<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Terra Industries Inc.
- --------------------------------------------------------------------------------
(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):
[X] No fee required
[_] 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 transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO APPEARS HERE]
March 31, 1998
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 5, 1998 at the Sioux City Hilton, 707 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. There also 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. Please check the appropriate box on your proxy card if you plan to
attend.
It is important that you be represented whether or not you plan to attend
the Meeting personally. Please promptly complete, date and return your proxy
card in the enclosed return envelope to ensure that your vote will be received
and counted.
On behalf of the Board of Directors and management, we would like to
express our appreciation for your support during 1997. We look forward to
seeing you at the Meeting.
/s/ Burton M. Joyce /s/ William R. Loomis, Jr.
BURTON M. JOYCE WILLIAM R. LOOMIS, JR.
President and Chief Executive Officer Chairman of the Board
<PAGE>
[LOGO APPEARS HERE]
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
---------------------------------------------
To the Stockholders:
The Annual Meeting of Stockholders of Terra Industries Inc. (the
"Corporation") will be held at the Sioux City Hilton, 707 Fourth Street, Sioux
City, Iowa, on Tuesday, May 5, 1998 at 9:00 a.m., central daylight time, for the
following purposes:
(a) to elect directors of the Corporation;
(b) to ratify the selection by the Board of Directors of the firm of
Deloitte & Touche LLP as independent accountants for the Corporation
for 1998; and
(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 6, 1998 are entitled to notice of, and to vote at, the
Meeting.
/s/ George H. Valentine
GEORGE H. VALENTINE
Senior Vice President, General Counsel
and Corporate Secretary
March 31, 1998
<PAGE>
PROXY STATEMENT
General
The Annual Meeting of Stockholders of Terra Industries Inc. (the
"Corporation") will be held at the Sioux City Hilton, 707 Fourth Street, Sioux
City, Iowa, on Tuesday, May 5, 1998 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 31, 1997.
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 other matters 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 the ratification of its
selection of independent accountants. 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 6, 1998 (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.
There were 74,945,211 Common Shares issued and outstanding on March 6, 1998.
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 the ratification of independent accountants, 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 ratification of independent accountants 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.
Taurus International S.A. and Taurus Investments S.A., the Corporation's
51.4% and 5.3% stockholders as of December 31, 1997, respectively, are
subsidiaries of Minorco, a company incorporated under the laws of Luxembourg as
a societe anonyme. Each of Taurus International, Taurus Investments and Minorco
have advised the Corporation that they intend to vote the Common Shares
registered in the name of Taurus International and Taurus Investments for the
election of each of the directors set forth in this Proxy Statement and for the
ratification of independent accountants as set forth herein, thereby ensuring
the election of each of the directors and the approval of the selection of
independent accountants.
2
<PAGE>
ELECTION OF DIRECTORS
Nominees
The Board of Directors currently consists of ten members who are elected to
hold office until the next Annual Meeting or until their successors are duly
elected and qualified or their earlier resignation or removal. 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>
Edward G. Beimfohr (65) Partner, Lane & Mittendorf (a New York law firm) since 1994
prior to 1990.
Carole L. Brookins (54) Founder, Chairman 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 (68) Retired; Chairman of the Board and Chief Executive 1983
Officer of First Interstate Bancorp (a bank holding
company) from June 1990 to May 1995 and President
thereof from January 1985 to May 1990.
David E. Fisher (55) Finance Director of Minorco (an international natural 1993
resources company) since January 1990.
Burton M. Joyce (56) 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.
Anthony W. Lea (49) Executive Director and member of Executive Committee 1994
of Minorco since prior to 1990; Joint Managing
Director thereof from January 1990 to December 1992;
Director of Anglo American Corporation of South Africa
Limited since November 1993.
William R. Loomis, Jr. (49) Chairman of the Board of Directors of the Corporation 1996
since May 1996; Chairman, President and Chief
Executive Officer of Minorco (U.S.A.) Inc. since March
1996; Managing Director of Lazard Freres & Co. LLC (an
investment banking firm) since June 1995; General
Partner in the Banking Group of Lazard Freres & Co.
from 1984 to June 1995.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Year first
Present positions and offices with the Corporation and elected
Name and Age principal occupations and positions during the past five years Director
------------ -------------------------------------------------------------- --------
John R. Norton III (68) Chairman and Chief Executive Officer of J. R. Norton 1993
Company (an agricultural production company) 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.
Henry R. Slack (48) Chief Executive and member of Executive Committee of 1983
Minorco since December 1992; President thereof since
September 1985 and Director thereof since 1981.
Robert L. Thompson (52) President and Chief Executive Officer of Winrock 1997
International (an international agricultural
development firm) since July 1993; Dean of Agriculture
at Purdue University from 1987 to 1993; Assistant
Secretary to Economics at the U.S. Department of
Agriculture from 1985 to 1987; Senior Staff Economist,
President's Council of Economic Advisers from 1983 to
1985.
</TABLE>
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, Castle &
Cooke, Inc., Schuff Steel Company and Wells Fargo & Company; Mr. Joyce is a
director of IPSCO Inc.; Mr. Lea is a director of Engelhard Corporation; Mr.
Loomis is a director of Engelhard Corporation; Mr. Norton is a director of
Apollo Group, Inc., Arizona Public Service Company, Aztar Corporation, Pinnacle
West Capital Corporation and Suncor, Inc.; 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 six
meetings. Each member attended at least 75% of the aggregate of all meetings of
the Board of Directors and 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 one meeting of the Personnel Committee.
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 three times in 1997,
is currently comprised of Ms. Brookins, Mr. Norton and Mr. Thompson. 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, is currently
comprised of Messrs. Carson, Joyce, Loomis 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 currently
comprised of Messrs. Beimfohr, Carson and Slack. Its functions include
administering certain employee benefit plans, recommending to the Board of
Directors the appointment of executive officers of the Corporation,
4
<PAGE>
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.
The Board of Directors of the Corporation establishes from time to time
Special Committees of the Board, whose functions are specifically delegated at
the time of establishment. In addition, the Board of Directors and committees of
the Board of Directors take action by unanimous written consent in lieu of a
meeting from time to time.
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 December 31, 1997, 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.
<TABLE>
<CAPTION>
=========================================================================================
Name and address of Amount and nature Percentage
beneficial owner Title of class of beneficial of class
ownership
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taurus International S.A.
9 rue Sainte Zithe Common Shares 38,560,725 sole 51.4%
L-2763 Luxembourg City voting and
Grand Duchy of Luxembourg investment power
- -----------------------------------------------------------------------------------------
Taurus Investments S.A.
9 rue Sainte Zithe Common Shares 4,000,000 sole 5.3%
L-2763 Luxembourg City voting and
Grand Duchy of Luxembourg investment power
- -----------------------------------------------------------------------------------------
Minorco Common Shares 42,560,725 sole
9 rue Sainte Zithe voting power 56.7%
L-2763 Luxembourg City through its
Grand Duchy of Luxembourg subsidiaries Taurus
International and
Taurus Investments
- -----------------------------------------------------------------------------------------
Sasco Capital, Incorporated Common Shares 5,221,200 7.0%
10 Sasco Hill Road sole investment
Fairfield, CT 06430 power (sole voting
power over
3,132,400)
- -----------------------------------------------------------------------------------------
Pioneering Management Corporation Common Shares 4,739,500 6.3%
60 State Street sole voting and
Boston, MA 02109 investment power
=========================================================================================
</TABLE>
Each of Taurus International S.A. and Taurus Investments S.A. is a company
incorporated under the laws of Luxembourg as a societe anonyme and is wholly
owned by Minorco. Minorco is a company incorporated under the laws of Luxembourg
as a societe anonyme and is an international natural resources company with
operations in gold, base metals, industrial minerals, paper and packaging and
agribusiness. The capital stock of Minorco is owned in part as follows:
approximately 45.6%, directly or through subsidiaries, by Anglo American
Corporation of South Africa Limited ("Anglo American"), a publicly held mining
and finance company, and approximately 22.5%, directly or through subsidiaries,
by De Beers Centenary AG ("Centenary"), a publicly held Swiss diamond mining and
investment company. Approximately 38.5% 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 29.4% of the capital stock of Centenary and approximately 32.5% of
the capital stock of De Beers is owned, directly or through subsidiaries, by
Anglo American. De Beers owns approximately 9.5% of Centenary.
5
<PAGE>
Mr. Nicholas F. Oppenheimer, Deputy Chairman and a director of Anglo
American, Chairman and a director of Centenary and De Beers, and a director of
Minorco, and Mr. Slack, a director of the Corporation, 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 and approximately 8% of the outstanding shares of Anglo American.
Messrs. Beimfohr, Fisher, Lea and Loomis are also directors of Minorco. Mr.
Fisher is also a director of Taurus International and Taurus Investments. Mr.
Lea is also a director of Anglo American and Taurus Investments. Minorco and
certain affiliates of Minorco have engaged in certain transactions with the
Corporation as described under the caption "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, 1997: directors and nominees
individually, the chief executive officer (who is also a director), the four
other most highly compensated executive officers, and the directors and
executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
Number of Common Shares
Name Beneficially Owned/1//
---- ----------------------
<S> <C>
E.G. Beimfohr............................................. 5,000
M.L. Bennett.............................................. 78,535/2//
C.L. Brookins............................................. 800
E.M. Carson............................................... 1,000
D.E. Fisher............................................... 250
L.S. Hlobik............................................... 66,580/2/
B.M. Joyce................................................816,252/2//
A.W. Lea.................................................. 250
W.R. Loomis, Jr........................................... 25,000
F.G. Meyer................................................113,019/2//
J.R. Norton III........................................... 1,031
H.R. Slack................................................ 250
R.L. Thompson............................................. 250
G.H. Valentine............................................ 97,775/2/
Directors and all executive officers
as a group (17 persons)..............................1,397,763/2//
</TABLE>
- -------------
/1// Each director, nominee or executive officer has 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. The number of Common Shares shown also reflect the ownership
of certain restricted Common Shares subject to certain performance related
vesting conditions and Common Shares under the Corporation's Employees'
Savings and Investment Plan as of December 31, 1997.
/2// The number of Common Shares shown as beneficially owned by Messrs. Bennett,
Hlobik, Joyce, Meyer and Valentine and by all directors and executive
officers as a group, include 10,000, 10,000, 570,000, 27,700, 9,333 and
682,032 Common Shares, respectively, as to which such person or group had
the right to acquire beneficial ownership pursuant to the exercise, on or
before May 5, 1998, of employee stock options. No other individual listed
held any stock options for Common Shares that are exercisable on or before
May 5, 1998.
Section 16(a) Beneficial Ownership Reporting Compliance
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 ofownership and reports of
6
<PAGE>
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.
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, and each of the four other
most highly compensated executive officers of the Corporation (determined as of
the end of the last fiscal year), (hereafter referred to as the "named executive
officers"), for the fiscal years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
=====================================================================================================
Annual Compensation
- -----------------------------------------------------------------------------------------------------
Name and Other Annual
Principal Position Year Salary/1/ Bonus/2/ Compensation/3/
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Burton M. Joyce 1997 $614,539 $375,000 $4,154
President and 1996 543,115 450,000 3,764
Chief Executive Officer 1995 485,257 375,000 3,513
Michael L. Bennett 1997 207,346 120,063 2,120
Executive Vice 1996 270,039 108,600 1,943
President and Chief 1995 171,442 109,633 1,943
Operating Officer
Lawrence S. Hlobik/7/ 1997 225,346 111,413 --
Sr. Vice President and 1996 200,385 119,900 --
President, Nitrogen 1995 143,180 85,781 --
Division
Francis G. Meyer 1997 239,115 71,224 1,830
Sr. Vice President and 1996 223,769 91,800 1,581
Chief Financial Officer 1995 186,330 94,172 1,664
George H. Valentine 1997 209,116 82,049 2,120
Sr. Vice President, 1996 195,654 99,300 1,943
General Counsel and 1995 165,782 104,520 1,943
Corporate Secretary
=====================================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================
Long-Term Compensation
---------------------------------------
Awards Payouts
---------------------------------------
Restricted All Other
Name and Stock LTIP Compen-
Principal Position Year Award(s)/4/ Options Payouts sation/5/
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Burton M. Joyce 1997 -- 162,000 -- $26,424
President and 1996 $1,828,125/6/ 60,000 -- 24,682
Chief Executive Officer 1995 -- -- -- 21,985
Michael L. Bennett 1997 -- 56,000 -- 11,602
Executive Vice 1996 365,625/6/ 30,000 -- 9,022
President and Chief 1995 -- -- -- 7,714
Operating Officer
Lawrence S. Hlobik/7/ 1997 -- 40,000 -- 9,763
Sr. Vice President and 1996 558,750/6/ 30,000 -- 8,807
President, Nitrogen 1995 191,250/7/ -- -- 86,516
Division
Francis G. Meyer 1997 -- 36,000 -- 9,478
Sr. Vice President and 1996 365,625/6/ 30,000 -- 9,084
Chief Financial Officer 1995 -- -- -- 8,385
George H. Valentine 1997 -- 36,000 -- 8,289
Sr. Vice President, 1996 292,500/6/ 28,000 -- 7,986
General Counsel and 1995 -- -- -- 7,459
Corporate Secretary
=======================================================================================================
</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.
7
<PAGE>
/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.
/4/ The number of restricted Common Shares ("Restricted Shares") held, and the
value thereof (shown in parenthesis), at December 31, 1997 by each of the
named executive officers is: Burton M. Joyce: 125,000 ($1,632,813); Michael
L. Bennett: 37,000 ($483,313); Lawrence S. Hlobik: 55,000 ($718,438);
Francis G. Meyer: 37,000 ($483,313); and George H. Valentine: 30,000
($391,875). During the restricted period, a holder of Restricted Shares 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.
/5/ "All Other Compensation" includes amounts contributed, allocated or accrued
for the named executive officers under the Corporation's Employees Savings
and Investment Plan and Supplemental Deferred Compensation Plan. In the
case of Mr. Hlobik, his reported amount under this column in 1995 also
includes taxable relocation compensation.
/6/ On November 12, 1996, the Personnel Committee of the Corporation's Board of
Directors approved the grant of 125,000, 25,000, 25,000, 25,000 and 20,000
Restricted Shares under the Corporation's 1992 Stock Incentive Plan to each
of Messrs. Joyce, Bennett, Hlobik, Meyer and Valentine, respectively. The
closing per share price of the Common Shares on the New York Stock Exchange
("NYSE") on the date of award was $14.625. The restrictions lapse (i) if
the executive remains employed by the Corporation until November 12, 2005
or (ii) with respect to 25%, 25% and 50% of these Restricted Shares if,
prior to November 12, 2001, the 30 business day average closing price of
the Common Shares on the NYSE is at least $20.50, $22.50 and $24.625 per
share, respectively. The restrictions lapse earlier in the event of a
change in control. See "Employee Contracts and Termination of Employment
and Change in Control Arrangements".
Mr. Hlobik also received a grant of 15,000 Restricted Shares as approved by
the Personnel Committee on February 19, 1996. The closing per share price
of the Common Shares on the NYSE on the first trading day following the
date of award was $12.875. The restrictions lapse with respect to 50%, 25%
and 25% of these Restricted Shares if, prior to February 20, 2002, the 30
business day average closing price of the Common Shares on the NYSE is at
least $16.375, $18.25 and $20.00 per share, respectively. The restrictions
lapse earlier under certain circumstances involving a change in control.
See "Employee Contracts and Termination of Employment and Change in Control
Arrangements".
/7/ Mr. Hlobik joined the Corporation as Senior Vice President, Marketing of
the Nitrogen Division in February 1995 and was promoted to Senior Vice
President of the Corporation and President, Nitrogen Division in February
1996. On February 16, 1995, the Personnel Committee approved the grant of
15,000 Restricted Shares to Mr. Hlobik. The closing price of the Common
Shares on the NYSE on the date of award was $12.75. The restrictions lapse
with respect to 50%, 25% and 25% of these Restricted Shares if, prior to
June 16, 2001, the 30 business day average closing price of the Common
Shares on the NYSE is at least $16.25, $18.125 and $19.875 per share,
respectively. The restrictions lapse earlier under certain circumstances
involving a change in control. See "Employee Contracts and Termination of
Employment and Change in Control Arrangements".
8
<PAGE>
Stock Options
The following table contains information concerning the grant of options to
purchase the Corporation's Common Shares granted in 1997 under the Corporation's
stock incentive plans to the named executive officers. No stock appreciation
rights were granted under the Plan during fiscal year 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
============================================================================================================================
Potential Realizable Value
at Assumed Annual
Individual Grants Rates of Stock Price
Appreciation
for Option Term/2/
- ----------------------------------------------------------------------------------------------------------------------------
% of Total
Number of Options Granted
Options to Employees Exercise or Base Expiration
Name Granted in 1997/1/ in 1997 Price Per Share Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Burton M. Joyce 162,000 18.6% $12.125 12/15/07 $1,235,306 $3,130,509
Michael L. Bennett 56,000 6.4 12.125 12/15/07 427,019 1,082,151
Lawrence S. Hlobik 40,000 4.6 12.125 12/15/07 305,014 772,965
Francis G. Meyer 36,000 4.1 12.125 12/15/07 274,513 695,669
George H. Valentine 36,000 4.1 12.125 12/15/07 274,513 695,669
=============================================================================================================================
</TABLE>
/1/ The Options vest in one-third increments on the business day following each
of the first, second and third anniversary of the date of grant. The
options are exercisable with respect to all of the Common Shares set forth
above following a change in control. See "Employment Contracts and
Termination of Employment and Change in Control Arrangements".
/2/ The amounts reflected in the table represent assumed rates of appreciation
only. Actual gains, if any, on stock option exercises by the named
executive officers depend on the future performance of the Corporation's
Common Shares and overall market conditions, as well as continued
employment.
Option Exercises and Year-End Value Table
The following table provides information concerning the exercise of stock
options during 1997 as well as the number and value of unexercised options to
purchase the Corporation's Common Shares granted under stock incentive plans of
the Corporation.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
================================================================================================================
Number of Unexercised Value of Unexercised
Number of shares Value Options at December 31, in-the-Money Options at
Name acquired on Realized 1997 December 31, 1997/1/
exercise in 1997 ------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Burton M. Joyce 25,000 $73,438 570,000 327,000 $3,598,750 $472,188
Michael L. Bennett -0- -0- 10,000 76,000 -0- 52,500
Lawrence S. Hlobik -0- -0- 10,000 60,000 -0- 37,500
Francis G. Meyer 4,000 $10,625 27,700 56,000 121,644 33,750
George H. Valentine -0- -0- 9,333 54,667 -0- 33,750
================================================================================================================
</TABLE>
/1/ Based on the closing price on the New York Stock Exchange-Composite
Transaction of the Corporation's Common Shares on December 31, 1997
($13.0625).
9
<PAGE>
PENSION PLAN TABLES
The following table shows for employees retiring in 1997 the estimated
annual retirement benefit payable on a straight life annuity basis under the
Employee's Retirement Plan of the Corporation (the "Retirement Plan") and the
Corporation's Excess Benefit Plan (the "Excess Benefit Plan"), on a non-
contributory basis, which covers Burton M. Joyce and certain other employees of
the Corporation, at various levels of accrued service and compensation.
<TABLE>
<CAPTION>
==========================================================================================
Years of Credited Service
Remuneration
------------------------------------------------------------------------
5 10 15 20 25 30
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $12,347 $24,695 $37,042 $49,390 $61,737 $74,084
250,000 21,097 42,195 63,292 84,390 105,487 126,584
500,000 42,972 85,945 128,917 171,890 214,862 257,834
750,000 64,847 129,695 194,542 259,390 324,237 389,084
1,000,000 86,722 173,445 260,167 346,890 433,612 520,334
==========================================================================================
</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 Employee's Savings and
Investment Plan. Covered earnings are limited by Section 401(a)(17) of the
Internal Revenue Code ("Code") to $160,000 in 1997. The above benefits are
subject to the limitations of Section 415 of the Code, which provided for a
maximum annual payment of approximately $125,000 in 1997. Under the 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.
"Compensation" under the Excess Benefit Plan also includes amounts deferred
under the Supplemental Deferred Compensation Plan. Eligible compensation for
Burton M. Joyce as of the end of the last calendar year is $1,064,539 and the
estimated years of service for Mr. Joyce is 11.
Certain executive officers of the Corporation and certain other employees
of the Corporation 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
------------------------------------------------------------------------
5 10 15 20 25 30
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $10,847 $21,695 $32,542 $43,390 $54,237 $65,084
250,000 18,597 37,195 55,792 74,390 92,987 111,584
500,000 37,972 75,945 113,917 151,890 189,862 227,834
750,000 57,347 114,695 172,042 229,390 286,737 334,084
1,000,000 76,722 153,445 230,167 306,890 383,612 460,334
==========================================================================================
</TABLE>
Eligible compensation for the following named executive officers as of the
end of the last calendar year is: Michael L. Bennett: $378,946; Lawrence S.
Hlobik: $345,246; Francis G. Meyer: $330,915, and
10
<PAGE>
George H. Valentine: $308,416. The estimated years of service for each such
officer is as follows: Michael L. Bennett: 24; Lawrence S. Hlobik: 3; Francis G.
Meyer: 15 and George H. Valentine: 4.
Eligible compensation for each of the named executive officers includes the
salary paid in 1997 to each of the named executive officers plus the bonus paid
in 1997 to such executive officers for service to the Corporation and its
subsidiaries in 1996. Amounts reported in the table entitled "Summary
Compensation Table" for 1997 include the salary paid to each of the named
executive officers in 1997 plus the bonus paid to such executive officers in
1998 for service to the Corporation and its subsidiaries in 1997.
Employee Contracts and Termination of Employment and Change in Control
Arrangements
Stock awards granted after October 1996 to the named executive officers
automatically vest or become exercisable in the event of any of the following
changes in control of the Corporation: (i) any person or group of persons (other
than Minorco and its affiliates) acquires beneficial ownership of the
outstanding securities of the Corporation in an amount having, or convertible
into securities having, 25% or more of the ordinary voting power for the
election of directors of the Corporation, provided that this 25% beneficial
ownership trigger shall apply only when Minorco and its affiliates no longer own
50% or more of the voting shares of the Corporation; (ii) during a period of not
more than 24 months, a majority of the Board of Directors of the Corporation
ceases to consist of the existing membership or successors nominated by the
existing membership or their similar successors; (iii) all or substantially all
of the individuals and entities who were the beneficial owners of the
Corporation's outstanding securities entitled to vote do not own more than 60%
of such securities in substantially the same proportions following a shareholder
approved reorganization, merger, or consolidation; or (iv) shareholder approval
of either (A) a complete liquidation or dissolution of the Corporation or (B) a
sale or other disposition of all or substantially all of the assets of the
Corporation, or a transaction having a similar effect.
Stock awards granted prior to November 1996 automatically vest or become
exercisable beginning on the day that any such officer's employment with the
Corporation is terminated involuntarily or such officer's responsibilities or
compensation are substantially reduced, if such termination or reduction occurs
within twelve months of the date on which any person or group of persons acting
in concert (other than Minorco and its affiliates) 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.
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 $18,000 for services as a
director. In addition, such directors receive a fee of $1,000 for each Board
meeting attended and a fee of $800 for each Committee meeting attended (a
chairperson receives a fee of $2,000 for each Committee meeting attended in the
role of chairperson) and such directors are reimbursed for their expenses of
attending such meetings. Mr. Loomis, the Chairman of the Board of Directors,
receives an annual retainer of $100,000 for his services.
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 at the market close on the
last trading day in 1992, of $100 in Common Shares of the Corporation, the S & P
500 Stock Index and an industry peer group. The peer group designated "Industry
Peer Group" consists of the following companies selected by the Corporation: Ag
Services of America Inc.; Agrium Inc.; DEKALB Genetics Corporation; Freeport-
McMoRan Resource Partners, Limited Partnership; IMC Global Inc.; LESCO, Inc.;
Methanex Corp.; Mississippi Chemical
11
<PAGE>
Corporation; Potash Corporation of Saskatchewan Inc.; The Scotts Company and
Terra Nitrogen Company, L.P. The Corporation selected the Industry Peer Group to
reflect as closely as possible its business as a producer of nitrogen
fertilizer, crop production products, seed and services for agricultural, turf,
ornamental and other growers as well as a producer of nitrogen products and
methanol for industrial customers.
[FIVE-YEAR STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
------------------------------------------------------
December 31,
- --------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terra Industries Inc. 100 161 221 304 321 288
- --------------------------------------------------------------------------------------------
S & P 500 Stock Index 100 110 112 153 189 252
- --------------------------------------------------------------------------------------------
Industry Peer Group 100 117 132 179 206 189
- --------------------------------------------------------------------------------------------
</TABLE>
The graph 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.
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
Mr. Slack, a director and member of the Personnel Committee of the Board of
Directors of the Corporation, is an executive officer and director of Minorco.
The Corporation has engaged in certain transactions with Minorco and its
affiliates as discussed under the caption "Certain Relationships and Related
Transactions" below.
REPORT ON EXECUTIVE COMPENSATION
General Policy
The foundation of the Corporation's compensation policy is to retain and
motivate executive officers and other employees who are capable of leading the
Corporation in achieving its business objectives and in creating stockholder
value. 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 directors that are not employees of
the Corporation. The Corporation's executive compensation program is designed
to be (i) competitive, (ii) tied to performance and (iii) aligned with
stockholder interests. 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
stock incentive plans approved by stockholders (the "Long-Term Plans"). 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.
Compensation opportunities for the Corporation's executive officers are
intended to be fixed at levels generally competitive with amounts paid to
executive officers with comparable experience and responsibilities at other
companies engaged in similar business as the Corporation and with other
companies of similar size or market capitalization ("Performance Peer Group").
The Performance Peer Group includes virtually all of the companies in the
Industry Peer Group, supplemented with companies from the chemical and
distribution industries to reflect the Corporation's diversified operations,
larger revenue base than typical among the Industry Peer Group companies, and
competition for executive officers from companies other than those included in
the Industry Peer Group. The Committee periodically obtains advice from an
independent consultant concerning total compensation competitiveness against the
Performance Peer Group, including salary, annual incentives, and long-term
awards. In addition, competitive information is obtained at least annually from
various sources on salary and annual incentive levels for comparable executive
positions among companies covering a wide variety of industry segments,
including non-durable goods manufacturers, chemical companies, and distribution
and other non-manufacturing companies.
Since the total compensation, exclusive of stockholder approved stock
option grants and existing deferral plans, for any executive has thus far been
below the $1 million threshold at which tax deductions are limited under the
Internal Revenue Code, the Committee has not had to address issues relative
thereto. In the event total compensation for any executive may exceed the $1
million threshold in the future, the Committee intends to balance tax
deductibility of executive compensation with its responsibility to retain and
motivate executives with competitive compensation programs. As a result, the
Committee may take such actions it deems to be in the best interest of the
stockholders, including: (i) provide non-deductible compensation above the $1
million threshold; (ii) require deferral of a portion of the bonus or other
compensation to a time when payment may be deductible by the Corporation; and/or
(iii) modify existing programs to qualify bonuses or other performance-based
compensation to be exempt from the deduction limit.
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 in the Performance Peer Group.
13
<PAGE>
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 adjustments to base salaries. The base
salaries of the executive officers of the Corporation in 1997 were generally
fixed at levels near the midpoint of the Performance Peer Group for comparable
positions. The Committee determines base salary in the case of a significant
promotion or new hire on a basis consistent with the Corporation's general
compensation policy.
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. The Targeted Goals include one set of goals for the
corporate group and another set for each of the Corporation's two divisions.
Some individuals participate in part or in whole based on divisional goals, but
the executive officers as a group participate primarily based on the corporate
goals.
For awards to participants in 1998 under the Key Executive Plan regarding
service to the Corporation in 1997 (the "1997 Plan"), the Targeted Goals for the
corporate group were based on net income and return-on-equity, with net income
receiving a 50% weight and return-on-equity receiving the remaining 50%.
Incentive compensation awarded in 1998 under the 1997 Plan to the named
executive officers reflected individual achievements on specified objectives and
the Corporation's attainment of 87.5% of the net income goal and 87.3% of the
return-on-equity goal, or 87.4% overall achievement under the 1997 Plan.
Long Term Awards
Long-term incentive awards under the Long-Term Plans are designed to
provide an incentive to executive officers in increasing stockholder value on a
sustained basis. Based on various factors, including the recommendations of an
independent compensation consultant, the Committee issues from time to time
incentive stock options, non-qualified stock options and restricted shares. The
Committee also periodically grants awards in the case of significant promotions
or new hires on a basis consistent with the Corporation's general compensation
policy.
After reviewing the Long-Term Plans and recommendations of its independent
consultant, the Committee determined in 1996 to grant stock options annually to
key employees and restricted shares every two years to a small group of high
ranking executives. Based on the recommendations of the independent consultant,
the Committee determined the appropriate number of stock options that were
granted to key executives in December 1997. The stock options vest in one-third
increments over a three year period. Individual awards continue to take into
account the respective scope of accountability, strategic and operational
responsibilities and the contribution of each executive officer. No restricted
shares were granted in 1997.
In deciding to grant long-term incentive awards to the Corporation's
executive officers, the Committee recognizes that the value of the awards will
not be immediately realized, will be dependent on
14
<PAGE>
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.
CEO Compensation
Base Salary. In determining the base salary of Mr. Joyce for 1997, the
Committee (with the advice of an independent compensation consultant) 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 improving the Corporation's operating
results and stockholder value. No specific weight was assigned to these factors
in determining Mr. Joyce's base salary increase for 1997. Based on the
foregoing, Mr. Joyce's salary was increased, effective April 1, 1997 to $635,000
from $559,000. Mr. Joyce's 1997 base salary was fixed at a level below the
midpoint of the Performance Peer Group.
Annual Incentive Awards. Mr. Joyce's target percentage for purposes of
calculating his annual incentive award under the 1997 Plan was 60%. Based on
Mr. Joyce's annual salary at December 31, 1997, and taking into consideration
the relative achievement of the Targeted Goals for 1997 (as discussed above) and
other factors, his incentive award in 1998 under the 1997 Plan was $375,000.
Long Term Awards. The award of employee stock options to Mr. Joyce in 1997
was fixed generally consistent with awards to other executive officers under the
Long-Term Plans. The Committee determined (with the advice of an independent
compensation consultant) that the number of stock options granted to Mr. Joyce
should be larger than the number of awards granted to other executive officers
of the Corporation under the Long-Term Plans given his high level of
responsibility. After consideration of, among other factors, 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
stock options to purchase 162,000 of the Corporation's Common Shares was
appropriate. Similar to the awards granted to the other executive officers of
the Corporation, the options granted to Mr. Joyce vest in one-third increments
over a three year period.
E. G. Beimfohr E. M. Carson H. R. Slack, Chairman
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation subleased office space in 1997 to a subsidiary of Minorco
on an arms-length basis. This subsidiary of Minorco paid the Corporation
approximately $340,000 in 1997 for such sublease. This sublease expires on June
30, 1998.
During 1997, the Corporation and an affiliate of Minorco engaged in two
transactions in the ordinary course of their respective businesses. The
Corporation purchased approximately $550,000 of catalysts for its plants. The
terms of each transaction was based on arms-length negotiations. The
Corporation may continue to purchase catalysts from such affiliate of Minorco in
the future.
The Corporation purchased the United Kingdom nitrogen fertilizer business
of Imperial Chemical Industries Plc on December 31, 1997. On the date of this
purchase, Minorco temporarily provided at no cost to the Corporation a guaranty
of certain of the Corporation's indebtedness. This guaranty was released on
January 15, 1998.
The new U.K. business will purchase in the ordinary course of its 1998
business and on an arms-length basis potash from a subsidiary of Minorco. The
U.K. business, under the ownership of ICI, had been purchasing all its potash
requirements from such subsidiary of Minorco. Potash is used in the U.K.
business along with ammonium nitrate as an ingredient in the manufacture of
blended fertilizers. These blended fertilizers represent approximately 5% or
less of sales for the U.K. business.
From time to time the Corporation utilizes one or more investment banking
firms to advise on potential transactions. Although Lazard Freres & Co. LLC has
in the last year provided certain advisory services to the Corporation in
connection with a possible joint venture or other transaction, Lazard Freres &
Co. LLC did not receive any compensation pursuant to the engagement. William R.
Loomis, Jr., the Chairman of the Board of Directors of the Corporation, is a
Managing Director of Lazard Freres & Co. LLC.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify its
selection of Deloitte & Touche LLP as independent accountants for the
Corporation for the fiscal year 1998. Deloitte & Touche LLP serves as
independent accountants for Minorco and various subsidiaries of Minorco.
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 LLP as independent accountants for the
Corporation for the year 1998 be, and it hereby is, ratified.
It is expected that members of Deloitte & Touche LLP 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 the ratification of
the selection of independent accountants.
The Board of Directors recommends that you vote FOR the ratification of the
selection of independent accountants.
16
<PAGE>
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be submitted at the 1999 Annual
Meeting of Stockholders must be received by the Corporation at its principal
executive offices on or before December 3, 1998 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 facsimile 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 Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 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 31, 1998
17
<PAGE>
- --------------------------------------------------------------------------------
Please mark your 1796
[X] vote 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 proposals 1 and 2.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of
Directors. [_] [_]
(see reverse)
For, accept vote withheld from the following nominee(s):
________________________________________________________
FOR AGAINST ABSTAIN
2. 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.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
[Terra LOGO HERE]
TERRA INDUSTRIES INC.
Annual Meeting of Stockholders
DATE: Tuesday, May 5, 1998
TIME: 9:00 A.M.
PLACE: Sioux City Hilton
707 Fourth Street
Sioux City, Iowa 51101
<PAGE>
PROXY
TERRA INDUSTRIES INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints WILLIAM R. LOOMIS, JR., BURTON M. JOYCE and
FRANCIS G. MEYER, jointly and severally, as proxies, with power of substitution,
to vote at the Annual Meeting of Stockkholders (including adjournments) of TERRA
INDUSTRIES INC. to be held May 5, 1998, with all powers the undersigned would
possess if personally present, on the election of directors, on the Proposals
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:
E.G. BEIMFOHR, C.L. BROOKINS, E.M. CARSON,
D.E. FISHER, B.M. JOYCE, A.W. LEA, W.R. LOOMIS, JR.,
J.R. NORTON III, H.R. SLACK AND R.L THOMPSON
(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
------------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
"Fax On-Call" News Release Service Available
Terra offers a toll-free number you can use to obtain company announcements.
This service, available 24 hours a day, is a quick way to receive quarterly
earnings reports and other company news.
Just dial 1-800-758-5804 and use the Terra code, 437906.
Our goal is to provide you and other interested investors with timely
information, efficiently and cost effectively.
.....
Don't forget to visit our website located at www.terraindustries.com. Let us
know what you think of it and how we can make it more useful to you.
[TERRA LOGO]
