<PAGE> 1
SCHEDULE 14A
(RULE 14a - 101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POTASH CORPORATION OF SASKATCHEWAN 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:
(4) Date filed:
<PAGE> 2
C. E. CHILDERS Potash Corporation of
Chairman & Chief Executive Officer [ LOGO ] Saskatchewan Inc.
March 26, 1997
Dear Shareholder:
You are invited to attend the Annual Meeting of shareholders of Potash
Corporation of Saskatchewan Inc. which will be held on Thursday, May 8, 1997 at
10:30 a.m. (local time) at the Ramada Hotel, 1st Avenue and 22nd Street,
Saskatoon, Saskatchewan, Canada.
Enclosed you will find the Notice of Annual Meeting and Board of Directors
Proxy Circular and related information covering the formal business of the
meeting.
If you are unable to attend this year's meeting, please carefully consider the
enclosed material and then complete and return your proxy in the envelope
provided. A prompt response will ensure your vote is counted.
Sincerely,
/s/ C. E. CHILDERS
-------------------
C. E. Childers
PCS Tower, Suite 500, 122 - 1st Avenue South, Saskatoon, Saskatchewan S7K 7G3
<PAGE> 3
[LOGO]
POTASH CORPORATION OF SASKATCHEWAN INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of shareholders of Potash
Corporation of Saskatchewan Inc. (the "Corporation"), a Saskatchewan
corporation, will be held on Thursday, May 8, 1997 at 10:30 a.m. (local time)
at the Ramada Hotel, 1st Avenue and 22nd Street, Saskatoon, Saskatchewan,
Canada for the following purposes:
1. to receive the financial statements of the Corporation for the year ended
December 31, 1996 and the report of the auditors thereon;
2. to elect directors;
3. to appoint auditors for the Corporation;
4. to transact such other business as may properly come before the meeting or
any adjournments thereof.
DATED at Saskatoon, Saskatchewan this 26th day of March, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN L.M. HAMPTON
---------------------
John L.M. Hampton
Secretary
Shareholders who are unable to attend in person are requested to date, sign and
return, as soon as possible and in the envelope enclosed for that purpose, the
enclosed form of proxy.
<PAGE> 4
[ LOGO ]
POTASH CORPORATION OF SASKATCHEWAN INC.
BOARD OF DIRECTORS PROXY CIRCULAR
ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION OF PROXIES
THIS PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE BOARD OF DIRECTORS (THE "BOARD") OF POTASH CORPORATION OF SASKATCHEWAN
INC. (THE "CORPORATION"), A SASKATCHEWAN CORPORATION, AND CONSTITUTES A
SOLICITATION BY OR ON BEHALF OF THE MANAGEMENT OF THE CORPORATION UNDER THE
BUSINESS CORPORATIONS ACT (SASKATCHEWAN), FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS OF THE CORPORATION (THE "MEETING") TO BE HELD ON MAY 8, 1997 AND
ANY ADJOURNMENTS THEREOF. All costs of solicitation will be borne by the
Corporation. In addition to the mail, proxies may be solicited by telephone or
in person by employees of the Corporation who will receive no additional
compensation for such services. The Corporation has retained The Proxy
Solicitation Company Ltd. to assist in the solicitation of proxies in Canada
and Kissel-Blake Inc. to assist in the solicitation of proxies in the United
States for total estimated fees of $17,000. In addition, the Corporation will
reimburse brokers, nominees and fiduciaries for reasonable expenses incurred by
them in sending proxy material to the beneficial owners of common shares of the
Corporation (the "Shares") held by such persons.
A shareholder who has given a proxy may revoke it at any time before it is
exercised by attending the Meeting and voting in person or by replacing it with
a duly executed proxy bearing a later date. In addition to revocation in either
such manner or in any other manner permitted by law, a shareholder giving a
proxy may revoke the proxy by instrument in writing executed by the shareholder
or by his attorney authorized in writing and deposited either at the registered
and principal executive office of the Corporation, Suite 500, 122 - lst Avenue
South, Saskatoon, Saskatchewan, Canada, S7K 7G3, at any time up to and
including the last business day preceding the day of the Meeting, or any
adjournment thereof, or with the chairman of the Meeting on the day of the
Meeting or any adjournment thereof.
This proxy circular and the accompanying Notice of Annual Meeting and proxy
will first be sent or given to shareholders on or about March 26, 1997.
Except as otherwise stated, the information contained herein is given as of
February 28, 1997.
Unless otherwise specified, all dollar amounts are expressed in United States
dollars.
3
<PAGE> 5
VOTING SHARES
There are 53,558,910 common shares of the Corporation outstanding as of March
7, 1997, each Share carrying the right to one vote per Share.
Each shareholder of record at the close of business on March 20, 1997 is
entitled to vote at the Meeting the Shares registered in his name on that date
except to the extent that he has transferred any of those Shares and the
transferee has both established the transferee's ownership of the transferred
Shares and demanded, not later than 10 days prior to the Meeting, that the
Corporation recognize the transferee as the person entitled to vote the
transferred Shares at the Meeting.
The quorum for any meeting of shareholders is one or more persons present and
holding or representing by proxy not less than 5% of the total number of
outstanding Shares.
OWNERSHIP OF SHARES BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of February 28, 1997, with
respect to the beneficial ownership of Shares held by the executive officers of
the Corporation named in the Summary Compensation Table herein and by all
directors and executive officers of the Corporation.
<TABLE>
<CAPTION>
Name Amount and Nature of
Beneficial Ownership
(1)(2)(3)
<S> <C>
Charles E. Childers 168,542
William J. Doyle 112,516
Thomas J. Wright 15,000
John Gugulyn 55,747
Barry E. Humphreys 39,054
All directors and executive officers as a group, including
the above-named persons (24 persons) 671,144
</TABLE>
(1) The number of Shares beneficially owned is reported on the basis of
regulations of the Securities and Exchange Commission (the "SEC"), and includes
Shares that the individual has the right to acquire at any time within 60 days
of February 28, 1997 and Shares directly or indirectly held by the individual
or by certain family members over which the individual has sole or shared
voting or investment power.
(2) Each of the directors and executive officers of the Corporation owned less
than 1% of the Shares issued and outstanding as at February 28, 1997. The
directors and executive officers of the Corporation as a group beneficially
owned approximately 1.5% of the Shares issued and outstanding as at February
28, 1997.
(3) Includes Shares purchasable within 60 days of February 28, 1997 through the
exercise of options granted by the Corporation, as follows: Mr. Childers
167,500 Shares; Mr. Doyle 102,500 Shares; Mr. Wright 15,000 Shares; Mr. Gugulyn
55,500 Shares; Mr. Humphreys 39,000 Shares; and directors and executive
officers as a group, including the foregoing, 638,500 Shares.
4
<PAGE> 6
ELECTION OF DIRECTORS
The Articles of the Corporation provide that the Board shall consist of a
minimum of 6 directors and a maximum of 20, with the actual number to be
determined from time to time by the Board. The Board has determined that at the
present time there will be 15 directors.
Proxies solicited hereby will be voted for the following proposed nominees (or
for substitute nominees in the event of contingencies not known at present) who
will, subject to the bylaws of the Corporation and applicable corporate law,
serve to hold office until the next annual meeting of shareholders or until
their successors are elected or appointed in accordance with the bylaws or
applicable corporate law. The affirmative vote of a plurality of the Shares
present in person or by proxy at the Meeting and voted in respect of the
election of directors is required to elect directors.
The following table states the names and ages of all the persons to be
nominated for election as directors, all other positions and offices with the
Corporation now held by them, their present principal occupation or employment,
the period during which present directors of the Corporation have served as
directors, and the number of Shares beneficially owned, directly or indirectly,
or over which control or direction is exercised, by each of them.
<TABLE>
<CAPTION>
Name and Principal Director Number of Shares
Occupation Age Since Beneficially Owned(11)
<S> <C> <C> <C>
Isabel Anderson (1), 57 1989 15,833
President and Research Director,
AAL InfoServe
(consulting company)
Douglas J. Bourne (4)(6), 73 1990 13,400
Retired, former Chairman and
Chief Executive Officer, Battle
Mountain Gold Company (gold
mining company)
Charles E. Childers (1)(5), 64 1989 168,542
Chairman, President and Chief
Executive Officer of the
Corporation
Denis J. Cote (1)(3), 65 1989 17,185
Retired, former Chairman and
Chief Executive Officer of
The UMA Group Limited
(consulting engineers)
William J. Doyle, 46 1989 112,516
President, PCS Sales (marketing
subsidiaries of the Corporation)
Honourable Willard Z. Estey, Q.C. 77 1990 16,700
(2)(7), Retired, former Justice
of the Supreme Court of Canada
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
Name and Principal Director Number of Shares
Occupation Age Since Beneficially Owned(11)
<S> <C> <C> <C>
Dallas Howe (2), 52 1991 14,000
President and Chief Executive
Officer, Advanced Data Systems
Limited and BDM Information
Systems Group of Companies
(international computer
systems suppliers)
James F. Lardner (1), 72 1989 8,400
Retired, former Vice-President,
Deere & Company (agricultural
equipment manufacturer)
Donald E. Phillips (3)(8), 64 1991 4,000
Retired, former President and
Chief Executive Officer,
Pitman-Moore, Inc. (animal feed
and health products
producer and marketer)
Paul J. Schoenhals (4), 55 1992 2,100
President, Petroleum Industry
Training Service
Daryl K. Seaman (3)(9), 74 1989 9,000
Chairman and President,
Dox Investments Inc. (private
holding company); former
Chairman and Chief Executive
Officer, Bow Valley Industries
Ltd. (oil company)
E. Robert Stromberg, Q.C. (1), 55 1991 9,646
Partner, Robertson Stromberg
(law firm)
Jack G. Vicq (2), 57 1989 9,593
Professor of Accounting,
Associate Dean, College of
Commerce, University of
Saskatchewan
Barrie A. Wigmore (3), 55 1989 9,000
Limited Partner, The Goldman
Sachs Group, L.P. (investment
banking firm)
Paul S. Wise (4)(10), 76 1989 12,705
Retired, former President
and Chief Executive Officer,
Alliance of American Insurers
</TABLE>
6
<PAGE> 8
Notes:
1 Member of the Executive Committee.
2 Member of the Audit Committee.
3 Member of the Compensation Committee.
4 Member of the Environmental Affairs Committee.
5 Charles E. Childers is also a director of Battle Mountain Gold Company.
6 Douglas J. Bourne is also a director of Battle Mountain Gold Company.
7 Willard Z. Estey is also a director of ACC Corp., CanWest Global
Communications Corp. and Fundy Cable Ltd.
8 Donald E. Phillips is also a director of Synbiotics Inc. and Great Lakes
REIT Inc.
9 Daryl K. Seaman is also a director of Abacan Resource Corporation.
10 Paul S. Wise is also a director of TMK/United Funds, Inc., United Funds
and Waddell & Reed Funds, Inc.
11 Includes Shares purchasable within 60 days of February 28, 1997 through
the exercise of options granted by the Corporation, as follows: Isabel
Anderson 13,000 Shares; Douglas J. Bourne 13,000 Shares; Charles E.
Childers 167,500 Shares; Denis J. Cote 13,000 Shares; William J. Doyle
102,500 Shares; Willard Z. Estey 13,000 Shares; Dallas Howe 13,000
Shares; James F. Lardner 8,000 Shares; Donald E. Phillips 3,000 Shares;
Paul J. Schoenhals 2,000 Shares; Daryl K. Seaman 8,000 Shares; E. Robert
Stromberg 8,000 Shares; Jack G. Vicq 9,000 Shares; Barrie A. Wigmore
8,000 Shares; and Paul S. Wise 10,500 Shares.
William J. Doyle is Chairman of Canpotex Limited, a potash export, sales and
marketing company owned in equal shares by the three potash producers in
Saskatchewan. In 1996, the Corporation's sales to Canpotex Limited amounted to
$184,025,000.
All of the above directors have had the principal occupation indicated for the
previous five years except as follows: Ms. Anderson served from 1968 to 1993
as a professor of economics, University of Saskatchewan; Mr. Cote served from
1991 to 1992 as Senior Consultant, UMA Group (consulting engineers), and from
January 1993 to September 1993 as President and Chief Executive Officer of
Reclamation Management Ltd. (environmental services contracting company); Mr.
Estey was Counsel to McCarthy Tetrault (law firm) from 1988 to 1996; Mr.
Stromberg was Counsel to Robertson Stromberg from June 1993 to November 1994;
Mr. Vicq was a professor of accounting and taxation, College of Commerce,
University of Saskatchewan prior to assuming the position of professor of
accounting and associate dean of the College in 1993; and Mr. Doyle was
President of Potash Corporation of Saskatchewan Sales Limited (and located in
Chicago, Illinois) prior to 1995 and Executive Vice President, Potash and
Sales, of the Corporation prior to March 1997.
The law firm of Robertson Stromberg has provided and continues to provide legal
services to the Corporation. E. Robert Stromberg is a partner of Robertson
Stromberg.
During 1996, there were 8 meetings of the Board of Directors and the number of
meetings held by committees of the Board of Directors were: (i) Executive
Committee - 9; (ii) Audit Committee - 7; (iii) Compensation Committee - 4; and
(iv) Environmental Affairs Committee - 2. Each of the Corporation's directors
attended at least 75% of the total of the meetings of the committees on which
the director served and the meetings of the Board.
7
<PAGE> 9
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation in respect of the individuals who
were, as at December 31, 1996, the Chief Executive Officer and the other four
most highly compensated executive officers of the Corporation (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Other
Annual Securities All Other
Name and Compensa- Underlying LTIP Compensa-
Principal tion Options Payouts tion
Position Year Salary Bonus Granted (5)
$ $ (4) $ # $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. Childers 1996 1,000,000 1,000,000 (2) 80,000 1,274,431 11,000(6)
Chairman, 1995 900,000 900,000 246,541 60,000 452,694 10,617(6)
President and 1994 410,040 568,709 62,729 50,000 103,579 9,419(6)
Chief Executive
Officer
William J. Doyle, 1996 356,500 500,000 (3) 40,000 770,715 7,857(7)
Executive Vice 1995 330,000 276,000 - 40,000 164,189 14,603(7)
President, Potash 1994 295,000 250,000 - 30,000 78,273 11,343(7)
and Sales
Thomas J. Wright, 1996 418,200 300,000 - 35,000 303,056 8,437(8)
Executive Vice 1995 297,250 238,000 - 30,000 51,368 6,318(8)
President, PCS
Phosphate Company,
Inc. (11)(12)
John Gugulyn, 1996 164,515 144,480 - 20,000 336,970 6,300(9)
Senior Vice 1995 150,808 143,323 - 13,000 70,851 6,839(9)
President, 1994 137,081 120,631 - 13,000 34,526 6,334(9)
Administration
Barry E. Humphreys, 1996 149,559 118,642 - 20,000 336,970 6,175(10)
Senior Vice 1995 134,811 117,079 - 11,000 70,851 6,719(10)
President, Finance 1994 118,885 99,087 - 11,000 34,526 6,203(10)
& Treasurer
</TABLE>
(1) All amounts, which were denominated in Canadian dollars, have been
converted to United States dollars using the average exchange rate for the
month prior to the date of payment.
(2) Mr. Childers' employment contract provides for reimbursement to him in
respect of the differential between Canadian and U.S. income taxes. See
"Employment Contracts and Termination of Employment". The amount for 1996 is
not presently calculable and will be determined following the filing of Mr.
Childers' Canadian and U.S. income tax returns.
(3) Mr. Doyle is entitled to a reimbursement in respect of the differential
between Canadian and U.S. income taxes for 1996, the amount of which is not
presently calculable and will be determined following the filing of Mr. Doyle's
Canadian and U.S. income tax returns.
8
<PAGE> 10
(4) Reports amounts awarded pursuant to the Corporation's Short-Term Incentive
Plan and, where applicable, contractual bonuses. See "Compensation Committee -
Short-Term Incentive Compensation".
(5) Options granted pursuant to the Corporation's Stock Option Plan - Officers
and Key Employees.
(6) The reported amounts for 1996, 1995 and 1994 consist, respectively, of:
(i) $4,930, $5,533 and $5,443 which represents the Corporation's
contribution to the Corporation's defined contribution pension plan (see
"Pension Plans"); and
(ii) $6,070, $5,084 and $3,976 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation.
(7) The reported amounts for 1996, 1995 and 1994 consist, respectively, of:
(i) $4,926, $11,863 and $9,240 which represents the Corporation's
contribution to the Corporation's defined contribution pension plan (see
"Pension Plans"); and
(ii) $2,931, $2,740 and $2,103 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation.
(8) The reported amount for 1996 and 1995 consists, respectively, of:
(i) $7,500 and $5,437 which represents the Corporation's contribution to
the Phosphate Savings Plan (see "Pension Plans"); and
(ii) $937 and $881 which represents the value of the benefit for group
term life insurance premiums paid by the Corporation.
(9) The reported amounts for 1996, 1995 and 1994 consist, respectively, of:
(i) $4,937, $5,603 and $5,326 which represents the Corporation's
contribution to the Corporation's defined contribution pension plan (see
"Pension Plans"); and
(ii) $1,363, $1,236 and $1,008 which represents the value of the benefit
for group term life insurance premiums paid by the Corporation.
(10) The reported amounts for 1996, 1995 and 1994 consist, respectively, of:
(i) $4,937, $5,618 and $5,326 which represents the Corporation's
contribution to the defined contribution pension plan (see "Pension
Plans");
(ii) $1,238, $1,101 and $877 which represents the value of the benefit for
group term life insurance premiums paid by the Corporation.
(11) On April 10, 1995, the Corporation purchased all of the outstanding shares
of PCS Phosphate Company, Inc. ("PCS Phosphate" - formerly Texasgulf Inc.).
The compensation reported for Thomas J. Wright for 1995 is for the period from
April 10, 1995 to December 31, 1995.
(12) Mr. Wright was, during 1995, a participant in a Deferred Compensation Plan
offered to eligible employees of PCS Phosphate pursuant to which a total of
$34,666, included above under "Salary", was deferred. See "Employment
Contracts and Termination of Employment".
9
<PAGE> 11
OPTIONS
The following table sets forth the grants of stock options to the Named
Executive Officers pursuant to the Corporation's Stock Option Plan - Officers
and Key Employees for the year ended December 31, 1996.
OPTION GRANTS DURING THE
MOST RECENTLY COMPLETED FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to Exercise or Grant Date
Options Employees in Base Price Expiration Present Value
Name Granted (1) # Fiscal Year $/Share Date (2) (3) $
<S> <C> <C> <C> <C> <C>
Charles E. Childers 80,000 14.47 71 Nov. 7, 2006 1,933,600
William J. Doyle 40,000 7.23 71 Nov. 7, 2006 966,800
Thomas J. Wright 35,000 6.33 71 Nov. 7, 2006 845,950
John Gugulyn 20,000 3.62 Cdn$94.75 Nov. 7, 2006 482,060
Barry E. Humphreys 20,000 3.62 Cdn$94.75 Nov. 7, 2006 482,060
</TABLE>
(1) Options granted on November 7, 1996. Each option is exercisable with
respect to one-half of the indicated number on or after November 7, 1997 and
with respect to the balance of the indicated number on or after November 7,
1998 (or earlier in the event of a "change of control" of the Corporation as
defined in the Corporation's Stock Option Plan - Officers and Key Employees).
(2) The Modified Black-Scholes Option Pricing Model was used to determine the
grant date present value of the stock options granted in fiscal 1996 by the
Corporation to the Named Executive Officers. Under the Modified Black-Scholes
Option Pricing Model, the grant date present value of the stock options referred
to in the table was Cdn $32.11 per Share for Mr. Gugulyn and Mr. Humphreys and
$24.17 for Mr. Childers, Mr. Doyle and Mr. Wright. The material assumptions and
adjustments incorporated in the Modified Black-Scholes Option Pricing Model in
estimating the value of options reflected in the above table include the
following:
(i) with respect to options held by Mr. Gugulyn and Mr. Humphreys, an
interest rate of 7.42% (representing the interest rate on a Canadian
Treasury security with a maturity date corresponding to that of the option
term) and with respect to options held by Mr. Childers, Mr. Doyle and Mr.
Wright, an interest rate of 6.20% (representing the interest rate on a
U.S. Treasury security with a maturity date corresponding to that of the
option term);
(ii) with respect to options held by Mr. Gugulyn and Mr. Humphreys,
volatility of 32.60% (calculated using daily stock prices on The Toronto
Stock Exchange for the one-year period prior to the grant date) and with
respect to options held by Mr. Childers, Mr. Doyle and Mr. Wright,
volatility of 31.46% (calculated using daily stock prices on the New York
Stock Exchange for the one-year period prior to the grant date);
(iii) with respect to options held by Mr. Gugulyn and Mr. Humphreys,
dividends at the rate of Cdn. $1.44 per Share and with respect to Mr.
Childers, Mr. Doyle and Mr. Wright, dividends at the rate of $1.06 per
Share (representing the annualized dividends paid with respect to a Share
at the date of grant); and
(iv) a reduction of approximately 25% to reflect the probability of
forfeiture due to termination prior to vesting, and the probability of a
shortened option term due to termination of employment prior to the option
expiration date.
The ultimate values of the options will depend on the future market price of
the Shares, which cannot be forecast with reasonable accuracy. The actual
value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the market value of the Shares over the exercise
price on the date the option is exercised.
(3) Amounts denominated in Canadian dollars are converted to United States
dollars at the exchange rate in effect at the date of grant of the options.
10
<PAGE> 12
The following table sets forth the options exercised during the year ended
December 31, 1996 by the Named Executive Officers and the year-end value of
unexercised in-the-money options held by such individuals at December 31, 1996.
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Securities Aggregate Number of Securities
Acquired Value Underlying Options Value of Unexercised in-the-
on Exercise Realized at FY-End Money Options at FY-End (1)
Name # $ # # $ $
- ---- ----------- ----------- ----------- ---------- ----------- -----------
Not Not
Exercisable Exercisable Exercisable Exercisable
<S> <C> <C> <C> <C> <C> <C>
Charles E. Childers 37,500 2,382,841(2) 167,500 110,000 8,716,902 1,435,934
William J. Doyle 22,500 1,287,659(2) 102,500 60,000 5,166,248 770,623
Thomas J. Wright - - 15,000 50,000 153,750 643,750
John Gugulyn - - 55,500 26,500 3,196,364 384,938
Barry E. Humphreys 5,000 304,524(2) 39,000 25,500 2,133,446 374,407
</TABLE>
(1) Values are calculated by determining the amount by which the market value
of the Shares underlying the options on December 31, 1996 exceeded the exercise
prices of the options and converting Canadian dollar amounts to United States
dollars using the December 31, 1996 exchange rate of $1.3697.
(2) Amounts denominated in Canadian dollars are converted to United States
dollars using the approximate exchange rate in effect at the date of exercise
of the options.
PENSION PLANS
The Potash Corporation of Saskatchewan Inc. Pension Plan (the "PCS Plan")
requires all participating employees to contribute 5.5% of their earnings (or
such lesser amount as is deductible for Canadian Income Tax purposes) to the
PCS Plan and the Corporation to contribute an equal amount. When an individual
retires, the full amount of equity in the individual's account is used to
purchase a pension.
PCS Sales has a pension plan for U.S. employees organized under Section 401(k)
of the U.S. Internal Revenue Code (the "Code") (the "PCS Sales Plan"). The PCS
Sales Plan requires PCS Sales to match employee contributions up to 5.5% of the
employees' earnings, to the maximum amount allowable under U.S. law. The PCS
Plan and the PCS Sales Plan are generally available, as applicable, to all
salaried employees of those Corporations and a portion of unionized employees.
The Corporation has a Supplemental Retirement Income Plan (the "Supplemental
Plan") which is unfunded and non-contributory and which provides a
supplementary pension benefit for the Corporation's officers and certain other
key managers. Under the basic terms of the Supplemental Plan a pension benefit
is provided in an amount equal to 2% of the participant's average three highest
years' earnings multiplied by the participant's years of pensionable service
(to a maximum of 35 years), minus any annual retirement benefit payable under
the PCS Plan or the PCS Sales Plan. Benefits under the Supplemental Plan are
paid in the currency in which the participant's earnings are denominated. For
a designated group of senior officers of the Corporation, who include Messrs.
Childers, Doyle, Humphreys and Gugulyn, the benefit payable is an amount equal
to: (i) 5% of the senior officer's average three highest years' earnings
11
<PAGE> 13
multiplied by the senior officer's years of pensionable service (to a maximum
of ten years), plus (ii) 2% of the senior officer's average three highest years
of earnings multiplied by the senior officer's years of pensionable service in
excess of 25 years to a maximum of 10 additional years, minus (iii) any annual
retirement benefit payable under the PCS Plan or the PCS Sales Plan. Benefits
payable to employees who have reached the minimum age (55) for retirement
pursuant to the Supplemental Plan are secured by letters of credit provided by
the Corporation.
PCS Phosphate has a defined benefit pension plan (the "PCS Phosphate Plan") for
all eligible U.S. employees. Under the PCS Phosphate Plan, employees are
required to contribute 1% of their base salary. PCS Phosphate contributions
are required whenever plan assets are not sufficient to meet applicable funding
standards. For employees age 60 or older with at least 20 years of service,
the PCS Phosphate Plan provides for a retirement benefit of 2% of the
employee's average (i.e. the average of the highest sixty consecutive months
during the most recent 120 months) compensation multiplied by the employee's
years of service (maximum 35 years). Employees who do not meet the minimum age
or years of service requirement receive a reduced benefit.
PCS Phosphate also maintains a defined contribution plan under Section 401(k)
of the Code (the "Phosphate Savings Plan"). The Phosphate Savings Plan allows
eligible employees to contribute up to 15% of their earnings to the plan
(subject to IRS limitations). PCS Phosphate matches the first 5% of employee
contributions.
The PCS Phosphate benefit plans are available to full-time employees of PCS
Phosphate, Moab Salt, Inc. and certain PCS Sales employees transferred from PCS
Phosphate. Mr. Wright is a participant in each of the foregoing PCS Phosphate
plans and is also a participant in PCS Phosphate's Deferred Compensation Plan
(see "Employment Contracts and Termination of Employment").
PCS Phosphate has a Supplemental Benefit Plan (the "Phosphate Supplemental
Plan") which is unfunded and non-qualified. The purpose of the Supplemental
Benefit Plan is to enable PCS Phosphate to continue to provide the same net
benefits to employees whose benefits under the respective plans would otherwise
be limited by the Code. Mr. Wright is a participant in this plan but not the
Supplemental Plan in which the other Named Executive Officers participate.
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<PAGE> 14
The following table shows the estimated annual benefits payable upon retirement
to C.E. Childers, W.J. Doyle, J. Gugulyn and B.E. Humphreys pursuant to the
Supplemental Plan. Estimated benefits payable pursuant to the Supplemental
Plan will be reduced by any benefits payable pursuant to the PCS Plan, or the
PCS Sales Plan.
SUPPLEMENTAL RETIREMENT INCOME PLAN TABLE
<TABLE>
<CAPTION>
Remuneration Years of Service
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 62,500 $ 62,500 $ 62,500 $ 75,000 $ 87,500
150,000 75,000 75,000 75,000 90,000 105,000
175,000 87,500 87,500 87,500 105,000 122,500
200,000 100,000 100,000 100,000 120,000 140,000
225,000 112,500 112,500 112,500 135,000 157,500
250,000 125,000 125,000 125,000 150,000 175,000
300,000 150,000 150,000 150,000 180,000 210,000
400,000 200,000 200,000 200,000 240,000 280,000
450,000 225,000 225,000 225,000 270,000 315,000
500,000 250,000 250,000 250,000 300,000 350,000
900,000 450,000 450,000 450,000 540,000 630,000
1,300,000 650,000 650,000 650,000 780,000 910,000
1,700,000 850,000 850,000 850,000 1,020,000 1,190,000
2,100,000 1,050,000 1,050,000 1,050,000 1,260,000 1,470,000
2,500,000 1,250,000 1,250,000 1,250,000 1,500,000 1,750,000
2,900,000 1,450,000 1,450,000 1,450,000 1,740,000 2,030,000
</TABLE>
For the purposes of the Supplemental Plan, earnings are defined as the
executive's annual base pay plus 100% of all bonuses paid or payable, in
respect of a particular year, to the executive. The normal retirement age
pursuant to the Supplemental Plan is 65, with a reduction in benefits for early
retirement prior to age 62. No benefits pursuant to the Supplemental Plan are
payable if retirement occurs prior to age 55.
As of December 31, 1996, the three highest year average earnings for the
purposes of the Supplemental Plan for each Named Executive Officer
participating in the Supplemental Plan were as follows: $2,203,151 for C.E.
Childers; $1,006,892 for W.J. Doyle; $434,395 for J. Gugulyn; and $393,470 for
B.E. Humphreys.
The estimated credited years of service at normal retirement age of 65 for each
of the Named Executive Officers participating in the Supplemental Plan are as
follows: 10.5 years for C.E. Childers; 28 years for W.J. Doyle; 13 years for
J. Gugulyn; and 39 years for B.E. Humphreys.
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<PAGE> 15
The following table represents an estimate of the combined retirement income of
Mr. Wright from the PCS Phosphate Plan and Phosphate Supplemental Plan at the
levels of average base salary and the years of service shown.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Remuneration Years of Service
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500
150,000 45,000 60,000 75,000 90,000 105,000
175,000 52,500 70,000 87,500 105,000 122,500
200,000 60,000 80,000 100,000 120,000 140,000
225,000 67,500 90,000 112,500 135,000 157,500
250,000 75,000 100,000 125,000 150,000 175,000
300,000 90,000 120,000 150,000 180,000 210,000
400,000 120,000 160,000 200,000 240,000 280,000
450,000 135,000 180,000 225,000 270,000 315,000
500,000 150,000 200,000 250,000 300,000 350,000
</TABLE>
Pursuant to the PCS Phosphate Plan and Phosphate Supplemental Plan, earnings
are defined as the average base salary computed on the highest 60 months of
service out of the last 120 consecutive months of service. The benefits
available under the PCS Phosphate Plan and Phosphate Supplemental Plan are not
subject to offset for other retirement benefits. As of December 31, 1996, the
final average compensation for the purposes of the PCS Phosphate Plan and the
Phosphate Supplemental Plan for Mr. Wright was $371,889. The estimated
credited years of service at normal retirement age of 65 for Mr. Wright is 31
years.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
(i) Chief Executive Officer
The terms and conditions of Mr. Childers' employment with the Corporation are
governed by an employment agreement, the current term of which expires June 30,
2001 and pursuant to which Mr. Childers shall serve as Chairman of the Board of
Directors and Chief Executive Officer of the Corporation until June 30, 1998
and thereafter as Chairman of the Board of Directors and as a special advisor
to the Corporation to June 30, 2001. Pursuant to the agreement, Mr. Childers'
salary compensation was $1,000,000 for the year ended December 31, 1996 and
will be $1,100,000 for the year ended December 31, 1997, $550,000 for the
period January 1, 1998 to June 30, 1998 and, thereafter, the annual amount of
$300,000 until June 30, 2001. Mr. Childers' agreement provides for
reimbursement to him on an annual basis of the amount by which income taxes
payable in Canada exceed those which otherwise would have been payable in the
United States.
The employment agreement for Mr. Childers provides for payment, upon
termination without cause, of an amount equal to the amounts payable for the
remaining term of the agreement. In the event of termination, for any reason,
the Corporation will provide a comprehensive medical insurance plan for Mr.
Childers equivalent to the medical plan currently in existence, which plan
shall remain in effect for the lifetime of Mr. Childers. The Corporation will
also pay reasonable moving expenses of Mr. Childers upon termination of the
agreement for any reason, including expiry of the term. Pursuant to the
agreement, in the event that the Corporation is sold, dissolved, merged or
amalgamated, Mr. Childers shall retain his position on the same
14
<PAGE> 16
terms as in the agreement or, in the alternative, the Corporation shall
compensate Mr. Childers in the same manner as provided for in the agreement.
The Board of Directors has recently authorized Mr. Childers' continuance as
Chairman of the Board of Directors and Chief Executive Officer of the
Corporation for an additional year beyond the June 30, 1998 date as specified
in his employment agreement. The terms of such extension are to be determined
and will be reflected in an amendment to the employment agreement when
complete.
(ii) Change in Control Agreements
Effective December 30, 1994, the Corporation, and where applicable, PCS
Sales, entered into Change in Control Agreements with each of the Named
Executive Officers, other than T.J. Wright. The initial term of each Change in
Control Agreement is to December 31, 1997, subject to automatic renewal for
successive one year terms until the employee reaches age 65 or unless either
party gives notice of termination. A change in control of the Corporation will
be deemed to have occurred if:
a) there is a significant (50 percent or more) change in the Board within
any two year period, not including replacement directors approved for
nomination by the Board;
b) there occurs an amalgamation, merger, consolidation, or other
transaction whereby the control of the existing shareholders of the
Corporation is diluted to less than 50 percent control of the surviving or
consolidated entity;
c) there occurs a significant (50 percent or more based on book value)
sale or other disposition of the fixed assets of the Corporation within
any twelve month period; or
d) any party acquires 20 percent or more of the voting securities of the
Corporation.
Benefits pursuant to the Change in Control Agreements will be payable upon
termination of the executive's employment within two years following a change
in control. Termination of the executive's employment is defined to include
the executive ceasing to be employed for any reason, including constructive
dismissal, except by reason of death, disability, resignation or voluntary
retirement, or dismissal for dishonest or wilful misconduct.
The severance benefit entitlements upon termination of employment
following a change in control of the Corporation are:
a) a lump sum payment of three times the executive's base salary and
average bonus for the last three years;
b) a lump sum payment of the pro-rata target bonus for the short year in
which termination occurs;
c) immediate vesting and cash out of all outstanding LTIP awards;
Payments to be made pursuant to the foregoing and relating to the
employee's bonus may be deferred by the executive for up to three years or
for such other period as may be permitted by the Income Tax Act (Canada);
d) a credit of three additional years of service under the Supplemental
Plan;
e) three year continuation of medical, disability, and group term life
insurance. These terminate, however, upon obtaining similar coverage from
a new employer or upon commencement of retiree benefits;
f) financial or outplacement counselling to a maximum of Cdn. $10,000.
15
<PAGE> 17
All outstanding non-exercisable options granted to the executive pursuant
to the Corporation's stock option plan will become exercisable upon a change in
control occurring. In the event no public market for the shares exists, the
Corporation (or PCS Sales as the case may be) will compensate the executive for
the value of his options on the basis of a share value approved by the
shareholders of the Corporation upon a change in control, or, if no such value
has been approved, then based upon the market value of the Shares when last
publicly traded.
For Mr. Childers and Mr. Doyle, there is provision for a "gross up" of
payments to cover excise taxes if payable in respect of such benefits.
For Mr. Childers, the following additional provisions apply to his Change
in Control Agreement:
a) termination of employment is defined to include, in addition to the
matters set forth above, voluntary resignation in the thirteenth month
following the month in which the change in control occurs;
b) benefits are payable under the Change in Control Agreement only if the
termination of employment occurs on or prior to June 30, 1997, in which
case such benefits are in full satisfaction of any rights, whether at
common law or under contract, which Mr. Childers might otherwise have on
termination of employment;
c) in addition to severance benefits set forth above, benefits payable
under the Change in Control Agreement include the provision of a
comprehensive medical insurance plan which shall remain in force for the
lifetime of Mr. Childers.
(iii) Other
The current severance policy of the Corporation for termination without
cause, which is applicable to all salaried employees including the Named
Executive Officers, is notice of impending termination, or payment of salary in
lieu of notice, equivalent to one month for each complete year of service plus
an additional two months. Such policy will be superseded by specific
termination provisions contained in a written agreement.
With respect to Mr. Doyle, a sum of $250,000 was paid on July 1, 1996 in
respect of $50,000 per annum amounts which had accrued since July 1, 1991.
Such payment was conditional upon Mr. Doyle remaining in the employ of the
Corporation throughout such period.
Prior to 1996, Mr. Wright contributed to a Deferred Compensation Plan.
Pursuant to this plan, Texasgulf Inc. (now PCS Phosphate) and Mr. Wright
entered into a Deferred Compensation Agreement dated August 30, 1985, as
amended, under which a portion of the salary otherwise payable to Mr. Wright
was irrevocably deferred and credited to an unfunded account which is payable
in ten annual instalments beginning in the year following the year he retires
or otherwise ceases to be an employee of PCS Phosphate. The unfunded account
balance, $546,887 as at December 31, 1996, accumulates interest compounded
quarterly at a rate equal to the quoted rate for 90-day unsecured commercial
paper.
COMPENSATION COMMITTEE
Composition of the Compensation Committee
The following individuals served as members of the Compensation Committee
during the fiscal year which ended on December 31, 1996.
Denis J. Cote (Chairman)
Donald E. Phillips
Daryl K. Seaman
Barrie A. Wigmore
16
<PAGE> 18
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is, at
present, composed of four directors who are neither officers nor former
officers of the Corporation. The Committee is charged with formulating and
making recommendations to the Board in respect of compensation issues relating
to directors and senior officers of the Corporation. The Committee also makes
recommendations regarding the Corporation's Stock Option Plans and administers
its Short and Long-Term Incentive Plans, each in accordance with its terms. In
addition, the Committee, in consultation with the Chief Executive Officer,
considers and reports to the Board regarding corporate succession matters.
Executive compensation policies are designed with the objective of attracting
and retaining qualified executives by providing compensation packages which are
competitive within the market place and by compensating them in a manner which
encourages individual performance consistent with shareholder expectations.
Salary
In 1995 the Corporation adopted a "broad band" salary system for senior
executives (i.e. vice presidents and above, but not including the chief
executive officer) of the Corporation. Under the broad band system a salary
range is established by the Compensation Committee for each senior executive
level after consultation with independent compensation consultants. Each
individual's salary is set within the applicable range taking into account the
individual's duties, performance and experience. Individual executive salaries
are subject to approval by the Chief Executive Officer and the Compensation
Committee of the Board of Directors.
Short-Term Incentive Compensation
The Corporation's Short-Term Incentive Plan is intended to aid in developing
strong corporate management by providing financial incentives to key employees
to meet or achieve objectives which contribute materially to the Corporation's
success. The plan provides for incentive awards based on an individual's
performance, position with the Corporation and the financial results of the
Corporation. Ranges of incentive awards are established for each position,
which awards are expressed as a percentage of annual salary. The actual
percentage used in calculating the award is determined by the Corporation's
return on equity in relation to a pre-established target, subject to adjustment
based upon the individual's performance. Under the terms of the plan,
generally no payments are made when the return on equity is less than 50% of
the target set by the Board for that year. For senior executives, which
include the Named Executive Officers, incentive awards range from 20% to 100%
of salary depending upon actual return on equity as compared to target return
on equity once the minimum threshold requirement has been met, all subject to a
plus or minus 10% adjustment based on the Executive's performance.
Long-Term Incentive Compensation
The Corporation's Long-Term Incentive Plan, established in 1994 and amended
December 15, 1995, is designed to retain high-potential, high-value employees,
to recognize and reward their significant contributions to the long-term
success of the Corporation, and to align their interests more closely with the
shareholders of the Corporation. The plan provides for the discretionary grant
of units to eligible employees effective January 1, 1994 and January 1 every
three years thereafter and on such other dates as circumstances warrant. A
maximum of 1,000,000 units may be granted pursuant to the Long-Term Incentive
Plan. A unit is a notional amount equal to the market value of a common share
of the Corporation. The units are divided equally into "part one" and "part
two" units upon their grant. The number of units granted to an eligible
employee is approximately three times the amount determined by dividing the
employee's target award under the Short-Term Incentive Plan by the closing
price of the shares on The Toronto Stock Exchange on the first day preceding
the date of the grant of the units in which a board lot of shares was traded on
such Exchange.
The units are redeemed for cash on the basis of their "market value" on a
redemption date. The "market value" of a unit is the closing price of the
shares on The Toronto Stock Exchange on the first day preceding the redemption
date in which a board lot of shares was traded on such Exchange. Cash amounts
payable under the plan to employees
17
<PAGE> 19
working in the United States, who receive salary in United States currency
shall be converted to United States currency on the redemption date, based on
the published exchange rate of the Bank of Canada in effect as of the close of
business on the business day immediately preceding the redemption date, or such
other basis as may be equitably determined by the Committee. Redemption dates
are determined by the Committee in accordance with the terms of the plan. The
redemption date for the part one units may not be later than the last day of
the third calendar year following the calendar year of the grant of the units.
As a matter of policy, the Committee has determined that part one units will be
redeemed no later than the last day of the second calendar year following the
calendar year of the grant of the units. One-third of the part two units must
be redeemed on or before each of the first, second, and third anniversary of
the grant of the units.
The number of part one units eligible to be redeemed on a redemption date is
subject to adjustment based upon the performance of the Corporation and the
employee, in accordance with criteria established by the Committee from time to
time. The Committee may, on or before a redemption date for part one units,
reduce or increase an employee's part one units by a maximum of 50%.
The interests of management are also tied to the interests of the Corporation's
shareholders through the annual grant of options to executives and other key
employees pursuant to the Corporation's Stock Option Plan - Officers and Key
Employees. The options are granted at 100% of market value, become exercisable
over two years (or earlier in the event of a "change of control" as defined in
the plan) and expire after ten years. Options are granted having regard to the
position in and contribution made to the Corporation by the individual
involved. The aggregate number of Shares issuable pursuant to options granted
under the Corporation's Stock Option Plan - Officers and Key Employees is
3,842,000. The number of options granted to an individual is a function of the
individual's position within the Corporation and his or her ability to affect
corporate performance.
In considering whether and how many options are to be granted the Committee
considers the aggregate number of options outstanding and is also guided in
such matters by applicable regulatory constraints.
In relative terms, greater emphasis within the compensation package is given to
annual cash compensation (salary and short-term incentives) than to long-term
incentives and options. However, each element of the package is designed to
complement the others in enabling the Corporation to achieve the objectives of
its compensation policies.
Chief Executive Officer Compensation
The terms and conditions of Mr. Childers' employment with the Corporation are
governed by an employment agreement. Among other things, the agreement
provides that, in addition to receiving an annual salary, Mr. Childers is
entitled to participate in other compensation programs of general applicability
to senior corporate management.
The Committee reviews annually the CEO's salary, any awards under the Short and
Long-Term Incentive Plans and any grant of options under the Corporation's
Stock Option Plan - Officers and Key Employees. The CEO's annual salary is
determined primarily on the basis of the individual's performance and the
performance of the Corporation. While no mathematical weighting formula
exists, the Committee considers all factors which it deems relevant including
the net income of the Corporation, the Corporation's share price, the duties
and responsibilities of the CEO and current compensation levels. Awards
pursuant to the Short and Long-Term Incentive Plans and under the Corporation's
Stock Option Plan - Officers and Key Employees are made in accordance with the
plans as outlined above.
Reference is also made to the compensation of chief executive officers of an
appropriate comparable group of fertilizer producers and marketers selected by
the Corporation. The comparison of Mr. Childers' compensation to the
comparable group incorporates many factors including the relative size of the
companies, their profitability and share price, the duties of the chief
executive officer and any other extenuating or special circumstances.
Mr. Childers' compensation for 1996 as set forth in the Summary Compensation
Table was determined in accordance with the foregoing.
Submitted on behalf of the Compensation Committee: Denis J. Cote, Donald E.
Phillips, Daryl K. Seaman, and Barrie A. Wigmore.
18
<PAGE> 20
PERFORMANCE GRAPHS
The following graph illustrates the Corporation's cumulative shareholder
return, assuming reinvestment of dividends, by comparing a Cdn$100 investment
in the Corporation's Shares at December 31, 1991 to the return on the TSE 300
Total Return Index.
[graph]
<TABLE>
<CAPTION>
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
<S> <C> <C> <C> <C> <C> <C>
Potash Corporation of Saskatechewan Inc. - $100 $125 $167 $244 $507 $621
TSE Listing
TSE 300 $100 $99 $131 $130 $149 $225
</TABLE>
19
<PAGE> 21
The following graph illustrates the Corporation's cumulative shareholder
return, assuming reinvestment of dividends, by comparing a $100 investment in
the Corporation's Shares at December 31, 1991 to the return on the Standard &
Poor's 500 Index and the shareholder return of two peer groups of fertilizer
producers and marketers selected by the Corporation. The "Self-selected Peer
Group" represents the peer group used by the Corporation in the performance
graph set forth in its 1996 proxy circular. The "New Peer Group" reflects
certain modifications to the existing peer group and will be used in subsequent
years by the Corporation.
[graph]
<TABLE>
<CAPTION>
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
<S> <C> <C> <C> <C> <C> <C>
Potash Corporation of Saskatchewan Inc. - $100 $116 $151 $205 $436 $530
NYSE Listing
Self-selected Peer Group $100 $83 $104 $109 $182 $187
New Peer Group $100 $81 $105 $111 $166 $170
S&P 500(R) $100 $108 $118 $120 $165 $203
</TABLE>
The Self-selected Peer Group consists of:
COMPANY SYMBOL
First Mississippi Corporation (1) FRM
Freeport McMoran Resource Partners LP FRP
IMC Global Inc. IGL
Terra Industries Inc. TRA
Vigoro Corporation (2) VGR
The New Peer Group consists of:
COMPANY SYMBOL
Agrium Inc. * (beg. 6/30/93) AGU
Freeport McMoran Resource Partners LP FRP
IMC Global Inc. IGL
Mississippi Chemical Corp. (beg. 9/30/94) GRO
Terra Industries Inc. TRA
*TSE Listing
(1) On December 24, 1996, Mississippi Chemical Corp. acquired the fertilizer
assets of First Mississippi Corporation. The Self-selected Peer Group contains
data for First Mississippi Corporation to this date.
(2) Vigoro Corporation was acquired by IMC Global Inc. on March 1, 1996. The
Self-selected Peer Group contains data for Vigoro Corporation through December
31, 1995.
20
<PAGE> 22
COMPENSATION OF DIRECTORS
Each director who is not also an officer or employee of the Corporation (an
"outside director") receives from the Corporation an annual retainer of
$20,000, a per diem fee of $1,000 for meetings he or she attends and a travel
fee of $500 per day where travel is required on a day or days on which a
meeting does not occur. Outside directors receive an additional $2,500 per
year, if a chairman of a Board committee. Each outside director who is a member
of a Board committee receives a per diem fee of $1,000 for meetings he or she
attends, provided such meetings are not held the same day as a Board meeting.
Outside directors are also reimbursed for expenses incurred in discharging
their responsibilities.
On November 7, 1996, the Board approved amendments to the Stock Option
Incentive Plan - Unaffiliated Directors (the "Directors' Stock Option Plan")
and at the same meeting granted options to purchase 3,000 Shares to each of the
13 outside directors of the Corporation. Such options have an exercise price
equal to the fair market value of the Shares at the time the options were
granted (Cdn. $94.75 per Share for non-U.S. resident directors and $71 for U.S.
resident directors, respectively), become exercisable over two years (or
earlier in the event of a change in control of the Corporation as defined) and
expire ten years after the date on which they were granted.
CORPORATE GOVERNANCE
This statement of corporate governance is made pursuant to the requirements of
The Toronto Stock Exchange and the Montreal Exchange relating to disclosure of
corporate governance practices. Reference is also made to the guidelines for
improved corporate governance in Canada ("Guidelines") contained in the
December 1994 report of The Toronto Stock Exchange Committee on Corporate
Governance in Canada.
MANDATE OF THE BOARD
The Board has the duty to direct the management of the business and affairs of
the Corporation pursuant to the powers vested in it by The Business
Corporations Act (Saskatchewan) and by the articles and bylaws of the
Corporation, and in accordance with obligations imposed by law.
In furtherance of the discharge of such duties and obligations, the Board holds
six regularly scheduled meetings annually and additional meetings to consider
particular issues as required. In 1996 the Board held 8 meetings.
The Board, either directly or through its committees, is called upon to:
(i) approve the Corporation's annual operating and capital budgets, all
material acquisitions and divestitures and the scope of its business
activities;
(ii) ensure that appropriate systems are in place to manage the
Corporation's principal business risks, including financial, environmental,
and regulatory risks;
(iii) monitor and approve succession planning and appointment and
remuneration of senior management;
(iv) monitor and assess the integrity of the Corporation's internal
controls and management information systems; and
(v) establish a communications policy.
BOARD COMPOSITION
As of February 28, 1997 fifteen directors comprised the Board. Of that number
thirteen were non-management or outside directors (a director that is not an
officer or employee of the Corporation) and twelve were unrelated directors (a
director free from any relationship with the Corporation which could materially
interfere with the director's ability to act with a view to the best interests
of the Corporation, other than arising from shareholding). In determining
whether directors were related or unrelated the Board applied the test set
forth in the Guidelines.
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<PAGE> 23
As of February 28, 1997 the Corporation did not have a significant shareholder
as defined in the Guidelines.
The Board has considered its size and has concluded that it functions
effectively in discharging its obligations both through Board and Committee
meetings.
INDEPENDENT BOARD ACTION
At present the Chairman of the Board is also the Chief Executive Officer of the
Corporation.
The Board, with thirteen outside directors, twelve of whom are unrelated
directors, can and does function independently of management. There are four
committees of the Board, each of which plays a significant role in the
discharge of the Board's duties and obligations. Each committee is composed
wholly of outside directors, except the Executive Committee which is chaired by
the Chief Executive Officer. Each Committee may, if and when considered
appropriate by it to do so, retain the services of outside advisers. The Board
has implemented a procedure for the Executive Committee to authorize a director
to engage an outside adviser at the Corporation's expense in appropriate
circumstances. In addition, the Board has met, and may meet in the future,
without management present, as circumstances require.
COMMITTEES
(i) Executive Committee
The Executive Committee is composed of five directors, one of whom is, in
accordance with the bylaws of the Corporation, the Chief Executive Officer. Of
the other four committee members, all are outside directors and three are
unrelated directors. Between meetings of the Board it has, with certain
exceptions, all the powers vested in the Board. In addition, the Executive
Committee nominates candidates for directorship of the Corporation. It has
responsibility for corporate governance issues.
(ii) Audit Committee
The Audit Committee is composed of three unrelated directors. The committee
meets with the Corporation's financial management personnel, internal auditor
and external auditor at least once each quarter to review the Corporation's
financial reporting practices and procedures and authorize the release of
unaudited quarterly financial statements, and reviews the Corporation's annual
financial statements prior to their submission to the Board for approval. The
committee also recommends to the Board the external auditors to be proposed to
the shareholders for appointment at the annual meeting of shareholders.
(iii) Compensation Committee
The Compensation Committee is composed of four unrelated directors. This
committee formulates and makes recommendations to the Board in respect of
compensation issues relating to directors and senior management of the
Corporation and in respect of corporate salary and benefits policy. It reviews
and approves, on an annual basis, the Corporation's salary administration
program. It is responsible for the annual report on executive compensation.
The committee, in consultation with the Chief Executive Officer, considers and
reports to the Board regarding corporate succession matters.
(iv) Environmental Affairs Committee
The Environmental Affairs Committee is composed of three unrelated directors.
The committee works to ensure that the Corporation's commitment to the
protection of the environment is fulfilled. It routinely receives
environmental audit reports for review and discussion with senior management
and monitors environmental issues in other areas of corporate activity such as
off-site transportation, distribution and storage of product. The committee
reviews and discusses with management potential changes to regulatory
requirements and to corporate environmental policy.
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<PAGE> 24
DECISIONS REQUIRING BOARD APPROVAL
The Board is responsible for all decisions relating to the Corporation which,
by law, cannot be delegated to Board committees or management.
The Board reviews and approves, among other things, the Corporation's annual
budget, unbudgeted capital expenditures which exceed one million dollars (Cdn),
debt and equity financing, changes to capital structure, material acquisitions
and divestitures, appointment and remuneration of the chief executive officer,
directors to be proposed for election at the Corporation's annual meeting, and
any other matter which is of material significance to the Corporation.
DIRECTOR RECRUITMENT AND BOARD EFFECTIVENESS
The Executive Committee acts as the nominating committee of the Board. When
vacancies occur, the chairman of the committee (who is, at present, the Chief
Executive Officer) discusses with and seeks advice from committee members
regarding potential candidates. Upon the Executive Committee reaching a
consensus, Board approval of the proposed nominee is sought. The Corporation's
nominating process recognizes the importance of input from the Chief Executive
Officer regarding nominations, while leaving the ultimate decision to the Board
acting on the advice of the Executive Committee.
The Board has not established any formal measures for assessing Board,
Committee and individual director effectiveness.
SHAREHOLDER COMMUNICATION
The Corporation's shareholder communications policy is one of timely public
dissemination of material information. Shareholder questions, comments and
concerns may be made to the Corporation's Investor Relations Department, to the
Corporate Secretary, or to the Corporation's transfer agent.
BOARD'S EXPECTATIONS OF MANAGEMENT
Management of the Corporation is expected to perform the following functions:
(i) provide timely accurate reports to the Board on the business and
affairs of the Corporation and on matters of material significance to the
Corporation;
(ii) conduct an annual budgeting process and monitor the Corporation's
performance as compared to the annual budget approved by the Board;
(iii) make such decisions and take, on a timely basis, such actions as are
necessary for the Corporation to discharge its obligations and meet
applicable requirements, while seeking to enhance shareholder value; and
(iv) review on an ongoing basis the Corporation's strategies and their
implementation in all key areas of the Corporation's activities.
APPOINTMENT OF AUDITORS
Proxies solicited hereby will be voted to reappoint the firm of Deloitte &
Touche, the present auditors, as auditors of the Corporation to hold office
until the next annual meeting of shareholders, unless the shareholder signing
such proxy specifies otherwise. The affirmative vote of a majority of Shares
voted on such matter is required to reappoint the firm of Deloitte & Touche, as
auditors of the Corporation. A representative of Deloitte & Touche is expected
to attend the Meeting. At that time the representative will have the
opportunity to make a statement if he or she desires and will be available to
respond to appropriate questions.
23
<PAGE> 25
MANNER OF VOTING PROXIES
Proxies solicited hereby will be voted or withheld from voting on the election
of directors and voted for or against or withheld from voting on the
appointment of auditors in accordance with any specifications made on the
proxy. In the absence of any such specification, such proxies will be voted for
the election of the directors and the appointment of the auditors specified in
this proxy circular.
The Board knows of no matters to come before the Meeting other than the matters
referred to in the Notice of Annual Meeting. However, if any other matters
which are not now known to the Board should properly come before the Meeting or
any adjournment thereof, or if amendments or variations to the matters referred
to in the Notice of Annual Meeting are presented for action at the Meeting or
any adjournment thereof, the proxies will be voted on such matters, amendments
or variations in accordance with the best judgement of the person voting the
proxy which confers such discretionary authority.
GENERAL
Proposals of shareholders intended to be presented at the Corporation's annual
meeting of shareholders in 1998 and which such shareholders are entitled to
request be included in the management proxy circular for that meeting must be
received at the Corporation's principal executive offices not later than
February 6, 1998 under The Business Corporations Act (Saskatchewan) and not
later than November 26, 1997 under the U.S. Securities Exchange Act of 1934.
In respect of matters to be voted on at the Meeting, where a broker may not be
permitted to vote Shares held in street name in the absence of instructions
from the beneficial owner of the Shares, such Shares will be considered not
entitled to vote, although such Shares and Shares for which the holders abstain
from voting will count for purposes of determining the presence of a quorum.
Copies of the Corporation's most recent Form 10-K together with any document
incorporated by reference therein, the most recent annual financial statements
together with the accompanying report of the auditor, and any interim financial
statements filed subsequent to the filing of the most recent annual financial
statements may be obtained on request from the Secretary of the Corporation.
The contents and the sending of this management proxy circular have been
approved by the Board.
/s/ JOHN HAMPTON
-------------------------------
JOHN L.M. HAMPTON
SECRETARY
March 26, 1997
24
<PAGE> 26
[LOGO]
<PAGE> 27
Proxy
POTASH CORPORATION OF SASKATCHEWAN INC.
[LOGO]
For use at the annual meeting of shareholders TO BE HELD on May 8, 1997.
This proxy is solicited on behalf of the Board of Directors of the Corporation.
The undersigned holder of common shares ("Shares") of Potash Corporation of
Saskatchewan Inc. (the "Corporation") hereby appoints Charles E. Childers,
Chairman, Chief Executive Officer and President, or failing him, Barry E.
Humphreys, Senior Vice President, Finance and Treasurer, or failing him, John
L.M. Hampton, Senior Vice President, General Counsel and Secretary, or instead
of any of the foregoing,
_____________________________________________, as proxy for the undersigned to
attend, vote and act for and on behalf of the undersigned at the annual meeting
of shareholders of the Corporation to be held at the Ramada Hotel, 1st Avenue
and 22nd Street, Saskatoon, Saskatchewan, Canada on Thursday, the 8th day of
May, 1997 (the "Meeting") at 10:30 a.m., and at any adjournments thereof, and
hereby revokes any proxy previously given by the undersigned.
1. A shareholder has the right to appoint a person, who need not be a
shareholder, to represent him and to attend and act on his behalf at the
Meeting, other than the nominees designated above, and may exercise such right
by inserting the name of his nominee in the space provided above for that
purpose.
2. The Shares represented by this proxy will be voted in accordance with any
choice specified in this proxy. If no specification is made, the persons named
above will vote such Shares for the election of the directors named in this
proxy and for the appointment of Deloitte & Touche as auditors of the
Corporation.
3. If this proxy is not dated, it shall be deemed to be dated on the date on
which this proxy was mailed by the Corporation.
Without limiting the general powers hereby conferred, the Shares represented by
this proxy are to be:
<TABLE>
<S> <C> <C>
1. [ ] VOTED FOR the election as directors of all nominees listed below
(except as marked to the contrary below), or
[ ] WITHHELD FROM VOTING for all nominees listed below.
</TABLE>
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.
<TABLE>
<S> <C> <C> <C>
I. Anderson W.J. Doyle D.E. Phillips J.G. Vicq
D.J. Bourne W.Z. Estey P.J. Schoenhals B.A. Wigmore
C.E. Childers D. Howe D.K. Seaman P.S. Wise
D.J. Cote J.F. Lardner E.R. Stromberg
</TABLE>
2. Voted FOR [ ], or AGAINST [ ], or WITHHELD FROM VOTING [ ] on, the
appointment of Deloitte & Touche as auditors of the Corporation.
Dated the _______________ day of __________________________________, 1997.
_________________________________________________________________________
Name of Shareholder (please print)
_________________________________________________________________________
Signature of Shareholder
