<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 (S) 240.14a-11(c) or (S) 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 13, 2000
Dear Stockholder:
It is a pleasure for us to extend to you a cordial invitation to attend the
annual meeting of stockholders of Terra Industries Inc. to be held at 9:00 a.m.,
central daylight time, on Tuesday, May 2, 2000 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 annual meeting. There will also be a
report to stockholders on Terra and its business, and stockholders will have an
opportunity to discuss matters of interest concerning Terra.
We hope all stockholders 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 annual 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 1999. We look forward to seeing
you at the meeting.
Burton M. Joyce William R. Loomis, Jr.
President and Chief Executive Officer Chairman of the Board
<PAGE>
[Logo Appears Here]
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
---------------------------------------------
To the Stockholders:
The annual meeting of the stockholders of Terra Industries Inc. ("Terra")
will be held at the Sioux City Convention Center, 801 Fourth Street, Sioux City,
Iowa, on Tuesday, May 2, 2000 at 9:00 a.m., central daylight time, for the
following purposes:
(a) to elect directors to Terra's Board;
(b) to ratify the selection by the Board of Directors of the firm of
Deloitte & Touche LLP as Terra's independent accountants for 2000; and
(c) to transact such other business as may properly come before the annual
meeting.
Only stockholders of record of Terra's common stock at the close of
business on March 3, 2000 are entitled to notice of, and to vote at, the annual
meeting.
George H. Valentine
Senior Vice President, General Counsel
and Corporate Secretary
March 13, 2000
<PAGE>
PROXY STATEMENT
General
The annual meeting of the stockholders of Terra Industries Inc. will be
held at the Sioux City Convention Center, 801 Fourth Street, Sioux City, Iowa,
on Tuesday, May 2, 2000 at 9:00 a.m., central daylight time.
The mailing address of Terra's principal executive offices 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 30, 2000.
The accompanying proxy form is solicited by Terra's Board of Directors. It
may be revoked at any time before it is voted at the annual meeting by giving
written notice to the Corporate Secretary. These proxies, if properly executed,
duly returned and not revoked, will be voted for the election of directors,
except to the extent the stockholder withholds voting authority. Such proxies
will also be voted 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 annual
meeting other than the election of directors and the ratification of its
selection of independent accountants. The persons named in the accompanying form
of proxy will have discretionary authority to vote on any other matter that is
properly presented at the meeting, according to their best judgment. A
stockholder's presence at the annual meeting does not of itself revoke the
proxy.
Securities Entitled to Vote
The only securities entitled to be voted at the annual meeting are shares
of Terra's common stock. Only holders of common stock at the close of business
on the record date, March 3, 2000, are entitled to vote. Each share of common
stock is entitled to one vote, and all shares vote together as a single class.
There were 75,873,540 shares of common stock issued and outstanding on March 3,
2000.
Vote Required
Stockholders are entitled to cast one vote for each director nominated to
the Board of Directors for each share of common stock held on the record date.
Cumulative voting is not permitted. Stockholders are also entitled to one vote
per share on each other matter voted upon at the annual meeting. To be elected,
a director-nominee must receive over half the votes present at the meeting in
person or by proxy and actually cast in the election of directors. Shares of
stockholders abstaining from voting, but otherwise present at the meeting in
person or by proxy, will be included with broker non-votes and voted shares in
determining the number of shares present at the meeting. Such abstaining shares
and broker non-votes, however, will not be counted as a vote for or against any
director-nominee or as a vote for or against any other matter.
Taurus International S.A. and Taurus Investments S.A. on the record date
owned 50.8% and 5.3% of Terra's outstanding common stock, respectively. Both of
these companies are incorporated under the laws of Luxembourg as a societe
anonyme and are wholly-owned subsidiaries of Anglo American plc ("Anglo
American"), a company incorporated under the laws of England and Wales as a
public limited company. Terra has been advised by these companies that these
shares will be voted for the election of the director-nominees described in this
proxy statement. They will also be voted for the ratification of the Board of
Directors' selection of Deloitte & Touche LLP as Terra's independent accountants
for 2000. As a result, the election of these directors and the ratification of
such selection are ensured.
<PAGE>
ELECTION OF DIRECTORS
Nominees
Up to ten directors comprise Terra's Board of Directors. Each is elected to
hold office for a term expiring with the next-occurring annual meeting (or
earlier with the election and qualification of a successor) or upon resignation
or removal. The affirmative vote of over half the votes present at the annual
meeting, entitled to be cast for a director-nominee and actually cast in the
election of directors, is required for election to the Board. Unless otherwise
indicated, proxies in the accompanying form will be voted for the nominees named
below or for any successor nominee designated by the Board. Such a successor
nominee would be designated only in the unlikely event that a nominee named
below becomes unable or unwilling to serve as a director before the election.
All of the nominees named below are incumbent directors. Set forth below
opposite the name and age of each nominee are his or her present positions and
offices with Terra, his or her principal occupations during the past five years,
and the year in which he or she was first elected a director:
<TABLE>
<CAPTION>
Year First
Present Positions and Offices with Terra and Elected
Name and Age Principal Occupation During the Past Five Years Director
------------ ----------------------------------------------- ----------
<S> <C> <C>
Edward G. Beimfohr (67) Partner, Windels, Marx, Lane & Mittendorf (a New York law firm) since 1994
prior to 1990.
Carole L. Brookins (56) Founder, Chairman and Chief Executive Officer of World Perspectives, 1993
Incorporated (an information, analysis and consulting firm
specializing in agricultural policies, markets and issues) since 1980.
Edward M. Carson (70) Retired; Chairman of the Board and Chief Executive Officer of First 1983
Interstate Bancorp (a bank holding company) from June 1990 to May 1995
and President thereof from January 1985 to May 1990.
Thomas H. Claiborne (35) Vice President Administration and Secretary to the Executive Committee 1999
of Anglo American plc (an international natural resources company)
since May 1999; Vice President of Minorco Services (UK) Ltd. From
December 1996 to May 1999; and Executive - Corporate Finance thereof
from November 1995 to December 1996.
Eric K. Diack (42) Executive Vice President - Finance of Anglo Industries and the Anglo 1999
Ferrous Metals Division of Anglo American plc; Finance Director of
Anglo American Industrial Corporation Ltd. from 1997 to 1999; and
Executive Director thereof from 1996 to 1997.
David E. Fisher (57) Former Finance Director of Minorco (an international natural resources 1993
company) from January 1990 to May 1999.
Burton M. Joyce (58) President and Chief Executive Officer of Terra since May 1991; 1986
Executive Vice President and Chief Operating Officer thereof from
February 1988 to May 1991.
William R. Loomis, Jr. Chairman of the Terra Board of Directors since May 1996; 1996
(51) 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>
2
<PAGE>
<TABLE>
<S> <C> <C>
John R. Norton III (70) 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 (50) Chairman of Task (USA) Inc.; Former Chief Executive and 1983
Director of Minorco.
</TABLE>
The Board of Directors recommends that you vote FOR the election of each of
these above-named director-nominees.
Several directors are also on the boards of directors of other companies
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. Diack is a director of McCarthy Retail
Ltd.; Mr. Joyce is a director of IPSCO Inc.; Mr. Loomis is a director of
Engelhard Corporation; Mr. Norton is a director of Apollo Group, Inc.; and Mr.
Slack is a director of Engelhard Corporation and South African Breweries PLC.
Board of Directors and Committees
The Board of Directors held five regular meetings and six special meetings
in 1999. Each director attended at least 75% of the total number of meetings of
the Board and of Board committees of which he or she was a member, except that
Mr. Claiborne did not attend one of the three Board meetings occurring during
his incumbency.
The Board of Directors has an audit committee, an executive committee and a
personnel committee. The Board does not have a nominating committee. The audit
committee met three times in 1999 and is currently comprised of Ms. Brookins,
Mr. Loomis and Mr. Norton. The audit committee reviews Terra's procedures for
reporting financial information to the public. Each year this committee
recommends to the full Board a firm of independent accountants to audit and
review Terra's books and records. The committee reviews the scope of such audit,
related reports and recommendations and any non-audit services provided by such
firm. Terra's internal audits, reports and related recommendations are also
reviewed by the audit committee.
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 Terra between meetings
of the Board.
The personnel committee held two regular meetings and four special meetings
last year and is currently comprised of Messrs. Beimfohr, Carson and Slack. Its
functions include recommending to the Board of Directors the appointment of
Terra executive officers and establishing the compensation to be paid to such
individuals. The committee also administers certain employee benefit plans,
establishes and in consultation with management, administers compensation
guidelines and personnel policies. See the "Report on Executive Compensation,"
below.
The Board of Directors establishes special committees of the Board from
time to time. The specific functions of such committees are determined at the
time of establishment. In addition, the Board and its committees occasionally
take action by unanimous written consent in lieu of a meeting.
3
<PAGE>
Equity Security Ownership
Principal stockholders. The following table shows the ownership of Terra
securities as of December 31, 1999 by the only persons known to Terra to
beneficially own more than five percent of any class of Terra voting securities.
The information in this table is based on information reported to Terra by or on
behalf of such persons:
<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 Stock 38,560,725 sole voting 50.8%
9 rue Sainte Zithe and investment power
L-2763 Luxembourg City
Grand Duchy of Luxembourg
- --------------------------------------------------------------------------------------------------------
Taurus Investments S.A. Common Stock 4,000,000 sole voting and 5.3%
9 rue Sainte Zithe investment power
L-2763 Luxembourg City
Grand Duchy of Luxembourg
- --------------------------------------------------------------------------------------------------------
Anglo American plc Common Stock 42,560,725 sole voting 56.1%
20 Carlton House Terrace power through its
London SW1Y 5AN subsidiaries Taurus
England International and Taurus
Investments
- --------------------------------------------------------------------------------------------------------
Dimensional Fund Advisors Inc. Common Stock 4,361,500 sole voting and 5.8%
1299 Ocean Avenue, 11th 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 Anglo American. Anglo American is a company incorporated under the laws
of England and Wales as a public limited company and with its subsidiaries and
associates is a world leader in gold, platinum group metals, diamonds and coal,
with significant interests in base and ferrous metals, industrial minerals and
forest products. The capital stock of Anglo American is owned in part as
follows: approximately 28.7%, directly or through subsidiaries, by De Beers
Consolidated Mines Limited ("De Beers"), a publicly-held mining and investment
company, and approximately 6.67%, directly or through subsidiaries, by De Beers
Centenary AG ("Centenary"), a publicly-held Swiss diamond mining and investment
company. Approximately 28.59% of the capital stock of Centenary and
approximately 32.24% of the capital stock of De Beers is owned, directly or
through subsidiaries, by Anglo American. De Beers owns approximately 11.33% of
Centenary.
Mr. Nicholas F. Oppenheimer, Deputy Chairman and a director of Anglo
American, Chairman and a director of Centenary and De Beers, has an indirect
partial interest in approximately 7.2% of the outstanding shares of Anglo
American.
4
<PAGE>
Directors and Officers. The following table shows, as of December 31, 1999,
the number of shares of Terra common stock owned by (1) each director-nominee;
(2) Terra's chief executive officer (who is also a director); (3) the four other
most highly-compensated executive officers; and (4) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Shares of Common Stock
Name Beneficially Owned/1/
---- ------------------
<S> <C>
E.G. Beimfohr................................................. 5,000
M.L. Bennett.................................................. 186,371/2/
C.L. Brookins................................................. 800
E.M. Carson................................................... 1,000
T.H. Claiborne................................................ 250
E.K. Diack.................................................... 0
D.E. Fisher................................................... 250
B.M. Joyce.................................................... 1,042,994/2/
W.R. Loomis, Jr............................................... 75,000
F.G. Meyer.................................................... 195,322/2/
J.R. Norton III............................................... 1,058
W.M. Rosenbury................................................ 218,998/2/
H.R. Slack.................................................... 250
G.H. Valentine................................................ 185,934/2/
Directors and all executive officers as a group (15 persons).. 1,966,739/2/
</TABLE>
- -----------------
/1/ Each director-nominee or executive officer has sole voting and investment
power over the shares shown as beneficially owned. Mr. Joyce beneficially
owned 1.4% of Terra's issued and outstanding common stock. Each other
director-nominee and executive officer individually and beneficially owned
less than one percent, and the directors and executive officers as a group
owned 2.6% of Terra's issued and outstanding common stock. These share
numbers include ownership of restricted common stock, which is subject to
certain performance-related vesting conditions, and shares held under
Terra's Employees' Savings and Investment Plan, in each case as of December
31, 1999.
/2/ The shares shown include shares subject to employee stock options which can
be exercised on or before May 2, 2000. Upon such exercise, the option
holder(s) would acquire beneficial ownership of shares as follows: Mr.
Bennett (67,334); Mr. Joyce (643,000); Mr. Meyer (61,000); Mr. Rosenbury
(70,666); and Mr. Valentine (52,000) and all directors and executive
officers as a group (911,333).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Terra's
executive officers, directors and beneficial owners of more than ten percent of
Terra's common stock to file initial reports of ownership and reports of changes
in beneficial ownership of the stock with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange ("NYSE"). Executive officers and
directors are required by SEC regulations to furnish Terra with copies of all
Section 16(a) forms they file. All of Terra's executive officers, directors and
beneficial owners of more than ten percent of Terra's common stock have made all
filings required under Section 16(a). This conclusion is based solely on a
review of the copies of such filings furnished to Terra and of written
representations from Terra's executive officers and directors.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides a summary of compensation paid or accrued by
Terra to or on behalf of certain Terra executive officers. These officers
include Terra's chief executive officer and each of Terra's four other most
highly compensated executive officers. These executive officers are those in
office as of December 31, 1999 and are collectively referred to below as the
"named executive officers." Compensation information is provided for the years
1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
====================================================================================================================================
Long-Term-Compensation
Annual Compensation ------------------------------------
Awards Payouts
- --------------------------------------------------------------------------- ------------------------- -------
Other
Name and Annual Restricted Securities All Other
Principal Position Year Salary/1/ Bonus/2/ Compen- Stock Underlying LTIP Compen-
sation/3/ Award(s)/4/ Options Payouts sation/5/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Burton M. Joyce 1999 $612,020 -- -- -- 415,000 -- $10,000
President and 1998 686,347 -- $ 5,863 $575,000 -- -- 30,169
Chief Executive Officer 1997 614,539 $375,000 4,154 -- 162,000 -- 26,424
- ------------------------------------------------------------------------------------------------------------------------------------
Michael L. Bennett 1999 322,346 -- -- -- 160,000 -- 50,477
Exec. Vice President, Chief 1998 339,616 -- 2,320 287,500 -- -- 14,922
Operating Officer and President, 1997 270,346 120,063 2,120 -- 56,000 -- 11,602
Nitrogen Division
- ------------------------------------------------------------------------------------------------------------------------------------
Francis G. Meyer 1999 235,124 -- -- -- 100,000 -- 45,458
Sr. Vice President and 1998 255,655 -- 1,830 287,500 -- -- 10,379
Chief Financial Officer 1997 239,115 71,224 1,830 -- 36,000 -- 9,478
- ------------------------------------------------------------------------------------------------------------------------------------
George H. Valentine 1999 215,231 -- -- -- 90,000 -- 10,000
Sr. Vice President, 1998 231,424 -- 1,348 201,250 -- -- 9,394
General Counsel and 1997 209,116 82,049 2,120 -- 36,000 -- 8,289
Corporate Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
W. Mark Rosenbury 1999 211,296 -- 40,075/6/ -- 90,000 -- 21,717
Sr. Vice President and 1998 221,731 -- 60,003/7/ 212,750 -- -- 21,240
Chief Administrative Officer 1997 193,115 56,264 2,120 -- 25,000 -- 18,920
====================================================================================================================================
</TABLE>
/1/ For 1999 "Salary" includes 26 biweekly payments and for all years includes
amounts deferred at the election of the named executive officer under
Terra's Employees' Savings and Investment Plan and Supplemental Deferred
Compensation Plan.
/2/ "Bonus" includes, for the applicable year of service, amounts awarded under
Terra's Incentive Award Program for Officers and Key Employees and includes
portions thereof deferred at the election of the named executive officer
under Terra's Supplemental Deferred Compensation Plan. Bonuses earned in
one year are paid in the following year. Each year shown therefore
indicates the salary earned and paid in that year and any bonus earned in
that year and paid in the next year.
/3/ "Other Annual Compensation" includes tax reimbursements or "gross-ups" with
respect to certain perquisites provided to the named executive officers.
While the named executive officers receive certain other perquisites, such
perquisites do not exceed the lesser of $50,000 or 10% of such officer's
salary and bonus, except for Mr. Rosenbury as described below.
6
<PAGE>
/4/ The number of shares of restricted Terra common stock held, and the value
thereof (shown in parenthesis), at December 31, 1999 by each of the named
executive officers is: Mr. Joyce: 100,000 ($156,250); Mr. Bennett: 62,000
($96,875); Mr. Meyer: 62,000 ($96,875); Mr. Valentine: 45,000 ($70,313) and
Mr. Rosenbury 53,000 ($82,813). During the restricted period, a holder of
restricted shares is entitled to all benefits incidental to ownership of
Terra common stock, including voting such shares and receiving such
dividends as from time to time may be declared by the Board of Directors.
/5/ "All Other Compensation" includes amounts contributed, allocated or accrued
for the named executive officers under Terra's Employees Savings and
Investment Plan and Supplemental Deferred Compensation Plan.
/6/ "Other Annual Compensation" for Mr. Rosenbury in 1999 consists of: (i) a
tax gross-up for excess U.K. taxes over hypothetical U.S. federal and state
taxes - $15,325; and (ii) taxable reimbursement of expatriate living
expenses while on assignment in the U.K. - $24,750.
/7/ "Other Annual Compensation" for Mr. Rosenbury in 1998 consists of: (i) a
tax gross-up for excess U.K. taxes over hypothetical U.S. federal and state
taxes - $28,170; (ii) taxable reimbursement of expatriate living expenses
while on assignment in the U.K. - $19,898; and (iii) a tax gross-up with
respect to certain U.S.-taxable perquisites -- $2,320.
Option Exercises and Year-End Value Table
The following table provides information concerning the exercise of stock
options during 1999 as well as the number and value of unexercised options to
purchase Terra common stock granted under Terra's stock incentive plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1999 OPTION VALUES
<TABLE>
<CAPTION>
========================================================================================================
Number of
shares Number of Securities Value of Unexercised
Name acquired on Value Underlying Unexercised in-the-Money Options at
exercise in Realized Options at December 31, December 31, 1999 /1/
1999 1999
---------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Burton M. Joyce -0- -0- 643,000 594,000 -0- -0-
Michael L. Bennett -0- -0- 67,334 178,666 -0- -0-
Francis G. Meyer -0- -0- 61,000 112,000 -0- -0-
George H. Valentine -0- -0- 52,000 102,000 -0- -0-
W. Mark Rosenbury -0- -0- 70,666 98,334 -0- -0-
========================================================================================================
</TABLE>
/1/ Based on the closing price per share on the New York Stock Exchange-
Composite Transaction of Terra common stock on December 31, 1999 ($1.5625).
7
<PAGE>
PENSION PLAN TABLES
The following table shows for employees retiring in 1999 the estimated
annual retirement benefit payable on a straight life annuity basis under Terra's
Employee's Retirement Plan (the "Retirement Plan") and Terra's Excess Benefit
Plan (the "Excess Benefit Plan"), on a non-contributory basis, which covers
Messrs. Joyce and Rosenbury and certain other Terra employees, at various levels
of accrued service and compensation.
<TABLE>
<CAPTION>
===============================================================================
Remuneration YEARS OF CREDITED SERVICE
5 10 15 20 25 30
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $12,133 $ 24,266 $ 36,400 $ 48,533 $ 60,666 $ 72,799
250,000 20,883 41,766 62,650 83,533 104,416 125,299
500,000 42,758 85,516 128,275 171,033 213,791 256,549
750,000 64,633 129,266 193,900 258,533 323,166 387,799
1,000,000 86,508 173,016 259,525 346,033 432,541 519,049
===============================================================================
</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 Terra's Employee's Savings and Investment
Plan. Covered earnings are limited by Section 401(a)(17) of the Internal Revenue
Code (the "Code") to $160,000 in 1999. 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 1999. Under the Excess Benefit Plan,
however, Terra 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 Mr. Joyce as of December 31, 1999
is $612,020 and the estimated years of service for Mr. Joyce is 13.
Certain Terra executive officers and certain other employees 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>
===============================================================================
Remuneration YEARS OF CREDITED SERVICE
5 10 15 20 25 30
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $10,633 $ 21,266 $ 31,900 $ 42,533 $ 53,166 $ 63,799
250,000 18,383 36,766 55,150 73,533 91,916 110,299
500,000 37,758 75,516 113,275 151,033 188,791 226,549
750,000 57,133 114,266 171,400 228,533 285,666 342,799
1,000,000 76,508 153,016 229,525 306,033 382,541 459,049
===============================================================================
</TABLE>
The named executive officers had compensation (as defined under the
Retirement Plan) in 1999 as follows: Mr. Bennett - $322,346; Mr. Meyer -
$235,124; Mr. Valentine - $215,231; and Mr. Rosenbury - $221,297. The estimated
years of service under the Retirement Plan for each such officer is as follows:
Mr. Bennett -- 26; Mr. Meyer -- 17; Mr. Valentine -- 6; and Mr. Rosenbury -- 12.
8
<PAGE>
Employee Contracts and Termination of Employment and Change of Control
Arrangements
Terra's chief executive officer and each of the other named executive
officers are party with Terra to an executive retention agreement. Each such
agreement provides the executive with certain benefits if his employment is
terminated under specified conditions. To receive benefits, the executive must
be terminated within two years (three years for Mr. Joyce) of a change of
control (as defined in the agreement) of Terra. In addition, such termination
must be made either by Terra or a successor entity without cause, or by the
executive for good reason.
Benefits under the executive retention agreements 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 Terra'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 Terra. Terra 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
In August 1999 the Board of Directors decided to compensate directors who
are not Terra employees with the grant of options to purchase Terra common
stock. These options were granted in replacement of the former cash-based
director compensation policy. (Directors continue to be reimbursed in cash for
their expenses in attending meetings of the Board and its committees.) As a
result, in August 1999, Mr. Loomis, Chairman of the Board, was granted an option
to purchase 75,000 shares of common stock. Each of Mr. Norton, chairman of the
audit committee, and Mr. Slack, chairman of the personnel committee, was granted
an option to purchase 20,000 shares of common stock. Each of the remaining non-
employee directors was granted an option to purchase 18,000 shares of common
stock. The exercise price of each option is the closing price of Terra common
stock on the date of grant.
Mr. Loomis is party with Terra to an executive retention agreement. This
agreement provides for a lump-sum payment of $500,000 to Mr. Loomis if he is
terminated as Chairman under specified conditions. To receive benefits, Mr.
Loomis must be terminated within two years of a change in control of Terra. In
addition, such termination must be made either by Terra or a successor entity
without cause, or by Mr. Loomis for good reason.
Performance Graph
The SEC requires that a comparative performance graph be included with this
proxy statement. A line-graph presentation is required, comparing cumulative,
indexed, five-year stockholder returns on specified, hypothetical investments.
These investments must include the S & P 500 Stock Index and either a
nationally-recognized industry standard or an index of peer companies selected
by Terra.
Terra has for some years chosen to use a self-selected industry peer group.
For this year's graph, Terra has changed this industry peer group to better
reflect Terra's business after the sale of its distribution business in June
1999. The new industry peer group is intended to reflect as closely as possible
Terra's business as a producer of nitrogen products and methanol for
agricultural and industrial customers.
The current peer group consists of the following companies: Agrium Inc.;
Lyondell Chemical Company; Methanex Corp.; Mississippi Chemical Corporation;
Norsk Hydro ASA; Potash Corporation of Saskatchewan Inc.; and Terra Nitrogen
Company, L.P.
9
<PAGE>
The former peer group consisted of the following companies: Ag Services of
America Inc.; Agrium Inc.; DEKALB Genetics Corporation (through the date of its
acquisition); IMC Global Inc.; LESCO, Inc.; Methanex Corp.; Mississippi Chemical
Corporation; Phosphate Resource Partners Limited Partnership (formerly known as
Freeport-McMoRan Resource Partners, Limited Partnership); Potash Corporation of
Saskatchewan Inc.; The Scotts Company; and Terra Nitrogen Company, L.P.
The graph below assumes an investment of $100 at the close of the last
trading day in 1994. Four alternative investments are compared: Terra common
stock; the S & P 500 Stock Index; the current industry peer group; and the
former industry peer group.
Five-Year Stock Performance Graph
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
December 31,
- -------------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terra Industries Inc. 100 137.28 144.96 130.16 63.45 16.27
- -------------------------------------------------------------------------------------------------------------------------
S & P 500 Stock Index 100 137.58 169.17 225.60 290.08 351.12
- -------------------------------------------------------------------------------------------------------------------------
Current Industry Peer Group 100 109.00 133.60 130.92 91.88 93.13
- -------------------------------------------------------------------------------------------------------------------------
Former Industry Peer Group 100 135.37 155.51 144.21 133.35 107.19
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
This graph may not be regarded as part of any Terra filing made under the
Securities Act of 1933 or under the Securities Exchange Act of 1934. This is
true even if such filings contain statements incorporating this proxy by general
reference. This graph can only be regarded as filed under these laws by a
statement specifically incorporating this information into such filing.
Compensation Committee Interlocks and Insider Participation
No director has any direct or indirect material interest in or relationship
with Terra other than stockholdings as discussed above and as related to his or
her position as a director, except as described under the caption "Certain
Relationships and Related Transactions." No officer or other employee of Terra
served on the board of directors of any other entity, where any officer or
director of such entity also served on Terra's Board.
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<PAGE>
REPORT ON EXECUTIVE COMPENSATION
General Policy
The foundation of Terra's compensation policy is to retain and motivate
executive officers and other employees who are capable of leading Terra 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, which is comprised entirely of
directors who are not Terra employees. Terra's executive compensation program is
intended to be (1) competitive; (2) tied to performance; and (3) aligned with
stockholder interests. The three general elements of Terra's executive
compensation program are base salary, annual incentive awards and long-term
incentive compensation. Incentive awards are made under Terra's Incentive Award
Program for Officers and Key Employees (the "Key Executive Plan"). Long-term
incentive compensation consists of stock options, restricted stock or other
award opportunities offered under Terra's stockholder-approved stock incentive
plans (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.
The compensation of Terra executive officers is intended to be competitive
with that offered by a performance peer group to persons with comparable
experience and responsibilities. The performance peer group is comprised of
companies of similar size or market capitalization to Terra and engaged in
businesses similar to Terra's. The performance peer group includes virtually all
of the companies in the industry peer group selected for the comparative
performance graph above. The performance peer group also includes other chemical
companies in order to better reflect Terra's nitrogen and methanol businesses,
the relative size of Terra's revenue base and competition for executive-level
talent. The personnel committee of the Board periodically obtains advice from an
independent compensation consultant concerning total compensation
competitiveness versus the performance peer group, including salary, annual
incentives and long term awards. In addition, salary and incentive compensation
information for comparable executive positions in other industries is obtained
at least annually from sources covering a wide variety of industry segments,
including non-durable goods manufacturers and manufacturers of chemicals other
than nitrogen products and methanol.
The Internal Revenue Code limits the ability of Terra to deduct from
taxable income compensation paid to any executive in excess of $1 million. In
the event compensation for any Terra executive exceeds this $1 million
threshold, the personnel committee will balance the benefits of tax
deductibility with its responsibility to retain and motivate executives with
competitive compensation programs. As a result, the personnel committee may take
actions it deems to be in the best interest of Terra stockholders, including:
(1) provide non-deductible compensation above the $1 million threshold; (2)
require the executive to defer a portion of bonus or other compensation in
excess of this threshold to a time when payment may be deductible by Terra;
and/or (3) modify Terra compensation programs to qualify bonuses or other
performance-based compensation to be exempt from the deduction limit.
Base Salary
Annual base salaries paid to Terra'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 Mr. Joyce)
are reviewed by the committee annually with Mr. Joyce and the Senior Vice
President and Chief Administrative Officer and are largely based on the
individual's performance and contribution to Terra. 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
11
<PAGE>
adjustments to base salaries. The base salaries of Terra's executive officers in
1999 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 Terra's
compensation policy.
Annual Incentive Awards
In making annual incentive awards, the personnel committee of the Board
reviews the Key Executive Plan in the first quarter of each year. At this time,
the committee approves an incentive award pool which is based on a target
percentage of each executive officer's salary and on the achievement by Terra of
certain targeted financial goals. The targeted percentage of salary generally
increases with the executive officer's level of responsibility. The targeted
financial goals are proposed by Terra management and reviewed by the committee.
The overall incentive award pool is increased or reduced based on Terra's
performance measured against the targeted financial goals. Individual awards are
then increased or reduced based on the executive officer's achievement of
personal goals and the size of the incentive award pool. A set of individual
goals are established each year by each executive and the senior officer he or
she reports to, or in the case of Mr. Joyce, the personnel committee.
For incentive awards made payable in 2000 under the Key Executive Plan for
service to Terra in 1999, the targeted financial goals were based on return-on-
equity. In determining an individual award, achievement of targeted financial
goals was given a weight of up to 75% and achievement of individual goals was
given a weight of up to 34%. Because of the continuing industry downturn and
operating losses experienced by Terra, the committee exercised its discretionary
authority and suspended the Key Executive Plan for 1999. As a result, no
incentive compensation was awarded in 2000 to the named executive officers.
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 personnel committee of the Board from
time to time issues 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 Terra's general
compensation policy.
In deciding to grant long term incentive awards to Terra's executive
officers, the committee recognizes that (i) the value of the awards will not be
immediately realized, (ii) will be dependent on building profitability and
stockholder value well after the date of grant, and (iii) 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 periodically grants stock options to key employees and
restricted shares to a small group of high-ranking employees. The personnel
committee and/or the full Board of Directors took the following actions in 1999
concerning long term incentive awards with the advice of an independent
compensation consultant:
. Granted stock options to the chief executive officer, the other named
executive officers and other key employees on a basis generally
consistent with prior grants.
. Granted no restricted shares in 1999.
12
<PAGE>
CEO Compensation
Base Salary. In determining Mr. Joyce's base salary each year, the
personnel committee (with the advice of an independent compensation consultant)
considers several factors. These factors include salaries for comparable
positions in companies within the performance peer group and Mr. Joyce's
continuing efforts to improve Terra's operating results and to preserve and
enhance stockholder value. No specific weight is given to these factors in
determining base salary. In consideration of the continuing industry downturn,
its effect on Terra's stock price and Terra's reduced size after the sale of its
distribution business, Mr. Joyce's base salary of $670,000 was reduced in August
1999 to $502,500. This base salary is below the midpoint salaries for comparable
positions in the performance peer group.
Annual Incentive Awards. Mr. Joyce's target salary percentage for purposes
of calculating his annual incentive award under the Key Executive Plan was 60%.
Based on Terra's failure to achieve the targeted financial goals for 1999 (as
discussed above), Mr. Joyce was not awarded incentive compensation in 2000 for
service in 1999.
Long Term Awards. The personnel committee and/or the full Board of
Directors took action in 1999 concerning long term incentive awards to Mr.
Joyce. Several factors, along with the advice of an independent compensation
consultant, were considered in taking this action. This action was also
generally consistent with actions taken on behalf of Terra's other executive
officers. Factors considered included the value of awards typically given chief
executive officers of companies within the performance peer group. As a result,
in August 1999 Mr. Joyce was granted an option to purchase 415,000 shares of
Terra common stock. No restricted shares were granted Mr. Joyce in 1999.
Other Compensation. Mr. Joyce and Terra are party to an executive retention
agreement, the terms of which are described above under "Employee Contracts and
Termination of Employment and Change of Control Arrangements."
The Personnel Committee
of the Board of Directors
of Terra Industries Inc.
E.G. Beimfohr
E.M. Carson
H.R. Slack, Chairman
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999 Terra and a then-affiliate of Anglo American engaged in
transactions in the ordinary course of their respective businesses. (During the
course of 1999 Anglo American sold its interest in the affiliate in question.)
Terra purchases catalysts for its plants based on arms-length negotiations with
various suppliers, including this then-affiliate of Anglo American. Terra may
continue to purchase catalysts from this former Anglo American affiliate and/or
others in the future.
Terra's U.K. business purchases potash in the ordinary course of its
business and on an arms-length basis from a subsidiary of Anglo American. This
supply relationship began before this business was purchased by Terra in 1997.
Potash and ammonium nitrate are used in the U.K. business to make blended
fertilizers. These blended fertilizers represent 5% or less of sales for the
U.K. business.
From time to time Terra uses one or more investment banking firms to advise
on potential transactions. In 1999, Lazard Freres & Co. LLC provided advisory
services to Terra in connection with the sale of Terra's distribution business
and the potential disposition of Anglo American's Terra shares. Mr. Loomis,
Chairman of Terra's Board of Directors, is also 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 Terra for the
fiscal year 2000. Deloitte & Touche LLP also serves as independent accountants
for Anglo American and various subsidiaries of Anglo American.
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 2000 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.
To ratify the Board's selection of independent accountants, over half of
the votes cast "for" or "against" such ratification must be cast "for."
The Board of Directors recommends that you vote FOR the ratification of its
selection of independent accountants.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of stockholders intended to be submitted at the 2001 annual
meeting of stockholders must be received by Terra at its principal executive
offices on or before November 20, 2000 to be eligible for inclusion in Terra's
proxy statement and accompanying proxy for such meeting. If a stockholder
intends to bring a matter before the 2001 annual meeting of stockholders other
than by submitting a proposal for inclusion in the proxy statement, the
stockholder must give timely notice to Terra and otherwise satisfy the
requirements of the Securities Exchange Act of 1934. To be timely, such notice
must be received by the Corporate Secretary at Terra's principal executive
offices on or before February 2, 2001.
14
<PAGE>
MISCELLANEOUS
Terra will pay the cost of soliciting of proxies. Proxies are being
solicited through the mail. Certain Terra employees, without additional
compensation, may also solicit proxies personally, by telephone or by facsimile.
Terra 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 Terra's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 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 13, 2000
15
<PAGE>
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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 2, 2000, 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: (Comments or Change of Address)
E.G. BEIMFOHR, C.L. BROOKINS, E.M. CARSON, T.H. CLAIBORNE, E.K. DIACK,
D.E. FISHER, B.M. JOYCE, W.R. LOOMIS, JR., J.R. NORTON III and H.R. SLACK
(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]
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<PAGE>
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[X] Please mark your 1796
votes as in this
example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR 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, except 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 .
[LOGO]
TERRA INDUSTRIES INC.
Annual Meeting of Stockholders
DATE: Tuesday, May 2, 2000
TIME: 9:00 A.M.
PLACE: Sioux City Convention Center
801 Fourth Street
Sioux City, Iowa 51101
