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Exhibit 10(aa)
LONG-TERM
INCENTIVE PLAN
Potash Corporation of
Saskatchewan Inc
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CONTENTS
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<TABLE>
<S> <C>
SECTION 1 - ESTABLISHMENT OF THE PLAN 1
1.01 Purpose 1
1.02 Term 1
SECTION 2 - DEFINITIONS 2
2.01 Absolute Percentage 2
2.02 Actively Employed 2
2.03 Award Payment 2
2.04 Award Percentage 2
2.05 Board 2
2.06 CEO 2
2.07 Closing Share Price 2
2.08 Committee 3
2.09 Corporation 3
2.10 Dividends 3
2.11 Entitled Executive 3
2.12 Exchange 3
2.13 Opening Share Price 3
2.14 PCS Inc. 3
2.15 Performance Cycle 3
2.16 Permanent Disability 3
2.17 Peer Group of Corporations 3
2.18 Plan 4
2.19 Relative Percentage 4
2.20 Salary 4
2.21 Target Percentage 4
2.22 Total Shareholder Return (TSR) 4
SECTION 3 - PARTICIPATION 6
3.01 Participation Requirements 6
SECTION 4 - AWARD PAYMENTS 7
4.01 Calculation of Award Payment 7
4.02 Timing of Payment 7
4.03 Adjustments to Award Payments 7
SECTION 5 - ADMINISTRATION OF THE PLAN 8
5.01 Powers of the Committee 8
5.02 Determination of Target Percentage 8
5.03 Calculation of Total Shareholder Return 8
5.04 Delegation of Duties 8
SECTION 6 - TERMINATION OF EMPLOYMENT 9
6.01 Termination of Employment 9
</TABLE>
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<TABLE>
<S> <C>
SECTION 7 - GENERAL PROVISIONS 10
7.01 Death Benefits 10
7.02 Disability or Retirement 10
7.03 Leaves of Absence 10
7.04 Assignment or Alienation 10
7.05 Amendment or Termination 11
7.06 Effect of Amendment or Termination 11
7.07 No Enlargement of Contractual Rights 11
7.08 Interpretation 11
7.09 Withholding of Taxes 11
7.10 Binding on Successors 11
7.11 Currency 11
APPENDIX "A" - ABSOLUTE PERCENTAGE OF TARGET PERCENTAGE 12
APPENDIX "B" - RELATIVE PERCENTAGE OF TARGET PERCENTAGE 13
APPENDIX "C" - TARGET PERCENTAGE 14
</TABLE>
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SECTION 1 - ESTABLISHMENT OF THE PLAN
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1.01 PURPOSE
This Long-term Incentive Plan is established for the purpose of:
(a) providing competitive compensation for Entitled Executives;
(b) rewarding Entitled Executives for improving Total Shareholder
Return;
(c) rewarding Entitled Executives for attaining a Total Shareholder
Return that is in excess of the Peer Group of Corporations;
(d) rewarding Entitled Executives for their efforts and contributions
to the achievement of the long-term success of the business
interests of the Corporation;
(e) aligning the interests of Entitled Executives more closely with
the shareholders of the Corporation; and,
(f) enhancing the ability of the Corporation to recruit and retain
high potential, high value executives.
1.02 TERM
Subject to Section 7.05 (Amendment or Termination), this Plan shall be
effective on and after January 1, 2000.
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SECTION 2 - DEFINITIONS
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The following terms, when capitalized, shall be defined as follows:
2.01 ABSOLUTE PERCENTAGE
"Absolute Percentage" means the percentage of an Entitled Executive's
Target Percentage derived in accordance with the table contained in
Appendix "A" and applied to arrive at the Award Percentage of the
Entitled Executive for a given Performance Cycle.
2.02 ACTIVELY EMPLOYED
"Actively Employed" means an Entitled Executive who is at work on a
regular basis and performing the full scope of his or her job duties.
2.03 AWARD PAYMENT
"Award Payment" means a cash payment to an Entitled Executive
calculated pursuant to Section 4.01 (Calculation of Award Payments).
2.04 AWARD PERCENTAGE
"Award Percentage" means the percentage of an Entitled Executive's
Salary derived from the following formula:
(a) the sum of the Entitled Executive's Absolute Percentage and
his or her Relative Percentage
MULTIPLIED BY
(b) the Entitled Executive's Target Percentage.
If the sum of paragraph (a) in the above formula is less than zero,
then the Award Percentage will be deemed to be zero.
2.05 BOARD
"Board" means the Board of Directors of PCS Inc..
2.06 CEO
"CEO" means the Chief Executive Officer of PCS Inc..
2.07 CLOSING SHARE PRICE
"Closing Share Price" means, for PCS Inc. or a corporation of the Peer
Group of Corporations, the average closing price of the corporation's
common shares on the Exchange for the last five trading days of a given
Performance Cycle.
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2.08 COMMITTEE
"Committee" means the Compensation Committee of the Board.
2.09 CORPORATION
"Corporation" means Potash Corporation of Saskatchewan Inc. and its
direct and indirect subsidiaries.
2.10 DIVIDENDS
"Dividends" means, for PCS Inc. or a corporation of the Peer Group of
Corporations, an amount equal to the cumulative amount of dividends
paid by the corporation during a given Performance Cycle, assuming
dividend reinvestment.
2.11 ENTITLED EXECUTIVE
"Entitled Executive" means an executive employee of the Corporation who
is recommended by the CEO and approved by the Committee to participate
in this Plan.
2.12 EXCHANGE
"Exchange" means the principal stock exchange upon which PCS Inc. or a
corporation of the Peer Group of Corporations, as the case may be,
trades.
2.13 OPENING SHARE PRICE
"Opening Share Price" means for the Performance Cycle commencing
January 1, 2000, the average closing price of PCS Inc., or a
corporation of the Peer Group of Corporations, on the Exchange for the
last five trading days of 1999. For subsequent Performance Cycles, the
Opening Share Price means the Closing Share Price of such corporation
for the immediately preceding Performance Cycle.
2.14 PCS INC.
"PCS Inc." means Potash Corporation of Saskatchewan Inc.
2.15 PERFORMANCE CYCLE
"Performance Cycle" means a period of three consecutive calendar years.
The first Performance Cycle commences on January 1, 2000 and ends on
December 31, 2002. The next Performance Cycle will commence on January
1, 2003 and end on December 31, 2005, and so on.
2.16 PERMANENT DISABILITY
"Permanent Disability" means the permanent incapacity of an Entitled
Executive, as determined in accordance with the disability plan to
which the Entitled Executive belongs.
2.17 PEER GROUP OF CORPORATIONS
"Peer Group of Corporations" means, initially, the following group of
corporations:
(a) Agrium Inc.;
(b) IMC Global Inc.;
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(c) Mississippi Chemical Corporation; and,
(d) Terra Industries Inc.
This group may be modified to reflect any mergers or acquisitions
within the group, or as otherwise deemed appropriate by the Committee
2.18 PLAN
"Plan" means this Long-term Incentive Plan, as amended from time to
time.
2.19 RELATIVE PERCENTAGE
"Relative Percentage" means the percentage of an Entitled Executive's
Target Percentage derived in accordance with the table contained in
Appendix "B" and applied to arrive at the Award Percentage of the
Entitled Executive for a given Performance Cycle.
2.20 SALARY
"Salary" means an amount equal to the sum of the Entitled Executive's
annual base salary paid in each of the three calendar years in a
Performance Cycle while the Entitled Executive is Actively Employed or
on short-term disability, as determined in accordance with the
disability plan to which the Entitled Executive belongs.
2.21 TARGET PERCENTAGE
"Target Percentage" means the percentage as set forth in Appendix "C"
of an Entitled Executive's Salary recommended by the CEO, approved by
the Committee and applied to arrive at the Award Percentage of the
Entitled Executive for a given Performance Cycle.
2.22 TOTAL SHAREHOLDER RETURN (TSR)
"Total Shareholder Return" or "TSR" means, for any corporation in a
given Performance Cycle, a percentage derived from the following
formula:
(a) Closing Share Price
minus
Opening Share Price
plus
Dividends
DIVIDED BY
(b) Opening Share Price
MULTIPLIED BY
(c) 100
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The Total Shareholder Return for the Peer Group of Corporations shall
be determined by dividing the sum of the Total Shareholder Returns for
each corporation of the Peer Group of Corporations by the number of
corporations in the Peer Group of Corporations.
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SECTION 3 - PARTICIPATION
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3.01 PARTICIPATION REQUIREMENTS
Participation in the Plan is limited to Entitled Executives.
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SECTION 4 - AWARD PAYMENTS
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4.01 CALCULATION OF AWARD PAYMENT
An Entitled Executive shall receive an Award Payment equal to the
Entitled Executive's Award Percentage multiplied by his or her Salary.
4.02 TIMING OF PAYMENT
The Committee shall approve the amount of the Award Payments within 30
days of the end of each Performance Cycle and an Entitled Executive
shall receive his or her Award Payment within 30 days thereafter.
4.03 ADJUSTMENTS TO AWARD PAYMENTS
(a) Participation During Performance Cycle
An employee of the Corporation who becomes an Entitled
Executive after the commencement of a Performance Cycle shall
participate in this Plan as of the date he or she becomes an
Entitled Executive. The Award Payment of such Entitled
Executive shall be calculated by deeming the Opening Share
Price used in arriving at the TSR to be the average closing
price of PCS Inc., or a corporation of the Peer Group of
Corporations, on the Exchange for the last five trading days
prior to his or her becoming an Entitled Executive.
(b) Job Promotion During Performance Cycle
An Entitled Executive who is promoted from one Group to another
Group as set forth in Appendix "C", shall have his or her
Target Percentage prorated in accordance with his or her period
of employment within each Group during a given Performance
Cycle.
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SECTION 5 - ADMINISTRATION OF THE PLAN
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5.01 POWERS OF THE COMMITTEE
The Committee shall have the power and authority to approve all
Entitled Executives, approve Target Percentages and generally
administer the Plan. The Committee shall conclusively interpret the
provisions of this Plan and decide all questions of fact arising in the
application thereof.
5.02 DETERMINATION OF TARGET PERCENTAGE
Within 30 days of the approval of the proposed Entitled Executives and
their respective Target Percentages by the Committee, PCS Inc. will
prepare a written notice to such Entitled Executives specifying their
Target Percentage and the terms of the Plan deemed relevant by the
Committee.
5.03 CALCULATION OF TOTAL SHAREHOLDER RETURN
Management of PCS Inc. shall provide a report to the Committee within
30 days of the end of each Performance Cycle showing the calculations
for obtaining the Total Shareholder Return for PCS Inc. and each of the
corporations in the Peer Group of Corporations. Final determination of
the Total Shareholder Return for PCS Inc. and any corporation in the
Peer Group of Corporations shall be approved by the Committee.
5.04 DELEGATION OF DUTIES
The Committee and/or the Board may delegate to any director or
directors or any officer or officers of PCS Inc. such administrative
duties and powers as it may see fit with respect to the Plan.
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SECTION 6 - TERMINATION OF EMPLOYMENT
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6.01 TERMINATION OF EMPLOYMENT
(a) TERMINATION WITHOUT CAUSE
If an Entitled Executive's employment with the Corporation is
terminated by the Corporation without just cause, he or she
shall be entitled to an Award Payment calculated as of the
Entitled Executive's termination date. The Award Payment will
be paid to the Entitled Executive within a reasonable period
of time from his or her termination date. The Entitled
Executive shall not be eligible to participate in the Plan
during Performance Cycles commencing after his or her date of
notice of termination of employment.
(b) VOLUNTARY TERMINATION OR TERMINATION WITH CAUSE
If an Entitled Executive's employment with the Corporation is
voluntarily terminated by the Entitled Executive or is
terminated by the Corporation for just cause, he or she shall
immediately cease to participate in the Plan and shall forfeit
any and all rights he or she may have under this Plan
including, but not limited to, any Award Payment except with
respect to any Award Payment granted or grantable for a
Performance Cycle completed before the date of such
termination.
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SECTION 7 - GENERAL PROVISIONS
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7.01 DEATH BENEFITS
If an Entitled Executive dies while participating in this Plan, his or
her estate shall be entitled to an Award Payment calculated as of the
Entitled Executive's date of death. The Award Payment will be paid to
the estate of the Entitled Executive within a reasonable period of time
from the date of death of the Entitled Executive.
7.02 DISABILITY OR RETIREMENT
If an Entitled Executive suffers:
(a) a Permanent Disability; or
(b) retires from employment with the Corporation in accordance
with the then prevailing retirement policy of the Corporation,
he or she shall be entitled to an Award Payment calculated as of the
Entitled Executive's date of Permanent Disability or date of
retirement, as the case may be. The Award Payment will be paid to the
Entitled Executive within a reasonable period of time from his or her
date of Permanent Disability or date of retirement, as the case may be.
The Entitled Executive shall not be eligible to participate in the Plan
during Performance Cycles commencing after his or her date of Permanent
Disability, or retirement.
7.03 LEAVES OF ABSENCE
If an Entitled Executive takes a leave of absence from employment,
approved by the Corporation, with or without pay, he or she shall be
deemed to continue to participate in the Plan for the remainder of the
Performance Cycle within which the leave of absence is taken. The
Entitled Executive shall not be eligible to participate in the Plan
during Performance Cycles commencing after his or her leave of absence
unless recommended by the CEO and approved by the Committee.
7.04 ASSIGNMENT OR ALIENATION
Except as required by applicable laws and subject to Section 7.01
(Death Benefits), the right of an Entitled Executive to receive an
Award Payment under this Plan shall not be:
(a) given as security;
(b) subject to transfer, anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or
hypothecation; or
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(c) subject to execution, attachment, levy or similar process or
assignment by operation of law,
and any attempt to effect any such action shall be null and void and of
no effect.
7.05 AMENDMENT OR TERMINATION
Subject to Section 7.06 (Effect of Amendment or Termination), this Plan
may be amended in whole or in part from time to time or terminated by
The Corporation. Any amendment or termination shall be binding on The
Corporation, Entitled Executives and their respective beneficiaries.
Notice of termination or amendment shall be provided to Entitled
Executives and in the case of deceased Entitled Executives, their
respective beneficiaries.
7.06 EFFECT OF AMENDMENT OR TERMINATION
Notwithstanding Section 7.05 (Amendment or Termination), no amendment
or termination of any provision of this Plan shall directly or
indirectly deprive any Entitled Executive or beneficiary of all or any
portion of an Award Payment earned to the date of the amendment or
termination.
7.07 NO ENLARGEMENT OF CONTRACTUAL RIGHTS
This Plan shall not give any Entitled Executive the right to be
retained in the service of the Corporation nor shall it interfere with
the right of The Corporation to terminate the employment of the
Entitled Executive. Participation in this Plan shall not give any
Entitled Executive any right or claim to any benefit, except to the
extent provided in this Plan.
7.08 INTERPRETATION
This Plan shall be interpreted pursuant to the laws of the Province of
Saskatchewan. Section headings are for convenience only and shall not
be considered provisions of the Plan. Words in the singular shall
include the plural, and vice versa, unless qualified by the context.
7.09 WITHHOLDING OF TAXES
The Corporation shall withhold all applicable taxes from any amounts
paid pursuant to this Plan.
7.10 BINDING ON SUCCESSORS
This Plan shall be binding on any successor or successors of The
Corporation whether by merger, consolidation or otherwise.
7.11 CURRENCY
The Award Payments payable pursuant to this Plan shall be paid in the
same currency as the Entitled Executive receives his or her Salary. If
the Salary of an Entitled Executive is paid in more than one currency
during a Performance Cycle, the currency of his or her Award Payment
for that Performance Cycle shall be determined by the CEO in
consultation with the Senior Vice-President, Administration.
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APPENDIX "A" - ABSOLUTE PERCENTAGE OF TARGET PERCENTAGE
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<TABLE>
<CAPTION>
TSR OF PCS INC. ABSOLUTE PERCENTAGE OF TARGET PERCENTAGE
---------------------------------------------- ----------------------------------------------------
<S> <C>
Less than or equal to -50% 0%
-25% 37.5%
0% 75%
25% 112.5%
50% 150%
75% 187.5%
100% 225%
125% 262.5%
150% 300%
---------------------------------------------- ----------------------------------------------------
</TABLE>
[FN]
Notes:
1. All absolute TSR performances between the percentages in the above
table will be interpolated.
2. Where the TSR of PCS Inc. exceeds 150%, the Absolute Percentage shall
increase by 37.5% for every 25% increase in the TSR of PCS Inc.
</FN>
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APPENDIX "B" - RELATIVE PERCENTAGE OF TARGET PERCENTAGE
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<TABLE>
<CAPTION>
TSR OF PCS INC. MINUS THE TSR OF THE PEER GROUP OF RELATIVE PERCENTAGE OF TARGET PERCENTAGE
CORPORATIONS
----------------------------------------------------------- ------------------------------------------------
<S> <C>
Less than or equal to -30 - 25.0%
-20 - 18.75%
-10 - 12.50%
0 0%
5 + 25.0%
10 + 30.0%
20 + 35.0%
30 + 40.0%
40 + 45.0%
50 + 50.0%
----------------------------------------------------------- ------------------------------------------------
</TABLE>
[FN]
Notes:
1. All relative TSR performances between the percentages in the above
table will be interpolated.
2. Where TSR of PCS Inc. minus the TSR of the Peer Group of Corporations
exceeds 50%, the Relative Percentage of Target Percentage shall
increase by 5% for every 10% increase in the TSR of PCS Inc. minus the
TSR of the Peer Group of the Corporation.
</FN>
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APPENDIX "C" - TARGET PERCENTAGE
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<TABLE>
<CAPTION>
TIER GROUP TARGET AWARD
------- ---------------------------------------- --------------------
<S> <C> <C>
I Corporate President, 50%
and CEO
II Corporate Sr. VPs, 40%
Subsidiary Presidents
III Corporate VPs, 30%
Subsidiary Executive VPs,
Selected Subsidiary VPs
IV Selected Subsidiary VPs, 25%
Selected Corporate Executive employees
V Subsidiary General Managers Operations, 20%
Selected Subsidiary VPs,
Selected Directors
</TABLE>
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