<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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
March 22, 1999
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 4, 1999 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. 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 1998. 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]
NOTICE OF 1999 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 Convention Center, 801 Fourth
Street, Sioux City, Iowa, on Tuesday, May 4, 1999 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 1999; 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 5, 1999 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 22, 1999
<PAGE>
PROXY STATEMENT
General
The Annual Meeting of Stockholders of Terra Industries Inc. (the
"Corporation") will be held at the Sioux City Convention Center, 801 Fourth
Street, Sioux City, Iowa, on Tuesday, May 4, 1999 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 24, 1999.
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 5, 1999 (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 75,464,040 Common Shares issued and outstanding on March 5, 1999.
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
51.1% and 5.3% stockholders as of December 31, 1998, 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.
<PAGE>
ELECTION OF DIRECTORS
Nominees
The Board of Directors currently consists of nine 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 occupation during the past five years Director
----------- ------------------------------------------------------ ----------
<S> <C> <C>
Edward G. Beimfohr (66) Partner, Lane & Mittendorf (a New York law firm) since 1994
prior to 1990.
Carole L. Brookins (55) 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 (69) Retired; Chairman of the Board and Chief Executive Officer 1983
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 (56) Finance Director of Minorco (an international natural 1993
resources company) since January 1990.
Burton M. Joyce (57) President and Chief Executive Officer of the Corporation 1986
since May 1991; Executive Vice President and Chief
Operating Officer thereof from February 1988 to May 1991.
Anthony W. Lea (50) Executive Director and member of Executive Committee of 1994
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. (50) Chairman of the Board of the Corporation since May 1996; 1996
Chairman, President and Chief Executive Officer of Minorco
(U.S.A.) Inc. from 1996 to 1998; 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.
John R. Norton III (69) 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.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Year first
Present positions and offices with the Corporation and elected
Name and Age principal occupation during the past five years Director
------------ ----------------------------------------------- ---------
<S> <C> <C>
Henry R. Slack (49) Chief Executive and member of Executive Committee of Minorco 1983
since December 1992; President thereof from 1985 to 1998
and Director thereof since 1981.
</TABLE>
The Board of Directors recommends that you vote FOR the election as director
of each nominee named above.
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. Beimfohr is a director of General Nutrition Inc.;
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 and South
African Breweries PLC.
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.
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
1998, is currently comprised of Ms. Brookins and Mr. Norton. 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 five 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, 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.
3
<PAGE>
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, 1998, 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 TITLE OF AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER CLASS BENEFICIAL OWNERSHIP CLASS
- -----------------------------------------------------------------------------------------------====================
<S> <C> <C> <C>
Taurus International S.A. Common Shares 38,560,725 sole voting 51.1%
9 rue Sainte Zithe and investment power
L-2763 Luxembourg City
Grand Duchy of Luxembourg
- -----------------------------------------------------------------------------------------------====================
Taurus Investments S.A. Common Shares 4,000,000 sole voting and 5.3%
9 rue Sainte Zithe investment power
l-2763 Luxembourg City
Grand Duchy of Luxembourg
- -----------------------------------------------------------------------------------------------====================
Minorco Common Shares 42,560,725 sole voting power 56.4%
9 rue Sainte Zithe power through its subsidiaries
L-2763 Luxembourg City Taurus International and
Grand Duchy of Luxembourg Taurus Investments
- -----------------------------------------------------------------------------------------------====================
Sasco Capital, Inc. Common Shares 4,491,591 sole investment 5.9%
10 Sasco Hill Road power (sole voting power over
Fairfield, CT 06430 2,777,691 )
- -----------------------------------------------------------------------------------------------====================
Dimensional Fund Advisors Inc. Common Shares 4,361,500 sole voting and 5.8%
1299 Ocean Avenue, 11/th/ Fl. investment power
Santa Monica, CA 90401
===================================================================================================================
</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 37.9% 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 29.8% of the capital stock of Centenary and
approximately 33.5% of the capital stock of De Beers is owned, directly or
through subsidiaries, by Anglo American. De Beers owns approximately 10.9% of
Centenary.
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 and a
director of Minorco and a director of Anglo American, have indirect partial
interests in approximately 6.3% of the outstanding shares of Minorco and
approximately 8.7% of the outstanding shares of Anglo American. Messrs.
Beimfohr, Fisher and Lea 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.
4
<PAGE>
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, 1998: 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............................................................ 155,311 /2/
C.L. Brookins........................................................... 800
E.M. Carson............................................................. 1,000
D.E. Fisher............................................................. 250
B.M. Joyce.............................................................. 992,558 /2/
A.W. Lea................................................................ 250
W.R. Loomis, Jr......................................................... 75,000
F.G. Meyer.............................................................. 176,694 /2/
J.R. Norton III......................................................... 1,058
H.R. Slack.............................................................. 250
M.R. Summa.............................................................. 80,531 /2/
G.H. Valentine.......................................................... 148,010 /2/
Directors and all executive officers as a group (17 persons)............ 1,977,013/2/
</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 2.6% 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, 1998.
/2/ The number of Common Shares shown as beneficially owned by Messrs. Bennett,
Joyce, Meyer, Summa and Valentine and by all directors and executive
officers as a group, include 38,666, 609,000, 45,000, 21,666, 30,666 and
831,727 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 4, 1999, of employee stock options. No other individual listed
held any stock options for Common Shares that are exercisable on or before
May 4, 1999.
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 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.
5
<PAGE>
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, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term-Compensation
Annual Compensation
Awards
Restricted Securities
Name and Other Annual Stock Underlying
Principal Position Year Salary /1/ Bonus /2/ Compensation /3/ Award(s) /4/ Options
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Burton M. Joyce 1998 $686,347 -- $5,863 $ 575,000 /6/ --
President and 1997 614,539 $375,000 4,154 -- 162,000
Chief Executive Officer 1996 543,115 450,000 3,764 1,828,125 /7/ 60,000
Michael L. Bennett 1998 339,616 -- 2,320 287,500 /6/ --
Exec. Vice President, Chief 1997 270,346 120,063 2,120 -- 56,000
Operating Officer and President, 1996 207,039 108,600 1,943 365,625 /7/ 30,000
Nitrogen Division
Francis G. Meyer 1998 255,655 -- 1,830 287,500 /6/ --
Sr. Vice President and 1997 239,115 71,224 1,830 -- 36,000
Chief Financial Officer 1996 223,769 91,800 1,581 365,625 /7/ 30,000
Monty R. Summa 1998 247,693 -- 3,658 258,750 /6/ --
Sr. Vice President and 1997 143,846 49,761 -- 237,500 /8/ 65,000
President, Distribution 1996 -- -- -- -- --
Division /8/
George H. Valentine 1998 231,424 -- 1,348 201,250 /6/ --
Sr. Vice President, 1997 209,116 82,049 2,120 -- 36,000
General Counsel and 1996 195,654 99,300 1,943 292,500 /7/ 28,000
Corporate Secretary
<CAPTION>
Payouts
All Other
LTIP Comp-
Payouts ensation /5/
------- ------------
<S> <C> <C>
Burton M. Joyce -- $30,169
President and -- 26,424
Chief Executive Officer -- 24,682
Michael L. Bennett -- 14,922
Exec. Vice President, Chief -- 11,602
Operating Officer and President, -- 9,022
Nitrogen Division
Francis G. Meyer -- 10,379
Sr. Vice President and -- 9,478
Chief Financial Officer -- 9,084
Monty R. Summa -- 8,034
Sr. Vice President and -- 23,929
President, Distribution -- --
Division /8/
George H. Valentine -- 9,394
Sr. Vice President, -- 8,289
General Counsel and -- 7,986
Corporate Secretary
</TABLE>
/1/ "Salary" includes for 1998 twenty-seven biweekly payments and for all years
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, for the applicable year of service, amounts awarded under
the Corporation's Incentive Award Program for Officers and Key Employees and
includes amounts deferred at the election of the named executive officer
under the Corporation's Supplemental Deferred Compensation Plan.
/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, 1998 by each of the
named executive officers is: Burton M. Joyce: 100,000 ($618,750); Michael L.
Bennett: 62,000 ($383,625); Francis G. Meyer: 62,000 ($383,625); Monty R.
Summa: 45,000 ($278,438); and
6
<PAGE>
George H. Valentine: 45,000 ($278,438). 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. Summa, his reported amount under this column in 1997 also includes
taxable relocation compensation.
/6/ On December 14, 1998, the Corporation's Board of Directors approved, as
recommended by its Personnel Committee, the grant of the following
Restricted Shares under the Corporation's 1997 Stock Incentive Plan: 100,000
to Mr. Joyce; 50,000 to Mr. Bennett; 50,000 to Mr. Meyer; 45,000 to Mr.
Summa and 35,000 to Mr. Valentine. The closing price per Common Share on the
New York Stock Exchange ("NYSE") on the date of award was $5.75. The
restrictions lapse upon the earliest of (i) the 30 business day average
closing price of the Common Shares on the NYSE is at least $11.50 per share;
(ii) a change of control of the Corporation (as defined in the award); and
(iii) the executive remaining employed with the Corporation until December
15, 2000.
/7/ On November 12, 1996, the Personnel Committee of the Corporation's Board of
Directors approved the grant of 125,000, 25,000, 25,000 and 20,000
Restricted Shares under the Corporation's 1992 Stock Incentive Plan to each
of Messrs. Joyce, Bennett, Meyer and Valentine, respectively. The closing
per share price of the Common Shares on the NYSE on the date of award was
$14.625. The restrictions lapsed in December 1998 pursuant to action by the
Corporation's Board of Directors; provided, however, that if the executive's
employment terminates with the Corporation (other than by death or
disability) prior to the earlier of (i) a change of control of the
Corporation (as defined in the original award), (ii) the achievement of the
stock price targets set forth in such original awards or (iii) two years
from the date the restrictions lapsed, then such executive is to reimburse
the Corporation an amount equal to the value of the stock on the date of
vesting net of income and employment taxes withheld.
/8/ Mr. Summa joined the Corporation as Senior Vice President of the Corporation
and President, Distribution Division in April 1997. The Personnel Committee
approved the grant of 20,000 Restricted Shares to Mr. Summa effective on the
date of his employment. The closing price of the Common Shares on the NYSE
on the effective date of award was $11.875. The restrictions lapsed on terms
consistent with footnote 7 above.
Option Exercises and Year-End Value Table
The following table provides information concerning the exercise of stock
options during 1998 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, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Number of Number of Securities Value of Unexercised
shares acquired Value Underlying Unexercised in-the-Money Options at
Name on exercise in Realized Options at December 31, 1998 December 31, 1998 1/
1998 --------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Burton M. Joyce 35,000 $124,688 609,000 253,000 $403,125 $-0-
Michael L. Bennett -0- -0- 38,666 47,334 -0- -0-
Francis G. Meyer -0- -0- 45,000 36,000 6,563 -0-
Monty R. Summa -0- -0- 21,666 43,334 -0- -0-
George H. Valentine -0- -0- 30,666 33,334 -0- -0-
</TABLE>
/1/ Based on the closing price on the New York Stock Exchange-Composite
Transaction of the Corporation's Common Shares on December 31, 1998
($6.1875).
7
<PAGE>
PENSION PLAN TABLES
The following table shows for employees retiring in 1998 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 $12,191 $ 24,382 $ 36,573 $ 48,765 $ 60,956 $ 73,147
250,000 20,941 41,882 62,823 83,765 104,706 125,647
500,000 42,816 85,632 128,448 171,265 214,081 256,897
750,000 64,691 129,382 194,073 258,765 323,456 388,147
1,000,000 86,566 173,132 259,698 346,265 432,831 519,397
</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 1998. The above benefits are
subject to the limitations of Section 415 of the Code, which provided for a
maximum annual payment of approximately $130,000 in 1998. 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 $1,061,347 and the
estimated years of service for Mr. Joyce is 12.
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 $10,691 $ 21,382 $ 32,073 $ 42,765 $ 53,456 $ 64,147
250,000 18,441 36,882 55,323 73,765 92,206 110,647
500,000 37,816 75,632 113,448 151,265 189,081 226,897
750,000 57,191 114,382 171,573 228,765 285,956 343,147
1,000,000 76,566 153,132 229,698 306,265 382,831 459,397
</TABLE>
Eligible compensation for the following named executive officers as of the
end of the last calendar year is: Michael L. Bennett: $459,679; Francis G.
Meyer: $326,879; Monty R. Summa: $297,454 and
8
<PAGE>
George H. Valentine: $313,473. The estimated years of service for each such
officer is as follows: Michael L. Bennett: 25; Francis G. Meyer: 16; Monty R.
Summa: 1 and George H. Valentine: 5.
Eligible compensation for each of the named executive officers includes the
salary paid in 1998 to each of the named executive officers plus the bonus paid
in 1998 to such executive officers for service to the Corporation and its
subsidiaries in 1997. Amounts reported in the table entitled "Summary
Compensation Table" for 1998 include the salary paid to each of the named
executive officers in 1998 plus the bonus paid to such executive officers in
1999 for service to the Corporation and its subsidiaries in 1998.
Employee Contracts and Termination of Employment and Change in Control
Arrangements
The named executive officers are parties to Executive Retention Agreements
with the Corporation. These agreements provide for benefits in the event such
officer's employment is terminated at any time within two years (three years in
the case of Mr. Joyce) following a change of control of the Corporation (as
defined in the agreements) without cause, or by such officer for good reason.
The change of control benefits include: (a) continuation of base salary and
bonus for two years (three years in the case of Mr. Joyce); (b) continuation of
medical and dental benefits for two years (three years in the case of Mr.
Joyce); (c) payment of accrued but unpaid compensation; (d) automatic vesting in
the Corporation's Excess Benefit Plan with an addition of two years (a maximum
of eight years in the case of Mr. Joyce), to the credited service level and the
age of the participant for purposes of computing the accrued benefits under the
Excess Benefit Plan; (e) certain outplacement services; and (f) office space and
secretarial support for one year for Mr. Joyce. Such benefits are in lieu of
any other severance benefits that may otherwise be payable. Compensation earned
from other employment shall not reduce the amounts otherwise payable by the
Corporation. The Corporation also agreed to reimburse each such officer on an
after-tax basis for any excise tax incurred as a result of the "excess parachute
payment" provisions of the Internal Revenue Code.
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) and
such directors are reimbursed for their expenses of attending such meetings.
The Corporation supported the participation by Ms. Brookins, a director, as
a speaker at a December 1998 agricultural seminar in the U.K. The Corporation
paid Ms. Brookins' expenses and an honorarium totaling in the aggregate less
than $10,000.
Mr. Loomis, the Chairman of the Board of Directors, receives an annual
retainer of $100,000 for his services. In December 1998, Mr. Loomis received a
grant of 50,000 Restricted Shares and entered into an Executive Retention
Agreement with the Corporation. The closing per share price of the Common
Shares on the NYSE was $5.75 on the date of grant of the Restricted Shares. The
restrictions lapse upon the earliest of (i) the 30 business day average closing
price of the Common Shares on the NYSE is at least $11.50 per share; (ii) a
change of control of the Corporation; and (iii) the executive remaining employed
with the Corporation until December 15, 2000. The Executive Retention Agreement
provides for a $500,000 lump sum payment to Mr. Loomis in the event his
directorship is terminated at any time within two years following a change of
control of the Corporation (as defined in the agreement) without cause, or by
Mr. Loomis for good reason.
9
<PAGE>
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 1993, 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 (through the
date of being acquired); IMC Global Inc.; LESCO, Inc.; Methanex Corp.;
Mississippi Chemical Corporation; Freeport-McMoRan Resource Partners, Limited
Partnership (now known as Phosphate Resource Partners Limited Partnership);
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
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
December 31,
- ----------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terra Industries Inc. 100 137 188 199 179 87
- ----------------------------------------------------------------------------------------------
S & P 500 Stock Index 100 101 139 171 229 294
- ----------------------------------------------------------------------------------------------
Industry Peer Group 100 101 174 198 185 176
- ----------------------------------------------------------------------------------------------
</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.
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.
10
<PAGE>
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 Officers and Key Employees (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.
In the event total compensation for any executive exceeds the $1 million
threshold at which tax deductions are limited under the Internal Revenue Code,
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.
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 1998 were generally
fixed at levels near the midpoint of the Performance Peer Group for
11
<PAGE>
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 1999 under the Key Executive Plan regarding
service to the Corporation in 1998 (the "1998 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%. No
incentive compensation was awarded in 1999 under the 1998 Plan to the named
executive officers reflecting the Corporation's failure to attain the net income
goal or the return-on-equity goal.
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.
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 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.
Individual awards continue to take into account the respective scope of
accountability, strategic and operational responsibilities and the contribution
of each executive officer.
The Committee has regularly been granting stock options annually to key
employees and restricted shares every two years to a small group of high ranking
employees. The last general grant of restricted shares was in November 1996.
The Committee and/or the Board of Directors took the following actions in 1998
concerning long-term incentive awards with the advice of an independent
compensation consultant:
. Granted restricted shares to a small group of high ranking employees
in December 1998 on a basis generally consistent with prior grants.
. Granted no stock options to the named executive officers in 1998.
. Provided immediate vesting of restricted shares that were granted in
1996 and 1997. The executives agreed however, that if their
employment is terminated with the Corporation (other than by death or
disability) prior to the earlier of (i) a change of control of the
Corporation, (ii) the achievement of the stock price targets set
forth in such grants or (iii) two years from the date the
restrictions lapsed, then such executive is to reimburse the
Corporation an amount equal to the value of the stock on the date of
vesting net of income and employment taxes withheld.
12
<PAGE>
. In connection with the expected disposition of Minorco's interest in
the Corporation, provided executive retention agreements to
executives to help enhance performance and retain designated
management support and guidance. For a description of the terms of
these agreements, see "Employee Contracts and Termination of
Employment and Change of Control Arrangements."
CEO Compensation
Base Salary. In determining the base salary of Mr. Joyce for 1998, 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 1998. Based on the
foregoing, Mr. Joyce's salary was increased, effective April 1, 1998 to $670,000
from $635,000. Mr. Joyce's 1998 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 1998 Plan was 60%. Based on
the Corporation's failure to achieve the Targeted Goals for 1998 (as discussed
above), Mr. Joyce was awarded no incentive award in 1999 under the 1998 Plan.
Long Term Awards. The Committee and/or the Board of Directors took action
in 1998 concerning long-term incentive awards on behalf of Mr. Joyce on a basis
generally consistent with actions taken on behalf of the other executive
officers. After consideration of, among other factors, the value of awards
typically given chief executive officers of companies within the Performance
Peer Group, the Committee and/or Board of Directors concluded (with the advice
of an independent compensation consultant) that a 1998 grant to Mr. Joyce of
100,000 restricted shares was appropriate, no stock options would be granted in
1998, the restrictions would lapse on restricted shares that were granted to him
in 1996 and an executive retention agreement would be provided. For a
description of the terms of Mr. Joyce's executive retention agreement, see
"Employee Contracts and Termination of Employment and Change of Control
Arrangements."
E. G. Beimfohr E. M. Carson H. R. Slack, Chairman
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation subleased office space in 1998 to a subsidiary of Minorco
on an arms-length basis. This subsidiary of Minorco paid the Corporation
approximately $170,000 in 1998 for such sublease. This sublease expired on June
30, 1998.
During 1998, the Corporation and an affiliate of Minorco engaged in
transactions in the ordinary course of their respective businesses. The
Corporation purchases catalysts for its plants based on arms-length negotiations
with various suppliers, including an affiliate of Minorco. The Corporation may
continue to purchase catalysts from such affiliate of Minorco and/or others 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 purchases potash in the ordinary course of its
business and on an arms-length basis 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. Lazard Freres & Co. LLC has in the
last year provided advisory services to the Corporation in connection with the
evaluation of matters related to Minorco's expected disposition of its interest
in the Corporation. 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 1999. 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 1999 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.
14
<PAGE>
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders intended to be submitted at the 2000 Annual
Meeting of Stockholders must be received by the Corporation at its principal
executive offices on or before December 4, 1999 to be eligible for inclusion in
the Corporation's proxy statement and accompanying proxy for such meeting. If a
stockholder intends to bring a matter before the 2000 Annual Meeting of
Stockholders, other than by submitting a proposal for inclusion in the proxy
statement, the stockholder must give timely notice to the Corporation and
otherwise satisfy the requirements of the Securities Exchange Act of 1934. To
be timely, a stockholder's notice must be received by the Corporate Secretary at
the Corporation's principal office on or before February 15, 2000.
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, 1998 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 22, 1999
15
<PAGE>
[X] Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, the 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 AGAINST ABSTAIN
2. Approval of independent accountants [_] [_] [_]
For, except vote withheld from the following nominee(s):
_________________________________________________________
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.
[Logo of Terra Industries]
TERRA INDUSTRIES INC.
Annual Meeting of Stockholders
Date: Tuesday, May 4, 1999
Time: 9:00 A.M.
Place: Sioux City Convention Center
801 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 Stockholders (including adjournments) of TERRA
INDUSTRIES INC. to be held May 4, 1999, 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 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
-------------
________________________________________________________________________________
.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.
[Logo of Terra Industries here]
