the scope of such firm's audit,
reviewing reports and recommendations and fees of the Corporation's independent
accountants, reviewing the scope of all internal audits and reports and
recommendations in connection therewith and reviewing non-audit services
provided by the Corporation's independent accountants.
The Executive Committee, which did not meet last year, consists of
Messrs. Carson, Joyce, Richards and Slack. The Executive Committee is
authorized to exercise, to the extent permitted by law, all the power and
authority of the Board of Directors in the management of the Corporation
between meetings of the Board.
The Personnel Committee, which met three times last year, is comprised
of Messrs. Carson, Hone and Slack. Its functions include performing the duties
of the committees that administer certain employee benefit plans, recommending
to the Board of Directors the appointment of executive officers of the
Corporation, establishing the compensation to be paid to such individuals and
establishing compensation administration guidelines generally for the
Corporation and its subsidiaries, and, in consultation with management,
establishing and administering significant personnel policies of the
Corporation.
EQUITY SECURITY OWNERSHIP
Principal Stockholders. The following table shows, based on
information reported to the Corporation by or on behalf of such persons, the
ownership, as of January 31, 1994, of the Corporation's securities by the only
persons known to the Corporation to be the beneficial owners of more than five
percent of any class of the Corporation's voting securities.
-4-
<PAGE> 7
<TABLE>
<CAPTION>
Amount and
nature of
Name and address of Title of beneficial Percentage
beneficial owner class ownership of class
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minorco (U.S.A.) Inc. Common Shares 37,160,725 sole 53%
5251 DTC Parkway voting and
Suite 700 investment
Englewood, Colorado 80111 power
Sasco Capital Incorporated Common Shares 4,204,400 sole 6%
10 Sasco Hill Road investment
Fairfield, Connecticut 06430 power 1/
</TABLE>
1/ Sasco Capital Incorporated has sole voting power over 2,367,200 of the
4,204,400 Common Shares beneficially owned by it as of January 31, 1994,
or 6% of the total voting power of the Corporation.
- - - --------------
Minorco USA is involved in mining and natural resource-related
activities in North America. Minorco USA is indirectly wholly owned by
Minorco, a company incorporated under the laws of Luxembourg as a societe
anonyme. Minorco is an international natural resources company principally
involved in mining and the processing of gold, base metals and industrial
materials, pulp, paper, packaging and in agribusiness. Minorco's address is 9
rue Sainte Zithe, L-2763 Luxembourg City, Grand Duchy of Luxembourg. The
capital stock of Minorco is owned in part as follows: approximately 43%,
directly or through subsidiaries, by Anglo American Corporation of South Africa
Limited ("Anglo American"), a publicly held mining and finance company;
approximately 22%, directly or through subsidiaries, by De Beers Centenary AG
("Centenary"), a publicly held Swiss diamond mining and investment company; and
approximately 3% by Anglo American Gold Investment Company Limited ("Amgold"),
a publicly held mining investment company. Approximately 39% of the capital
stock of Anglo American is owned, directly or through subsidiaries, by De Beers
Consolidated Mines Limited ("De Beers"), a publicly held diamond mining and
investment company. Approximately 29% of the capital stock of Centenary and
approximately 33% of the capital stock of De Beers is owned, directly or
through subsidiaries, by Anglo American. De Beers owns approximately 9% of
Centenary. Approximately 50% of the capital stock of Amgold is owned, directly
or through subsidiaries, by Anglo American.
Mr. Nicholas F. Oppenheimer, Deputy Chairman and a director of Anglo
American, Centenary, De Beers, and Chairman and a director of Amgold and a
director of Minorco, and Mr. Slack, a director of the Corporation and Minorco
USA, Chief Executive, President and a director of Minorco and a director of
Anglo American, have indirect partial interests in approximately 7% of the
outstanding shares of Minorco, approximately 8% of the outstanding shares of
Anglo American, and less than one percent of the outstanding shares of Amgold.
Also, Messrs. Hone and Richards beneficially own respectively 3,350 and 1,000
Minorco Ordinary Shares, and Mr. Hone beneficially owns 1,000 Anglo American
Ordinary Shares, each constituting less than one percent of the outstanding
shares of the issuer. Mr. Richards is Chairman of the Board, Chief Executive
Officer and President of Minorco USA and a director of Minorco. Mr. Fisher is
a director of Minorco USA and Minorco. Mr. Joyce is a Vice President of
Minorco USA. Minorco USA is engaged in certain transactions with the
Corporation described under "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"
below.
Directors and Officers. The following table shows the equity securities
of the Corporation and its subsidiaries that were beneficially owned by each of
the following individuals as of December 31, 1993: directors and nominees
individually, the chief executive officer (who is also a director), the four
other most highly compensated executive officers, P. D. Foster (who retired as
an executive officer of the Corporation in July 1993), and the directors and
executive officers of the Corporation as a group.
-5-
<PAGE> 8
<TABLE>
<CAPTION>
Number of Common Shares
Name Beneficially Owned 1/
---- ----------------------
<S> <C>
J.S. Burchfield . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,415 2/
E.M. Carson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
P.D. Foster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,324 2/
B.T.A. Hone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,711
B.M. Joyce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344,438 2/ 3/
F.G. Meyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,149 2/
J.R. Norton III . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
R.F. Richards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458,343 2/
H.R. Slack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
W.M. Rosenbury . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,147 2/
Directors and all executive officers as a group (14 persons) . . . . 1,314,163 2/
</TABLE>
- - - --------------
1/ Except as described in footnote three below, each director, nominee or
executive officer had sole voting and investment power over the shares
shown as beneficially owned. Each director, nominee and executive officer
individually beneficially owned less than one percent, and the directors
and executive officers as a group owned approximately 2% of the total
issued and outstanding Common Shares of the Corporation.
2/ The number of Common Shares shown as beneficially owned by Messrs. Joyce,
Richards, Rosenbury, Meyer and Foster and by all directors and executive
officers as a group, include 255,000, 446,000, 81,000, 37,700, 62,200 and
921,700 Common Shares, respectively, as to which such person or group had
the right to acquire beneficial ownership pursuant to the exercise, on or
before April 30, 1994, of employee stock options. Mr. Burchfield does not
own any employee stock options. The number of Common Shares shown also
reflect the ownership of certain restricted Common Shares subject to
certain performance related vesting conditions and of matching
contributions of Common Shares under the Corporation's Employees' Savings
and Investment Plan as of December 31, 1993.
3/ Mr. Joyce shares with his spouse investment and voting power with respect
to 30,000 Common Shares.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers, directors and greater than ten percent
beneficial owners to file initial reports of ownership and reports of changes
in beneficial ownership with the Securities and Exchange Commission ("SEC") and
the New York Stock Exchange. Executive officers and directors are required by
SEC regulations to furnish the Corporation with copies of all Section 16(a)
forms they file. Based solely on a review of the copies of such forms
furnished to the Corporation and written representations from the Corporation's
executive officers and directors, all of the Corporation's officers, directors
and greater than ten percent beneficial owners made all required filings,
except Messrs. John S. Burchfield and Basil T.A. Hone, who each reported one
transaction late on a subsequently filed Form 5.
-6-
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Corporation and its subsidiaries, to or on
behalf of the Corporation's Chief Executive Officer, each of the four other
most highly compensated executive officers of the Corporation (determined as of
the end of the last fiscal year), and P. D. Foster, who retired as an executive
officer of the Corporation in July 1993 (hereafter referred to as the "named
executive officers"), for the fiscal years ended December 31, 1991, 1992 and
1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------- ----------------------- ----------
Other All
Name and Annual Restricted Other
Principal Compen- Stock LTIP Compensa-
Position Year Salary 1/ Bonus 2/ sation 3/ Award(s) 11/ Options Payouts tion 4/
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Burton M. Joyce 1993 $417,924 $356,000 $2,731 -- -- -- $9,285
President and 1992 380,012 190,000 5,071 -- 300,000 10/ -- 7,966
Chief Executive 1991 363,341 270,000 $99,999 5/ 75,000 --
Officer
Reuben F. Richards 1993 342,240 6/ -- 25,003 -- -- -- 4,497
Chairman of the 1992 342,000 6/ -- 25,675 -- -- -- 8,139
Board 1991 397,667 6/ -- 50,000 6/ -- --
W. Mark Rosenbury 1993 188,977 104,694 3,559 -- -- -- 4,497
Executive Vice 1992 175,255 65,000 3,487 150,000 7/ -- -- 6,955
President and Chief 1991 157,666 81,000 -- 23,000 --
Operating Officer
Francis G. Meyer 1993 127,105 65,427 1,733 -- -- -- 3,813
Vice President and 1992 118,320 28,800 1,683 50,000 7/ -- -- 3,550
Chief Financial 1991 109,841 35,000 -- 13,000 --
John S. Burchfield 8/ 1993 114,836 35,425 832 -- -- -- 3,445
Vice President 1992 82,923 25,000 -- 150,000 7/ -- -- 2,892
Human Resources 1991 -- -- -- -- --
Paul D. Foster 9/ 1993 120,000 42,174 1,733 -- -- -- 3,600
Senior Vice 1992 149,156 46,400 1,808 -- -- -- 5,502
President - Sales 1991 139,720 29,000 -- 13,000 --
Terra International
</TABLE>
1/ "Salary" includes amounts deferred at the election of the named
executive officer under the Corporation's Employees' Savings and
Investment Plan and Supplemental Deferred Compensation Plan.
2/ "Bonus" includes amounts awarded under the Corporation's Incentive
Award Program for Key Executives.
3/ "Other Annual Compensation" includes tax reimbursements or "gross-ups"
provided to the named executive officers. While the named executive
officers enjoy certain other perquisites, such perquisites do not
exceed the lesser of $50,000 or 10% of such officer's salary and
bonus. "Other Annual Compensation" includes only amounts earned for
the fiscal years ending December 31, 1992 and 1993.
4/ For 1992, "All Other Compensation" includes amounts (i) attributable
to premium payments by the Corporation on behalf of the named
executive officers to continue term life insurance coverage not
-7-
<PAGE> 10
otherwise available under the Corporation's standard life insurance
plan, and (ii) contributed, allocated or accrued for the named
executive officers under the Corporation's Employees' Savings and
Investment Plan (the "401(K) Plan"). For 1993, such amounts include
only amounts contributed, allocated or accrued for the named executive
officers under the 401(K) Plan. "All Other Compensation" includes
only amounts earned for the fiscal years ended December 31, 1992 and
1993.
5/ Mr. Joyce was awarded 33,333 restricted Common Shares during 1991.
The closing price of the Common Shares on the New York Stock Exchange
on the date of grant, May 1, 1991, was $3.00. The Common Shares may
not be sold, transferred or assigned until the restrictions expire.
The restriction applicable to 20% of the Common Shares expired on each
of May 1, 1992 and May 1, 1993, and the restrictions applicable to an
additional 20% expire on May 1 in each year thereafter until 1996, so
long as Mr. Joyce remains an employee of the Corporation. The
aggregate number of restricted Common Shares held by Mr. Joyce at
December 31, 1993, was 20,000, and the value thereof calculated as of
the date of grant was $60,000. During the restricted period, Mr.
Joyce is entitled to all benefits incidental to ownership of the
Common Shares, including voting the Common Shares and receiving such
dividends as from time to time may be declared by the Board of
Directors of the Corporation.
6/ Effective May 1, 1991, Mr. Richards commenced performing services for
Minorco USA as well as the Corporation, and Minorco USA has since that
date reimbursed the Corporation for one-half of the compensation paid
to, or accrued on behalf of, Mr. Richards. The amounts shown in the
Summary Compensation Table are net of any reimbursement by Minorco
USA. The Corporation is a party to a deferred compensation agreement
with Mr. Richards described under "Employee Contracts and Termination
of Employment Arrangements" pursuant to which Mr. Richards accrues
certain compensation, reported in the Summary Compensation Table for
the periods indicated, payable at such time as he ceases to be an
employee of the Corporation, attains age 65 or becomes totally
disabled.
7/ On September 25, 1992, the Personnel Committee of the Corporation's
Board of Directors approved the grant of 30,000, 10,000 and 30,000
restricted Common Shares of the Corporation under its 1992 Stock
Incentive Plan ("Performance Shares") to each of Messrs. Rosenbury,
Meyer and Burchfield, respectively. The restricted period terminated
with respect to all but 50% of the Performance Shares on February 1,
1994. The restrictions lapse with respect to an additional 25% of the
Performance Shares after any period of thirty (30) consecutive
business days during which the average closing price of the Common
Shares on the New York Stock Exchange is at least $8.75 per share and
with respect to the remaining 25% after any period of thirty (30)
consecutive business days during which the average price is at least
$10.00 per share. Unvested Performance Shares automatically vest
beginning on the day that either of Messrs. Rosenbury's, Meyer's or
Burchfield's employment with the Corporation is terminated
involuntarily or his respective responsibilities or compensation are
substantially reduced, if such termination or reduction occurs prior
to February 28, 1999, and within twelve months of the date on which
any person or group of persons acting in concert (other than Minorco
USA) acquires beneficial ownership of the outstanding securities of
the Corporation in an amount having, or convertible into securities
having, 50% or more of the ordinary voting power for the election of
directors of the Corporation.
During the restricted period, Messrs. Rosenbury, Meyer and Burchfield
are entitled to all benefits incidental to ownership of the Common
Shares, including voting the Common Shares and receiving such
dividends as from time to time may be declared by the Board of
Directors of the Corporation. No other restricted Common Shares were
owned by Messrs. Rosenbury, Meyer or Burchfield at December 31, 1993.
8/ Mr. Burchfield joined the Corporation as Vice President - Human
Resources in March 1992.
9/ Mr. Foster retired from Terra International, Inc. ("Terra
International") as Senior Vice President - Sales in July 1993 and
remains a consultant to Terra International under a consulting
agreement until
-8-
<PAGE> 11
December 31, 1994, which is described under "Employee Contracts and
Termination of Employment Arrangements."
10/ The options granted to Mr. Joyce in September 1992 vest in the same
manner as the Performance Shares described in footnote seven to the
"SUMMARY COMPENSATION SCHEDULE."
11/ The number of restricted Common Shares held, and the value thereof
(shown in parenthesis), at December 31, 1993 by each of the named
executive officers is: Burton M. Joyce: 20,000 ($152,500); W. Mark
Rosenbury: 30,000 ($228,750); Francis G. Meyer: 10,000 ($76,250); and
John S. Burchfield: 30,000 ($228,750). Messrs. Richards and Foster did
not own any restricted Common Shares at December 31, 1993.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information concerning the unexercised
options to purchase the Corporation's Common Shares granted under the 1983
Stock Option Plan, and the 1987 and 1992 Stock Incentive Plans of the
Corporation. None of the named executive officers exercised any stock options
during 1993.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1993 OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised in-the-Money
Name Options at December 31, 1993 Options at December 31, 1993 1/
--------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Burton M. Joyce 255,000 300,000 $603,750 $787,500
Reuben F. Richards 446,000 -- 780,453 --
W. Mark Rosenbury 81,000 -- 171,825 --
Francis G. Meyer 37,700 -- 91,150 --
John S. Burchfield -- -- -- --
Paul D. Foster 62,200 -- 140,763 --
</TABLE>
1/ Based on the closing price on the New York Stock Exchange--Composite
Transactions of the Corporation's Common Shares on December 31, 1993
($7.625).
PENSION PLAN TABLES
The following table shows the estimated annual retirement benefit
payable on a straight life annuity basis under the Employees' Retirement Plan
of Terra International (the "Retirement Plan") and the Corporation's Excess
Benefit Plan, on a non-contributory basis, which covers the named executive
officers (other than Paul D. Foster, who, as a former employee of Terra
International, is entitled to estimated annual retirement benefits as set forth
below) and certain other employees of Terra International, at various levels of
accrued service and compensation.
-9-
<PAGE> 12
<TABLE>
<CAPTION>
Years of Credited Service
--------------------------------------------------------------------------------------
Remuneration 10 15 20 25 30
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$150,000 $24,887 $37,331 $49,774 $62,218 $74,661
250,000 42,387 63,581 84,774 105,968 127,161
500,000 86,137 129,206 172,274 215,343 258,411
750,000 129,887 194,831 259,774 324,718 389,661
</TABLE>
"Compensation" under the Retirement Plan includes all salaries and wages
paid to a participant, including bonuses, overtime, commissions and amounts the
participant elects to defer under the Corporation's Employees' Savings and
Investment Plan and Supplemental Deferred Compensation Plan. Covered earnings
are limited by Section 401(a)(17) of the Internal Revenue Code ("Code") to
$235,840 in 1993. The above benefits are subject to the limitations of Section
415 of the Code, which, in 1993, provided for a maximum annual payment of
approximately $115,641. Under the Corporation's Excess Benefit Plan, however,
the Corporation will supplement those benefits so that the amount the
participant will receive will be equal to the amount that would have been
received under the Retirement Plan but for such limitations. Covered
compensation for the named executive officers (other than Paul D. Foster) as
of the end of the last calendar year is: Burton M. Joyce: $607,924; Reuben F.
Richards: $684,480; W. Mark Rosenbury: $253,977; Francis G. Meyer: $155,905;
and John S. Burchfield: $139,836. The estimated years of service for each
named executive officer is as follows: Burton M. Joyce: 7; Reuben F. Richards:
11; W. Mark Rosenbury: 7; Francis G. Meyer: 11; and John S. Burchfield: 2.
Except for those employees of Terra International entitled to benefits
set forth in the above table, executive officers of the Corporation, including
Paul D. Foster, who are employees of Terra International, are entitled to the
estimated annual retirement benefit under the Retirement Plan and Excess
Benefit Plan as set forth in the following table:
<TABLE>
<CAPTION>
Years of Credited Service
--------------------------------------------------------------------------------------
Remuneration 10 15 20 25 30
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$150,000 $ 21,887 $ 32,831 $ 43,774 $ 54,718 $ 65,661
250,000 37,387 56,081 74,774 93,468 112,161
500,000 76,137 114,206 152,274 190,343 228,411
750,000 114,887 172,331 229,774 287,218 344,661
</TABLE>
Covered compensation for Paul D. Foster as of the end of the last
calendar year is $166,400, and the estimated years of service for Mr. Foster is
16.
Covered compensation for each of the named executive officers includes
the salary paid in 1993 to each of the named executive officers plus the bonus
paid in 1993 to such executive officers for service to the Corporation and its
subsidiaries in 1992. Amounts reported in the table entitled "SUMMARY
COMPENSATION TABLE" for 1993 include the salary paid to each of the named
executive officers in 1993 plus the bonus paid to such executive officers in
1994 for service to the Corporation and its subsidiaries in 1993. Covered
compensation for Mr. Richards includes amounts paid by the Corporation subject
to reimbursement by Minorco USA, as more particularly described under "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" below.
-10-
<PAGE> 13
EMPLOYEE CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Paul D. Foster retired from Terra International as Senior Vice President
- - - - Sales in July 1993 (the "Retirement Date"). In May 1993, Terra International
entered into a retirement agreement ("Retirement Agreement") with Mr. Foster
pursuant to which it agreed to pay Mr. Foster, after the Retirement Date, 50%
of his then full-time salary ($159,999), together with full benefits, through
December 31, 1993, and thereafter a specific rate for each day's service
provided by Mr. Foster to Terra International. On December 30, 1993, Mr.
Foster and Terra International terminated the Retirement Agreement and entered
into a consulting agreement ("Consulting Agreement") pursuant to which Terra
International agreed to retain Mr. Foster as a consultant through December 31,
1994 at a rate of $50,000 for a minimum of 50 days' service to Terra
International by Mr. Foster.
The Corporation is a party to a deferred compensation agreement with
Reuben F. Richards that remains effective until he ceases to be an employee,
attains age 65 or becomes totally disabled. Pursuant to the agreement, from
April 1, 1983, to March 31, 1991, the Corporation credited an account for Mr.
Richards with phantom stock units equal to the number of whole Common Shares
that could have been acquired with $50,000 at the market price on the last
business day of such quarter. In no event may the value of the phantom stock
unit account on any date be less than $1.6 million, the product of (i) $50,000
and (ii) the number of full fiscal quarters through March 31, 1991 (the
"minimum amount"). Beginning April 1, 1991, as of the end of each fiscal
quarter the Corporation credits a cash account for Mr. Richards with $50,000
per fiscal quarter. Mr. Richards is entitled to payment of phantom stock units
credited to his phantom stock unit account and cash balances credited to his
cash account with respect to each fiscal year, provided he remains a full-time
employee either for five years thereafter or until his death, total disability
or attainment of age 65. If his employment is otherwise terminated, the Board
of Directors may require him to forfeit the preceding five years of phantom
stock units or cash credited to his account. Mr. Richards has no right to
payments under the agreement while employed; thereafter, the phantom stock
units credited to his account are to be valued at the greater of (i) the
minimum amount or (ii) the product of the number of his nonforfeited phantom
stock units and the market price of the Common Shares. The Corporation may pay
any amount due to Mr. Richards, his designated beneficiary or his estate under
the terms of the agreement, in cash either as soon as practicable or over a
period of 10 or fewer years, in equal quarterly installments (with interest).
Effective May 1, 1991, Mr. Richards commenced performing services for Minorco
USA as well as the Corporation, and Minorco USA is obligated to reimburse the
Corporation for one-half of the deferred compensation accrued on behalf of Mr.
Richards under the terms of the agreement.
As described in footnote seven to the table entitled "SUMMARY
COMPENSATION TABLE," the vesting or exercisability of certain awards granted to
the named executive officers is accelerated in the event of certain corporate
transactions including a change in control of the Corporation.
DIRECTOR COMPENSATION
Each director who is not an officer or employee of the Corporation or of
one of its subsidiaries receives an annual retainer of $16,000 for services as
a director. In addition, such directors receive a fee of $800 for each Board
or Committee meeting attended and are reimbursed for their expenses of
attending such meetings.
PERFORMANCE GRAPH
The SEC requires that the Corporation include in this Proxy Statement a
line-graph presentation comparing cumulative, five-year shareholder returns on
an indexed basis with the S&P 500 Stock Index and either a nationally
recognized industry standard or an index of peer companies selected by the
Corporation.
The graph appearing below assumes the investment on January 1, 1989, of
$100 in Common Shares of the Corporation, the S & P 500 Stock Index and two
industry peer groups. The peer group designated "Former Industry Peer Group"
consists of agribusiness companies selected by the Corporation in January 1993
for inclusion in last year's Proxy Statement, and consists of Ag Services of
America Inc., Agricultural Minerals Corporation, BioTechnica International,
Inc., Deere & Company, DEKALB Genetics Corporation, First Mississippi
Corporation, Freeport-McMoRan Resource Partners, Limited Partnership, IMC
Fertilizer Group, Inc., Potash
-11-
<PAGE> 14
Corporation of Saskatchewan Inc. and The Vigoro Corporation. The peer group
designated "Current Industry Peer Group" consists of the companies included in
the Former Industry Peer Group, except Deere & Company, an agriculture
equipment manufacturer, and includes LESCO, Inc., a company engaged in the
manufacture and sale of fertilizer, turf protection, grass seed and other
products. The Corporation selected the Current Peer Group for inclusion in
this year's Proxy Statement to more accurately reflect its business as a
producer and distributor of crop production and professional products and
services to farm and other non-agribusiness customers.
[Five-Year Stock Performance Graph]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terra Industries Inc. 100 90 55 74 72 116
Former Industry Peer Group 100 106 95 118 108 155
Current Industry Peer Group 100 84 86 124 109 132
S & P 500 Stock Index 100 132 127 166 179 197
</TABLE>
Although the companies included in the Current Industry Peer Group were
selected because of similar industry characteristics, they are not
representative of the Corporation's business during the entire period
indicated. The Corporation began a major restructuring of its operations in
late 1990 to focus on agribusiness and moved its corporate headquarters from
New York to Sioux City, Iowa. Prior to the restructuring, the Corporation's
financial results were substantially affected by the performance of its
non-agribusiness operations, including coal, base metals and gold mining
operations. The comparison of the Corporation's performance to the performance
of the Current Industry Peer Group following the restructuring should be more
meaningful, and is reflected in the graph appearing below, which assumes the
investment on January 1, 1991, of $100 in Common Shares of the Corporation,
the Current Industry Peer Group and the S & P 500 Stock Index.
-12-
<PAGE> 15
[Three-Year Stock Performance Graph]
<TABLE>
<CAPTION>
1991 1992 1993 1994
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Terra Industries Inc. 100 134 131 211
Current Industry Peer Group 100 143 126 153
S & P 500 Stock Index 100 130 140 154
</TABLE>
The graphs appearing above shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange
Act of 1934, except to the extent the Corporation specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Richards, the Chairman of the Board of the Corporation, is a
director of Minorco and the Chairman of the Board, Chief Executive Officer,
President and a member of the compensation committee of Minorco USA; Mr.
Joyce, the President and Chief Executive Officer of the Corporation, is a Vice
President of Minorco USA; and Mr. Slack, a director of the Corporation and the
Chairman of the Personnel Committee of the Board of Directors of the
Corporation, is an officer of Minorco and a director of Minorco and Minorco
USA. Minorco USA is indirectly wholly owned by Minorco.
The Corporation and Minorco USA engage in various transactions in the
ordinary course of business discussed more fully under "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS" below. Such transactions are primarily on a
cost-reimbursement or contractual basis, or, in certain cases, are on terms
determined by reference to market prices.
-13-
<PAGE> 16
REPORT ON EXECUTIVE COMPENSATION
GENERAL POLICY
The foundation of the Corporation's compensation policy is to offer
competitive compensation opportunities to attract, retain and motivate
executive officers. The compensation of executive officers is reviewed and
approved annually by the Personnel Committee of the Board of Directors of the
Corporation (the "Committee"), which is comprised entirely of non-employee
directors. The three general elements in the Corporation's executive
compensation program consist of base salary, annual incentive awards under the
Corporation's Incentive Award Program for Key Executives (the "Key Executive
Plan"), and long-term incentive compensation in the form of stock options,
restricted stock or other award opportunities offered under the Corporation's
1992 Stock Incentive Plan approved by stockholders in May 1992 (the "Long-Term
Plan"). As an executive officer's level of responsibility increases, a greater
portion of his or her total compensation is based on annual and long-term
incentive compensation and less on base salary.
BASE SALARY
Annual base salaries paid to the Corporation's executive officers are
fixed at levels generally competitive with amounts paid to executive officers
with comparable experience and responsibilities at other companies engaged in a
similar business as the Corporation and with other companies of similar size or
market capitalization ("Performance Peer Group"). There is no correlation
between the composition of the Performance Peer Group and the composition of
the Current Industry Peer Group used for purposes of calculating the
comparative shareholder returns set forth in the Performance Graphs appearing
above. To attract, retain and motivate executive officers, the Corporation
competes with a broader spectrum of companies (many of which are non-public)
than those included in the Current Industry Peer Group.
Changes in the base salaries of executive officers (other than Burton M.
Joyce, the Corporation's President and Chief Executive Officer) are reviewed by
the Committee annually with Mr. Joyce and the Vice President-Human Resources
and are largely based on the individual's performance and contribution to the
Corporation. In addition, the Committee periodically obtains advice from an
independent compensation consultant concerning salary competitiveness. The
salary survey and other information provided by the compensation consultant is
then considered along with factors relating to the executive officer's
performance to determine appropriate increases to base salaries.
ANNUAL INCENTIVE AWARDS
Under the Key Executive Plan, which is reviewed and approved by the
Committee in the first quarter of each year, an incentive award pool is
established based on a target percentage of executive officers' salaries and
the achievement of certain financial goals proposed by management to the
Committee (the "Targeted Goals"). The incentive award pool is then increased
or reduced based on the Corporation's performance measured against the Targeted
Goals. Annual incentive payments for individual executive officers are based
on their target percentage, which generally increases as the executive
officer's level of responsibility increases. Awards are then increased or
reduced based on the individual executive officer's achievement of specified
objectives established at the beginning of each fiscal year, individual job
performance and the size of the incentive award pool.
For awards to participants under the Key Executive Plan in 1993
respecting service to the Corporation in 1992 (the "1992 Plan"), the Targeted
Goals were based on net income and cash flow, with net income receiving a 60%
weight and cash flow receiving the remaining 40%. Incentive compensation
awarded in 1993 under the 1992 Plan to the named executive officers reflected
the Corporation's attainment of 100% of the net income goal and 86% of the cash
flow goal, or 95% overall achievement under the 1992 Plan (the "1992
-14-
<PAGE> 17
Performance Factor). The 1992 Performance Factor was modified from 95% to 92%
by the Committee, based on a recommendation from Mr. Joyce.
Incentive compensation awarded in 1994 under the Key Executive Plan
respecting service to the Corporation in 1993 (the "1993 Plan") was calculated
in the same manner as the 1992 Plan. Under the 1993 Plan, however, the
Targeted Goals were based on net income and return-on-equity, with net income
receiving a 60% weight and return-on-equity receiving the remaining 40%.
Incentive compensation awarded in 1994 reflected the Corporation's attainment
of 106% of the net income goal and 103% of the return-on-equity goal, or 105%
overall achievement under the 1993 Plan.
LONG TERM AWARDS
Long-term incentive awards under the Long-Term Plan are designed to
provide an incentive to executive officers in increasing shareholder value on a
sustained basis. Prior to 1992, the Corporation granted to its executive
officers options to purchase Common Shares of the Corporation; however, as part
of the Corporation's review of its compensation policies, management perceived
that the Corporation's practice of granting stock options as the exclusive
means of long-term incentive compensation had not been an effective incentive
tool in achieving the Corporation's financial goals. To address this concern,
the Corporation engaged an independent compensation consultant in July 1992 to
evaluate the competitiveness of the Corporation's compensation plans and
provide recommendations to the Committee regarding long-term incentive
compensation to be awarded to the Corporation's executive officers.
The consultant reviewed base, annual and long-term incentive
compensation policies and practices for executive officers of the Corporation
and compared the same with compensation offered to executive officers of
companies within the Performance Peer Group. The consultant's report concluded
that the Corporation's base salaries and annual bonus payments were generally
competitive with the companies within the Performance Peer Group but its
long-term incentive programs were not competitive. The report made specific
recommendations regarding structuring long-term incentive grants to executive
officers under the Long-Term Plan in order to provide an incentive opportunity
to executive officers that aligns the financial interest of the Corporation's
senior management with that of its stockholders.
Acting on the recommendations of the independent consultant, the
Committee issued, in September of 1992, incentive stock options and
non-qualified stock options to Mr. Joyce and certain other key employees of the
Corporation and restricted stock ("Performance Shares") to other key employees,
including executive officers of the Corporation (who in prior years had
received grants of stock options rather than Performance Shares). Performance
Shares are grants of restricted Common Shares of the Corporation that vest if
the Corporation's Common Shares achieve certain sustained levels of
appreciation in the six years following their issuance. As of the date of the
award, participants have all the rights of a stockholder other than the right
to sell the Performance Shares. The Committee believes that this encourages
participants, including executive officers, to view themselves as long-term
stockholders, thus serving the interests of all stockholders by focusing their
efforts on building stockholder value. Performance Shares are subject to
forfeiture if the performance threshold is not attained or if a participant
terminates employment for any reason prior to vesting.
In deciding to grant long-term incentive awards to the Corporation's
executive officers that vest on the basis of appreciation of the market price
of the Corporation's Common Shares, the Committee noted that the value of the
awards will not be immediately realized and will be dependent on building
profitability and stockholder value well after the date of grant and will
provide a continuing incentive to executive officers long after the award has
actually been earned.
In determining the specific grants of Performance Shares to executive
officers in September of 1992, the Committee reviewed with the Vice
President-Human Resources of the Corporation and the independent consultant the
recommended individual awards, taking into account the respective scope of
accountability,
-15-
<PAGE> 18
strategic and operational goals and contribution of each executive officer. No
grants were made under the Long-Term Plan to Mr. Joyce or the other named
executive officers of the Corporation in 1993.
CEO COMPENSATION
Base Salary. In determining the base salary of Mr. Joyce for 1993, the
Committee considered his then current salary relative to the competitively
determined salary range for a comparable position in companies within the
Performance Peer Group, as well as Mr. Joyce's continued success in
restructuring the Corporation's business to focus on agribusiness. No specific
weight was assigned to these factors in determining Mr. Joyce's base salary
increase for 1993.
Based on the foregoing, Mr. Joyce's salary was increased, effective
March 1, 1993, by $44,898 to $425,000 from $380,102, which was his base salary
since May 1, 1991. Mr. Joyce's base salary was further increased by $3,765,
effective January 1, 1994. This $3,765 increase in Mr. Joyce's base salary
solely reflects the payment to Mr. Joyce as base salary amounts previously paid
on his behalf by the Corporation for certain employee benefits, which were
discontinued.
Annual Incentive Awards. Mr. Joyce's target percentage for purposes of
calculating his annual incentive award under the 1992 Plan was 50% of his
annual base salary, and is 75% under the 1993 Plan. Based on his annual salary
at December 31, 1992, and his then target percentage of 50%, the incentive
award to Mr. Joyce under the 1992 Plan was $190,000. Based on Mr. Joyce's
annual salary at December 31, 1993, and taking into consideration the
Corporation's 1993 performance, which, as discussed above, exceeded the
Targeted Goals, his incentive award under the 1993 Plan was $356,000. This
amount included an additional incentive award under the 1993 Plan, and
reflected the achievement of specific goals relating to the successful
acquisition of the Corporation's Canadian operations from ICI Canada, Inc. and
the integration of those operations into Terra International. In considering
the additional incentive award, the Committee noted that the successful
acquisition and integration of the Canadian operations resulted in a
contribution to earnings per share in 1993 of $.13 compared to initial
projections of $.10 per share.
Long Term Awards. The award of employee stock options to Mr. Joyce in
September of 1992 was fixed separately from awards to other executive officers
under the Long-Term Plan and was based on, among other factors, the Committee's
determination that Mr. Joyce's awards should be at greater risk than awards to
executive officers generally, so that his awards would have less value if the
stockholders do not enjoy sustained appreciation in their investments. On the
basis of an analysis of the relative value of stock options and Performance
Shares as determined by the Corporation's independent compensation consultant,
the Committee determined that the number of stock options granted to Mr. Joyce
should be larger than the number of Performance Shares that would otherwise be
granted to Mr. Joyce under the Long-Term Plan but provide the same long term
opportunity as a grant of Performance Shares. Based on that determination,
among other factors, including consideration of the ratio between the value of
incentive awards typically given chief executive officers of companies within
the Performance Peer Group, the Committee concluded that a grant to Mr. Joyce
of options to purchase 300,000 of the Corporation's Common Shares was
appropriate. Similar to the Performance Shares granted to the other executive
officers of the Corporation, the options granted to Mr. Joyce vest if the
Corporation's Common Shares achieve certain sustained levels of appreciation in
the six years following their issuance.
E. M. Carson B.T.A. Hone H. R. Slack
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, a subsidiary of Minorco USA has engaged in certain
metals trading and inventory financing activities with a corporation wholly
owned by the Corporation. In certain instances, the obligations of such
corporation to the subsidiary of Minorco USA have been guaranteed by the
Corporation. On January 1, 1994, the amount guaranteed under this arrangement
was approximately $2.2 million.
The Corporation and Minorco USA and its affiliates also engage in
various transactions in the ordinary course of business incident to the conduct
of their respective operations. Minorco USA and its affiliates paid
-16-
<PAGE> 19
the Corporation in 1993 or were billed an aggregate of approximately $3.4
million in connection with such transactions, including, among other things,
(i) the provision of office space, (ii) one-half of the salary, benefits,
office services and related overhead paid to, or incurred on behalf of, Reuben
F. Richards, the Chairman of the Board of Directors of the Corporation, (iii)
the purchase or allocation of insurance and the provision of related risk
management services in an amount approximating $2.4 million at December 31,
1993, and (iv) other miscellaneous charges. The terms of each transaction are
based on arms-length negotiations and are principally on a cost-reimbursement
or contractual basis, or, in the case of insurance, by reference to the cost to
each company of purchasing separate policies.
PROPOSAL 1
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify its
selection of Deloitte & Touche as independent accountants for the Corporation
for the fiscal year 1994. Deloitte & Touche serves as independent accountants
for Minorco and various subsidiaries of Minorco, including Minorco USA.
The Board of Directors intends to introduce at the Annual Meeting the
following resolution:
RESOLVED, that selection by the Board of Directors of the Corporation of
Deloitte & Touche as independent accountants for the Corporation for the
year 1994 be, and it hereby is, ratified.
It is expected that members of Deloitte & Touche will attend the Annual
Meeting to make a statement if they desire to do so and to respond to any
appropriate questions that may be asked by stockholders.
The affirmative vote of a majority of the votes cast by the holders of
Common Shares voting thereon is necessary for adoption of Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Proposals of stockholders intended to be submitted at the 1995 Annual
Meeting of Stockholders must be received by the Corporation at its principal
executive offices on or before November 23, 1994 to be eligible for inclusion
in the Corporation's proxy statement and accompanying proxy for such meeting.
MISCELLANEOUS
The cost of the solicitation of proxies will be borne by the
Corporation. In addition to the use of the mails, proxies may be solicited
personally, by telephone or by telegraph or by a few regular employees of the
Corporation without additional compensation. The Corporation does not expect
to pay any compensation for the solicitation of proxies but will reimburse
brokers and other persons holding stock in their names, or in the names of
nominees, at approved rates, for their expenses for sending proxy material to
principals and obtaining their proxies.
A COPY OF THE CORPORATION'S 1993 ANNUAL REPORT ON FORM 10-K FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (WITHOUT EXHIBITS) WILL BE MADE
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CORPORATE
RELATIONS DEPARTMENT, TERRA INDUSTRIES INC., TERRA CENTRE, 600 FOURTH STREET,
P.O. BOX 6000, SIOUX CITY, IOWA 51102-6000.
March 25, 1994
-17-
<PAGE> 20
PROXY
TERRA INDUSTRIES INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints REUBEN F. RICHARDS, BURTON M. JOYCE AND FRANCIS
G. MEYER, jointly and severally, as proxies, with power of substitution, to
vote at the Annual Meeting of Stockholders (including adjournments) of TERRA
INDUSTRIES INC. to be held May 3, 1994, with all powers the undersigned would
possess if personally present, on the election of directors, on the Proposal
described in the Proxy Statement and, in accordance with their discretion, on
any other business that may come before the meeting.
Election of Directors, Nominees:
C.L. BROOKINS, E.M. CARSON, D.E. FISHER,
B.T.A. HONE, B.M. JOYCE, J.R. NORTON III,
R.F. RICHARDS and H.R. SLACK
(Comments or Change of Address)
- - - -------------------------------------
- - - -------------------------------------
- - - -------------------------------------
- - - -------------------------------------
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
Please mark your
X votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election
of directors and FOR Proposal 1.
The Board of Directors recommends a vote FOR proposal 1.
FOR WITHHELD
Election of Directors. (see reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- - - --------------------------------------------------------
FOR AGAINST ABSTAIN
1. Approval of Independent accountants [ ] [ ] [ ]
Change of Address or Comments (on reverse). [ ]
I will attend the Annual Meeting. [ ]
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
SIGNATURE (S) DATE
------------------------------------ -------------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please also give your full title. If a corporation, please
sign in full corporate name by an authorized officer. If a partnership,
please sign in full partnership name by an authorized person.
