defc14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to 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)
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Fee paid previously with preliminary materials. |
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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. |
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Form, Schedule or Registration Statement No.: |
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October 13, 2009
To Our
Stockholders:
We are pleased to invite you to attend the annual meeting of
stockholders of Terra Industries Inc. to be held at 10:00 am
Eastern Time, on Friday, November 20, 2009, at the offices
of Credit Suisse, 11 Madison Avenue, Floor 2B Auditorium,
New York, New York 10010.
The accompanying notice of our 2009 Annual Meeting of
Stockholders and Proxy Statement describe the matters to be
considered and voted upon at the annual meeting. In conjunction
with the annual meeting, we will also report on Terra and its
business, and you will have an opportunity to discuss matters of
interest concerning Terra.
As you may already be aware, on January 15, 2009, CF
Industries Holdings, Inc. (CF) made an unsolicited
proposal to acquire Terra on the terms of a fixed exchange ratio
of 0.4235 common shares of CF for each common share of Terra,
and on February 23, 2009, CF, through its wholly owned
subsidiary, Composite Acquisition Corporation, commenced an
unsolicited exchange offer to acquire all outstanding common
shares of Terra based on the same exchange ratio (the
Offer). CF subsequently has revised its proposal
four times:
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On March 9, 2009, CF sent a letter to the Board reaffirming
CFs intent to pursue a business combination with Terra and
stating that CF would be prepared to enter into a negotiated
merger agreement with Terra on the basis of an exchange ratio
based on $27.50 for each Terra common share, with an exchange
ratio of not less than 0.4129 of a CF common share and not more
than 0.4539 of a CF common share (the March 9
Proposal).
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On March 23, 2009, CF sent another letter to the Board
stating that CF would be prepared to enter into a negotiated
merger agreement with Terra on the basis of an exchange ratio
based on $30.50 for each Terra common share, with an exchange
ratio of not less than 0.4129 of a CF common share and not more
than 0.4539 of a CF common share, the same collar as the March 9
Proposal (the March 23 Proposal).
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On August 5, 2009, CF sent another letter to the Board
stating that CF would be prepared to enter into a negotiated
merger agreement with Terra on the basis of a fixed exchange
ratio of 0.465 common shares of CF for each common share of
Terra, the return of at least $1 billion of cash to
stockholders of the combined company and the distribution to
only CFs stockholders prior to the merger of certain
contingent future shares (the August 5 Proposal).
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On September 28, 2009, CF announced that it had sent a
merger agreement to Terra, which included a fixed exchange ratio
of 0.465 common shares of CF for each common share of Terra
(such exchange ratio to be adjusted upon the declaration by
Terra of its proposed $7.50 per common share special cash
dividend) and the distribution to only CFs stockholders
prior to the merger of certain contingent future shares (the
September 28 Proposal, and together with the Offer,
the March 9 Proposal, the March 23 Proposal and the August 5
Proposal, CFs Proposals).
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CF terminated the Offer on August 31, 2009, without
purchasing any Terra common shares. In an attempt to advance
CFs proposal for a business combination with Terra, on
February 3, 2009 and again on September 9, 2009, CF
Composite, Inc., a wholly owned subsidiary of CF, notified us
that it intends to nominate and, together with CF and certain
other participants, solicit proxies for an opposition slate of
three nominees for election as directors at the annual meeting.
After careful consideration of the terms of CFs Proposals
in consultation with Terras financial and legal advisors,
the Board unanimously concluded that each of CFs Proposals
run counter to Terras strategic objectives, substantially
undervalue Terra both absolutely and relative to CF and would
deliver less value to Terras stockholders than would
owning Terra on a stand-alone basis.
As we have previously communicated to you, our Board of
Directors and management remain committed to enhancing
stockholder value by continuing to execute our strategic plan,
which we believe will deliver significantly more value to
stockholders than CFs Proposals. The initiation by CF of a
costly and disruptive proxy contest interferes with the
execution of our strategic plan and our realization of this
goal. Any support for CF Composites nominees would be an
endorsement of CFs Proposals, which are not in the best
interests of Terra and its stockholders. Please read the section
of the accompanying Proxy Statement entitled CFs
Proposals for more information on CFs Proposals and
the reasons for the Boards recommendation.
The Board of Directors unanimously recommends that you vote
FOR the election of each of the Board of Directors
nominees named on the enclosed WHITE proxy card. The
Board of Directors urges you NOT to vote or submit any blue
proxy card sent to you by CF or any of its affiliates.
We hope all our stockholders will be able to attend the annual
meeting. It is important that you be represented, whether or not
you plan to attend the annual meeting personally. Please
promptly complete, sign, date and return the enclosed
WHITE proxy card in the postage-paid envelope provided to
ensure that your vote will be received and counted. In the
alternative, you may vote your WHITE proxy card by
telephone or via the Internet as described in more detail in the
section of the accompanying Proxy Statement entitled How
To Vote; Submitting Your Proxy; Revoking Your Proxy.
Your vote is very important to us. If you have questions or
require any assistance with voting your shares, please call our
proxy solicitor, MacKenzie Partners, Inc., toll-free at
(800) 322-2885.
On behalf of the Board of Directors and management, thank you
for your support. We look forward to seeing you at the meeting.
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Michael L. Bennett
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Henry R. Slack
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President and Chief Executive Officer
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Chairman
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Notice of 2009
Annual Meeting of Stockholders
To the
Stockholders:
The annual meeting of the stockholders of Terra Industries Inc.
(Terra) will be held at 10:00 am Eastern Time, on
Friday, November 20, 2009, at the offices of Credit Suisse,
11 Madison Avenue, Floor 2B Auditorium, New York, New York
10010 in order to:
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elect three Class II directors to serve until the 2012
annual meeting of stockholders, and until their successors are
elected and qualified;
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consider and act upon a proposal to ratify the Audit
Committees selection of the firm of Deloitte &
Touche LLP as Terras independent registered public
accounting firm for 2009; and
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transact such other business as may properly come before the
annual meeting.
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The above matters are described in the Proxy Statement
accompanying this Notice. You are urged, after reading the Proxy
Statement, to vote your shares by proxy using one of the
following methods: (a) vote by telephone, (b) vote via
the Internet or (c) complete, sign, date and return your
WHITE proxy card in the postage-paid envelope provided.
Voting instructions are described in more detail in the section
of the accompanying Proxy Statement entitled How To Vote;
Submitting Your Proxy; Revoking Your Proxy.
We also urge you NOT to vote or submit any blue proxy card
sent to you by CF Industries Holdings, Inc. or any of its
affiliates. You can revoke any such proxy card you may have
previously submitted in accordance with the instructions set
forth under How To Vote; Submitting Your Proxy; Revoking
Your Proxy of the accompanying Proxy Statement.
Only stockholders of record of Terras common shares at the
close of business on October 9, 2009 are entitled to notice
of, and to vote at, the annual meeting.
John W. Huey
Vice President, General Counsel
and Corporate Secretary
October 13, 2009
Table of
Contents
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About the Annual
Meeting
GENERAL
The annual meeting of the stockholders of Terra Industries Inc.
(Terra or the Company) will be held at
10:00 am Eastern Time, on Friday, November 20, 2009, at the
offices of Credit Suisse, 11 Madison Avenue, Floor 2B
Auditorium, New York, New York 10010.
The mailing address of Terras principal executive offices
is Terra Centre, 600 Fourth Street, P.O. Box 6000,
Sioux City, Iowa
51102-6000.
This Proxy Statement and the accompanying WHITE proxy
card are first being sent or given to stockholders on or about
October 13, 2009.
Terras Board of Directors (the Board of
Directors or Board), through this Proxy
Statement and the accompanying WHITE proxy card, is
soliciting your vote on matters being submitted for stockholder
approval at the annual meeting. At the meeting, stockholders
will vote on the election of three Class II directors, the
ratification of Deloitte & Touche LLP as Terras
independent registered public accountants for 2009 and such
other business as may properly come before the annual meeting.
As you may already be aware, on January 15, 2009, CF
Industries Holdings, Inc. made an unsolicited proposal to
acquire Terra on the terms of a fixed exchange ratio of 0.4235
common shares of CF for each common share of Terra, and on
February 23, 2009, CF, through its wholly owned subsidiary,
Composite Acquisition Corporation, commenced an unsolicited
exchange offer to acquire all outstanding common shares of Terra
based on the same exchange ratio (the Offer). CF
subsequently has revised its proposal four times:
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On March 9, 2009, CF sent a letter to the Board reaffirming
CFs intent to pursue a business combination with Terra and
stating that CF would be prepared to enter into a negotiated
merger agreement with Terra on the basis of an exchange ratio
based on $27.50 for each Terra common share, with an exchange
ratio of not less than 0.4129 of a CF common share and not more
than 0.4539 of a CF common share (the March 9
Proposal).
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On March 23, 2009, CF sent another letter to the Board
stating that CF would be prepared to enter into a negotiated
merger agreement with Terra on the basis of an exchange ratio
based on $30.50 for each Terra common share, with an exchange
ratio of not less than 0.4129 of a CF common share and not more
than 0.4539 of a CF common share, the same collar as the March 9
Proposal (the March 23 Proposal).
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On August 5, 2009, CF sent another letter to the Board
stating that CF would be prepared to enter into a negotiated
merger agreement with Terra on the basis of a fixed exchange
ratio of 0.465 common shares of CF for each common share of
Terra, the return of at least $1 billion of cash to
stockholders of the combined company and the distribution to
only CFs stockholders prior to the merger of certain
contingent future shares (the August 5 Proposal).
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On September 28, 2009, CF announced that it had sent a
merger agreement to Terra, which included a fixed exchange ratio
of 0.465 common shares of CF for each common share of Terra
(such exchange ratio to be adjusted upon the declaration by
Terra of its proposed $7.50 per common share special cash
dividend) and the distribution to only CFs stockholders
prior to the merger of certain contingent future shares (the
September 28 Proposal, and together with the Offer,
the March 9 Proposal, the March 23 Proposal and the August 5
Proposal, CFs Proposals).
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CF terminated the Offer on August 31, 2009, without
purchasing any Terra common shares. In an attempt to advance
CFs proposal for a business combination with Terra, on
February 3, 2009 and again on September 9, 2009, CF
Composite, Inc., a wholly owned subsidiary of CF, notified us
that it intends to nominate and, together with CF and certain
other participants, solicit proxies for an opposition slate of
three nominees for election as directors at the annual meeting.
1
After careful consideration of the terms of CFs Proposals
in consultation with Terras financial and legal advisors,
the Board unanimously concluded that each of CFs Proposals
run counter to Terras strategic objectives, substantially
undervalue Terra both absolutely and relative to CF and would
deliver less value to Terras stockholders than would
owning Terra on a stand-alone basis.
As we have previously communicated to you, our Board of
Directors and management remain committed to enhancing
stockholder value by continuing to execute our strategic plan,
which we believe will deliver significantly more value to
stockholders than CFs Proposals. The initiation by CF of a
costly and disruptive proxy contest interferes with the
execution of our strategic plan and our realization of this
goal. Any support for CF Composites nominees would be an
endorsement of CFs Proposals, which are not in the best
interests of Terra and its stockholders. Please read the section
of the accompanying Proxy Statement entitled CFs
Proposals for more information on CFs Proposals and
the reasons for the Boards recommendation.
The Board of Directors unanimously recommends that you vote
FOR the election of each of the Board of Directors
nominees named on the WHITE proxy card accompanying this
Proxy Statement.
Please read How To Vote; Submitting Your Proxy; Revoking
Your Proxy for more information on how to vote or revoke
your proxy.
Nominations by CF, CF Composite, their respective affiliates and
certain other related persons (collectively, the CF
Group) have NOT been endorsed by Terras Board of
Directors.
We urge you NOT to sign or return any blue proxy card that you
may receive from the CF Group. The Company is not responsible
for the accuracy of any information provided by or relating to
the CF Group contained in any proxy solicitation materials filed
or disseminated by the CF Group or any other statements that
they may otherwise make.
The Board of Directors is not aware at this date of any matter
proposed to be presented at the annual meeting other than the
election of directors and the ratification of the Audit
Committees selection of independent registered public
accountants. The persons named on the accompanying WHITE
proxy card will have discretionary authority to vote on any
other matter that is properly presented at the meeting,
according to their best judgment.
SECURITIES
ENTITLED
TO
VOTE
The only securities eligible to be voted at the annual meeting
are Terras common shares. Only holders of common shares at
the close of business on the record date, October 9, 2009,
are entitled to vote. Each common share represents one vote, and
all shares vote together as a single class. There were
99,825,840 common shares issued and outstanding on
October 9, 2009.
QUORUM;
VOTE
REQUIRED
The presence in person or by proxy of stockholders entitled to
cast a majority of all the votes entitled to be cast at the
meeting constitutes a quorum. Stockholders are entitled to one
(1) vote per share.
A majority of all the votes cast at a meeting at which a quorum
is present is sufficient to approve any matter which properly
comes before the meeting, except as otherwise provided by law or
by Terras charter, and except that a plurality of all the
votes cast at a meeting at which a quorum is present is
sufficient to elect a director.
In the election for directors, every stockholder has the right
to vote each share of stock owned by such stockholder on the
record date for as many persons as there are directors to be
elected. Cumulative voting is not permitted. To be elected, a
director-nominee must receive a plurality of the votes cast at
the meeting. Because CF Composite has indicated that it will
nominate three candidates for election to the Board of
Directors, the Company expects that the number of nominees for
election as directors at the annual meeting will exceed the
number of directors to be elected at the annual meeting. This
means that the three nominees standing in the election who
receive the greatest number of votes cast at the annual meeting
will be elected as directors. Only
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votes cast FOR a nominee will be counted. Common shares of
stockholders abstaining from voting but otherwise present at the
meeting in person or by proxy (abstentions), votes
withheld and broker non-votes will not be counted as votes cast
for such purpose and therefore will have no effect on the
results of the election.
The proposal to ratify the Audit Committees selection of
independent registered public accountants must receive a
majority of the votes cast at the annual meeting. Abstentions
and broker non-votes will not be counted as votes cast for such
purposes and therefore will have no effect on the results of the
vote.
HOW
TO
VOTE;
SUBMITTING
YOUR
PROXY;
REVOKING
YOUR
PROXY
You may vote your shares either by voting in person at the
annual meeting or by submitting a completed proxy. By submitting
a proxy, you are legally authorizing another person to vote your
shares. The enclosed WHITE proxy card designates Henry R.
Slack, Michael L. Bennett and Daniel D. Greenwell to vote your
shares in accordance with the voting instructions you indicate
on your WHITE proxy card.
If you submit your executed WHITE proxy card designating
Messrs. Slack, Bennett and Greenwell as the individuals
authorized to vote your shares, but you do not indicate how your
shares are to be voted, then your shares will be voted by those
individuals in accordance with the Board of Directors
recommendations, which are described in this Proxy Statement. In
addition, if any other matters are properly brought up at the
annual meeting (other than the proposals contained in this Proxy
Statement), then each of these individuals will have the
authority to vote your shares on those matters in accordance
with his discretion and judgment. The Board of Directors
currently does not know of any matters to be raised at the
annual meeting other than the proposals contained in this Proxy
Statement.
We urge you to vote by doing one of the following:
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Vote by Mail: You can vote your shares by mail by
completing, signing, dating and returning your WHITE proxy card
in the postage-paid envelope provided. In order for your proxy
to be validly submitted and for your shares to be voted in
accordance with your instructions, we must receive your
mailed WHITE proxy card by 5:00 p.m. Eastern Time, on
November 19, 2009.
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Vote by Telephone: You can also vote your shares by
calling toll free 1-888-693-8683, at any time on a
touch-tone telephone and following the recorded instructions. If
you submit your proxy by telephone, then you may submit your
voting instructions up until 11:59 p.m. Eastern Time, on
November 19, 2009. If you are a beneficial owner, or you
hold your shares in street name as described below,
please contact your bank, broker or other holder of record to
determine whether you will be able to vote by telephone.
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Vote by Internet: You can vote your shares via the
Internet by going to www.cesvote.com and following the
steps outlined on the secure Web site. If you submit your proxy
via the Internet, then you may submit your voting instructions
up until 11:59 p.m. Eastern Time, on November 19,
2009. If you are a beneficial owner, or you hold your shares in
street name as described below, please contact your
bank, broker or other holder of record to determine whether you
will be able to vote via the Internet.
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The Board of Directors recommends that you do NOT sign or return
any blue proxy card that may be sent to you by the CF Group,
even as a protest. Withholding authority to vote for CF
Composites nominees on a blue proxy card that the CF Group
may send you is not the same as voting FOR the Board of
Directors nominees.
Your proxy is revocable. If you are a stockholder of record,
after you have submitted your WHITE proxy card, you may
revoke it by mail before the annual meeting by sending a written
notice to Terras Vice President, General Counsel and
Corporate Secretary at Terra Centre, 600 Fourth Street,
P.O. Box 6000, Sioux City, IA
51102-6000.
If you wish to revoke your submitted WHITE proxy card and
submit new voting instructions by mail, then you must sign, date
and mail a new WHITE proxy card with your new voting
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instructions, which we must receive by 5:00 p.m. Eastern
Time, on November 19, 2009. If you are a stockholder of
record and you voted your WHITE proxy card by telephone
or via the Internet, you may revoke your submitted proxy
and/or
submit new voting instructions by that same method, which must
be received by 11:59 p.m. Eastern Time, on
November 19, 2009. You also may revoke your WHITE
proxy card by attending the annual meeting and voting your
shares in person. Attending the annual meeting without taking
one of the actions above will not revoke your proxy. If you are
a beneficial owner, or you hold your shares in street
name as described below, please contact your bank, broker
or other holder of record for instructions on how to change or
revoke your vote.
The Board of Directors urges you NOT to sign or return any blue
proxy card that may be sent to you by the CF Group. If you have
previously submitted a blue proxy card that may have been sent
to you by the CF Group, you may change any vote you may have
cast in favor of CF Composites nominees and vote in favor
of the Board of Directors nominees by following the
instructions on the WHITE proxy card to vote by telephone
or via the Internet, or by completing, signing, dating and
returning the enclosed WHITE proxy card in the
postage-paid envelope provided, or by attending the annual
meeting and voting your shares in person.
Your vote is very important to the Company. If you do not plan
to attend the annual meeting, we encourage you to read this
Proxy Statement and submit your completed WHITE proxy
card prior to the annual meeting in accordance with the above
instructions so that your shares will be represented and voted
in accordance with your instructions. Even if you plan to attend
the annual meeting in person, we recommend that you vote your
shares in advance as described above so that your vote will be
counted if you later decide not to attend the annual meeting.
You are entitled to attend the annual meeting only if you are a
stockholder of record or a beneficial owner as of the close of
business on October 9, 2009, or if you hold a valid proxy
for the annual meeting.
If your shares are not registered in your name but in the
street name of a bank, broker or other holder of
record (a nominee), then your name will not appear
in the Companys register of stockholders. Your nominee, as
the record holder of your shares, is required to vote those
shares in accordance with your instructions. If you do not give
instructions to your nominee, the nominee will be entitled to
vote the shares with respect to discretionary items
but will not be permitted to vote the shares with respect to
non-discretionary items (those shares are treated as
broker non-votes). If the CF Group solicits proxies
to elect CFs nominees to the Board of Directors at the
annual meeting, then the election of directors will be a
non-discretionary item for any nominee holding
shares on your behalf. As a result, if your shares are held in
street name and you do not provide instructions as
to how your shares are to be voted in the election of directors,
your nominee will not be able to vote your shares in the
election of directors, and your shares will not be voted for any
of the Board of Directors or the CF Groups nominees.
In order for you to attend the annual meeting, you must bring a
letter or account statement showing that you beneficially own
the shares held by the nominee, as well as proper photo
identification. Note that even if you attend the annual meeting,
you cannot vote the shares that are held by your nominee unless
you have a proxy from your nominee. We urge you to provide
instructions to your nominee so that your votes may be counted
on this important matter. We urge you to vote your shares by
following the instructions provided on the enclosed WHITE
proxy card and returning the WHITE proxy card to your
nominee to ensure that your shares will be voted on your behalf.
If you have questions or require any assistance with voting your
shares, please contact our proxy solicitor, MacKenzie Partners,
Inc. at:
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, New York 10016
(212) 929-5500
(Call Collect)
or
Call Toll-Free
(800) 322-2885
Email: terraproxy@mackenziepartners.com
4
IMPORTANT
NOTICE
REGARDING
THE
AVAILABILITY
OF
PROXY
MATERIALS
FOR THE
STOCKHOLDER
MEETING
The Proxy Statement and the 2008 Annual Report to Stockholders
are available on the Companys Web site at
http://www.terraindustries.com.
Information on how to obtain directions to be able to attend the
meeting and vote in person are available by contacting Kim
Mathers, Communications Manager of Terra, at
(712) 233-6411
or MacKenzie Partners, Inc., toll-free at
(800) 322-2885.
or
You may write to us at:
Terra Industries Inc.
Investor Relations
Terra Centre
600 Fourth Street
P.O. Box 6000
Sioux City, IA
51102-6000
The Company makes available, free of charge on its Web site,
this Proxy Statement, the Annual Report to Stockholders, Annual
Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and amendments to these reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the Exchange Act), as soon as
reasonably practicable after these documents are electronically
filed with, or furnished to, the Securities and Exchange
Commission (the SEC). These documents are posted on
the Web site at www.terraindustries.com. Select the
Investors link, followed by Terra Industries
(TRA), and choose SEC Filings.
5
CFs
Proposals
BACKGROUND
OF
CFS
PROPOSALS
AND THE
SOLICITATION
On the evening of January 15, 2009, while in attendance at
a fertilizer industry function, Mr. Michael L. Bennett,
President and Chief Executive Officer of Terra, was approached
by Mr. Stephen R. Wilson, President and Chief Executive
Officer of CF. During their conversation, Mr. Wilson
delivered a letter to Mr. Bennett proposing a business
combination between Terra and CF, whereby CF would acquire all
outstanding Terra common shares at a fixed exchange ratio of
0.4235 CF common shares for each Terra common share.
Mr. Wilson also noted that CF would make public the
contents of the letter that evening.
On the same evening, Mr. Bennett notified Terras
Board and other members of senior management of CFs
unsolicited public proposal.
On January 16, 2009, by way of press release, Terra
publicly confirmed receipt of CFs unsolicited proposal.
That same day, Terras Board met by telephone with members
of senior management, as well as representatives from Cravath,
Swaine & Moore LLP (Cravath) and Wachtell,
Lipton, Rosen & Katz (Wachtell and
together with Cravath, the Legal Advisors),
Terras legal advisors, and Credit Suisse Securities (USA)
LLC (Credit Suisse and together with the Legal
Advisors, the Advisors), Terras financial
advisors. During this meeting, the participants discussed
CFs proposal, the fiduciary duties of the Board members in
relation to the proposal and the process for evaluating the
proposal. At the conclusion of the meeting, the Board directed
management and the Advisors to continue working diligently with
respect to their review of CFs proposal.
On January 26, 2009, the Board convened a special meeting
with members of senior management and representatives of the
Advisors at the offices of Cravath. Also in attendance was
Mr. William R. Loomis, Jr., the former Chairman of the
Board, who had been engaged by the Board as a consultant in
connection with CFs unsolicited proposal. At this meeting,
management and the Advisors presented to the Board an overview
of CFs proposal and the Legal Advisors provided a review
of the fiduciary duties of a board of directors upon receipt of
an unsolicited proposal, such as the one received from CF, and
reviewed with the Board certain actions that Terra was permitted
to take pursuant to Terras charter and bylaws and
applicable law. The Board carefully considered the full range of
strategic, industrial, financial and legal aspects of CFs
proposal and the nature and timing of the proposal. After a
lengthy discussion, the Board unanimously concluded that such
proposal did not present a compelling case for creation of
additional value for stockholders of either Terra or CF, and
that such proposal substantially undervalued Terra on an
absolute basis and relative to CF. Accordingly, the Board
unanimously determined to reject CFs proposal. On the
morning of January 28, 2009, Messrs. Bennett and Slack
sent a letter to Mr. Wilson providing CF with Terras
response to CFs proposal. Terra also issued a press
release disclosing this letter.
Later that day, CF issued a press release reiterating its
proposal and announcing that it remained committed to a
combination with Terra and would consider its options to that
end.
On or about February 2, 2009, Mr. Wilson telephoned
Mr. Bennett to request a meeting between the two executives
to discuss CFs proposal, without providing any further
details.
On February 3, 2009, CF delivered a notice to Terra and
issued a press release stating that it submitted a slate of
three nominees for election to Terras Board at
Terras 2009 annual meeting of stockholders and intended to
commence an exchange offer for all of the outstanding Terra
common shares at the same exchange ratio as disclosed in
CFs proposal of January 15, 2009.
Later that evening, Terra issued a press release in response to
CFs press release, in which it acknowledged that CF had
submitted a slate of nominees and noted that Terras Board
is composed of eight highly qualified directors, seven of whom
are independent. In addition, Terra restated the Boards
view that CFs proposal did
6
not present a compelling case to create additional value for the
stockholders of either company, and that it substantially
undervalued Terra on an absolute basis and relative to CF. In
the press release, Terra noted that Terras Board and
management remained committed to enhancing stockholder value by
continuing to execute Terras strategic plan which the
Board believes would deliver significantly more value to
Terras stockholders than CFs proposal. Terra also
noted that many of Terras major stockholders had expressed
to Terra their disinterest in CFs proposal and their
support of Terras strategy (which was based on various
discussions held between Terras management and its key
stockholders).
On February 5, 2009, the Board convened a special meeting
with the representatives of the Advisors at the offices of
Cravath. Also in attendance was Mr. Loomis. During this
meeting, the Board discussed in-depth various strategic
alternatives that were available to Terra. The Board also
considered Mr. Wilsons request for a meeting with
Mr. Bennett and decided that the two executives should meet.
On February 9, 2009, Mr. Bennett, along with
Mr. Loomis, had a meeting with Mr. Wilson and
Mr. Robert Kindler of Morgan Stanley, CFs financial
advisor, in Sioux City, Iowa. During the meeting,
Mr. Wilson reiterated CFs interest in the business
combination with Terra and its merits, indicated CFs
interest in having Mr. Bennett and other members of the
Board join CFs board of directors and noted CFs
desire to have Mr. Bennett serve as the Executive Vice
Chairman of the combined company. Mr. Wilson further stated
that the value provided in CFs proposal was full and fair.
Mr. Bennett agreed to inform the Board of the details of
their meeting at Terras upcoming Board meeting.
On February 17 and 18, 2009, the Board met at regularly
scheduled meetings at the offices of Cravath. During the meeting
on February 18, 2009, attended by the members of
management, Terras Advisors, Mr. Loomis and the
representatives of MacKenzie, the Board was apprised of the
recent developments relating to CFs proposal and discussed
Terras ongoing strategic plan. The Board was also provided
with the details of the meeting among Messrs. Bennett,
Wilson, Loomis and Kindler. Following the meeting,
Mr. Loomis telephoned Mr. Kindler and stated that the
details of the February 9th meeting were discussed
with the Board and that the Boards position with respect
to CFs proposal had not changed since its rejection of the
proposal on January 28, 2009.
On February 18, 2009, CF filed the Notification and Report
Form with the Department of Justice, Antitrust Division and the
Federal Trade Commission relating to its proposed acquisition of
Terra.
On February 23, 2009, CF and Composite Acquisition
Corporation commenced the exchange offer by filing a Tender
Offer Statement on Schedule TO and a Registration Statement
on
Form S-4
with the SEC. CF also issued a press release regarding the
commencement of the exchange offer.
At the same time, Mr. Wilson sent a letter to the Board,
noting that CF was commencing the Offer at the same exchange
ratio as disclosed in its earlier proposal. The letter stated
that CF did not see any reason to consider changing the terms of
its proposal, but that CF was prepared to review any information
Terra could provide that would justify a change in terms, and
was prepared to keep an open mind in that regard.
The letter also stated that CF intended to proceed with the
proxy contest to replace three of Terras directors at the
upcoming annual meeting of stockholders of Terra. In addition,
the letter stated that CF would welcome having a number of
Terras board members join the board of directors of the
combined company and that it was important to CF that
Mr. Bennett be one of those board members and continue to
serve in a senior executive capacity.
Later that same day, Terra issued a press release advising its
stockholders to take no action with respect to the exchange
offer.
On February 25, 2009, Mr. Michael M. Wilson, President
and Chief Executive Officer of Agrium Inc., a corporation
incorporated under the Canada Business Corporations Act
(Agrium), submitted a proposal by Agrium to the
board of directors of CF to acquire all of the capital stock of
CF for cash and Agrium shares at
7
$72.00 per CF common share, or a total of $3.6 billion,
based on the February 24, 2009 closing price of
Agriums shares (the Agrium Offer). According
to Agriums proposal, the Agrium Offer is conditioned upon
CFs termination of the Offer.
On the same day, by way of press release, CF publicly confirmed
receipt of Agriums proposal.
On March 3, 2009, the Board met by telephone with members
of senior management, representatives of the Advisors and
Mr. Loomis. After a thorough review of the terms and
conditions of the Offer, the Board unanimously concluded that
the Offer does not present a compelling case to create
additional value for the stockholders of either Terra or CF,
substantially undervalues Terra on an absolute basis and
relative to CF and is not in the best interests of Terra and its
stockholders. Accordingly, the Board unanimously determined to
recommend that Terras stockholders reject the Offer and
not tender their Terra common shares in the Offer, and approved
the filing of the Solicitation/Recommendation Statement on
Schedule 14D-9.
On the morning of March 9, 2009, Mr. Wilson sent a
letter to the board of directors of Agrium rejecting the Agrium
Offer.
Also on the morning of March 9, 2009, Mr. Wilson sent
a letter to the Board reaffirming CFs intent to pursue a
business combination with Terra and stating that CF would be
prepared to enter into a negotiated merger agreement with Terra
on the basis of an exchange ratio based on $27.50 for each Terra
common share, with an exchange ratio of not less than 0.4129 of
a CF common share and not more than 0.4539 of a CF common share.
The letter also stated that CF was prepared, as part of this
proposal, to issue participating preferred stock that would
trade at parity with CF common shares so as to avoid the
requirement under the New York Stock Exchange (the
NYSE) rules to obtain CF stockholder approval to
issue the required number of CF common shares to Terras
stockholders.
In addition, on March 9, 2009, CF issued a press release
regarding its decision to reject the Agrium Offer and disclosing
the above letter and filed an amendment to its Schedule TO.
On the morning of March 11, 2009, the Board met by
telephone with members of Terras senior management,
Mr. Loomis and the representatives of the Advisors and
MacKenzie. After careful consideration of the terms of the March
9 Proposal, the Board, with the assistance of its Advisors,
unanimously concluded that CFs proposal continues to run
counter to Terras strategic objectives, substantially
undervalues Terra both absolutely and relative to CF, and would
deliver less value to Terras stockholders than would
owning Terra on a stand-alone basis. Later that day,
Messrs. Bennett and Slack sent a letter to Mr. Wilson
providing CF with Terras response to the March 9 Proposal.
Terra also issued a press release disclosing this letter.
On March 12, 2009, CF filed a preliminary proxy statement
on Schedule 14A with the SEC with respect to its
solicitation of proxies to vote in favor of the election of
CFs nominees at Terras 2009 annual meeting of
stockholders. On the same day, CF issued a press release
announcing the filing of its preliminary proxy materials.
On March 16, 2009, Agrium commenced an exchange offer with
respect to all outstanding CF common shares by filing a Tender
Offer Statement on Schedule TO and a Registration Statement
on
Form F-4
with the SEC. Agrium also issued a press release announcing
commencement of its exchange offer.
On the same day, CF issued a press release stating that it will
file with the SEC the required Solicitation/Recommendation
Statement on
Schedule 14D-9
with respect to the Agrium exchange offer within 10 business
days.
On March 19, 2009, CF voluntarily withdrew its Notification
and Report Form previously filed with the Antitrust Division and
the FTC on February 18, 2009, relating to its proposed
acquisition of Terra. CF also issued a press release announcing
that it would re-file the Notification and Report Form on
March 23, 2009.
8
On the morning of March 23, 2009, CF filed a
Solicitation/Recommendation Statement on
Schedule 14D-9
with the SEC recommending that its stockholders reject the
exchange offer commenced by Agrium on March 16, 2009 with
respect to outstanding CF common shares and not tender their CF
common shares pursuant to the exchange offer.
Also on the morning of March 23, 2009, Mr. Wilson sent
a letter to the Board reaffirming CFs intent to pursue a
business combination with Terra and stating that CF would be
prepared to enter into a negotiated merger agreement with Terra,
structured as the March 9 Proposal, on the basis of an exchange
ratio based on $30.50 for each Terra common share, with an
exchange ratio of not less than 0.4129 of a CF common share and
not more than 0.4539 of a CF common share, the same collar as
CFs March 9 Proposal.
That day, CF issued a press release disclosing this letter, as
well as a press release announcing its recommendation to CF
stockholders with respect to the exchange offer commenced by
Agrium for all outstanding CF common shares.
In addition, on March 23, 2009, CF filed with the SEC a
revised preliminary proxy statement on Schedule 14A with
respect to its solicitation of proxies to vote in favor of the
election of CFs nominees at Terras 2009 annual
meeting of stockholders.
On the morning of March 24, 2009, the Board met by
telephone with members of Terras senior management,
Mr. Loomis and the representatives of the Advisors and
MacKenzie. After careful consideration of the terms of CFs
March 23 Proposal, the Board, with the assistance of its
Advisors, unanimously concluded that CFs proposal
continues to run counter to Terras strategic objectives,
substantially undervalues Terra both absolutely and relative to
CF, and would deliver less value to Terras stockholders
than would owning Terra on a stand-alone basis. Later that day,
Messrs. Bennett and Slack sent a letter to Mr. Wilson
providing CF with Terras response to the March 23
Proposal. Terra also issued a press release disclosing this
letter.
On the morning of March 27, 2009, Agrium publicly announced
that it had revised its exchange offer to acquire all
outstanding shares of CF by increasing the cash portion of the
consideration from $31.70 to $35.00.
On March 29, 2009, CF issued a press release announcing
that its board of directors has recommended that CFs
stockholders reject Agriums increased offer of
March 27, 2009 to acquire all outstanding shares of CF.
On March 30, 2009, Agrium filed with the SEC amendments to
its Tender Offer Statement on Schedule TO and Registration
Statement on
Form F-4
reflecting the terms of its increased offer to acquire all of
CFs outstanding common shares.
On April 13, 2009, the Board adopted an amendment to
Terras Bylaws providing that Terras annual meeting
of stockholders will be held each calendar year on the date that
is designated by the Board, consistent with a recent change in
Maryland law which eliminated the necessity for companies to
specify in their bylaws either a specific date or a
31-day
period during which their annual meeting must be held. On
April 14, 2009, Terra filed a
Form 8-K
announcing the amendment.
On April 21, 2009, CF voluntarily withdrew its Notification
and Report Form filed with respect to the Offer on
March 23, 2009 with the FTC and Antitrust Division under
the HSR Act.
On April 24, 2009, CF announced that it had extended the
Offer, which was scheduled to expire at 5:00 p.m. Eastern
Time, on May 15, 2009, until 5:00 p.m. Eastern Time,
on June 12, 2009, unless further extended. All other terms
and conditions of the Offer remained unchanged.
On May 4, 2009, CF re-filed its Notification and Report
Form with respect to the Offer with the FTC and Antitrust
Division under the HSR Act.
9
On May 11, 2009, Agrium publicly announced that it had
revised its exchange offer to acquire all outstanding common
shares of CF by increasing the cash portion of the consideration
from $35.00 to $40.00. Agrium also announced that it had
extended the expiration of the Agrium Offer until 12:00
midnight, Eastern Time, on June 15, 2009.
On May 15, 2009, CF issued a press release announcing that
its board of directors rejected Agriums revised offer of
May 11, 2009 to acquire all outstanding common shares of CF.
On May 22, 2009, CF announced that it had extended the
expiration date of the Offer, which was scheduled to expire at
5:00 p.m., Eastern Time, on June 12, 2009, until
5:00 p.m., Eastern Time, on June 26, 2009, unless
further extended. All other terms and conditions of the Offer
remained unchanged.
On June 3, 2009, CF issued a press release announcing that
it had received a Request for Additional Information (the
Second Request) from the FTC in connection
with its proposed business combination with Terra. The Second
Request extends the waiting period under the HSR Act during
which the FTC is permitted to review the transaction for up to
an additional 30 days following CFs compliance with
the Second Request, unless earlier terminated.
On the same day, Agrium reaffirmed its offer for CF and extended
the expiration of the Agrium Offer until 12:00 midnight, Eastern
Time, on June 22, 2009, from June 15, 2009.
On June 19, 2009, CF announced that it had extended the
expiration date of the Offer, which was scheduled to expire at
5:00 p.m., Eastern Time, on June 26, 2009, until
5:00 p.m., Eastern Time, on July 10, 2009, unless
further extended. All other terms and conditions of the Offer
remained unchanged.
On June 23, 2009, Agrium announced that it had extended the
expiration date of the Agrium Offer until 12:00 midnight,
Eastern Time, on July 22, 2009.
On July 6, 2009, CF announced that it had extended the
expiration date of the Offer, which was scheduled to expire at
5:00 p.m., Eastern Time, on July 10, 2009, to
5:00 p.m., Eastern Time, on August 7, 2009, unless
further extended. All other terms and conditions of the Offer
remained unchanged. CF also announced that it had filed a
certification with the FTC that it had substantially complied
with the FTCs Second Request.
On July 20, 2009, Agrium announced that it had extended the
expiration date of the Agrium Offer until 12:00 midnight,
Eastern Time, on August 19, 2009.
On August 5, 2009, Mr. Wilson sent a letter to the
Board reaffirming CFs intent to pursue a business
combination with Terra and stating that CF would be prepared to
enter into a negotiated merger agreement with Terra on the basis
of a fixed exchange ratio of 0.465 CF common shares for each
Terra common share, and the return of at least $1 billion
of cash to stockholders of the combined company and the
distribution to only CFs stockholders prior to the merger
of certain contingent future shares. On the same day, CF issued
a press release disclosing this letter and announcing that it
had further extended the expiration date of the Offer, which was
scheduled to expire at 5:00 p.m., Eastern Time, on
August 7, 2009, to 5:00 p.m., Eastern Time, on
August 21, 2009, unless further extended. All other terms
and conditions of the Offer remained unchanged.
Later that day, Terra issued a press release confirming receipt
of the above letter and announcing that the Board would consider
CFs latest proposal at a meeting to be held prior to the
end of the month.
On August 6, 2009, CF announced that the HSR Act premerger
waiting period applicable to CFs proposed business
combination with Terra expired at 11:59 p.m., Eastern Time,
on August 5, 2009. On August 12, 2009, CF received a
letter from the FTC stating that the FTC had closed its
investigation into CFs proposed business combination with
Terra.
10
On August 17, 2009, Agrium announced that it had extended
the expiration date of the Agrium Offer until 12:00 midnight,
Eastern Time, on September 22, 2009.
On August 21, 2009, CF announced that it had extended the
expiration date of the Offer, which was scheduled to expire at
5:00 p.m., Eastern Time, on August 21, 2009, to
5:00 p.m., Eastern Time, on August 31, 2009, unless
further extended. All other terms and conditions of the Offer
remained unchanged.
On the morning of August 25, 2009, the Board met by
telephone with members of Terras senior management,
Mr. Loomis and the representatives of the Advisors and
MacKenzie. After careful consideration of the terms of CFs
August 5 Proposal, the Board, with the assistance of its
Advisors, unanimously concluded that CFs proposal
continues to run counter to Terras strategic objectives,
substantially undervalues Terra both absolutely and relative to
CF, and would deliver less value to Terras stockholders
than would owning Terra on a stand-alone basis. Later that day,
Messrs. Bennett and Slack sent a letter to Mr. Wilson
providing CF with Terras response to the August 5
Proposal. Terra also issued a press release disclosing this
letter.
On August 31, 2009, CF announced that it had commenced
litigation in Maryland to compel Terra to hold its annual
meeting promptly. CF also announced that the Offer had expired
and would not be extended. No Terra common shares were purchased
by CF pursuant to the Offer.
That same day, Terra announced that the Board set a record date
of October 9, 2009 for the annual meeting. The annual
meeting of Terra stockholders will be held on November 20,
2009.
On September 9, 2009, CF delivered a notice to Terra
resubmitting CFs slate of three nominees for election to
Terras Board at Terras 2009 annual meeting of
stockholders.
On September 21, 2009, Agrium announced that it had
extended the expiration date of the Agrium Offer until 12:00
midnight, Eastern Time, on October 22, 2009.
On September 28, 2009, CF announced that it had acquired
6,985,048 common shares, or approximately 7%, of Terra in the
open market at a cost of approximately $247 million. CF
also announced that it had sent a merger agreement to Terra,
which included a fixed exchange ratio of 0.465 common shares of
CF for each common share of Terra (such exchange ratio to be
adjusted upon the declaration by Terra of its proposed $7.50 per
common share special cash dividend) and the distribution to only
CFs stockholders prior to the merger of certain contingent
future shares.
Later that day, Terra issued a press release confirming receipt
of the above merger agreement and announcing that the Board
would review and consider the proposal in due course.
On September 29, 2009, CF filed with the SEC a revised
preliminary proxy statement on Schedule 14A with respect to
its solicitation of proxies to vote in favor of the election of
CFs nominees at Terras 2009 annual meeting of
stockholders.
On September 30, 2009, the Board met by telephone with
members of Terras senior management, Mr. Loomis and
the representatives of the Advisors and MacKenzie. After careful
consideration of the terms of CFs September 28 Proposal,
the Board, with the assistance of its Advisors, unanimously
concluded that CFs proposal continues to run counter to
Terras strategic objectives, substantially undervalues
Terra both absolutely and relative to CF, and would deliver less
value to Terras stockholders than would owning Terra on a
stand-alone basis. Later that day, Terra issued a press release
announcing its response to CFs September 28 Proposal.
REASONS
FOR
RECOMMENDATION
After careful consideration, including a thorough review of
CFs Proposals with Terras financial and legal
advisors, Terras Board of Directors unanimously determined
that CFs Proposals are not in the best interests
11
of Terra and Terras stockholders. In reaching its
recommendation, Terras Board of Directors considered,
among other things, that:
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A combination with CF runs counter to Terras strategic
objectives which are designed to provide substantial value
differentiators to Terras stockholders. The Board
believes that the industrial logic behind CFs Proposals is
not compelling. Terra has deliberately pursued a strategy of
lowering its dependence on agricultural urea and ammonia sales
by, among other things, upgrading its product mix to urea
ammonium nitrate solutions and industrial ammonium nitrate and
increasing its sales into the industrial and environmental
markets. A combination with CF would shift that focus back to
agricultural urea and ammonia, which represent 70% of CFs
nitrogen sales and only 16% of Terras. Moreover, Terra has
deliberately located its core manufacturing assets away from the
U.S. Gulf Coast, where Terra believes import competition is
most
severe.1
In addition, Terras geographic plant positions in Oklahoma
and Iowa provide Terra with favorable transportation cost to its
customers located in the Corn Belt as compared to its
U.S. Gulf Coast competitors, and its joint venture in
Trinidad provides it with access to natural gas at a cost that
historically has been lower than in the United States. Of
CFs total ammonia production volumes, 73% is located on
the U.S. Gulf Coast whereas 65% of Terras is located
inland or in gas advantaged countries.
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CFs Proposals are opportunistic and substantially
undervalue Terra on both an absolute basis and relative to
CF. Terras Board of Directors believes that
CFs Proposals do not fully reflect the underlying
fundamental value of Terras assets, operations and
strategic plan, including its strong market position,
significant cash position and future growth prospects
(particularly with respect to the Companys Environmental
Technologies business). CFs Proposals do not reflect
Terras much greater relative contribution of nitrogen
results to the combined entity, and are opportunistically timed
to take advantage of Terras stock price being temporarily
depressed relative to CFs stock price as compared to
historic average trading prices during early 2006 through early
2008. Moreover, CFs proposed contingent future shares, the
sole purpose of which is to claw back consideration from
Terras stockholders, could result in an actual exchange
ratio of only 0.4224 of a CF common share for each Terra common
share, or 46.1% of the combined company. That is lower than
CFs original unsolicited bid in mid-January. The Board
also believes that CFs stock price has been inflated as a
result of the Agrium Offer. As a result, the actual value of
CFs Proposals could be significantly lower than what
current trading prices would indicate.
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CFs projected synergies claims are aggressive and the
combination is subject to substantial execution
risk. Terras management team has led four
significant acquisition integration efforts and is fully aware
of the difficulty in achieving acquisition synergies. CFs
management, by contrast, does not have experience effecting
business combinations like the one proposed by CF.
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Terras management and the Board believe that CF offers no
convincing basis to conclude its synergy estimates are
achievable, particularly given CFs lack of experience in
acquisitions.
1 Terras
belief is based on its fundamental knowledge of the nitrogen
fertilizer industry, including its understanding of the primary
points of entry for imported nitrogen products entering the
United States (namely, the U.S. Gulf Coast region), which
it has accumulated over more than forty years of operation, as
well as reports of the U.S. Department of Commerce. In a
report illustrating the points of entry and the amount of
imports of ammonia, dry urea and UAN into the United States, as
reported by the major customs districts, the
U.S. Department of Commerce reported that in 2008, 4,581
metric tons of ammonia, 3,444 metric tons of dry urea and 841
metric tons of UAN entered the United States through the Gulf
Coast compared to 3,513 metric tons of ammonia, 2,596 metric
tons of dry urea and 1,810 metric tons of UAN, respectively, for
all other U.S. points of entry.
12
Moreover, the Board believes CFs claimed synergies are not
sufficient to mitigate or compensate Terras stockholders
for the integration risks that are inherent in such a
transaction and are not compelling relative to the size of the
combined enterprise.
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Terra, on a stand-alone basis, will deliver greater value for
its stockholders than CFs Proposals. The Board
believes that Terras stand-alone prospects are strong and
will deliver more value to stockholders than CFs Proposals
with significantly less risk. Among the factors which the Board
believes result in Terra being well positioned in the current
environment include Terras:
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strong balance sheet with cash reserves;
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product mix oriented to the growth trends in upgraded products
for agricultural and industrial markets;
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Environmental Technologies business, which is uniquely
positioned for revenue and margin
growth;2
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pure play focus on nitrogen products;
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sufficient scale to efficiently manage supply in the context of
demand fluctuations;
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diverse customer and market mix without significant customer or
market concentrations; and
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geographic asset diversification and lower transportation costs
to end-users.
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A combination with CF would expose Terras stockholders
to risks associated with the phosphate fertilizer market without
compelling scale in that nutrient. Terra does not
believe CF will have sufficient assets or scale to be a leading
participant in the phosphate market. Participation in such a
non-core market dilutes the value proposition of a pure nitrogen
investment and exposes Terras stockholders to risks,
primarily the fluctuation in demand for phosphate, that may
reduce the value of Terras stockholders investment
in the nitrogen business if the two companies were combined.
Stockholders wishing to diversify into phosphate can accomplish
this through their own investments without the risks associated
with a combination with CF.
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CFs non-binding proposals create significant
uncertainty for Terras stockholders. CF has
terminated the Offer and CFs March 9 Proposal, March 23
Proposal, August 5 Proposal and September 28 Proposal do
not constitute binding offers to Terra or its stockholders,
creating significant uncertainty for Terras stockholders.
For example, CFs proposed merger is conditioned upon
CFs satisfactory due diligence of Terra. The Agrium Offer,
including its impact on CFs stock price, creates
additional significant uncertainty for Terras
stockholders. The Board believes that CF stockholders are
unlikely to approve a transaction with Terra if given the
alternative of the Agrium Offer. This view is borne out by the
very significant tender by CF stockholders into the Agrium Offer.
|
2 Terra
Environmental Technologies is a leader in nitrogen oxide
abatement chemistry, the leading North American diesel exhaust
fluid (DEF) producer and the only North
American business that has specifically targeted the DEF market
with other distributors (which market Terra believes will grow
to approximately two million tons of urea liquor by
2014-2015),
maintains a dedicated technical support staff to assist
customers with application of Terras products and provides
robust supply chain oversight for the critical automotive
application of DEF. Terras geographic and product mix
diversifications are important assets to this business.
13
Proposal 1:
Election of Directors
ELECTION
OF
DIRECTORS
The Board of Directors is divided into three classes, and
directors in each class serve staggered, three-year terms. The
term of office of the three directors assigned to Class II
expires at this annual meeting, and such three directors are
nominated for re-election at this annual meeting to serve
three-year terms until the annual meeting in 2012 and until
their successors are elected and qualify. As provided by
Maryland law, the terms of office of the three directors
assigned to Class I continue until the annual meeting in
2011, and the terms of office of the two directors assigned to
Class III continue until the annual meeting in 2010, and in
each case until their successors are elected and qualify. The
directors in each class are set forth below.
To be elected, a nominee must receive a plurality of the votes
cast at the meeting. Unless otherwise indicated by your
WHITE proxy card, if you return a validly completed and
executed WHITE proxy card or vote your WHITE proxy
card by telephone or via the Internet, your shares will be voted
FOR the nominees named below. As of the date of this Proxy
Statement, the Board of Directors has no reason to believe that
any of the nominees named below will be unable or unwilling to
serve. Each nominee named below has consented to being named in
this Proxy Statement and to serve if elected.
All of the nominees named below are incumbent directors. Set
forth below opposite the name and age of each nominee for
Class II director, and for the Class I and
Class III directors whose terms are continuing, are his or
her present positions and offices with Terra, his or her present
principal occupation and those carried on during the past five
years, the other boards of directors of companies subject to
reporting requirements of the U.S. Federal securities laws
on which he or she currently serves and the year in which he or
she first served as a director of Terra.
14
NOMINEES
FOR
ELECTION
AS
CLASS
II DIRECTOR
Terms Expiring at
Annual Meeting in 2009
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Present Positions
and Offices with Terra, Principal Occupation
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First Year as
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Name
and Age
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During
the Past Five Years and Other Public Company Boards
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Director
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Martha O. Hesse (67)
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Ms. Hesse founded, owned and was President and Chief Executive
Officer of Hesse Gas Company, a nationwide natural gas marketing
company, from 1992 to 2003. She served as Chairman of the U.S.
Federal Energy Regulatory Commission from 1986 to 1989, the
first woman to hold such position, and previously served as
assistant secretary for Management and Administration for the
U.S. Department of Energy, as well as Senior Vice President of
First Chicago Corporation, a multibank holding company. Ms.
Hesse co-founded and was Chief Operating Officer of SEI
Information Technology, a database management company, from 1969
until 1980. Ms. Hesse currently serves as Chairman of the Boards
of Enbridge Energy Company, Inc., the general partner of
Enbridge Energy Partners, LP, which owns and operates certain
crude oil, petroleum and natural gas-related assets in the
United States, and Enbridge Energy Management, LLC, which
manages the business and affairs of the partnership, and is a
member of the Audit, Finance and Risk Committees of each. She is
also a director of Amec plc, a supplier of consultancy,
engineering and project management services to the energy, power
and process industries, serving as chair of the Compliance and
Ethics Committee, and a director of Mutual Trust Financial
Group, an insurance-based financial services organization,
serving as chair of the Audit Committee.
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2001
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Henry R. Slack (59)
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Mr. Slack has served as Chairman of Terra since April 2001 and
as the Managing Member of Quarterwatch, LLC, a financial
advisory and related family services company, since 2003. Prior
to his retirement, he was Chief Executive Officer of Minorco SA,
an international mining company, from 1991 until 1999, when that
company merged with Anglo American Corporation to form Anglo
American plc. He has also served as a director of E. Oppenheimer
and Son International Limited, a private investment and holding
company, since 1979; served as Chairman of First Africa Group, a
private investment banking firm, from 2006 until its acquisition
in 2009; and was Chairman of Task (USA) Inc., a private
investment firm, from September 1999 to June 2002. Mr. Slack was
a member of the Board of Directors and the executive committee
of Anglo American Corporation, an international mining company,
from 1981 until 1999. He has also served on the Board of
Directors of Salomon Brothers Inc., a provider of
investment-banking, securities underwriting, and foreign
exchange trading services, from 1982 to 1988, SAB Miller plc.,
one of the worlds largest brewers, from 1998 to 2002, and
for more than twenty years on the Board of Engelhard
Corporation, a supplier of catalysts used in the petroleum,
chemical and food industries, until its acquisition in 2006.
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1983
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Dennis McGlone (59)
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Mr. McGlone has been a private investor since October 2005.
Prior to this, Mr. McGlone served as President, Chief Executive
Officer and Director of Copperweld Corp., a major North American
producer of steel tubing and fabricated tubular products, from
February 2004 to October 2005; President, Chief Operating
Officer, and Director of Copperweld from October 2002 to
February 2004; and Vice President of Copperweld from July 2001
to October 2002. He served as Vice President, Corporate Officer
of Armco Inc./AK Steel, a leading U.S. producer and
international marketer of steel products for automotive,
appliance, construction, power generation and distribution, and
process industries, from 1996 to March 2001.
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2006
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15
CLASS III
DIRECTORS
CONTINUING
IN
OFFICE
Terms Expiring at
Annual Meeting in 2010
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Present Positions
and Offices with Terra, Principal Occupation
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First Year as
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Name
and Age
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During
the Past Five Years and Other Public Company Boards
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Director
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David E. Fisher (67)
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Mr. Fisher has served as a director of Falcon Oil & Gas
Ltd., a global energy company, since 2007 and is Chairman of its
Audit Committee and a member of its Compensation Committee. Mr.
Fisher is the Chairman of Real Associates Limited, a private
company which invests in commercial and residential property
principally located in Scandinavia, and has served in that
capacity since 2005. He has over 25 years experience in the
natural resources and extractive industries, having served as
Finance Director of Minorco SA, an international mining company,
from 1992 until his retirement in 1999.
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1993
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Dod A. Fraser (59)
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Mr. Fraser has served as President of Sackett Partners
Incorporated., a consulting company he established in 2000,
since retiring from a 27-year career in investment banking.
Previously, Mr. Fraser was a General Partner of Lazard
Frères & Co., which he joined in 1978, and most
recently, from 1995 to 2000, he was with The Chase Manhattan
Bank, now JP Morgan Chase, where he was a Managing Director and
Group Executive leading the global oil and gas group. Mr. Fraser
also has served as a board member of Smith International, Inc.
(Smith), an oilfield service company, since 2004 and
Forest Oil Corporation (Forest Oil), an independent
oil and gas company, since 2000. He serves as Chairman of the
Audit Committees of both Smith and Forest Oil, and a member of
the Compensation Committee of Smith and the Nominating and
Corporate Governance Committee of Forest Oil.
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2003
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16
CLASS I
DIRECTORS
CONTINUING
IN
OFFICE
Terms Expiring at
Annual Meeting in 2011
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Present Positions
and Offices with Terra, Principal Occupation
|
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First Year as
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Name
and Age
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During
the Past Five Years and Other Public Company Boards
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Director
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Peter S. Janson (62)
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Mr. Janson retired from AMEC Inc., an engineering and
environmental services firm, in 2002. Mr. Janson served as
Chairman and Chief Executive Officer of AMEC Inc. and director
of AMEC plc from 2000 to 2002 and as President and Chief
Executive Officer of Agra Inc., an engineering and environmental
services firm (which was sold to AMEC Inc. in 2000), from 1999
to 2000. Mr. Janson also serves as a director of Teekay
Corporation, a provider of international crude oil and petroleum
product transportation services, serving on the Audit and
Compensation and Human Resources Committees. Mr. Janson served
as a director of Tembec Industries Inc., a forest products
company, from 2004 to 2008, and as a director of ATS Automation
Tooling Systems Inc., a provider of custom designed, built and
installed manufacturing solutions, from 2004 to 2007.
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2005
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Michael L. Bennett (55)
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|
Mr. Bennett, who has been employed by the Company for 34 years,
has served as President and Chief Executive Officer of Terra
since April 2001 and as Executive Vice President and Chief
Operating Officer of Terra from February 1997 to April 2001. Mr.
Bennett has served as President of Terra Nitrogen GP Inc.
(TNGP) (or its predecessor), a subsidiary of Terra
and the General Partner of Terra Nitrogen Company, L.P., since
June 1998, as Chairman of the Board of TNGP since April 2002 and
a director of TNGP (or its predecessor) since 1995. Mr. Bennett
has served as a director of Alliant Energy Corporation
(Alliant Energy), a public utility holding company,
since 2003 and is a member of the Capital Approval, the Audit
and the Executive Committees, and is the Chairman of the
Nominating and Governance Committee and the Lead Independent
Director. Mr. Bennett has also served as a director of
Interstate Power and Light Company, Wisconsin Power and Light
Company and Alliant Energy Resources, Inc., each a first tier
subsidiary of Alliant Energy, since 2003.
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2001
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James R. Kroner (48)
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|
Mr. Kroner has been a private investor since his retirement in
December 2005. Mr. Kroner served as Chief Financial Officer and
Chief Investment Officer for Endurance Specialty Holdings Ltd.
(Endurance), a publicly traded insurance and
reinsurance company, from December 2001 to December 2005 and as
Managing Director of Fox Paine & Company, a private equity
firm, from January 2000 to December 2001. Mr. Kroner served as a
director of Endurance from 2002 to 2003. Mr. Kroner has served
as a director of United America Indemnity, Ltd, a specialty
property and casualty insurer, since 2007, and serves as
Chairman of its Audit and Section 162 (m) Committees.
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2006
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The Board of Directors unanimously recommends that you vote
FOR the election of each of the above-named director-nominees
for Class II director.
The Company has received notice from CF Composite that it
intends to nominate three individuals for election to the Board
of Directors at the annual meeting. You may receive proxy
solicitation materials from the CF Group, including an
opposition proxy statement and a blue proxy card. The Board of
Directors urges you NOT to vote or submit any blue proxy card
sent to you by the CF Group. If you have previously returned or
voted a blue proxy card sent to you by the CF Group, you may
revoke it in accordance with the instructions set forth above
under How To Vote; Submitting Your Proxy; Revoking Your
Proxy.
17
Corporate
Governance
GENERAL
Terra strives to uphold the highest standards of ethical
conduct, to follow corporate governance best practices, to
report accurately and transparently and to fully comply with the
laws, rules and regulations that govern Terras business.
Terras Board of Directors currently consists of eight
members. In accordance with its Corporate Governance Guidelines,
Terras Board of Directors has affirmatively determined
that David E. Fisher, Dod A. Fraser, Martha O. Hesse, Peter S.
Janson, James R. Kroner, Dennis McGlone and Henry R. Slack each
meet the criteria for independence required by the NYSE listing
standards. The Board of Directors independence
determination was based on information provided by our directors
and discussions among our officers and directors. Following its
evaluation, the Board of Directors concluded that none of the
non-employee directors was involved in any transactions,
relationships or arrangements not otherwise disclosed that would
impair his or her independence. Mr. Bennett did not meet
the independence standards because he is an employee of Terra
and TNGP (or its predecessor), which is the General Partner of
Terra Nitrogen Company, L.P. and an indirect, wholly owned
subsidiary of Terra. The Nominating and Corporate Governance
Committee reviews and designates director-nominees in accordance
with the policies and principles of its charter and the
Corporate Governance Guidelines.
Except for Mr. Bennetts employment described above
with TNGP, no occupation carried on by any director during the
past five years was carried on with any corporation or
organization that is a parent, subsidiary or other affiliate of
the Company. There are no family relationships among any of the
directors and any executive officer of the Company, nor is there
any arrangement or understanding between any director, executive
officer and any other person pursuant to which that director or
executive officer was selected as a director or executive
officer of the Company, as the case may be. There are no
material proceedings in which any director or executive officer
of the Company is a party adverse to the Company or any of its
subsidiaries, or has a material interest adverse to the Company
or any of its subsidiaries.
Terra has structured its Board of Directors to provide separate
positions for a non-executive Chairman of the Board of Directors
and a chief executive officer. The Board of Directors plans to
maintain these responsibilities as separate positions.
During 2008, in accordance with the Corporate Governance
Guidelines, the independent directors met at regularly scheduled
executive sessions of the Board of Directors without management.
The Chairman of the Board, Henry R. Slack, presided at all these
executive sessions, which are held at each of our Board of
Directors meetings.
The Board of Directors currently has three committees: Audit,
Compensation, and Nominating and Corporate Governance. A
description of each committee and its function appears in the
Board of Directors and Committees section of this
proxy statement under the heading Committees of the Board
of Directors. The Audit, Compensation, and Nominating and
Corporate Governance Committees are each composed solely of
independent directors as required by the NYSE listing standards.
Each committee has its own charter setting forth the
qualifications for membership and the committees purposes,
goals and responsibilities. Each of these committees has the
power to hire independent legal, financial or other advisors it
deems necessary, without consulting or obtaining the advance
approval of any Terra officer.
The Board of Directors has also adopted a Code of Ethics and
Standards of Business Conduct, which outlines the principles,
policies and laws that govern Terras activities and which
serve as a tool for professional conduct in the workplace. The
Code of Ethics and Standards of Business Conduct applies to
Terras principal executive officer and principal financial
officer, as well as all other officers, directors and employees.
18
It is the Board of Directors practice to encourage all its
members to attend the Companys annual stockholders
meeting, although no written policy has been adopted in that
regard. All Board members attended the Companys 2008
stockholder meeting held May 6, 2008, in New York, New York.
Current versions of Terras Corporate Governance
Guidelines, Code of Ethics and Standards of Business Conduct and
committee charters can be found in the Investors
section under Governance on Terras website at
www.terraindustries.com, and are available in print, free of
charge, to any stockholder upon request.
COMMUNICATION
Interested parties who wish to report questionable practices by
Terra employees may do so by calling Terras toll free,
anonymous hotline at 1-866-551-8010 (in the U.S. and
Canada) or at
011-44-866-551-8010
(in the U.K.). Interested parties who wish to communicate any
message or voice a complaint to the Board of Directors, any of
its committees or the non-management directors should address
their communications to: Henry R. Slack, Chairman of the Board;
Terra Industries Inc.; Terra Centre; 600 Fourth Street; Sioux
City, Iowa 51101. Such communications can also be made by
calling
712-277-1340
or by e-mail
at boardethics@terraindustries.com.
19
Board of
Directors and Committees
COMMITTEES
OF THE
BOARD
OF
DIRECTORS
Audit
Committee. The
Audit Committee met five times in 2008 and is currently composed
of Mr. Fisher (Chairman), Ms. Hesse, Mr. Janson
and Mr. Kroner. The committee is composed entirely of
non-employee directors, each of whom meets the
independence requirements of the NYSE listing
standards. In accordance with Terras Audit Committee
charter, all members of the committee are financially literate
and the Board of Directors has determined that Mr. Fisher
meets the requirements to be named audit committee
financial expert as the term has been defined by the SEC.
The Audit Committee charter is available on Terras website
as set out in the Corporate GovernanceGeneral
section above.
The Audit Committee reviews Terras procedures for
reporting financial information to the public. The Audit
Committee also reviews Terras internal audits, reports and
related recommendations. Its members are directly responsible
for Terras independent auditor and have the sole authority
to appoint or replace the independent auditor. The committee
reviews the scope of the annual audit, reviews related reports
and recommendations and preapproves any non-audit services
provided by the independent registered public auditor. In
addition, the committee maintains, through regularly scheduled
meetings, open lines of communication between the Board of
Directors and Terras financial management, internal
auditors and independent registered public auditor. See the
Audit Committee Report below.
Compensation
Committee. The
Compensation Committee met three times in 2008 and is currently
composed of Messrs. Fraser (Chairman), Fisher, Janson and
McGlone. Each of the members of the committee meets the
independence requirements of the NYSE listing
standards. The committees functions include establishing
the compensation to be paid to Terras executive officers.
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 Compensation
Committee charter is available on Terras website as set
out in the Corporate GovernanceGeneral section
above.
Nominating
and Corporate Governance
Committee. The
Nominating and Corporate Governance Committee met two times in
2008. It is currently composed of Ms. Hesse (Chairman),
Mr. Fraser and Mr. Slack. Each of the members of the
committee meets the independence requirements of the
NYSE listing standards. The committees functions include
helping the Board of Directors fulfill its responsibilities to
stockholders by shaping the Companys corporate governance
and enhancing the quality and independence of the Board of
Directors nominees. In addition, the committee identifies and
reviews qualifications of potential Terra director candidates,
to include those recommended by stockholders, and makes
recommendations to the Board of Directors for nomination or
election. The Nominating and Corporate Governance Committee
generally identifies nominees for new directors based upon
outside research and recommendations from directors and officers
of the Company. Nominees for director are selected on the basis
of broad experience, wisdom, integrity, ability to make
independent analytical inquiries, understanding of Terras
business environment, and willingness to devote adequate time
and energy to Board of Directors duties. The Board of Directors
considers directors of diverse backgrounds, in terms of both the
individuals involved and their various experiences and areas of
expertise. Each Board of Directors member must ensure that
future commitments (including commitments to serve on boards of
other companies) do not materially interfere with the
members service as a Terra director. The Nominating and
Corporate Governance Committee charter is available on
Terras website as set out in the Corporate
GovernanceGeneral section above.
The Nominating and Corporate Governance Committee charter also
provides that the committee will review candidates who have been
recommended by stockholders. Appropriate materials describing
the personal and
20
professional background and experience of candidates recommended
by stockholders should be communicated to the Board of Directors
as set out in the Corporate Governance section of this proxy
statement under the heading Communication. The
committee will evaluate all such stockholder recommended
candidates on the basis of the same qualities and
characteristics as described in the preceding paragraph.
The Board of Directors establishes special Board of Directors
committees from time to time, determining such committees
specific functions as they are established. The Board of
Directors and its committees occasionally take action by
unanimous written consent in lieu of a meeting.
MEETINGS
OF THE
BOARD
OF
DIRECTORS
The Board of Directors held five regular meetings and three
special meetings in 2008. Each director attended at least
92 percent of the total meetings of the Board of Directors
and its committees of which he or she was a member.
COMPENSATION
COMMITTEE
INTERLOCKS
AND
INSIDER
PARTICIPATION
The Compensation Committee is composed of the directors named as
signatories to the Compensation Committee Report
below. No director has any direct or indirect material interest
in or relationship with Terra other than shareholdings as
discussed below and as related to his or her position as a
director, except as described under the caption
Transactions with Related Persons. During 2008, 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 Terras Board of Directors.
21
EQUITY
SECURITY
OWNERSHIP
Principal
stockholders.
The following table shows the ownership of Terra
securities as of September 30, 2009 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 the SEC by or on behalf of
such persons:
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Name
and address of
|
|
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Title
of
|
|
|
|
|
|
Percentage
|
beneficial
owner
|
|
|
class
|
|
|
Amount and nature
of beneficial ownership
1/
|
|
|
of
class
|
FMR LLC 2/
82 Devonshire Street
Boston, Massachusetts 02109
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|
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Common
Shares
|
|
|
11,187,505 sole voting and dispositive power
|
|
|
11.22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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CF Industries Holdings, Inc.
3/
4 Parkway North, Suite 400
Deerfield, Illinois 60015
|
|
|
Common
Shares
|
|
|
6,986,048 shared voting and dispositive power
|
|
|
7.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays Global Investors NA.
4/
45 Fremont Street
San Francisco, California 94105
|
|
|
Common
Shares
|
|
|
5,246,187 sole voting and investment power
|
|
|
5.26%
|
|
|
|
|
|
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TPG-Axon Capital Management, LP
5/
888 Seventh Avenue
38th
Floor
New York, New York 10019
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Common
Shares
|
|
|
5,130,000 shared voting and dispositive power
|
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5.15%
|
|
|
|
|
|
|
|
|
|
|
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1/ |
|
The
number of common shares listed does not include shares of the
4.25% Series A Cumulative Convertible Perpetual Preferred
Shares.
|
|
2/ |
|
FMR
LLC (FMR) reports that Fidelity
Management & Research Company (Fidelity),
a wholly-owned subsidiary of FMR, is the beneficial owner of
9,443,190 common shares of Terra. It further reports that
FMRs beneficial ownership includes (i) 15 common
shares of Terra beneficially owned by Strategic Advisers, Inc.,
a wholly-owned subsidiary of FMR, (ii) 1,415,000 common
shares of Terra beneficially owned by Pyramis Global Advisors,
LLC (PGALLC), an indirect wholly-owned subsidiary of
FMR, (iii) 123,070 common shares of Terra beneficially
owned by Pyramis Global Advisors Trust Company
(PGATC), an indirect wholly-owned subsidiary of FMR,
and (iv) 206,230 common shares of Terra beneficially owned
by FIL Limited (FIL). Edward C. Johnson 3d, Chairman
of FMR and FIL, and FMR, through its control of Fidelity, and
the funds each has sole dispositive power over 9,443,190 common
shares of Terra owned by the funds. Mr. Johnson and FMR,
through its control of PGALLC and PGATC, each has sole
dispositive power over (i) 1,415,000 common shares and sole
power to vote or to direct the voting of 1,415,000 common shares
of Terra owned by the institutional accounts or funds advised by
PGALLC and (ii) 123,070 common shares and sole power to
vote or to direct the voting of 123,070 common shares of Terra
owned by the institutional accounts managed by PGATC,
respectively. Neither FMR nor Mr. Johnson has the sole
power to vote or direct the voting of the shares owned directly
by the Fidelity funds, which power resides with the funds
Boards of Trustees. FMR further reports that members of the
family of Mr. Johnson, through their ownership of 49% of
the voting power of FMR and the execution of a
shareholders voting agreement with all other Series B
shareholders of FMR, may be deemed, under the Investment Company
Act of 1940, to form a controlling group with respect to FMR.
Partnerships controlled predominantly by members of the family
of Mr. Johnson own 47% of the total votes which may be cast
by all holders of FIL voting stock.
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3/ |
|
CF
Industries Holdings, Inc. (CF), CF Industries, Inc.
(CF Industries) and CF Composite, Inc. (CF
Composite) report that they are the beneficial owners of
6,986,048 common shares of Terra. CF, CF Industries and CF
Composite further report that they acquired the Terra shares
owned by them to further CFs proposal for a business
combination with Terra.
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|
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4/ |
|
Barclays
Global Investors, NA reports that it is an investment adviser
and the shares reported are held by the company in trust
accounts for the economic benefit of the beneficiaries of those
accounts.
|
22
|
|
|
5/ |
|
TPG-Axon
Capital Management, LP (TPG-Axon Management) reports
that it is an investment manager to TPG-Axon Partners, LP
(TPG-Axon Domestic) and TPG-Axon Partners
(Offshore), Ltd. (TPG-Axon Offshore), has the power
to direct the disposition and voting of the shares held by
TPG-Axon Domestic and TPG-Axon Offshore, and further that
TPG-Axon Partners GP, LP (PartnersGP) is the general
partner of TPG-Axon Domestic and TPG-Axon GP, LLC
(GPLLC) is the general partner of PartnersGP and
TPG-Axon Management. It further reports that Dinakar Singh LLC
(Singh LLC) is a Managing Member of GPLLC and that
Mr. Dinakar Singh, an individual, is the Managing Member of
Singh LLC and in such capacity may be deemed to control Singh
LLC, GPLLC and TPG-Axon Management, and therefore may be deemed
the beneficial owner of the securities held by TPG-Axon Domestic
and TPG-Axon Offshore.
|
Directors
and Officers.
The following table shows, as of September 30, 2009,
the number of Terra common shares owned by (i) each
director; (ii) Terras chief executive officer (who is
also a director); (iii) the six other most
highly-compensated executive officers; and (iv) all
directors and executive officers as a group.
|
|
|
|
|
|
|
Number of Common
Shares
|
Name
|
|
Beneficially
Owned
1/
|
|
|
D.E. Fisher
|
|
|
51,853
|
|
D.A. Fraser
|
|
|
37,097
|
|
M.O. Hesse
|
|
|
54,775
|
|
P.S. Janson
|
|
|
25,547
|
|
J.R. Kroner
|
|
|
25,647
|
|
D. McGlone
|
|
|
23,647
|
|
H.R. Slack
|
|
|
50,221
|
|
M.L. Bennett
|
|
|
581,936
|
|
D.D. Greenwell
|
|
|
84,094
|
|
J.D. Giesler
|
|
|
111,703
|
|
J.W. Huey
|
|
|
34,080
|
|
R.S. Sanders Jr.
|
|
|
103,249
|
|
Directors and all executive officers as a group (17 persons)
|
|
|
1,313,149
|
|
|
|
|
1/ |
|
Each
director or executive officer has sole voting and investment
power over the shares shown as beneficially owned. Each director
and executive officer individually and beneficially owned less
than one percent, and the directors and executive officers as a
group owned 1.32 percent of Terras issued and
outstanding common shares as of the date set forth above. These
share numbers include ownership of restricted common shares,
which are subject to certain vesting conditions, and shares held
under Terras Employees Savings and Investment Plan.
|
Change
in Control.
Except for CFs Proposals to acquire all of the
Companys outstanding common shares, the Company is not
aware of any arrangements, including any pledge by any person of
securities of the Company, the consummation or operation of
which may at a subsequent date result in a change of control of
the Company.
SECTION 16(A)
BENEFICIAL
OWNERSHIP
REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act requires Terras
executive officers, directors and beneficial owners of more than
10 percent of Terras common shares to file initial
reports of beneficial ownership and reports of changes in
beneficial ownership of the shares with the SEC and the NYSE.
Executive officers and directors are required by SEC regulations
to furnish Terra with copies of all Section 16(a) reports
they file. All persons who were Terra executive officers,
directors and beneficial owners of more than 10 percent of
Terras common shares at any time during 2008 filed all
reports required under Section 16(a) during and with
respect to 2008 in a timely manner, except Joseph D. Giesler,
Henry R. Slack and Douglas M. Stone, who each inadvertently
filed one Form 4 late. This conclusion is based solely on a
review of the copies of such filings furnished to Terra and of
written representations from Terras executive officers and
directors.
23
Executive
Compensation and Other Information
COMPENSATION
DISCUSSION
AND
ANALYSIS
This compensation discussion and analysis discusses the material
elements of compensation of our named executive officers for
2008. In 2008, our named executive officers were:
|
|
|
|
|
Michael L. Bennett, President and Chief Executive Officer;
|
|
|
|
Daniel D. Greenwell, Senior Vice President and Chief Financial
Officer;
|
|
|
|
Joseph D. Giesler, Senior Vice PresidentCommercial
Operations;
|
|
|
|
Richard S. Sanders, Jr., Vice
PresidentManufacturing; and
|
|
|
|
John W. Huey, Vice President, General Counsel and Corporate
Secretary.
|
As a producer and marketer of nitrogen products for agricultural
and industrial markets, Terras operating results are
affected by the volatile nature of the nitrogen products
industry. Demand for nitrogen products remained strong for much
of 2008, contributing to our record earnings and returns during
2008. However, the current period of strong growth for 2007 and
much of 2008 was preceded by a period of approximately six years
of difficult market conditions characterized by losses and low
returns. We expect that market volatility will continue to be a
factor in this industry. In fact, during the fourth quarter
2008, the broad economic decline negatively impacted nitrogen
product demand, leading to reduced sales prices and curtailment
of shipments. We have designed our executive compensation
program to reflect these fundamental factors. For additional
details regarding the cyclical nature of the nitrogen products
industry and our performance in light of these conditions, see
the Managements Discussion and Analysis of Financial
Conditions and Results of Operations in our 2008 Annual
Report on
Form 10-K.
Objectives
The Compensation Committees primary objectives in
designing our executive compensation program are to
(i) provide competitive incentive rewards for the
achievement of specific annual goals by Terra;
(ii) minimize fixed costs during cyclical downturns; and
(iii) provide incentives to manage our North American
and United Kingdom asset base as well as new investments to earn
returns in excess of our cost of capital over the long term.
Elements of
Compensation
Our compensation program is comprised of three primary
components:
|
|
|
Base Salary: |
|
Base salaries are targeted at the low end of the market range in
order to maintain low fixed cash costs during cyclical downturns. |
|
Annual Incentives: |
|
Annual incentives are paid in cash and provide the opportunity
during periods of average and cyclically robust performance for
management to earn competitive total cash compensation through a
combination of salary and annual incentive payments. |
|
Long-Term Incentives: |
|
Long-term incentives are paid in restricted shares and
performance shares in order to align the interests of our
executive officers with those of our stockholders. While a
portion is subject to time-based vesting in order to promote
retention, for our most senior officers, a significant portion
is comprised of performance share grants that will not vest
unless Terra meets specified performance goals and will vest at
above- |
24
|
|
|
|
|
target levels in the case of superior company performance. In
particular, the vesting criteria for the performance share
grants has significant upside potential tied to the ability of
our senior officers to successfully manage our existing asset
base and invest in new assets to generate returns in excess of
the cost of capital. Together with base salary and annual cash
incentive awards, long-term incentive awards are intended to
provide the opportunity for our executive officers to achieve
total compensation at approximately the 50th percentile of
companies in our survey comparison group if target levels of
performance are met. |
The Compensation Committees approach to executive
compensation is to review all three elements of compensation
together, rather than considering each element separately, and
to compare our executive compensation practices to a survey
comparison group of approximately 400 companies, as
described in the next paragraph. On a total compensation basis,
the combination of base salaries, annual cash incentive awards
and long-term incentives should provide our executive officers
with above-average compensation for above-average individual and
company performance and below-average compensation for
below-average performance.
Use of
Compensation Survey Data
In implementing our compensation program, our Compensation
Committee has reviewed studies conducted by its compensation
consultant, Towers Perrin, which compare our compensation
practices with respect to the levels of compensation and the mix
of types of compensation to those of companies that are similar
to us in revenue, market capitalization or industry profile. For
2008, the survey comparison group, which included approximately
400 companies in the 2008 Towers Perrin Compensation Data
Bank (the 2008 Towers Perrin Survey), was comprised
of a combination of general industry and
chemical industry companies. The 2008 Towers Perrin
Survey is a broad-based, published survey, rather than a survey
that was prepared specifically for the Company. The
general industry group included all companies in the
2008 Towers Perrin Survey, other than utilities, energy
companies and financial services companies. The purpose of
Towers Perrins review of the group of general industry
companies was to provide the Compensation Committee with a broad
overview of general market practices. Towers Perrin employed
regression analysis to normalize the data relative to companies
similar in size to Terra to ensure comparability.
Towers Perrin also reviewed publicly available data on the
compensation paid to the chief executive officers, chief
financial officers and chief legal officers of 24 companies
in our industry or a related industry, including most of the
13 companies included in the Performance Chart that appears
on page 25 of our 2008 Annual Report on
Form 10-K.
The purpose of the review of companies in the chemical industry
group and the group of 24 companies was to determine
whether the compensation practices of these groups differed from
the general industry group in any meaningful respects. For
purposes of reviewing 2008 compensation, Towers Perrin did not
identify any meaningful distinctions.
The general industry group serves as the Compensation
Committees main focus for information on market practices.
We believe that the broader group is appropriate in our case,
because Terra has few direct U.S. competitors, and many of
the companies in our industry do not compete with us in
executive recruitment. In addition, we recruit executive talent
from across a broad range of industries.
The data described above was used to provide the Compensation
Committee with a broad understanding of market practices, rather
than to compare the Companys pay practices to those of any
specific group. When the Compensation Committee targeted 2008
compensation at particular levels, these levels were based on
data regarding general compensation practices.
25
Internal Pay
Equity
Our Compensation Committees approach to determining the
compensation of Michael Bennett, our Chief Executive Officer, is
generally the same approach that is used to determine the
compensation levels of our other senior executives, with two
principal exceptions.
First, the performance measure for Mr. Bennetts
annual incentive award differs from those of our other executive
officers. The individual goals applicable to Mr. Bennett
under our Annual Incentive Plan are based on total company
performance, whereas the individual goals of the executives who
report directly to Mr. Bennett are generally based on their
particular areas of responsibility. This distinction is intended
to reflect Mr. Bennetts level of accountability and
influence with respect to overall company performance.
Additionally, in the case of long-term incentive awards, which
are comprised of a combination of time-based restricted stock
and performance share awards, two-thirds of
Mr. Bennetts awards are comprised of performance
shares, whereas half of the other senior executives awards
are comprised of performance shares. The Compensation Committee
believes that Mr. Bennett has a greater ability to
influence company performance, and, therefore, his awards should
have more upside and downside potential than awards granted to
our other executive officers.
|
|
III.
|
Role of Our
Compensation Consultant
|
In 2005, our Compensation Committee selected and retained Towers
Perrin to serve as its independent compensation consultant.
Towers Perrin advises and consults with the Chairman of our
Compensation Committee in connection with our compensation
programs and has particularly focused on long-term incentive
compensation, stock ownership guidelines and executive severance
and change in control arrangements. While Towers Perrin advises
our Compensation Committee in making its decisions, including by
providing our Compensation Committee with information about
current market practices, our Compensation Committee retains
ultimate authority to make all final determinations. Our Vice
President, Investor Relations and Human Resources, Joe Ewing,
often provides Towers Perrin with the necessary data and
background information that it needs in order to prepare
materials requested by the Compensation Committee.
At the request of our Compensation Committee, Towers Perrin also
assisted us in preparing the executive compensation disclosure
in this proxy statement and in our 2008 proxy statement by
reviewing the Compensation Discussion and Analysis and, based on
data we provided, assisting in the preparation of the proxy
tables.
|
|
IV.
|
2008 Executive
Compensation Program
|
Our Compensation Committee developed a 2008 executive
compensation program that provided for the following:
For 2008, our executive officers received base salaries at
approximately the 25th percentile of the survey comparison
group of companies. The Compensation Committee determined that
base salaries should be targeted around that level in order to
control fixed costs in light of the volatile nature of the
nitrogen products industry. The Summary Compensation Table below
details the annual base salaries paid in 2008 to each of our
named executive officers.
In February 2008, Mr. Bennett proposed increases to the
base salaries of our named executive officers, based on his
evaluation of each of our named executive officers
performance. The Compensation Committee considered the proposed
salary increases for our named executive officers and determined
that salary increases were appropriate in order to maintain base
salaries at the 25th percentile level. The Compensation
26
Committee also took into account the individual performance of
each of the named executive officers when determining the amount
of salary increase to award.
|
|
|
|
|
Executive
|
|
2007 Base Salary
|
|
2008 Base Salary
|
Bennett
|
|
$550,000
|
|
$600,000
|
Greenwell
|
|
$300,000
|
|
$330,000
|
Giesler
|
|
$232,000
|
|
$240,000
|
Sanders
|
|
$220,000
|
|
$242,000
|
Huey
|
|
$275,000
|
|
$285,000
|
|
|
|
|
|
|
|
B.
|
Annual
Incentive Compensation
|
The cash incentive awards to be paid to our executive officers
are allocated from an overall pool of available funds that is
established by our Compensation Committee during the first
quarter of each year based on the aggregate value of the
potential awards payable to all participants in our Annual
Incentive Plan. Payout levels under the Annual Incentive Plan
are determined based on a combination of individual performance
against individual goals and our achievement of return on
capital employed (ROCE) targets, as described below.
Prior to 2008, payout levels under the Annual Incentive Plan
were based on the achievement of net income targets. The
Compensation Committee decided in 2008 to switch to ROCE targets
because ROCE is a better indicator of the operating and
investment decisions of management and requires management to be
disciplined in the use of Terras capital, and also to
create consistency between the Annual Incentive Plan and the
long-term incentive programs.
Mr. Bennett prepared a proposal for his own individual
performance goals that was reviewed, modified and approved by
the Compensation Committee in the first quarter of 2008. In
addition, during the first quarter of 2008, each other executive
officer worked with Mr. Bennett to establish individual
performance goals for 2008, which focused on the
executives corresponding function, department or business
unit and which tracked Mr. Bennetts own individual
goals from an overall corporate perspective. At the same time,
during the first quarter of 2008, the Compensation Committee
approved the 2008 target annual incentive awards for each of our
executive officers.
The 2008 individual performance goals for each of our named
executive officers included the achievement of budgeted net
income of $334 million for 2008.
Mr. Bennetts individual goals for 2008 also included
development and implementation of strategies to deal with
enhancing organizational capabilities, pursuit of feedstock
diversification opportunities, and growth and development of the
Terra Environmental Technologies business.
Mr. Greenwells individual goals for 2008 also
included development and implementation of a strategy to deal
with Terras cash balances, identification of feedstock
diversification opportunities, and implementation of a tax
restructuring plan.
Mr. Gieslers individual goals for 2008 also included
development and implementation of strategies for the successful
expansion and restart of existing facilities, optimization of
production mix to maximize available margin and least cost
distribution, and organizational planning objectives relating to
supply chain and natural gas procurement.
Mr. Sanders individual goals for 2008 also included
exceeding 2008 budgeted plant production statistics and
achieving budgeted fixed operating costs, managing capital
expenditures within budget, reduction in the number and severity
of accidents, and reduction in environmental reportable
incidents.
27
Mr. Hueys individual goals for 2008 also included
management and control of department and outside legal expenses
while supporting the goals and objectives of management, full
and timely compliance with all SEC reporting requirements, and
completion of final aspects of the UK joint venture.
While funding of the incentive pool for 2008 was dependent on
2008 ROCE, performance by each executive officer against the
corresponding individual performance goals based on
recommendations by Mr. Bennett was used by the Compensation
Committee to determine the executives actual award. In its
exercise of discretion to determine individual awards under our
Annual Incentive Plan, our Compensation Committee applied
negative discretion to adjust the amount of certain individual
awards downward. In a similar manner, the Board of Directors
evaluates Mr. Bennetts performance at the end of each
year and determines the extent to which he has met his
performance goals and sets his actual bonus.
The following table, which sets forth the target and actual
annual incentive award for each of our named executive officers
under our 2005, 2006, 2007 and 2008 Annual Incentive Plans,
reflects how the cyclical nature of our business affected our
Annual Incentive Plan payouts. Our performance for 2007 and 2008
was robust while our performance for 2005 and 2006 was below
target.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
Actual
|
|
|
Target
|
|
|
Actual
|
|
|
Target
|
|
|
Actual
|
|
|
Target
|
|
|
Actual
|
|
|
|
2005
|
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
Annual
|
|
|
Annual
|
|
|
Annual
|
|
|
Annual
|
|
|
Annual
|
|
|
Annual
|
|
|
Annual
|
|
|
Annual
|
Executive
|
|
|
Incentives
|
|
|
Incentives
|
|
|
Incentives
|
|
|
Incentives
|
|
|
Incentives
|
|
|
Incentives
|
|
|
Incentives
|
|
|
Incentives
|
Bennett
|
|
|
$315,000
|
|
|
$200,000
|
|
|
$575,000
|
|
|
$0
|
|
|
$825,000
|
|
|
$1,468,500
|
|
|
$900,000
|
|
|
$1,710,000
|
Greenwell
|
|
|
$78,750
|
|
|
$52,000
|
|
|
$116,000
|
|
|
$0
|
|
|
$150,000
|
|
|
$300,000
|
|
|
$198,000
|
|
|
$396,000
|
Giesler
|
|
|
$86,000
|
|
|
$54,000
|
|
|
$134,400
|
|
|
$0
|
|
|
$139,200
|
|
|
$230,000
|
|
|
$144,000
|
|
|
$275,000
|
Sanders
|
|
|
$64,750
|
|
|
$50,000
|
|
|
$98,500
|
|
|
$0
|
|
|
$132,000
|
|
|
$245,000
|
|
|
$145,200
|
|
|
$290,000
|
Huey
|
|
|
N/A
|
|
|
N/A
|
|
|
$132,500(1)
|
|
|
$0
|
|
|
$137,500
|
|
|
$265,000
|
|
|
$142,500
|
|
|
$275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Mr. Hueys 2006
target incentive amount was prorated to reflect that he was
hired on October 25, 2006.
The target individual award to each of the executive officers
under the Annual Incentive Plan is determined as a percentage of
the executive officers base salary. The target awards to
each of our named executive officers pursuant to the 2008 Annual
Incentive Plan were 150% for Mr. Bennett, 60% for each of
Messrs. Greenwell, Giesler and Sanders and 50% for
Mr. Huey. These target awards were chosen to allow our
executive officers to achieve total compensation at
approximately the 50th percentile if target levels of
performance are met, and are identical to the target awards for
our named executive officers under the 2007 Annual Incentive
Plan.
The Annual Incentive Plan covers our officers and certain other
key employees. The size of the pool is determined based on the
aggregation of the individual target awards and is funded based
on our achievement of ROCE. The funding of the pool for the 2008
Annual Incentive Plan was determined based on the following
performance measures:
|
|
|
|
|
If Terras 2008 ROCE was less than 7%, the incentive pool
would not have been funded.
|
|
|
|
If Terras 2008 ROCE was equal to 7%, 50% of the target
annual incentive pool would have been funded.
|
|
|
|
For each 0.06% by which Terras 2008 ROCE was greater than
7%, an additional 1% of the target annual incentive pool would
have been funded.
|
Under this formula, if Terra had achieved a 2008 ROCE of 10%,
the incentive pool would have been funded at 100% of the target
amount, and with a 2008 ROCE of 16%, the incentive pool would
have been funded at the maximum level of 200% of the target
amount. The actual 2008 ROCE was greater than 16%, resulting in
the funding of the incentive pool with a total amount of
$5,758,725, equal to the maximum level.
28
The Compensation Committee selected achievement of 10% ROCE as
the target for 100% funding of the incentive pool for 2008,
because that level of ROCE, according to outside studies
performed by investment bankers at the request of our Chief
Financial Officer, was approximately equal to our cost of
capital for 2008.
The Compensation Committees approach in determining ROCE
for purposes of the Annual Incentive Plan is that while annual
incentive compensation levels for our executive officers should
reflect operating costs incurred during the relevant year,
decisions made by the Board of Directors about Terras
capital structure should neither increase nor decrease executive
compensation levels. This approach was reflected in the
calculation of 2008 ROCE, which excluded all income and gains
unrelated to the operations and operating assets of Terra and
included all losses and expenses related to operations and
operating assets of Terra.
While achievement of a threshold amount of ROCE is required in
order for the incentive pool to be funded, the Compensation
Committee retains discretion to make funds available for annual
incentive awards outside of the Annual Incentive Plan to reward
exceptional individual performance even if threshold performance
measures are not met.
In accordance with our philosophy of tying long-term incentive
awards to company performance, the Compensation Committee has
designed our long-term incentive program to accomplish the
following objectives: (1) reward achievement of ROCE
targets on a cumulative basis over a three-year period;
(2) provide more substantial incentives for achieving
returns above the cost of capital; (3) assist with
attraction and retention of executives; and (4) align
management incentives with shareholder interests through the use
of equity awards. To these ends, our long-term incentive
compensation is comprised of a combination of performance share
awards, which only vest upon achievement of performance goals
relating to our ROCE, and restricted shares, which vest based on
continued employment.
Each year, the Compensation Committee sets an annual target
award for each executive officer who participates in our
long-term incentive plan. For 2008, in the case of executive
officers other than Mr. Bennett, target grants were 130% of
annual base salary. Mr. Bennetts target grant was set
at 300% of his annual base salary. The Compensation Committee
determined that these target levels were appropriate for 2008
based on market data with respect to the comparison group of
companies and the objective of setting long-term compensation to
allow our executive officers to achieve total compensation at
approximately the 50th percentile if target levels of
performance are met. The target value of the long-term incentive
awards for 2008 for each of the named executive officers
(expressed as a percentage of base salary) is set forth under
Long-Term Incentive Awards beginning on
page 43.
The Compensation Committee determined that in the case of
executive officers other than Mr. Bennett, 50% of the value
of the 2008 long-term incentive grant should be subject to
time-based vesting criteria to assist in executive retention,
while the remaining 50% should be subject to performance-based
vesting criteria. As previously noted, Mr. Bennett received
one-third of his grant in restricted shares and two-thirds in
performance share grants. The performance share grants for 2008
were approved by the Compensation Committee on February 13,
2008 and were made on February 22, 2008, and the restricted
share grants for 2008 were approved by the Compensation
Committee on July 15, 2008 and were made on July 16,
2008.
In accordance with applicable disclosure rules, the Summary
Compensation Table on page 38 reflects the amounts we
recognized as an accounting expense pursuant to FAS 123R
for 2008 in connection with awards granted in 2008 and in prior
years. These values were not, however, considered by us or the
Compensation Committee when determining the long-term incentive
award grants. Instead, the Compensation Committee considered the
fair market value of the shares on the grant date and, in the
case of performance share awards, the value of potential payouts
based on achievement of the performance targets described below.
The full grant date values (determined in accordance with
FAS 123R) are set forth in the Grants of Plan-Based
29
Awards in 2008 Table on page 41, and the fair market value
of these awards, based on our stock price of $16.67 per share as
of December 31, 2008, is set forth in the Outstanding
Equity Awards at 2008 Fiscal Year-End Table on page 46.
2008 Performance
Share Awards
For purposes of the 2008 performance share grants, the number of
shares to be issued will depend on Terras annualized
average ROCE over the three-year performance period ending on
December 31, 2010. We use ROCE as the performance metric
because ROCE is a critical indicator of good operating and
investment decisions by management, is an important measurement
for judging success of Terras strategic initiatives, and
is a critical metric for investors.
The following table illustrates target and actual achievement of
ROCE as of December 31, 2008, with respect to the
2006-2008,
2007-2009
and
2008-2010
performance periods.
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|
Level of Payout
|
|
|
|
|
Actual
|
|
Actual Average
|
|
for Performance
|
Performance
|
|
Target
|
|
Achievement of
|
|
Annual ROCE
|
|
Share Awards
|
Period
|
|
ROCE
|
|
ROCE (by year)
|
|
(as of 12/31/08)
|
|
(as a % of target)
|
|
|
|
|
2006
|
|
4.303%
|
|
|
|
|
2006-2008
|
|
9%
|
|
2007
|
|
29.560%
|
|
34.306%
|
|
200%
|
|
|
|
|
2008
|
|
73.186%
|
|
|
|
|
|
2007-2009
|
|
9%
|
|
2007
|
|
29.560%
|
|
51.373%
|
|
To be determined
|
|
|
|
|
2008
|
|
73.186%
|
|
|
|
after 12/31/09
|
|
2008-2010
|
|
10%
|
|
2008
|
|
73.1863%
|
|
73.186%
|
|
To be determined after 12/31/10
|
|
The performance share grant payouts for the 2008 grant cycle
(with a performance period ending in 2010) will be
determined based on the following measures:
|
|
|
|
|
If Terras annualized average ROCE for the period is less
than 5%, no shares will be delivered.
|
|
|
|
If Terras annualized average ROCE for the period is
between 5% and 10%, 1% of the target number of shares will be
delivered for each 0.05% by which annualized average ROCE
exceeds 5%. Thus, if annualized average ROCE is equal to 10%,
100% of the target number of shares will be delivered.
|
|
|
|
If Terras annualized average ROCE for the period exceeds
10%, an additional 1% of the target number of shares will be
delivered for each 0.025% by which annualized average ROCE
exceeds 10%, up to a maximum of 200% of the target number of
shares.
|
Annualized average ROCE of 10% over a cumulative three year
period was determined by the Compensation Committee to be an
appropriate goal, as outside studies performed by investment
bankers indicated that it is approximately equal to our cost of
capital. As noted above in the description of the Annual
Incentive Plan, the Compensation Committee believes that while
long-term performance awards to our executive officers should
reflect operating costs incurred during the relevant performance
period, decisions made by the Board of Directors about
Terras capital structure should not affect executive
compensation levels.
Achievement of ROCE is the performance goal that determines both
the funding of the 2008 Annual Incentive Plan bonus pool and
payout of the 2008 performance share awards. In selecting
performance metrics for both arrangements, the Compensation
Committee considered the objectives of each type of arrangement
and set threshold, target and maximum levels for both
arrangements accordingly. While
30
achievement of 10% ROCE was determined to be the appropriate
target level under both arrangements, the Compensation Committee
determined that unlike the Annual Incentive Plan, which provides
no awards to any participants if the performance for the year is
below the level that would fund the target incentive pool at
50%, participants who hold performance shares may earn as few as
1% of the target number of shares for performance that is at the
threshold level over the three-year term of the performance
period. This approach is intended to ensure that poor
performance during an early part of the performance period will
not discourage participants by causing the performance
measurements to be impossible to achieve but allows participants
to earn some portion of the performance shares if performance in
the later part of the performance period has improved. In
addition, while achievement of ROCE under the Annual Incentive
Plan provides for a straight-line increase in the
percentage at which the bonus pool is funded, the performance
share awards provide for a two tiered approach,
pursuant to which achievement of ROCE above the target level
results in a greater increase in the total percentage of shares
awarded. The Compensation Committee determined that this
distinction was appropriate in order to provide additional
incentives to encourage our officers to excel in creating
long-term value for our shareholders.
Performance share grants vest at the end of a three-year
performance period, based on achievement of performance goals
and assuming that the participant remains employed by Terra.
Upon vesting of a performance share grant, the holder is
entitled to receive a number of shares ranging from 0% to 200%
of the target number of shares subject to the award, based on
achievement of ROCE. Individual performance does not play a part
in determining the level of vesting. Except in the case of
death, total disability or other special circumstances
identified by the Compensation Committee, the performance share
grants will be forfeited if employment terminates for any reason
prior to vesting, except that in the event of a change in
control of Terra, vesting of the performance share awards will
immediately accelerate and the holder will be entitled to the
greater of the target number of shares subject to the award and
a number based on actual company performance prior to the change
in control. In the event of termination of employment due to
death, the holder will become entitled to a number of
performance shares based on actual performance prior to death.
In the event of termination of employment due to total
disability, performance shares will continue to vest following
termination based on achievement of performance goals.
2008 Restricted
Share Awards
The restricted shares are subject to cliff vesting with 100% of
the award vesting on the third anniversary of the grant date,
assuming that the participant remains employed by Terra at such
time. Except in the case of death, total disability or
termination of employment without cause or for good reason (both
as defined in the award agreement) following a change in control
of Terra or in other special circumstances identified by the
Compensation Committee, the restricted shares will be forfeited
if employment terminates for any reason prior to vesting. In the
event of termination of employment due to death or total
disability, the vesting of restricted shares will accelerate in
full. Grants of restricted shares made prior to 2008 will vest
in full automatically upon a change in control of Terra. In
2008, the Compensation Committee considered the issue of vesting
of restricted shares upon a change in control and determined
that automatic vesting upon a change in control might not be in
the shareholders best interests, and that full vesting of
the restricted shares upon certain terminations following a
change in control of Terra would provide more retention value
while still providing appropriate protection to the holder of
the restricted shares. As a result, the Compensation Committee
decided that, following a change in control of Terra, the
vesting of restricted shares granted in 2008 and later years
shall only accelerate if the holder is terminated without cause
or for good reason.
Changes to
Incentive Compensation Programs for 2009
For past grants under the Annual Incentive Plan and the
long-term incentive program, cash has been excluded from the
calculation of ROCE. ROCE is defined as average annual income
from operations reduced by 35% for normal income tax expense
divided by average capital employed. Average capital
31
employed was previously defined to mean common and preferred
stockholders equity plus short and long-term debt,
deferred income taxes and minority interest, less cash. In
February 2009, the Compensation Committee examined different
scenarios for how the inclusion or exclusion of cash in the
denominator of ROCE would impact managements decisions and
affect the level of net income required to generate the target
levels of ROCE under the Annual Incentive Plan and long-term
incentive program.
After careful review, the Compensation Committee concluded that
the inclusion of cash in the ROCE calculation would create
additional incentives for management to use and invest cash
wisely to generate additional growth and income. Therefore, for
awards made in 2009 pursuant to both the Annual Incentive Plan
and the performance-based portion of the long-term incentive
program, the Compensation Committee has determined that the
formula to determine ROCE will include cash.
As the Compensation Committee noted during its study, the change
to the ROCE formula will cause the amount of net income that
will be required in order for the executive officers to reach
their maximum payout levels pursuant to the awards to be almost
twice the amount of net income that would be required if cash
was excluded from the calculation of ROCE. This change
represents a significant increase in the level of performance
required to generate payments under both the Annual Incentive
Plan and the long-term incentive program.
In addition to adding cash into the calculation of ROCE, the
Compensation Committee selected performance targets for the 2009
Annual Incentive Plan and the 2009 performance share grants that
are higher than the levels for previous grants. The funding of
the pool for the 2009 Annual Incentive Plan will be determined
based on the following performance measures:
|
|
|
|
|
If Terras 2009 ROCE is less than 9%, the incentive pool
will not be funded.
|
|
|
|
If Terras 2009 ROCE is equal to 9%, 50% of the target
annual incentive pool will be funded.
|
|
|
|
For each 0.07% by which Terras 2009 ROCE is greater than
9%, an additional 1% of the target annual incentive pool will be
funded.
|
Under this formula, if Terra achieves 2009 ROCE of 12.5%, the
incentive pool will be funded at 100% of the target amount, and
with 2009 ROCE of 19.5%, the incentive pool will be funded at
the maximum level of 200% of the target amount.
The performance share grant payouts for the
2009-2011
grant cycle (with a performance period ending in 2011) will
be determined based on the following measures:
|
|
|
|
|
If Terras annualized average ROCE for the period is less
than 7.5%, no shares will be delivered.
|
|
|
|
If Terras annualized average ROCE for the period is
between 7.5% and 12.5%, 1% of the target number of shares will
be delivered for each 0.05% by which annualized average ROCE
exceeds 7.5%. Thus, if annualized average ROCE is equal to
12.5%, 100% of the target number of shares will be delivered.
|
|
|
|
If Terras annualized average ROCE for the period exceeds
12.5%, an additional 1% of the target number of shares will be
delivered for each 0.025% by which annualized average ROCE
exceeds 12.5%, up to a maximum of 200% of the target number of
shares for an annualized average ROCE of 15% or higher.
|
The Compensation Committee selected the target of 12.5% ROCE for
both the 2009 Annual Incentive Plan and the 2009 performance
share grants because annualized average ROCE of 12.5% over a
cumulative three-year period is approximately equal to our cost
of capital, as indicated in outside studies performed by
investment bankers.
32
The Compensation Committee also determined that, unlike prior
grants of performance shares, the 2009 performance shares grants
should not vest automatically upon a change in control. Instead,
for the 2009 performance share grants and grants in future
years, following a change in control of Terra, the number of
shares that each holder will be entitled to receive will become
fixed as of the date of the change of control at the greater of
the target number of shares subject to the award and a number
based on actual company performance prior to the change in
control. Each holder of the performance shares will receive such
performance shares on the earlier of the date that such award
would otherwise vest or the date that such holder is terminated
without cause or for good reason (both as defined in the
performance share award agreement).
D. Severance
Prior to 2006, we were a party to executive retention agreements
with our senior executives that provided for payments and
benefits in the event of a termination of employment following a
change in control, but no executives were covered by employment
agreements or other severance arrangements that established the
level of payments and benefits to be provided in connection with
a termination that was not related to a change in control.
During this period, executive severance was generally determined
through individual negotiations, which often led to a variety of
inconsistent results. In 2006, the Compensation Committee
decided that a standard form of severance agreement covering
non-change in control severance was needed to promote additional
stability, ensure equitable treatment and avoid the need for
individual negotiations. At the same time, the Compensation
Committee decided to review its change in control severance
practices. In connection with the Compensation Committees
review of our severance practices, Towers Perrin provided the
Compensation Committee with information about severance benefits
that are generally provided in the event of an involuntary
termination of a senior executives employment, both in the
change in control and non-change in control contexts.
Based on the Compensation Committees review, on
October 5, 2006, we entered into employment severance
agreements with each individual who was an executive officer of
Terra at that time. In addition, we entered into an employment
severance agreement with Mr. Huey in October 2006 when he
became an executive officer.
All employment severance agreements with our executive officers
are identical except that Mr. Bennetts agreement
provides for an initial term of five years rather than three,
and the approval of three-quarters of our Board is required in
order to terminate Mr. Bennett for cause. Our
Compensation Committee considered these distinctions appropriate
in order to reflect Mr. Bennetts unique role within
our company. For a thorough description of the material terms of
the agreements with each of our named executive officers, see
Employment Severance Agreements beginning on
page 42. For a description and quantification of the
payments and benefits that may be provided to the named
executive officers under these agreements, see
Post-Employment Payments beginning on page 52.
The Compensation Committee selected the severance multiples and
levels of benefits based on information that Towers Perrin
provided in 2006 regarding current market practices relating to
executive severance. Annually, the Compensation Committee
considers and may extend the term of the agreements by one year.
Should the Compensation Committee decide not to extend their
terms, the agreements will expire one year thereafter.
In July 2008, the Compensation Committee reviewed the key terms
of the employment severance agreements with our executives and
the potential impact of the agreements upon a change in control
of Terra, including information provided by Towers Perrin
regarding the potential amounts of excise tax
gross-ups
that would be payable under different stock price scenarios. The
Compensation Committee decided to extend the terms of the
agreements (other than Mr. Bennetts agreement, which
expires in
33
2011) by one year from the originally scheduled expiration
date of October 2009, with minor changes to the severance
formula to address Internal Revenue Service guidance regarding
Section 162(m) of the Internal Revenue Code and the
addition of the willful breach of the Companys code of
conduct and failure to comply with government investigations to
the definition of cause.
E. Defined
Benefit Pension Plans
We do not offer defined benefit pension plans to our employees
who were hired on or after July 1, 2003. We do, however,
maintain the Terra Industries Inc. Employees Retirement
Plan, which is a tax-qualified defined benefit pension plan
maintained for the benefit of all U.S. employees hired
before July 1, 2003 (which includes each of our named
executive officers, other than Messrs. Greenwell or Huey).
On January 1, 1992, we adopted a supplemental executive
retirement plan (the SERP). The Compensation
Committee and the Board of Directors established the SERP so
that certain management and highly compensated employees would
not be ineligible for the benefits that would have been provided
to them under our tax-qualified defined benefit pension plan but
for the limits imposed by the Internal Revenue Code and the
Employee Retirement Income Security Act. The SERP is an unfunded
plan. Participants in the SERP have the status of unsecured
creditors of Terra. As of December 31, 2008, the only named
executive officers who had accrued benefits under the SERP were
Messrs. Bennett, Giesler and Sanders.
For a description of the benefits accrued by each of our named
executive officers under our defined benefit pension plans as of
December 31, 2008, see the Pension Benefits in Fiscal Year
2008 Table on page 49.
F. Defined
Contribution Plans
We maintain a 401(k) plan, which is a tax-qualified defined
contribution plan maintained for the benefit of all
U.S. employees, including our named executive officers. The
401(k) plan permits employees to contribute a portion of their
pay to the plan on a pre-tax basis. We also provide for a
company matching contribution as well as a direct company
contribution in the case of employees who are not eligible to
participate in the Terra Industries Inc. Employees
Retirement Plan. The amount of our 2008 contribution to the
401(k) on behalf of each of our named executive officers is set
forth in the explanation of the All Other Compensation column of
the Summary Compensation Table.
We established a nonqualified Supplemental Deferred Compensation
Plan on December 20, 1993. Due to the substantial
restrictions imposed by Section 409A of the Internal
Revenue Code, on December 31, 2004, we froze the plan with
respect to future deferrals. In general, the plan allowed
participants to defer certain portions of annual base salary and
annual incentive awards and to determine how to invest amounts
deferred pursuant to the plan. The plan is unfunded.
Participants in the plan have the status of unsecured creditors
of Terra. As of December 31, 2008, the only named executive
officers with an outstanding balance in the plan were
Messrs. Giesler and Sanders.
G. Employee
Welfare and Fringe Benefit Plans
Our named executive officers are eligible to participate in our
welfare and fringe benefit plans on the same basis as all of our
other full-time employees. These benefits include our medical,
dental and vision plans, life insurance, short-term and
long-term disability plans, business travel accident insurance,
tuition reimbursement, healthcare spending accounts, and
dependent care spending accounts. In addition, due to
limitations on the level of base salary covered by our primary
long-term disability policy and in order to provide executive
officers with long-term disability coverage equal to 60% of base
salary (which is the rate of coverage provided to all
U.S. employees), we maintain supplemental long-term
disability policies.
34
H. Perquisites
The named executive officers are provided company-paid
memberships in a local country club of their choice. We cover
any costs associated with this perquisite, including taxes. This
perquisite is provided in order to allow the executives to
entertain business associates of Terra, such as partners in
joint ventures, customers and suppliers. The named executive
officers are also permitted to use the club amenities for
personal and family activities.
|
|
A.
|
Stock
Ownership/Retention Guidelines
|
The Compensation Committee reviewed market data assembled by
Towers Perrin to arrive at a recommendation with respect to
stock ownership by our executive officers. The purpose of the
guidelines is to encourage our executive officers to own and
retain shares of our stock, thereby aligning their interests
with those of our other stockholders. Although these guidelines
are not mandatory, executive officers are strongly encouraged to
follow them. However, special circumstances may require an
executive officer to depart from the guidelines on occasion.
Current ownership guidelines are as follows:
|
|
|
Chief Executive Officer
|
|
4 times annual base salary
|
Senior Vice Presidents
|
|
3 times annual base salary
|
Vice Presidents
|
|
1 times annual base salary
|
Fifty percent of unvested restricted shares will count toward
the ownership guidelines prior to vesting. After satisfying the
ownership guidelines described above, the executive officers are
asked to hold an additional 50% of any shares awarded to them
under our long-term incentive programs (including restricted
shares and performance share grants) for a minimum of
12 months following vesting.
As of December 31, 2008, Mr. Bennetts share
ownership exceeded 9 times his annual base salary. The other
named executive officers, with the exception of
Mr. Greenwell, also exceeded their respective guideline
multiples as of December 31, 2008.
Mr. Greenwells share ownership was approximately 2.42
times his annual base salary as of December 31, 2008 due to
the recent decline in the price of our stock.
In October 2007, our Board of Directors implemented share
ownership guidelines of 20,000 shares for all non-employee
directors except the Chairman, which guideline is
30,000 shares. All newly elected directors are to be
allowed a five-year period from election to satisfy the new
guidelines.
Terras charter and bylaws provide indemnification for its
officers and directors to the maximum extent permitted by law.
In general, we will pay the costs of legal defense, settlements
or judgments on behalf of the officer or director relating to
actions taken in the course of employment or service with Terra,
as long as conduct meets applicable standards. We have entered
into Indemnity Agreements with the executive officers and
directors, including the named executive officers. The
agreements provide the maximum indemnity available under
Maryland General Corporate Law, which is substantially the same
as that provided under our charter and bylaws, and provide for
certain procedural requirements in order to obtain
indemnification, the timing of required determinations,
indemnification payments, advancement of expenses, and the
rights of officers and directors in the event that we fail to
provide indemnification or to advance expenses.
|
|
C.
|
Role of
Executive Officers in Determining Compensation
|
Executive officers who are directly involved in administering
the executive compensation program include Mr. Bennett and
Mr. Ewing, who is our Vice President, Investor Relations
and Human Resources. Mr. Bennett is excluded from
discussions and decisions regarding his own compensation.
Mr. Ewing
35
manages the administrative aspects of the Compensation
Committees relationship with Towers Perrin, as well as the
calculation and presentation to the Compensation Committee of
proposed executive annual salaries, annual incentive awards, and
long-term incentive awards. Mr. Ewing corresponds
frequently with Mr. Fraser, the Chairman of our
Compensation Committee. Mr. Ewing communicates frequently
with Mr. Bennett in all matters relating to executive
compensation, other than those matters that relate to
Mr. Bennetts own compensation. Mr. Ewing also
occasionally relies on Mr. Greenwell, our Senior Vice
President and Chief Financial Officer, to calculate and review
Terras ROCE, which is the relevant performance measure
under our Annual Incentive Plan and our long-term incentive
program. Mr. Huey, Vice President, General Counsel and
Corporate Secretary, is engaged with respect to legal and SEC
issues relating to executive compensation, including reporting
and disclosure issues.
Pursuant to its charter, the Compensation Committee is required
to meet at least twice annually but will meet more frequently to
the extent necessary. In 2008, the Compensation Committee met
three times. Generally, executive officers who attend the
meetings are Mr. Bennett, Mr. Ewing, and
Mr. Huey, who acts as secretary of the meeting.
Mr. Bennett and Mr. Ewing present the recommendations
for any changes to compensation of our executive officers,
except that no recommendations are made with respect to
Mr. Bennett. Mr. Bennett makes recommendations to the
Compensation Committee regarding the level of annual and
long-term incentive awards for executive officers other than
himself and reviews the performance of such executive officers
with regards to payout levels of incentive awards, but the
Compensation Committee makes the final determinations regarding
grants and payout levels of awards. Mr. Bennetts
day-to-day
knowledge of the performance of the executives of Terra enables
him to better evaluate the performance of the executives. The
Compensation Committee considers the recommendations of
Mr. Bennett as well as market data and the overall
compensation objectives of Terra in making its determinations.
Final decisions regarding compensation for Mr. Bennett are
made by the Compensation Committee in executive session,
excluding all members of management. Decisions regarding
Mr. Bennett are then communicated by Messrs. Slack and
Fraser to Mr. Bennett and subsequently to Mr. Ewing.
Mr. Ewing is responsible for implementing all approved
changes. Decisions regarding the other executive officers are
communicated by Mr. Bennett to Mr. Ewing.
|
|
D.
|
Deductibility
of Executive Compensation
|
As part of its role, the Compensation Committee reviews and
considers the deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code.
Section 162(m) provides that the Company may not deduct
compensation of more than $1,000,000 paid in any year to the
Chief Executive Officer or any of the three other most highly
compensated officers (excluding the Chief Financial Officer), to
the extent that such compensation is not
performance-based as defined in Section 162(m).
To qualify as performance-based compensation,
certain pre-established objective performance goals and certain
other conditions must be met. We have considered the potential
impact of Section 162(m) on Terras compensation plans
and have determined that it is consistent with Terras best
interests for the compensation of our executives to qualify for
the deduction available under Section 162(m) where
possible. Therefore, we have designed certain of our plans and
programs, including the 2008 Annual Incentive Plan and the 2008
performance share grants, as described above, to qualify for
deductibility under Section 162(m).
In 2008, the Internal Revenue Service released guidance
impacting the deductibility pursuant to Section 162(m) of
certain bonuses or other programs if the bonus or program is
referred to in the severance formula of an employees
employment agreement. In order to address this guidance, we have
determined to make a small change to the manner in which the
target bonus is calculated for purposes of the severance formula
in the employment severance agreements described above.
36
COMPENSATION
COMMITTEE
REPORT
We have reviewed and discussed the Compensation Discussion and
Analysis with management. Based on such review and discussions,
we recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in Terras Annual
Report on
Form 10-K
and this proxy statement on Schedule 14A.
Members of
the Compensation Committee
of the Board of Directors
Dod A. Fraser, Chairman
David E. Fisher
Peter S. Janson
Dennis McGlone
37
Summary
Compensation Table
The following table summarizes the compensation of each of our
named executive officers for the fiscal year ended
December 31, 2008. The named executive officers are our
Chief Executive Officer, Chief Financial Officer and three other
most highly compensated executive officers ranked by their total
compensation in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
Name &
Principal
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
Position
|
|
|
Year
|
|
|
Salary ($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)(5)
|
|
|
($)(6)
|
|
|
Total ($)
|
M. Bennett,
|
|
|
2008
|
|
|
$
|
592,308
|
|
|
|
$
|
|
|
|
|
$
|
2,879,126
|
|
|
|
$
|
|
|
|
|
$
|
1,710,000
|
|
|
|
$
|
184,533
|
|
|
|
$
|
25,028
|
|
|
|
$
|
5,390,994
|
|
President & CEO
|
|
|
2007
|
|
|
$
|
540,385
|
|
|
|
$
|
|
|
|
|
$
|
2,770,201
|
|
|
|
$
|
|
|
|
|
$
|
1,468,500
|
|
|
|
$
|
96,713
|
|
|
|
$
|
24,166
|
|
|
|
$
|
4,899,965
|
|
|
|
|
2006
|
|
|
$
|
492,308
|
|
|
|
$
|
|
|
|
|
$
|
1,147,153
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
80,572
|
|
|
|
$
|
22,421
|
|
|
|
$
|
1,742,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Greenwell,
|
|
|
2008
|
|
|
$
|
325,385
|
|
|
|
$
|
|
|
|
|
$
|
586,218
|
|
|
|
$
|
|
|
|
|
$
|
396,000
|
|
|
|
$
|
|
|
|
|
$
|
23,800
|
|
|
|
$
|
1,331,403
|
|
SVP & CFO (7)
|
|
|
2007
|
|
|
$
|
268,404
|
|
|
|
$
|
1,250
|
|
|
|
$
|
377,773
|
|
|
|
$
|
|
|
|
|
$
|
298,750
|
|
|
|
$
|
|
|
|
|
$
|
35,285
|
|
|
|
$
|
981,462
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Giesler,
|
|
|
2008
|
|
|
$
|
238,769
|
|
|
|
$
|
|
|
|
|
$
|
481,653
|
|
|
|
$
|
|
|
|
|
$
|
275,000
|
|
|
|
$
|
31,359
|
|
|
|
$
|
21,460
|
|
|
|
$
|
1,048,241
|
|
SVP Commercial
|
|
|
2007
|
|
|
$
|
230,462
|
|
|
|
$
|
|
|
|
|
$
|
559,488
|
|
|
|
$
|
|
|
|
|
$
|
230,000
|
|
|
|
$
|
26,366
|
|
|
|
$
|
20,578
|
|
|
|
$
|
1,066,894
|
|
Operations
|
|
|
2006
|
|
|
$
|
222,615
|
|
|
|
$
|
|
|
|
|
$
|
295,988
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
31,718
|
|
|
|
$
|
24,248
|
|
|
|
$
|
574,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Sanders, Jr.
|
|
|
2008
|
|
|
$
|
238,615
|
|
|
|
$
|
|
|
|
|
$
|
450,186
|
|
|
|
$
|
|
|
|
|
$
|
290,000
|
|
|
|
$
|
28,185
|
|
|
|
$
|
23,066
|
|
|
|
$
|
1,030,053
|
|
VP Manufacturing
|
|
|
2007
|
|
|
$
|
216,154
|
|
|
|
$
|
|
|
|
|
$
|
456,517
|
|
|
|
$
|
|
|
|
|
$
|
245,000
|
|
|
|
$
|
18,420
|
|
|
|
$
|
21,777
|
|
|
|
$
|
957,868
|
|
|
|
|
2006
|
|
|
$
|
197,692
|
|
|
|
$
|
|
|
|
|
$
|
233,094
|
|
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
20,077
|
|
|
|
$
|
23,540
|
|
|
|
$
|
474,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Huey
|
|
|
2008
|
|
|
$
|
283,462
|
|
|
|
$
|
|
|
|
|
$
|
407,612
|
|
|
|
$
|
|
|
|
|
$
|
275,000
|
|
|
|
$
|
|
|
|
|
$
|
21,403
|
|
|
|
$
|
987,476
|
|
VP, General Counsel
|
|
|
2007
|
|
|
$
|
273,077
|
|
|
|
$
|
|
|
|
|
$
|
217,079
|
|
|
|
$
|
|
|
|
|
$
|
265,000
|
|
|
|
$
|
|
|
|
|
$
|
26,919
|
|
|
|
$
|
782,075
|
|
& Corporate Secretary (7)
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
(1)
|
|
Represents
annual incentive plan payments in excess of the named executive
officers maximum opportunity under the annual incentive
plan.
|
|
|
|
(2)
|
|
Represents
the compensation costs of equity grants for financial reporting
purposes for the year under FAS 123R, rather than an amount
paid to or realized by the named executive officer. See
Terras Annual Report on
Form 10-K
for the assumptions made in determining FAS 123R values.
The FAS 123R value as of the grant date for equity grants
is spread over the number of months of service required for the
grant to become non-forfeitable. For additional information
about stock-based grants made in 2008, see the Grants of
Plan-Based Awards table and accompanying footnotes and narrative.
|
|
(3)
|
|
Reflects
the amount earned for 2008 performance under the annual
incentive plan, up to the individuals maximum incentive
opportunity. Amounts were earned in 2008 and paid in 2009, and
2007 amounts were earned in 2007 and paid in 2008.
|
|
(4)
|
|
In
the case of each of our named executive officers other than
Messrs. Greenwell and Huey, amounts shown are solely an
estimate of the increase for 2008 in the actuarial present value
of the named executive officers age 65 accrued
benefit under the Terra Industries Inc. Employees
Retirement Plan (Retirement Plan) and, in the case
of Messrs. Bennett, Giesler and Sanders, under the Terra
Industries Inc. Excess Benefit Plan (SERP). No
amount is payable under these plans before a participant attains
age 55.
|
|
(5)
|
|
Assumptions
used to calculate the actuarial present value of the accrued
benefits of the named executive officers are further described
under Pension Benefits in Fiscal Year 2008 Table on
page 49. The Change in Pension Value and Non-qualified
Deferred Compensation Earnings Column also reports the amount of
above market earnings on compensation that is deferred outside
of tax-qualified plans. No amount is reported with respect to
earnings on deferred compensation plans because above market
rates are not permitted under the Supplemental Deferred
Compensation Plan.
|
|
(6)
|
|
See
All Other Compensation disclosure for details.
|
|
(7)
|
|
Messrs. Greenwell
and Huey were not named executive officers in 2006.
|
39
All Other
Compensation Table
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
&
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
to Defined
|
|
|
|
Tax
|
|
|
|
|
|
|
|
Personal
|
|
Contribution
|
|
Insurance
|
|
Reimbursements
|
|
|
|
|
Name
|
|
|
Benefits(1)
|
|
Plans(2)
|
|
Premiums(3)
|
|
(4)
|
|
Other(5)
|
|
Total
|
M. Bennett,
President & CEO
|
|
|
$
|
6,885
|
|
|
$
|
10,800
|
|
|
$
|
2,798
|
|
|
$
|
4,484
|
|
|
$
|
60
|
|
|
$
|
25,028
|
|
D. Greenwell,
SVP & CFO
|
|
|
$
|
6,885
|
|
|
$
|
11,118
|
|
|
$
|
496
|
|
|
$
|
5,241
|
|
|
$
|
60
|
|
|
$
|
23,800
|
|
J. Giesler, SVP
Commercial Operations
|
|
|
$
|
5,773
|
|
|
$
|
11,230
|
|
|
$
|
521
|
|
|
$
|
3,876
|
|
|
$
|
60
|
|
|
$
|
21,460
|
|
R. Sanders,
VP Manufacturing
|
|
|
$
|
7,306
|
|
|
$
|
10,333
|
|
|
$
|
521
|
|
|
$
|
4,846
|
|
|
$
|
60
|
|
|
$
|
23,066
|
|
J. Huey,
VP, General Counsel & Corporate Secretary
|
|
|
$
|
4,685
|
|
|
$
|
10,975
|
|
|
$
|
1,849
|
|
|
$
|
3,833
|
|
|
$
|
60
|
|
|
$
|
21,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts
include only country club dues for each executive.
|
|
(2)
|
Includes
company contributions to each executives 401(k) account.
|
|
(3)
|
Includes
group life insurance premiums for coverage in excess of $50,000.
|
|
(4)
|
Includes
tax
gross-ups
paid by Terra in 2008 on perquisites and other benefits from
2007. These
gross-ups
are based only on taxes from company payment of country club
dues for all of the named executive officers.
|
|
(5)
|
Value
of gift card given to each named executive officer during 2008.
|
40
Grants of
Plan-Based Awards in 2008
The following table provides information on awards under the
Annual Incentive Plan and restricted share and performance share
awards granted in 2008 to each of our named executive officers.
The amount of the performance share awards and restricted share
awards that was expensed in 2008 is shown in the Summary
Compensation Table on page 38.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
Payouts
|
|
|
Estimated Future
Payouts
|
|
|
Stock
|
|
Option
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
|
Under
|
|
|
Awards:
|
|
Awards:
|
|
|
or Base
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive Plan
|
|
|
Equity Incentive
Plan
|
|
|
Number of
|
|
Number of
|
|
|
Price of
|
|
Market
|
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
Type of
|
|
|
Awards(4)
|
|
|
Awards(5)
|
|
|
Shares of
|
|
Securities
|
|
|
Option
|
|
Price on
|
|
|
Stock &
|
|
|
|
Grant
|
|
Date of
|
|
|
Award
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
Stock or
|
|
Underlying
|
|
|
Awards
|
|
Grant
|
|
|
Option
|
Name
|
|
|
Date(1)
|
|
Action(2)
|
|
|
(3)
|
|
|
($)
|
|
($)
|
|
($)
|
|
|
(#)
|
|
(#)
|
|
(#)
|
|
|
Units
(#)(6)
|
|
Options
(#)
|
|
|
($ /
Sh)
|
|
Date
|
|
|
Awards(7)
|
M. Bennett,
|
|
|
16-Jul-08
|
|
15-Jul-08
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,100
|
|
|
|
|
|
|
|
|
NA
|
|
|
$
|
46.44
|
|
|
|
$
|
561,924
|
|
President & CEO
|
|
|
22-Feb-08
|
|
13-Feb-08
|
|
|
PS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
|
|
|
56,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47.75
|
|
|
|
$
|
2,674,000
|
|
|
|
|
22-Feb-08
|
|
|
|
|
AI
|
|
|
|
450,000
|
|
|
|
900,000
|
|
|
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Greenwell,
|
|
|
16-Jul-08
|
|
15-Jul-08
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,300
|
|
|
|
|
|
|
|
|
NA
|
|
|
$
|
46.44
|
|
|
|
$
|
199,692
|
|
SVP & CFO
|
|
|
22-Feb-08
|
|
13-Feb-08
|
|
|
PS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,900
|
|
|
|
9,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47.75
|
|
|
|
$
|
467,950
|
|
|
|
|
22-Feb-08
|
|
|
|
|
AI
|
|
|
|
99,000
|
|
|
|
198,000
|
|
|
|
396,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Giesler,
|
|
|
16-Jul-08
|
|
15-Jul-08
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200
|
|
|
|
|
|
|
|
|
NA
|
|
|
$
|
46.44
|
|
|
|
$
|
148,608
|
|
SVP Commercial
|
|
|
22-Feb-08
|
|
13-Feb-08
|
|
|
PS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47.75
|
|
|
|
$
|
343,800
|
|
Operations
|
|
|
22-Feb-08
|
|
|
|
|
AI
|
|
|
|
72,000
|
|
|
|
144,000
|
|
|
|
288,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Sanders,
|
|
|
16-Jul-08
|
|
15-Jul-08
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200
|
|
|
|
|
|
|
|
|
NA
|
|
|
$
|
46.44
|
|
|
|
$
|
148,608
|
|
VP Manufacturing
|
|
|
22-Feb-08
|
|
13-Feb-08
|
|
|
PS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47.75
|
|
|
|
$
|
343,800
|
|
|
|
|
22-Feb-08
|
|
|
|
|
AI
|
|
|
|
72,600
|
|
|
|
145,200
|
|
|
|
290,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Huey,
|
|
|
16-Jul-08
|
|
15-Jul-08
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,700
|
|
|
|
|
|
|
|
|
NA
|
|
|
$
|
46.44
|
|
|
|
$
|
171,828
|
|
VP, Gen. Counsel &
|
|
|
22-Feb-08
|
|
13-Feb-08
|
|
|
PS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,300
|
|
|
|
8,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47.75
|
|
|
|
$
|
410,650
|
|
Corp. Secretary
|
|
|
22-Feb-08
|
|
|
|
|
AI
|
|
|
|
71,250
|
|
|
|
142,500
|
|
|
|
285,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects
the date grants were actually made.
|
|
(2)
|
|
Reflects
the date grants were approved by the Compensation Committee.
|
|
(3)
|
|
For
purposes of this table, RS means a grant of Restricted Stock, PS
means a grant of Performance Stock and AI means a grant under
the Annual Incentive Plan.
|
|
(4)
|
|
Reflects
grants made under Terras Annual Incentive Plan. Actual
payouts under this plan are based on performance versus
financial targets over the corresponding fiscal year and
individual performance. Cash payouts are made after completion
of the one-year performance period. Threshold awards are 50% of
target and maximum awards are 200% of target.
|
|
(5)
|
|
Reflects
grants of performance shares made under Terras long-term
incentive performance plan. Actual payouts under this plan are
based on performance versus financial targets over a three-year
period and depend on actual performance versus targets over the
performance period, except that in the event of a change in
control, performance shares will be issued immediately at the
higher of target or actual performance level for the quarters
completed prior to the change in control. Threshold award is
zero shares, and maximum award is 200% of targeted shares.
|
|
(6)
|
|
Reflects
grants of restricted shares that have time-based vesting, which
vest 100% on the third anniversary of the grant date or
immediately upon a change in control (except for 2008 grants,
which vest 100% on the third anniversary of the grant date or
upon a change in control and subsequent qualifying termination).
|
|
(7)
|
|
Amounts
reflect maximum payouts for the performance share grants and
stock price on the date of grant.
|
41
The following is a description of material factors necessary to
understand the information disclosed in the Summary Compensation
Table and the Grants of Plan-Based Awards table. This
description is intended to supplement the information discussed
in the Compensation Discussion and Analysis.
Employment
Severance Agreements
Background
On October 5, 2006, we entered into an employment severance
agreement with each of our named executive officers other than
Mr. Huey, with whom we entered into an employment severance
agreement on October 25, 2006. The named executive officers
were previously parties to executive retention agreements with
us, which provided for severance and other benefits in the event
of a termination of employment following a change in control.
The new employment severance agreements supersede and replace
the executive retention agreements and provide for severance and
other benefits in the event of a termination of employment under
circumstances that are both related to and unrelated to a change
in control.
Term
Each employment severance agreement has a three-year term, with
the exception of the agreement with Mr. Bennett, which has
a five-year term. The term may be extended for additional
one-year periods in the sole discretion of the Board of
Directors. The employment severance agreements may not be
terminated during the two-year period following a change in
control of Terra without the executives consent.
Severance and
Post-Termination Benefits
The employment severance agreements provide that the executives
will be entitled to certain compensation and benefits upon a
qualifying termination of employment. The extent and nature of
the compensation and benefits are identified and quantified in
the disclosure entitled Post-Employment Payments,
which appears on page 52 of this Proxy Statement.
Excise Tax
Gross-Up
The employment severance agreements provide that the executives
will be entitled to a
gross-up
payment to make the executives whole for any excise taxes
imposed as a result of Section 280G of the Internal Revenue
Code. Entitlement to a
gross-up
payment is not contingent on an executives termination of
employment. The estimated amount of the excise tax
gross-up for
each named executive officer is quantified in the disclosure
entitled Post-Employment Payments, which appears on
page 52 of this Proxy Statement.
Restrictive
Covenants
The employment severance agreements contain restrictive
covenants that apply following termination of a named executive
officers employment with Terra and are described in the
disclosure entitled Post-Employment Payments, which
appears on page 52 of this Proxy Statement.
Annual Incentive
Compensation
2008 Officer and
Key Employee Incentive Plan
We maintain an Annual Incentive Plan in which our officers and
other key employees selected by Mr. Bennett are entitled to
participate. As described in the Compensation Discussion and
Analysis, the Annual Incentive Plan provides participants,
including the named executive officers, the opportunity to earn
annual cash incentive awards based upon the achievement of
certain performance goals. Awards are paid from a pool
established by the Compensation Committee. Funding of the pool
for 2008 was based on performance targets relating to return on
capital employed. A description of performance target levels and
corresponding funding levels is set forth in the Compensation
Discussion and Analysis.
42
Each named executive officers threshold, target and
maximum incentive award amounts are disclosed in the Grants of
Plan-Based Awards table. Annual incentive payments may not be
increased to an amount greater than the named executive
officers target bonus times the pool funding percentage,
but may be decreased in the discretion of the Compensation
Committee. Payment of an annual incentive award is made as soon
as practicable following our determination of whether and to
what extent performance goals have been satisfied, subject to
approval by the Compensation Committee. Generally, in order to
be entitled to receive an annual incentive award payment, an
employee must be employed during the applicable fiscal year and
until the date of payment.
For 2008, our Compensation Committee set the following target
annual incentive award amounts for the named executive officers:
|
|
|
|
|
Mr. Bennetts target annual incentive award was equal
to 150% of base salary;
|
|
|
|
The target annual incentive award for each of
Messrs. Greenwell, Giesler and Sanders was equal to 60% of
base salary; and
|
|
|
|
Mr. Hueys target annual incentive award was equal to
50% of base salary.
|
In 2008, Terra exceeded the maximum level of performance under
the Annual Incentive Plan, and therefore the incentive pool was
funded at the maximum level. Each of our named executive
officers was eligible to receive an amount of up to 200% of
their target annual incentive award amounts. The actual awards
granted to each of our named executive officers was determined
by our Compensation Committee, based on its determination of
each named executive officers fulfillment of his
individual performance goals. For each of Messrs. Bennett,
Giesler, Sanders and Huey, the Compensation Committee, in its
discretion, granted an award that was less than such
executives maximum target level. For Mr. Greenwell,
the Compensation Committee, in its discretion, granted an award
that was equal to his maximum target level. This result is
reflected in the Non-Equity Incentive Plan Compensation and
Bonus columns of the Summary Compensation Table.
Long-Term
Incentive Awards
We maintain the Terra Industries Inc. Stock Incentive Plan of
2002, which we refer to as the 2002 Plan, and the 2007 Omnibus
Incentive Compensation Plan, which we refer to as the 2007 Plan,
under which the Compensation Committee may grant to the named
executive officers, as well as other eligible employees, stock
options, stock appreciation rights, restricted shares,
performance shares and other forms of stock-based compensation.
2008 Long-Term
Incentive Grants
For 2008, the Compensation Committee granted each of our named
executive officers an award based on a combination of restricted
shares and performance shares. Each named executive
officers target grant was determined as a percentage of
base salary. For 2008, our Compensation Committee set the
following target long-term incentive award values for the named
executive officers:
|
|
|
|
|
Mr. Bennetts target long-term incentive award was
equal to 300% of base salary;
|
|
|
|
The target long-term incentive award for each of
Messrs. Greenwell, Giesler, Sanders and Huey was equal to
130% of base salary.
|
With the exception of Mr. Bennett, all executive officers
were expected to receive one half of their grants in the form of
restricted shares and the other half in the form of performance
share grants. Mr. Bennett received one-third of his grant
in restricted shares and two-thirds in performance share grants.
In all cases, the number of shares subject to the grant was
calculated by dividing the target dollar value of the award by
the average of Terras closing stock price during the
twenty trading days prior to the date that the awards were
approved by
43
the Compensation Committee. The average stock price was rounded
to the nearest fifty cents, and the target number of shares was
rounded to the nearest 100 shares.
The number of shares of Terra common stock subject to each grant
and the grant date fair value of these awards is reflected in
the Grants of Plan-Based Awards table. The accounting cost
recognized in 2008 with respect to outstanding equity grants is
reflected in the Summary Compensation Table.
|
|
|
|
|
Restricted share grants. We
granted restricted shares to each of our named executive
officers on July 16, 2008. The principal terms and
conditions of these grants are described below.
|
|
|
|
|
|
Vesting. Each restricted share
grant is subject to cliff vesting with respect to 100% of the
restricted shares subject to the award on the third anniversary
of the grant date. However, in the event of a termination of
employment without cause or for good reason following a change
in control of Terra (within the meaning of the restricted share
award agreements) or termination of employment due to death or
total disability, all restricted shares will become immediately
vested. The Compensation Committee has the authority to extend
or accelerate the vesting period at any time, in its discretion.
|
|
|
|
Forfeiture. Upon an
executives termination of employment for any reason other
than death, total disability, termination without cause or for
good reason following a change in control of Terra or such other
circumstances as determined by the Compensation Committee in its
sole discretion, any unvested restricted shares held by the
executive will be immediately forfeited and terminated.
|
|
|
|
Voting and Dividend
Rights. Holders of restricted shares
are entitled to all rights of a stockholder of Terra, including
the right to vote and receive dividends with respect to the
restricted shares. However, if any distribution is made to our
stockholders other than a cash dividend, then any securities or
other property received by other stockholders will be subject to
the same restrictions applicable to the restricted shares.
|
|
|
|
|
|
Performance share grants. We
granted performance shares to each of our named executive
officers on February 22, 2008. The principal terms and
conditions of these grants are described below.
|
|
|
|
|
|
Vesting. Each performance share
grant is subject to cliff vesting with respect to all shares
subject to the award after December 31, 2010, based on
achievement of the performance goals during the period from
January 1, 2008 through December 31, 2010, as
described in the Compensation Discussion and Analysis. Upon
vesting, a holder will become entitled to receive a number of
shares ranging from 0% to 200% of the target number of shares
subject to the award, based on achievement of performance goals.
In the event of a change in control of Terra (within the meaning
of the performance share award agreements), vesting of
performance share awards will immediately accelerate and the
holder will be entitled to the greater of the target number of
shares subject to the award and a number based on actual company
performance prior to the change in control. In the event of
termination of employment due to death, the holder will become
entitled to a number of performance shares based on actual
performance prior to death. In the event of termination of
employment due to total disability, performance shares will
continue to vest following termination based on achievement of
performance goals. In special circumstances, as determined by
the Compensation Committee, the Compensation Committee may
extend the period for earning all or a portion of a
holders performance shares.
|
|
|
|
Forfeiture. Upon an
executives termination of employment prior to the end of
the performance period for any reason other than death, total
disability or such other circumstances as determined by the
Compensation Committee in its sole discretion, any unvested
performance shares held by the executive will be immediately
forfeited and terminated.
|
44
Pre-2008
Long-Term Incentive Grants
In accordance with applicable disclosure rules, the Stock Awards
column of the Summary Compensation Table reflects the amounts
that we recognized as an accounting expense for 2008 in
connection with restricted shares and performance share awards
granted in 2008 and in prior years. An expense was recognized in
2008 for prior-year awards granted in 2005, 2006 and 2007. We
granted time-based restricted shares in 2005, 2006 and 2007 on
terms and conditions that are substantially the same as the
grants made in 2008 and described above, except that the prior
grants of restricted shares will vest in full upon the change in
control of Terra. We also made performance share grants in 2006
and 2007. These grants, which were made on February 17,
2006 and February 28, 2007, were subject to three-year
performance periods ending on December 31, 2008 and
December 31, 2009, respectively.
Retirement
Benefits
Defined Benefit
Pension Plans
We maintain a U.S. tax-qualified defined benefit plan, and
an excess benefit plan, which we refer to as the SERP which
covers certain named executive officers. For a description of
the material terms of these plans and the present value of each
named executive officers accumulated benefits under these
plans as of December 31, 2008, see the Pension Benefits in
Fiscal Year 2008 Table and accompanying disclosure, beginning on
page 49.
Defined
Contribution Plans
We maintain a 401(k) plan, which is a tax-qualified defined
contribution plan maintained for the benefit of all
U.S. employees, including each of our named executive
officers. The 401(k) plan permits employees to contribute a
portion of eligible pay to the plan on a pre-tax basis. During
2008, we matched 100% of the first 3% of eligible compensation
that an employee contributed to the 401(k) plan and 60% of the
next 3% of pay contributed. In addition, in the case of
employees hired after June 30, 2003 and who are therefore
ineligible to participate in the U.S. tax-qualified defined
benefit plan, we made an additional non-elective contribution
for 2008 equal to 3.2% of eligible compensation. The amount of
our 2008 contribution to the 401(k) plan on behalf of each of
our named executive officers is set forth in the explanation of
the All Other Compensation column of the Summary Compensation
Table.
45
Outstanding
Equity Awards at 2008 Fiscal Year-End
The following table provides information on the holdings of
stock option and stock awards by each of our named executive
officers as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
Equity Incentive
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Plan Awards:
|
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market or Payout
|
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
Market Value of
|
|
Unearned
|
|
Value of Unearned
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Number of Shares
|
|
Shares or Units
|
|
Shares, Units or
|
|
Shares, Units or
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
|
or Units of Stock
|
|
of Stock That
|
|
Other Rights
|
|
Other Rights That
|
|
|
|
Options (#)
|
|
Options (#) Un-
|
|
Unearned Options
|
|
Exercise
|
|
Option Expiration
|
|
|
That Have Not
|
|
Have Not
|
|
That Have Not
|
|
Have Not Vested
|
Name
|
|
|
Exercisable
|
|
exercisable
|
|
(#)
|
|
Price ($)
|
|
Date
|
|
|
Vested (#)
|
|
Vested ($)(1)
|
|
Vested (#)
|
|
($)(1)
|
M. Bennett,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,000
|
(2)
|
|
$
|
1,283,590
|
|
|
|
|
|
|
|
|
|
President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,400
|
(3)
|
|
$
|
340,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,100
|
(4)
|
|
$
|
201,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,000
|
(5)
|
|
$
|
2,300,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,000
|
(6)
|
|
$
|
933,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Greenwell,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,400
|
(2)
|
|
$
|
356,738
|
|
|
|
|
|
|
|
|
|
SVP & CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
(3)
|
|
$
|
120,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,300
|
(4)
|
|
$
|
71,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,800
|
(5)
|
|
$
|
346,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,800
|
(6)
|
|
$
|
163,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Giesler,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,100
|
(2)
|
|
$
|
401,747
|
|
|
|
|
|
|
|
|
|
SVP Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,600
|
(3)
|
|
$
|
93,352
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200
|
(4)
|
|
$
|
53,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,800
|
(5)
|
|
$
|
313,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
(6)
|
|
$
|
120,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Sanders,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(2)
|
|
$
|
333,400
|
|
|
|
|
|
|
|
|
|
VP Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,300
|
(3)
|
|
$
|
88,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200
|
(4)
|
|
$
|
53,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,800
|
(5)
|
|
$
|
296,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200
|
(6)
|
|
$
|
120,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Huey,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
(2)
|
|
$
|
400,080
|
|
|
|
|
|
|
|
|
|
VP, General
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,600
|
(3)
|
|
$
|
110,022
|
|
|
|
|
|
|
|
|
|
Counsel & Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,700
|
(4)
|
|
$
|
61,679
|
|
|
|
|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,400
|
(5)
|
|
$
|
373,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,600
|
(6)
|
|
$
|
143,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See footnotes on following page.
46
|
|
|
(1)
|
|
Based
on a year-end closing price of $16.67 per share.
|
(2)
|
|
Restricted
shares will time-vest on August 3, 2009 or earlier upon a
change-in-control.
|
(3)
|
|
Restricted
shares will time-vest on July 26, 2010 or earlier upon a
change-in-control.
|
(4)
|
|
Restricted
shares will time-vest on July 18, 2011 or earlier upon a
change-in-control
and subsequent qualifying termination.
|
(5)
|
|
This
performance plan cycle will end December 31, 2009. The
actual number of shares paid out subsequent to that time will
depend on actual performance versus targets over the performance
period, except that in the event of a
change-in-control,
performance shares will be paid out immediately at the higher of
target or actual performance level of the quarters completed
prior to the
change-in-control.
The threshold award is zero; therefore, the number of shares and
market value shown in the Equity Incentive Plan Awards: Market
or Payout Value of Unearned Shares, Units or Other Rights That
Have Not Vested column are based on performance through
December 31, 2008 (200% of target) for the 2007 performance
plan grant.
|
(6)
|
|
This
performance plan cycle will end December 31, 2010. The
actual number of shares paid out subsequent to that time will
depend on actual performance verses targets over the performance
period, except that in the event of a
change-in-control,
performance shares will be paid out immediately at the higher of
target or actual performance level of the quarters completed
prior to the
change-in-control.
The threshold award is zero; therefore, the number of shares and
market value shown in the Equity Incentive Plan Awards: Market
or Payout Value of Unearned Shares, Units or Other Rights That
Have Not Vested column are based on performance through
December 31, 2008 (200% of target) for the 2008 performance
plan grant.
|
47
Option Exercises
and Stock Vested
The following table provides information, for each of our named
executive officers, on the number of restricted shares that
became vested in 2008 and the value realized before payment of
any applicable withholding taxes and broker commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock
Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Shares
Acquired
|
|
|
|
|
Number of
Shares
|
|
|
|
|
|
on
Exercise
|
|
Value Realized
on
|
|
|
Acquired on
Vesting
|
|
Value Realized
on
|
Name
|
|
|
(#)
|
|
Exercise ($)
|
|
|
(#)
|
|
Vesting ($)
|
M. Bennett,
|
|
|
|
|
|
|
|
|
|
|
|
|
54,000
|
(1)
|
|
|
3,008,880
|
|
President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
308,000
|
(2)
|
|
|
5,134,360
|
|
D. Greenwell,
|
|
|
|
|
|
|
|
|
|
|
|
|
9,579
|
(3)
|
|
|
380,957
|
|
SVP & CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(1)
|
|
|
417,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,800
|
(2)
|
|
|
713,476
|
|
J. Giesler,
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(1)
|
|
|
1,393,000
|
|
SVP Commercial Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
48,200
|
(2)
|
|
|
803,494
|
|
R. Sanders,
|
|
|
|
|
|
|
|
|
|
|
|
|
18,500
|
(1)
|
|
|
1,030,820
|
|
VP Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(2)
|
|
|
666,800
|
|
J. Huey, VP, General Counsel &
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects
time-vesting restricted shares vesting on July 30, 2008, at
a price of $55.72. Shares were granted on July 29, 2005.
|
(2)
|
|
Reflects
performance share awards for performance from January 1,
2006 through December 31, 2008. Shares were not actually
delivered until February 17, 2009, when the Compensation
Committee determined the level of performance achieved. Number
of shares is based on performance through December 31, 2008
(200% of target) and the share price is based on the
December 31, 2008 closing price of $16.67.
|
(3)
|
|
Reflects
time-vesting restricted shares vesting on April 7, 2008, at
a price of $39.77. Shares were granted on April 4, 2005.
|
48
Pension Benefits
in Fiscal Year 2008
The following table sets forth information on the pension
benefits for each of our named executive officers as of
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Years
|
|
Present Value
of
|
|
Payments
|
|
|
|
|
|
Credited
Service
|
|
Accumulated
|
|
During Last
|
Name
|
|
|
Plan
Name
|
|
(#)(1)
|
|
Benefit
($)(2)
|
|
Fiscal
Year ($)
|
M. Bennett, President
& CEO
|
|
|
Terra Industries Inc. Employees
Retirement Plan
|
|
|
36
|
|
|
$
|
571,695
|
|
|
$
|
|
|
|
|
|
Terra Industries Inc. Excess Benefit
Plan
|
|
|
36
|
|
|
$
|
800,882
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Greenwell, SVP &
CFO(3)
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Giesler, SVP
Commercial
|
|
|
Terra Industries Inc. Employees
Retirement Plan
|
|
|
21
|
|
|
$
|
219,454
|
|
|
$
|
|
|
Operations
|
|
|
Terra Industries Inc. Excess Benefit
Plan
|
|
|
21
|
|
|
$
|
5,589
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Sanders, VP
Manufacturing
|
|
|
Terra Industries Inc. Employees
Retirement Plan
|
|
|
15
|
|
|
$
|
164,670
|
|
|
$
|
|
|
|
|
|
Terra Industries Inc. Excess Benefit
Plan
|
|
|
15
|
|
|
$
|
4,532
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Huey, VP, General
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Counsel & Corporate
Secretary(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Except
in the case of Mr. Giesler, credited service is the period
of the executives actual service with Terra. In the case
of Mr. Giesler, credited service commenced on
August 1, 1987, which was the date Mr. Giesler became
employed by Freeport McMoran Inc. (FMI). FMI owned
Agricultural Minerals and Chemicals Inc., which was acquired by
Terra. Mr. Gieslers benefits under the Retirement
Plan are offset by benefits under the FMI defined benefit
pension plan.
|
(2)
|
|
Actuarial
present value for the Retirement Plan and SERP was determined in
accordance with the following assumptions:
|
|
|
Discount
rate equals 6.75%.
|
|
|
Postretirement
mortality was projected using the 2008 IRC 430 Annuitant
Mortality Table.
|
|
|
Employees
are assumed to have elected benefits in the form of a single
life annuity.
|
|
|
Benefits
commence at age 65.
|
(3)
|
|
Messrs. Greenwell
and Huey are not participants in the Terra Industries Inc.
Employees Retirement Plan or Excess Benefit Plan.
|
We maintain a U.S. tax-qualified defined benefit plan (the
Terra Industries Inc. Employees Retirement Plan or the
Retirement Plan) for the benefit of all
U.S. employees hired before July 1, 2003, including
each of our named executive officers except
Messrs. Greenwell and Huey. The Retirement Plan is closed
to employees hired on or after July 1, 2003.
We also maintain an excess benefit plan (the SERP). The purpose
of the SERP is to restore those benefits that a participant
would otherwise lose in the tax-qualified plan due to Internal
Revenue Code compensation limits and benefit limits.
49
Retirement
Plan
Benefit Accrual
Formula
The Retirement Plan provides an unreduced single life annuity at
age 65 equal to an amount which:
Multiplies
|
|
|
|
|
1.55% of the highest
60-month
average pensionable compensation by
|
|
|
Years of credited service and
|
Subtracts
|
|
|
|
|
0.6% of the highest
60-month
average pensionable compensation up to the social security
compensation limit multiplied by years of credited service (up
to a maximum of 35 years).
|
Prior to 2004, pensionable compensation included total salary
and wages paid to the participant for services rendered in the
period considered as service, including bonuses, overtime,
commissions and salary deferrals under a Section 401(k) or
Section 125 plan. Effective January 1, 2004, bonuses
are no longer considered as part of pensionable compensation.
Vesting
An employee hired prior to July 1, 2003 became eligible to
participate once he or she had completed a 12 consecutive month
period of at least 1,000 hours of service. Benefits under
the Retirement Plan cliff vest after five years of service.
Early
Retirement
Eligibility for early retirement under the Retirement Plan is
age 55 with 5 years of vesting service. For a
participant who commences pension benefits directly from active
status, the early retirement reductions are 3% per year from
age 65, 10% per year from age 60, 8% per year from
age 59, 6% per year from age 58 and 5% per year from
age 56. All other participants who commence pension
benefits prior to age 65 are subject to an actuarial
reduction of 6.67% per year from age 65 and 3.33% per year
from age 60. As of the date of this Proxy Statement, only
Mr. Bennett is eligible for early retirement under the
Retirement Plan.
Forms of
Benefit
Participants in the Retirement Plan generally can choose among
the following optional forms of benefit:
|
|
|
|
|
Single life annuity
|
|
|
|
50% joint and survivor annuity
|
|
|
|
75% joint and survivor annuity
|
|
|
|
100% joint and survivor annuity
|
|
|
|
10-year or
15-year
certain and life annuity
|
|
|
|
Social Security level income benefit.
|
Each option is provided on an actuarially equivalent basis.
SERP
The Retirement Plan benefits are limited by various constraints
by the Internal Revenue Code. The SERP is an unfunded plan
maintained to provide benefits to a certain group of management
and highly compensated employees. The terms of the SERP, as they
relate to our named executive officers, with respect to benefit
accrual formula, vesting, early retirement and forms of benefit
are the same as the Retirement Plan, except that under the SERP,
pensionable compensation is not subject to the limits imposed by
the Internal Revenue Code and deferred compensation is not
excluded from the definition of pensionable compensation under
the SERP.
50
Nonqualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
|
Contributions
|
|
Contributions
|
|
Earnings in
|
|
Withdrawals/
|
|
Aggregate
|
|
|
|
in Last FY
|
|
in Last FY
|
|
Last FY
|
|
Distributions
|
|
Balance at
|
Name
|
|
|
($)(1)
|
|
($)(1)
|
|
($)(1)
|
|
($)
|
|
Last
FYE ($)
|
M. Bennett,
President & CEO
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Greenwell,
SVP & CFO
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Giesler,
SVP Commercial Operations
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
976
|
|
|
$
|
|
|
|
$
|
39,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Sanders,
VP Manufacturing
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(88,448
|
)
|
|
$
|
|
|
|
$
|
135,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Huey,
VP, General Counsel & Corporate Secretary
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
deferred compensation plan was frozen prior to 2008. See the
narrative accompanying this table for more detail about this
plan.
|
The Nonqualified Deferred Compensation table shows information
about our Supplemental Deferred Compensation Plan, which was
frozen with respect to future deferrals on December 31,
2004. In general, prior to January 1, 2005, the plan
allowed participants to defer up to 20% of the
participants annual base salary and 20% of the
participants annual cash incentive awards and to determine
how to invest amounts deferred pursuant to the plan.
Participants with notional account balances remaining under the
Supplemental Deferred Compensation Plan are permitted to invest
their balances in various mutual funds. Participants are
permitted to make unlimited changes to their investment
alternatives under the Supplemental Deferred Compensation Plan.
For 2008, the value of Mr. Gieslers account balance
increased by 3% and the value of Mr. Sanders account
balance decreased by 39%. Such changes were solely attributable
to investment gains or losses, as applicable.
51
Post-Employment
Payments
This section describes and quantifies potential payments that
may be made to each named executive officer at, following, or in
connection with the resignation, severance, retirement, or other
termination of the named executive officers employment or
a change in control of Terra.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M.
Bennett, President & CEO
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control &
|
|
|
|
|
|
|
|
|
|
|
|
Unrelated to a
|
|
Control Without
|
|
Qualifying
|
|
|
|
Death
|
|
Disability
|
|
For Cause
|
|
Voluntary
|
|
Change in Control
|
|
Termination
|
|
Termination
|
Cash Severance
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,250,000
|
|
$
|
|
|
$
|
3,000,000
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
$
|
1,825,365
|
|
$
|
1,825,365
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
1,623,658
|
|
$
|
1,825,365
|
Performance Share Awards
|
|
|
$
|
3,233,980
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
3,233,980
|
|
$
|
3,233,980
|
Unexercisable Options
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
5,059,345
|
|
$
|
1,825,365
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
4,857,638
|
|
$
|
5,059,345
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
357,090
|
DC Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
357,090
|
Unvested Deferred Compensation
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
21,583
|
|
$
|
|
|
$
|
21,583
|
Outplacement
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
72,000
|
|
$
|
|
|
$
|
72,000
|
Perquisites
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Long-Term Disability
|
|
|
$
|
|
|
$
|
1,878,390
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Tax Gross-Ups
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
2,117,608
|
Total
|
|
|
$
|
|
|
$
|
1,878,390
|
|
$
|
|
|
|
$
|
|
|
|
$
|
93,583
|
|
$
|
|
|
$
|
2,211,191
|
Total
|
|
|
$
|
5,059,345
|
|
$
|
3,703,755
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,343,583
|
|
$
|
4,857,638
|
|
$
|
10,627,626
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.
Greenwell, SVP & CFO
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control &
|
|
|
|
|
|
|
|
|
|
|
|
Unrelated to a
|
|
Control Without
|
|
Qualifying
|
|
|
|
Death
|
|
Disability
|
|
For Cause
|
|
Voluntary
|
|
Change in Control
|
|
Termination
|
|
Termination
|
Cash Severance
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
792,000
|
|
$
|
|
|
$
|
1,056,000
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
$
|
548,443
|
|
$
|
548,443
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
476,762
|
|
$
|
548,443
|
Performance Share Awards
|
|
|
$
|
510,102
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
510,102
|
|
$
|
510,102
|
Unexercisable Options
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
1,058,545
|
|
$
|
548,443
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
986,864
|
|
$
|
1,058,545
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
DC Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Unvested Deferred Compensation
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
28,510
|
|
$
|
|
|
$
|
28,510
|
Outplacement
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
39,600
|
|
$
|
|
|
$
|
39,600
|
Perquisites
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Long-Term Disability
|
|
|
$
|
|
|
$
|
2,368,971
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Tax Gross-Ups
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
701,757
|
Total
|
|
|
$
|
|
|
$
|
2,368,971
|
|
$
|
|
|
|
$
|
|
|
|
$
|
68,110
|
|
$
|
|
|
$
|
769,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,058,545
|
|
$
|
2,917,414
|
|
$
|
|
|
|
$
|
|
|
|
$
|
860,110
|
|
$
|
986,864
|
|
$
|
2,884,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Giesler, SVP Commercial Operations
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control &
|
|
|
|
|
|
|
|
|
|
|
|
Unrelated to a
|
|
Control Without
|
|
Qualifying
|
|
|
|
Death
|
|
Disability
|
|
For Cause
|
|
Voluntary
|
|
Change in Control
|
|
Termination
|
|
Termination
|
Cash Severance
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
576,000
|
|
$
|
|
|
$
|
768,000
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
$
|
548,443
|
|
$
|
548,443
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
495,099
|
|
$
|
548,443
|
Performance Share Awards
|
|
|
$
|
433,420
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
433,420
|
|
$
|
433,420
|
Unexercisable Options
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
981,863
|
|
$
|
548,443
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
928,519
|
|
$
|
981,863
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
79,131
|
DC Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
79,131
|
Unvested Deferred Compensation
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
15,252
|
|
$
|
|
|
$
|
15,252
|
Outplacement
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
28,800
|
|
$
|
|
|
$
|
28,800
|
Perquisites
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Long-Term Disability
|
|
|
$
|
|
|
$
|
983,356
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Tax Gross-Ups
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
983,356
|
|
$
|
|
|
|
$
|
|
$
|
44,052
|
|
$
|
|
|
$
|
44,052
|
Total
|
|
|
$
|
981,863
|
|
$
|
1,531,799
|
|
$
|
|
|
|
$
|
|
$
|
620,052
|
|
$
|
928,519
|
|
$
|
1,873,046
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.
Sanders, VP Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control &
|
|
|
|
|
|
|
|
|
|
|
|
Unrelated to a
|
|
Control Without
|
|
Qualifying
|
|
|
|
Death
|
|
Disability
|
|
For Cause
|
|
Voluntary
|
|
Change in Control
|
|
Termination
|
|
Termination
|
Cash Severance
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
580,800
|
|
$
|
|
|
$
|
774,400
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
$
|
475,095
|
|
$
|
475,095
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
421,751
|
|
$
|
475,095
|
Performance Share Awards
|
|
|
$
|
416,750
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
416,750
|
|
$
|
416,750
|
Unexercisable Options
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
891,845
|
|
$
|
475,095
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
838,501
|
|
$
|
891,845
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
58,844
|
DC Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
58,844
|
Unvested Deferred Compensation
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
21,583
|
|
$
|
|
|
$
|
21,583
|
Outplacement
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
34,200
|
|
$
|
|
|
$
|
34,200
|
Perquisites
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Long-Term Disability
|
|
|
$
|
|
|
$
|
1,189,613
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Tax Gross-Ups
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
1,189,613
|
|
$
|
|
|
|
$
|
|
|
|
$
|
55,783
|
|
$
|
|
|
$
|
55,783
|
Total
|
|
|
$
|
891,845
|
|
$
|
1,664,708
|
|
$
|
|
|
|
$
|
|
|
|
$
|
636,583
|
|
$
|
838,501
|
|
$
|
1,780,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Huey, VP, General Counsel & Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Change in
|
|
Control &
|
|
|
|
|
|
|
|
|
|
|
|
Unrelated to a
|
|
Control Without
|
|
Qualifying
|
|
|
|
Death
|
|
Disability
|
|
For Cause
|
|
Voluntary
|
|
Change in Control
|
|
Termination
|
|
Termination
|
Cash Severance
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
641,250
|
|
$
|
|
|
$
|
855,000
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
$
|
571,781
|
|
$
|
571,781
|
|
$
|
|
$
|
|
$
|
|
|
$
|
510,102
|
|
$
|
571,781
|
Performance Share Awards
|
|
|
$
|
516,770
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
516,770
|
|
$
|
516,770
|
Unexercisable Options
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
1,088,551
|
|
$
|
571,781
|
|
$
|
|
$
|
|
$
|
|
|
$
|
1,026,872
|
|
$
|
1,088,551
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
DC Plan
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Total
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Unvested Deferred Compensation
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
28,510
|
|
$
|
|
|
$
|
28,510
|
Outplacement
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
29,040
|
|
$
|
|
|
$
|
29,040
|
Perquisites
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Long-Term Disability
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
|
Tax Gross-Ups
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
|
$
|
571,677
|
Total
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
57,550
|
|
$
|
|
|
$
|
629,227
|
Total
|
|
|
$
|
1,088,551
|
|
$
|
571,781
|
|
$
|
|
$
|
|
$
|
698,800
|
|
$
|
1,026,872
|
|
$
|
2,572,778
|
Named Executive
Officers Employed by the Company as of December 31,
2008
We have entered into executive severance agreements and maintain
certain plans that will require us to pay compensation and
provide certain benefits to each of our named executive officers
at, following, or in connection with the executives
termination of employment or a change in control of Terra. The
material
54
terms and conditions relating to these payments and benefits are
described below. Unless otherwise specifically noted, the terms
described below apply to each named executive officer on an
identical basis.
Involuntary
Termination Without Cause or Voluntary Termination
for Good Reason on December 31, 2008, Other
Than During the Two-Year Period Following a Change in
Control
If a named executive officers employment with Terra had
been involuntarily terminated by Terra without cause
or voluntarily terminated by the executive for good
reason on December 31, 2008, the executive would have
been entitled to the following payments and benefits:
|
|
|
|
|
A lump-sum cash severance payment in an amount equal to 1.5
times the sum of his annual base salary at termination and his
target annual incentive award for 2008;
|
|
|
Continuation of medical and dental benefits until the earlier of
two years following the date of termination or the date the
executive becomes covered by another employers major
medical plan; and
|
|
|
Outplacement services at our expense until the earlier of the
first anniversary of termination and the date that the executive
becomes employed by a new employer.
|
Termination Due
to Death on December 31, 2008
If a named executive officers employment with Terra was
terminated due to death on December 31, 2008, then his
estate would have been entitled to the following payments and
benefits:
|
|
|
|
|
Immediate vesting of all unvested restricted shares; and
|
|
|
Immediate vesting of all unvested performance shares at a level
based on actual performance during the performance period
through December 31, 2008.
|
Termination Due
to Disability on December 31, 2008
If a named executive officers employment with Terra was
terminated due to his disability on December 31, 2008, he
would have been entitled to the following payments and benefits:
|
|
|
|
|
Immediate vesting of all unvested restricted shares; and
|
|
|
Payment of monthly disability benefits.
|
Change in
Control Without a Qualifying Termination on
December 31, 2008
If a change in control of Terra occurred on
December 31, 2008, each named executive officer would have
been entitled to the following benefits:
|
|
|
|
|
Immediate vesting of all unvested restricted shares granted
prior to July 2008;
|
|
|
Immediate vesting of a number of performance shares equal to the
greater of the target number of shares subject to each
outstanding performance share grant and a number based on actual
performance during the performance period through
December 31, 2008; and
|
|
|
Payment of a
gross-up to
make the executive whole for any excise tax imposed as a result
of Section 280G of the Internal Revenue Code.
|
Involuntary
Termination Without Cause or Voluntary Termination
for Good Reason on December 31, 2008 During the
Two-Year Period Following a Change in
Control
If a named executive officers employment with Terra was
involuntarily terminated by Terra without cause or
voluntarily terminated by the executive for good
reason on December 31, 2008 and during the two-year
period following a change in control of Terra, he
would have been entitled to the following payments and benefits:
|
|
|
|
|
A lump-sum cash severance payment in an amount equal to two
times the sum of his annual base salary at termination and his
target annual incentive award for 2008;
|
55
|
|
|
|
|
Continuation of medical and dental benefits until the earlier of
two years following the date of termination or the date the
executive becomes covered by another employers major
medical plan;
|
|
|
Outplacement services at our expense until the earlier of the
first anniversary of termination and the date that the executive
becomes employed by a new employer;
|
|
|
Immediate vesting of all benefits accrued under the SERP and two
years of additional age and service credit for purposes of
calculating such benefits (only applicable to
Messrs. Bennett, Giesler and Sanders, because
Messrs. Greenwell and Huey do not participate in the SERP);
|
|
|
Immediate vesting of all unvested restricted shares;
|
|
|
Immediate vesting of a number of performance shares equal to the
greater of the target number of shares subject to each
outstanding performance share grant and a number based on actual
performance during the performance period through
December 31, 2008; and
|
|
|
Payment of a
gross-up to
make the executive whole for any excise tax imposed as a result
of Section 280G of the Internal Revenue Code.
|
Material Defined
Terms
The terms cause and good reason as used
above are defined under the employment severance agreements and
mean the following:
Cause means (i) the willful and continued
failure of the executive to perform substantially the
executives duties with Terra (other than any such failure
resulting from incapacity due to physical or mental illness);
(ii) the willful engaging by the executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to Terra; or (iii) the executives willful
and material breach of the employment severance agreement.
Good Reason means, other than during the two-year
period following a change in control (as defined in
the employment severance agreements), (i) our failure to
pay the executive any compensation when due (other than an
inadvertent failure that is remedied within 10 business days
following notice by the executive) and (ii) delivery by
Terra to the executive of a notice to terminate the
executives employment other than for cause or
permanent disability (as defined in the employment
severance agreement).
Good Reason means, during the two-year period
following a change in control (as defined in the
employment severance agreements), (i) our failure to pay
the executive any compensation when due (other than an
inadvertent failure that is remedied within 10 business days
following notice by the executive); (ii) delivery by Terra
to the executive of a notice to terminate the executives
employment other than for cause or permanent
disability (as defined in the employment severance
agreements); (iii) a reduction in the executives
annual base salary of 10% or more from the level in effect
immediately prior to the change in control;
(iv) the relocation of the executives principal place
of employment to a location more than 50 miles from such
executives principal place of employment immediately prior
to the change; (v) a reduction in the executives
target annual incentive award of more than 10% from the level in
effect immediately prior to the change in control;
(vi) a material diminution in the executives titles,
duties, responsibilities or status from those in effect
immediately prior to the change in control;
(vii) the removal of the executive from, or any failure to
re-elect the executive to, any of the offices the executive held
immediately prior to the change in control; or
(viii) any material reduction in the executives
retirement, insurance or fringe benefits from the levels in
effect immediately prior to the change in control.
The term change in control, as defined under the
employment severance agreements, means, in general, the
occurrence of any one of the following events: (i) certain
changes in the membership of a majority of the Board of
Directors; (ii) consummation of certain mergers or
consolidations of Terra with any other corporation following
which our stockholders hold less than 60% of the combined voting
power of the surviving entity; (iii) approval by our
stockholders of a plan of complete liquidation or dissolution of
Terra;
56
or (iv) certain acquisitions by a third party or third
parties, acting in concert, of at least 25% of our then
outstanding voting securities.
The definition of change in control for purposes of
the restricted share agreements and the performance share
agreements is substantially the same as that definition for
purposes of the employment severance agreements.
Release
Requirement
Pursuant to the employment severance agreements, an executive
will not be entitled to severance and other separation benefits
unless he executes a release of claims in favor of Terra and the
release becomes effective and irrevocable.
Post-Employment
Covenants
In exchange for the above-described payments and benefits to the
extent provided for under the employment severance agreements,
following termination of employment, the executive will remain
subject to confidentiality, cooperation and
non-solicitation/non-competition covenants that are set forth in
the employment severance agreements. The confidentiality
covenant prohibits the executive from disclosing
confidential information as defined under the
employment severance agreements. The cooperation covenant
requires the executive to cooperate with Terra in connection
with any lawsuit or investigation that is related to the
executives employment with Terra. The
non-solicitation/non-competition covenant prohibits the
executive, for a period of one year following his termination of
employment, from (i) engaging in any activity that is in
competition with Terra (including any business relating to the
production or marketing of nitrogen products) and
(ii) soliciting or hiring any of our employees without our
consent.
Methodologies and
Assumptions Used for Calculating Other Potential Post-Employment
Payments
For purposes of quantifying the other potential post-employment
payments disclosed in the following tables, we utilized the
following assumptions and methodologies:
|
|
|
|
|
Date of triggering event: The date of each
triggering event is December 31, 2008.
|
|
|
Determination of cash severance: Following a
qualifying triggering event, each named executive officer is
entitled to cash severance equal to the sum of the named
executive officers current base salary and target annual
incentive award multiplied by the appropriate severance
multiple. The severance multiple is 1.5 in the case of a
termination other than within two years following a change in
control of Terra, and is two in the case of a termination during
the two-year period following a change in control. In accordance
with this formula, each named executive officers cash
severance was determined based on the following:
|
|
|
|
|
|
Mr. Bennett: Annual base salary of $600,000 as of
December 31, 2008, and 2008 target annual incentive award
of $900,000.
|
|
|
|
Mr. Greenwell: Annual base salary of $330,000 as of
December 31, 2008, and 2008 target annual incentive award
of $198,000.
|
|
|
|
Mr. Giesler: Annual base salary of $240,000 as of
December 31, 2008, and 2008 target annual incentive award
of $144,000.
|
|
|
|
Mr. Sanders: Annual base salary of $242,000 as of
December 31, 2008, and 2008 target annual incentive award
of $145,200.
|
|
|
|
Mr. Huey: Annual base salary of $285,000 as of
December 31, 2008, and 2008 target annual incentive award
of $142,500.
|
57
|
|
|
|
|
Number of performance shares subject to vesting in the event
of a change in control: The performance share
award agreements provide that in the event of a change in
control of Terra, a number of performance shares equal to
the greater of the target number of shares subject to each
outstanding performance share grant and a number based on actual
performance during the performance period through
December 31, 2008 will become vested. Based on company
performance as of December 31, 2008, the actual performance
number for each of the outstanding performance share grants is
at least equal to the maximum level of performance, and,
therefore, we have assumed vesting at the maximum level (200% of
target).
|
|
|
Number of restricted shares subject to vesting in the event
of death or disability: The restricted share
award agreements for the outstanding grants of restricted shares
provide that in the event of a termination of employment due to
death or disability, the restricted shares subject to such grant
will vest in full.
|
|
|
Number of performance shares subject to vesting in the event
of death: The performance share award agreements
provide that in the event of a termination of employment due to
death, performance shares will vest at a level based on actual
performance during the performance period through the date of
death. Based on company performance as of December 31,
2008, the actual performance number for each of the outstanding
performance share grants is at least equal to the maximum level
of performance, and, therefore, we have assumed vesting at the
maximum level (200% of target).
|
|
|
Value of restricted shares and performance shares subject to
vesting: The value of each restricted share and
performance share that was subject to vesting upon a triggering
event was determined by multiplying the number of shares subject
to vesting by the closing price of Terra common stock on
December 31, 2008, the last trading day of 2008 (i.e.,
$16.67).
|
|
|
Value of continuation of health and dental
benefits: The value of health and dental benefits
which are continued for a two-year period following certain
qualifying triggering events was determined based on assumptions
used for financial reporting purposes under Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 106 (Employers Accounting for Postretirement
Benefits Other Than Pensions).
|
|
|
Value of post-termination outplacement
services: The value of post-termination
outplacement services was determined based on a value equal to
approximately 12% of an executives annual base salary as
of the date of termination of employment, which was adjusted
based on assumptions used for financial reporting purposes under
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 106 (Employers Accounting
for Postretirement Benefits Other Than Pensions).
|
|
|
Incremental value of accelerated vesting of SERP benefits and
additional age/service credit in the event of a change in
control: These amounts, which are
applicable to Messrs. Bennett, Giesler and Sanders, were
calculated by adding two years of credited service to the
year-end 2008 total pension benefit (i.e., sum of tax-qualified
pension and SERP) for the named executive officer and then
determining the present value of that accrued benefit deferred
to the date the executive reaches age 63, which is the
earliest age at which unreduced pension benefits would be
available to the executive with an extra two years of age. The
actuarial basis for these determinations is the same as the
basis used in the Pension Benefits Table.
|
|
|
Value of monthly disability benefits: The
value of monthly disability benefits is based on the present
value of the excess of each named executive officers
monthly disability benefit under our long-term disability plan
that covers the executive as of December 31, 2008, over the
monthly disability benefit that would be payable under our
long-term disability plan that is generally available to all
employees. Amounts are calculated using a 7% discount rate and
assuming that each named executive officer continues to receive
monthly disability benefits until age 65.
|
58
|
|
|
|
|
Determination of excise tax payments and tax
gross-up
payments made in connection with a change in
control: We determined the amount of the excise
tax payment by multiplying by 20% the excess parachute
payment that would arise in connection with payments made
to the applicable named executive officers upon either
(i) a change in control of Terra or (ii) a qualifying
termination of employment following a change in control. The
excess parachute payment was determined in accordance with the
provisions of Section 280G of the Internal Revenue Code. We
utilized the following key assumptions to determine the
applicable named executive officers tax
gross-up
payment:
|
|
|
|
|
|
based on our performance through December 31, 2008, all of
our outstanding performance share awards are currently expected
to vest at 200% of the target level. Therefore, the amount of
the excise tax with respect to the performance share awards was
calculated assuming that all performance goals with respect to
the performance share awards had already been met at the 200%
level. The result is that the amount of the excise tax
attributable to both the performance share awards and the
restricted shares is based solely on the value of the
accelerated vesting and the lapse of the obligation to perform
future services;
|
|
|
|
a statutory Federal income tax rate of 35%, a Medicare tax rate
of 1.45% and a state income tax rate of 8.98%, which is the
maximum individual income tax rate for Iowa;
|
|
|
|
each named executive officers Section 280G base
amount was determined based on average
W-2
compensation for the period from
2003-2007
(or the period of the executives employment with Terra, if
shorter); and
|
|
|
|
the interest rate assumption was 120% of the applicable Federal
rate for December 2008.
|
59
Director
Compensation
The following table summarizes the compensation of each of our
non-employee directors for the fiscal year ended
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Pension
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
Non-Equity
|
|
Value &
Nonqualified
|
|
|
|
|
|
|
|
or Paid
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
|
|
|
in Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
Name
|
|
|
($)(1)
|
|
($)(2)(3)
|
|
($)
|
|
($)
|
|
Earnings ($)
|
|
($)
|
|
Total ($)
|
Fisher, D.
|
|
|
$
|
57,500
|
|
|
$
|
166,242
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
223,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fraser, D.
|
|
|
$
|
46,500
|
|
|
$
|
166,242
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
212,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hesse, M.
|
|
|
$
|
50,250
|
|
|
$
|
166,242
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
216,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Janson, P.
|
|
|
$
|
46,250
|
|
|
$
|
166,242
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
212,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kroner, J.
|
|
|
$
|
43,750
|
|
|
$
|
150,009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
193,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McGlone, D.
|
|
|
$
|
41,250
|
|
|
$
|
150,009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
191,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Slack, H.
|
|
|
$
|
100,000
|
|
|
$
|
249,364
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
349,364
|
|
|
|
|
|
(1)
|
|
This
column sets forth the amount of the fees earned by each director
from Terra during 2008. For information about the nature of such
fees, see the narrative accompanying this table.
|
(2)
|
|
These
amounts represent the accounting cost of stock-based
compensation granted from 2005 through 2008 that was accrued
during 2008.
|
(3)
|
|
Includes
restricted share awards of 10,000 shares made in 2005
(except for the grant to the Chairman of the Board,
Mr. Slack, which was for 15,000 shares) and share
awards of 3,100 shares made in 2008 (except for the grant
to the Chairman of the Board, Mr. Slack, which was for
4,650 shares). Grants made in 2005 vest over a three-year
period; grants made since 2006 are immediately vested.
|
In May 2003, the Board of Directors voted to compensate
non-employee directors using a combination of cash and shares.
In 2007, the Board of Directors again reviewed the compensation
plan and structure for non-employee directors and made certain
revisions thereto while leaving intact the mix of cash and
shares.
Director Fees
Paid in Cash
Under the director compensation policy, in 2008, Mr. Slack,
Chairman of the Board, received an annual cash retainer of
$100,000 (paid quarterly). The other non-employee directors each
received an annual retainer of $27,500 (paid quarterly) and
meeting fees of $1,250 per meeting attended, including committee
meetings. Mr. Fisher received an additional annual cash
retainer of $10,000 (paid quarterly) for serving as Chairman of
the Audit Committee. Ms. Hesse, Chairman of the Nominating
and Corporate Governance Committee, and Mr. Fraser,
Chairman of the Compensation Committee, each received an
additional annual cash retainer of $4,000 (paid quarterly) for
serving as committee chairs.
60
Director Stock
Awards
2008 Stock
Awards
Pursuant to a resolution of the Board of Directors dated
August 16, 2006, the Board of Directors determined that
beginning in 2006 and on a going-forward basis, director stock
awards would be delivered in the form of fully vested shares of
Terra common stock. By resolution of the Board of Directors
dated October 23, 2007, the Board of Directors determined
that new equity grants should be made August 1 each year, and
that starting August 2008, the number of shares awarded shall be
determined by reference to a fixed dollar amount divided by the
share price of Terra shares for the previous 20 trading days
immediately preceding the date of grant, rounded up to the next
whole share. The dollar value used in the numerator is $150,000
for all non-employee directors except for Mr. Slack, the
Chairman, in which case the numerator is the sum of $225,000.
This level of stock award was selected based on a prior market
study of compensation paid to non-employee directors of public
companies. In addition, the Board of Directors determined that
each newly elected outside director will receive, simultaneously
with his or her election to the Board of Directors, an initial
grant of Terra shares that is equivalent to the annual equity
grant as described above. On August 1, 2008, each director
other than Mr. Slack received a grant of 3,100 shares
of Terra common stock, and Mr. Slack received a grant of
4,650 shares of Terra common stock.
Director Stock
Ownership Guides
Pursuant to resolution of the Board of Directors dated
October 23, 2007, the Board of Directors implemented,
effective immediately, Terra stock ownership guidelines for all
non-employee directors. The guide for all non-employee directors
is 20,000 shares for all except the Chairman, which guide
is 30,000 shares. All newly elected directors are to be
allowed a five-year period from election to satisfy the new
guidelines.
Other Director
Compensation
We reimburse all directors for reasonable travel and other
necessary business expenses incurred in the performance of their
services for Terra. Non-employee directors do not receive any
additional payments or perquisites. A director who is a Terra
employee, such as Mr. Bennett, does not receive any
additional compensation for service as a director.
61
TRANSACTIONS
WITH
RELATED
PERSONS
During 2008, the Company was engaged in no transactions, nor are
any such transactions currently proposed, in which a related
party, as that term is defined in Title 17,
Chapter II, Subpart § 229.404 of the Code of
Federal Regulations, had or will have a direct or indirect
material interest and which involves an amount exceeding
$120,000.
POLICIES
AND
PROCEDURES
The Audit Committee of the Board of Directors reviews all
material transactions with any related person as identified by
management. Related persons include any of our
directors, executive officers, certain of our stockholders and
immediate family members of any of the foregoing.
At its February 2008 meeting, the Audit Committee and Board of
Directors adopted a written policy for evaluating related person
transactions. To identify related person transactions under such
policy, each year we submit and require our directors and
officers to complete Director and Officer Questionnaires
identifying any transactions with us in which the officer or
director or their family members have an interest. Additionally,
all material undertakings by the Company are reviewed by
management, with a view, in part, to identify if a related
person is involved. Pursuant to our policy, we periodically
compile a list of related persons (Related Person
List) based on information gathered from responses to the
Director and Officer Questionnaire along with information
concerning stockholders who beneficially own more than five
percent (5%) of the voting securities of Terra, and distribute
the list to key members of management for review. Management is
instructed to review the Related Person List and promptly inform
the General Counsel of any current or proposed transactions with
any person on the list. The General Counsel is to report to the
Audit Committee any potential related person transaction so
identified. We review related person transactions due to the
potential for a conflict of interest. A conflict of interest
occurs when an individuals private interest interferes, or
appears to interfere, in any way with the Companys
interest. Our Code of Business Conduct and Ethics requires all
directors, officers and employees who may have a potential or
apparent conflict of interest to immediately notify our General
Counsel.
We expect our directors, officers and employees to act and make
decisions that are in the Companys best interests and
encourage them to avoid situations which present a conflict
between our interests and their own personal interests. Our
directors, officers and employees are prohibited from taking any
action that may make it difficult for them to perform their
duties, responsibilities and services to Terra in an objective
and fair manner. The Nominating and Corporate Governance
Committee is charged with responsibility to bring before the
Board of Directors all requests for a waiver of the
Companys Code of Ethics and Standards of Business Conduct.
62
Audit Committee
Report
The responsibilities of the Audit Committee, which are set forth
in the Audit Committee charter adopted by the Board of
Directors, include providing oversight to Terras financial
reporting process through periodic meetings with Terras
independent auditors, internal auditors and management to review
accounting, auditing, internal controls and financial reporting
matters. Terra management is responsible for the preparation and
integrity of the financial reporting information and related
systems of internal controls. The Audit Committee, in carrying
out its role, relies on Terras senior management,
including its senior financial management, its internal audit
function, and its independent auditors.
The Audit Committee appointed Deloitte & Touche LLP
(Deloitte & Touche) as the independent
registered public accounting firm for Terra for 2009 and
recommends that stockholders vote in favor of
Proposal 2: Ratification of Selection of Independent
Accountants.
The Audit Committee has reviewed and discussed with senior
management Terras audited financial statements included in
the 2008 Annual Report to Stockholders. Management has confirmed
to us that the data in such financial statements (i) has
been prepared with integrity and objectivity and is
managements responsibility, and (ii) has been
prepared in conformity with generally accepted accounting
principles.
The Audit Committee has discussed with Deloitte &
Touche, Terras independent registered accounting firm, the
matters required to be discussed by the Statement on Auditing
Standards No. 61 (SAS 61) Communications with
Audit Committees. SAS 61 requires Terras independent
registered accounting firm to provide us with additional
information regarding the scope and results of their audit of
Terras financial statements, including with respect to
(i) their responsibility under generally accepted auditing
standards, (ii) significant accounting policies,
(iii) management judgments and estimates, (iv) any
significant audit adjustments, (v) any disagreements with
management, and (vi) any difficulties encountered in
performing the audit.
The Audit Committee has received from Deloitte &
Touche a letter providing the disclosures required by the
applicable requirements of the Public Company Accounting
Oversight Board regarding Deloitte & Touches
communications with the Audit Committee concerning its
independence. Deloitte & Touche has discussed its
independence with us and has confirmed in such letter that, in
its professional judgment, it is independent of Terra within the
meaning of the Federal securities laws and other applicable
requirements. Deloitte & Touche has also discussed
with us its findings related to its review of Terras
internal control procedures as required by Section 404 of
the Sarbanes-Oxley Act.
Based on the review and discussions described above with respect
to Terras audited financial statements for the year ended
December 31, 2008, the Audit Committee has recommended to
the Board of Directors that such financial statements be
included in Terras Annual Report for 2008 on
Form 10-K
for filing with the SEC.
The Audit Committee has a policy concerning the approval of
audit and non-audit services to be provided by Terras
independent registered public accounting firm. A copy of this
policy can be found in Terras Audit Committee charter on
our website at www.terraindustries.com. Select the
Investors link, followed by Terra Industries
(TRA) and choose Governance. The policy
requires that all services provided by Terras independent
auditors to Terra, including audit services and permitted
audit-related and non-audit related services, be pre-approved by
the Audit Committee.
63
In giving our recommendation to the Board of Directors, we have
relied on (i) managements representation that the
data in such financial statements has been prepared with
integrity and objectivity and in conformity with generally
accepted accounting principles, and (ii) the report of
Terras independent registered accounting firm with respect
to such financial statements.
Members of the Audit Committee
of the Board of Directors
D.E. Fisher, Chairman
M.O. Hesse
P.S. Janson
J.R. Kroner
64
Proposal 2:
Ratification of Selection of Independent Accountants
The Board of Directors recommends that the stockholders ratify
the Audit Committees selection of Deloitte &
Touche as independent accountants for Terra for the fiscal year
2009.
It is expected that members of Deloitte & Touche 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.
PRINCIPAL
ACCOUNTANT
AUDIT
FEES
AND
SERVICE
FEES
The table below describes fees for professional audit services
rendered by Deloitte & Touche, Terras principal
accountant, for the audit of Terras annual financial
statements for the years ended December 31, 2008 and
December 31, 2007 and fees billed for other services
rendered by Deloitte & Touche during those periods.
All such audit and other services, as well as related fees for
2008, were approved in advance by the Audit Committee.
|
|
|
|
|
|
|
|
|
Type
of Fee
|
|
2008
|
|
|
2007
|
|
Audit Fees
1/
|
|
$
|
1,359,397
|
|
|
$
|
1,411,841
|
|
Audit Related Fees
2/ 4/
|
|
|
146,980
|
|
|
|
253,261
|
|
|
|
|
|
|
|
|
|
|
Total Audit and Audit Related Fees
|
|
|
1,506,377
|
|
|
|
1,665,102
|
|
|
|
|
|
|
|
|
|
|
Tax Fees 3/
4/
|
|
|
462,443
|
|
|
|
305,621
|
|
All Other Fees
4/
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,968,820
|
|
|
$
|
1,970,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/ |
|
Audit
Fees, including those for statutory audits, include the
aggregate fees paid by Terra during the fiscal year indicated
for professional services rendered by Deloitte &
Touche for the audit of Terras annual financial statements
and review of financial statements included in Terras
Form 10-Qs.
|
2/ |
|
Audit
Related Fees include the aggregate fees paid related to the
audit of the Companys retirement, savings and investment
plans, and audit related procedures as a result of the GrowHow
UK Limited joint venture.
|
3/ |
|
Tax
Fees include the aggregate fees paid by Terra during the fiscal
year indicated for professional services rendered by the
principal accountant for tax compliance, tax advice and tax
planning.
|
4/ |
|
The
full amount of each such service and related fees was approved
in advance by the Audit Committee.
|
The Audit Committee has advised Terras Board of Directors
that it has determined that the non-audit services rendered by
Terras independent registered accounting firm during
Terras most recent fiscal year are compatible with
maintaining such auditors independence.
The Board of Directors unanimously recommends that you vote
FOR the ratification of the Audit Committees selection of
independent accountants.
65
Submission of
Stockholder Proposals for 2010 Annual Meeting
Stockholder proposals intended for submission at the 2010 annual
meeting of stockholders must be received by Terra at its
principal executive offices on or before June 15, 2010 to
be eligible for inclusion in Terras proxy statement and
accompanying proxy for such meeting, unless the date of the 2010
annual meeting is changed by more than 30 days from
November 20, 2010, in which case the proposal must be
received a reasonable time before the Company begins to print
and send its proxy materials for the 2010 annual meeting. If a
stockholder intends to bring a matter before the 2010 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 Exchange Act. To be timely, such notice must be received by
the Corporate Secretary at Terras principal executive
offices not earlier than the close of business on July 23,
2010 and not later than the close of business on August 22,
2010, unless the 2010 annual meeting is more than 30 calendar
days before or more than 60 calendar days after
November 20, 2010, in which case the proposal must be
received not earlier than the close of business on the
120th calendar day prior to the date of the 2010 annual
meeting and not later than the close of business on the later of
the 90th calendar day prior to the date of the 2010 annual
meeting and the 10th calendar day following the day on
which the Company first publicly announces the date of the 2010
annual meeting.
Miscellaneous
Terra will pay all solicitation expenses in connection with this
Proxy Statement and related Company proxy soliciting material.
Proxies are being solicited through the mail. Certain executive
officers and other employees of Terra named in Annex A, on
behalf of the Company and without additional compensation, may
also solicit proxies personally, by telephone, fax, email or
other electronic means. Stockholders may also be solicited by
means of press releases issued by the Company and posted on its
Web site.
In addition, Terra has engaged MacKenzie Partners, Inc.
(MacKenzie) to assist it in connection with
soliciting proxies for a fee estimated not to exceed $350,000
plus reasonable
out-of-pocket
expenses. Terra has agreed to indemnify MacKenzie against
certain liabilities relating to or arising out of the
engagement. MacKenzie estimates that approximately 60 of its
employees will assist in this proxy solicitation, which they may
conduct personally, by mail, telephone, fax, email or other
electronic means.
Terra will request banks, brokers and other custodians, nominees
and fiduciaries to forward proxy soliciting material to the
beneficial owners of shares held of record by such persons and
obtain their voting instructions. The Company will reimburse
such persons at approved rates for their expenses in connection
with the foregoing activities.
We estimate that our expenses related to the solicitation in
excess of those normally spent for an annual meeting as a result
of the proxy contest (and excluding the salaries and wages of
our regular employees and officers) will be approximately $6
million, of which $3.6 million has been incurred as of the date
of this Proxy Statement. Additional information about persons
who are participants in this proxy solicitation is set forth in
Annex A.
A copy of Terras Annual Report on
Form 10-K,
including any amendments, for the fiscal year ended
December 31, 2008 filed with the SEC (without exhibits)
will be made available to stockholders without charge upon
written request to the Investor Relations Department, Terra
Industries Inc., Terra Centre, 600 Fourth Street,
P.O. Box 6000, Sioux City, Iowa
51102-6000.
October 13, 2009
66
Annex A
Information
Regarding Participants
The directors and the executive officers and employees of the
Company who are participants in the solicitation of proxies in
connection with the annual meeting (collectively, the
Participants) are listed below, together with the
amount of each class of the Companys securities
beneficially owned by each of these persons as of
September 30, 2009, including the number of securities for
which beneficial ownership can be acquired within 60 days
of such date. No Participant listed below owns any equity
securities of the Company of record that such Participant does
not own beneficially. Except as otherwise noted below, the
business address of each Participant is Terra Centre, 600 Fourth
Street, P.O. Box 6000, Sioux City,
Iowa 51102-6000.
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
Shares
|
|
|
|
|
Beneficially
|
Name
|
|
Title
|
|
Owned
|
|
|
David E.
Fisher1/
|
|
Director
|
|
51,853
|
Dod A.
Fraser2/
|
|
Director
|
|
37,097
|
Martha O.
Hesse3/
|
|
Director
|
|
54,775
|
Peter S.
Janson4/
|
|
Director
|
|
25,547
|
James R.
Kroner5/
|
|
Director
|
|
25,647
|
Dennis
McGlone6/
|
|
Director
|
|
23,647
|
Henry R.
Slack7/
|
|
Chairman of the Board
|
|
50,221
|
Michael L. Bennett
|
|
Director, President and Chief Executive Officer
|
|
581,936
|
Debra J. Bliven
|
|
Assistant Corporate Secretary
|
|
1,764
|
Edward J. Dillon
|
|
Vice President and Controller
|
|
10,300
|
Joe A. Ewing
|
|
Vice President, Investor Relations and Human Resources
|
|
70,404
|
Joseph D. Giesler
|
|
Senior Vice President, Commercial Operations
|
|
111,703
|
Daniel D. Greenwell
|
|
Senior Vice President and Chief Financial Officer
|
|
84,094
|
John W. Huey
|
|
Vice President, General Counsel and Corporate Secretary
|
|
34,080
|
Kim L. Mathers
|
|
Communications Manager
|
|
1,740
|
Geoffrey J. Obeney
|
|
Vice President, Information Technology
|
|
7,900
|
Richard S. Sanders Jr.
|
|
Vice President, Manufacturing
|
|
103,249
|
Earl B. Smith
|
|
Vice President, Business Development
|
|
8,500
|
Douglas M. Stone
|
|
Senior Vice President, Sales and Marketing
|
|
32,196
|
William L. Watson
|
|
Legal/Corporate Communications Assistant
|
|
101
|
|
|
|
|
1/
|
Mr. Fishers
business address is 39 Rue des Genets, L-8131 Bridel, Grand
Duchy of Luxembourg.
|
|
|
2/
|
Mr. Frasers
business address is 800 Westchester Avenue, Suite 641
North, Rye Brook, NY 10573.
|
67
|
|
|
|
3/
|
Ms. Hesses
business address is 4171 Autumn Hills Drive, Winnemucca, NV
89445.
|
|
|
4/
|
Mr. Jansons
business address is
88-3 Chemin
Sugar Hill, Knowlton, Quebec, J0E 1V0, Canada.
|
|
|
5/
|
Mr. Kroners
business address is 4525 S. Dean Martin Drive,
Suite 2400, Las Vegas, NV 89103.
|
|
|
6/
|
Mr. McGlones
business address is 202 White Oak Drive, Slippery Rock, PA 16057.
|
|
|
7/
|
Mr. Slacks
business address is P.O. Box 28, Peapack, NJ 07977.
|
68
Information
Regarding Transactions in our Securities
by Participants
The following table sets forth information regarding purchases
and sales of the Companys securities by Participants
during the past two years. Except as set forth below or as
otherwise disclosed in this Proxy Statement, no part of the
purchase price or market value of these securities is
represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities. To the extent
that any part of the purchase price or market value of any of
these securities is represented by funds borrowed or otherwise
obtained for the purpose of acquiring or holding such
securities, the amount of the indebtedness as of the latest
practicable date is set forth below. If such funds were borrowed
or obtained otherwise than pursuant to a margin account or bank
loan in the regular course of business of a bank, broker or
dealer, a description of the transaction and the parties is set
forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Transaction
|
Name
|
|
Transaction
Date
|
|
Common
Shares
|
|
Footnote
|
|
Michael L. Bennett
|
|
April 2, 2007
|
|
|
(8,500
|
)
|
|
|
(1
|
)
|
|
|
May 1, 2007
|
|
|
(16,000
|
)
|
|
|
(1
|
)
|
|
|
May 3, 2007
|
|
|
(1,000
|
)
|
|
|
(2
|
)
|
|
|
May 15, 2007
|
|
|
(2,500
|
)
|
|
|
(2
|
)
|
|
|
July 2, 2007
|
|
|
(16,000
|
)
|
|
|
(1
|
)
|
|
|
July 25, 2007
|
|
|
20,400
|
|
|
|
(3
|
)
|
|
|
July 30, 2007
|
|
|
(33,960
|
)
|
|
|
(4
|
)
|
|
|
October 1, 2007
|
|
|
(16,000
|
)
|
|
|
(1
|
)
|
|
|
October 31, 2007
|
|
|
(3,600
|
)
|
|
|
(2
|
)
|
|
|
December 6, 2007
|
|
|
(750
|
)
|
|
|
(2
|
)
|
|
|
January 2, 2008
|
|
|
(16,000
|
)
|
|
|
(1
|
)
|
|
|
February 22, 2008
|
|
|
56,000
|
|
|
|
(5
|
)
|
|
|
February 22, 2008
|
|
|
252,000
|
|
|
|
(6
|
)
|
|
|
February 22, 2008
|
|
|
(106,974
|
)
|
|
|
(4
|
)
|
|
|
February 26, 2008
|
|
|
(3,075
|
)
|
|
|
(2
|
)
|
|
|
April 1, 2008
|
|
|
(16,000
|
)
|
|
|
(1
|
)
|
|
|
May 1, 2008
|
|
|
(50,000
|
)
|
|
|
(1
|
)
|
|
|
July 1, 2008
|
|
|
(50,000
|
)
|
|
|
(1
|
)
|
|
|
July 16, 2008
|
|
|
12,100
|
|
|
|
(3
|
)
|
|
|
July 30, 2008
|
|
|
(22,923
|
)
|
|
|
(4
|
)
|
|
|
August 22, 2008
|
|
|
(2,050
|
)
|
|
|
(2
|
)
|
|
|
October 1, 2008
|
|
|
(4,800
|
)
|
|
|
(1
|
)
|
|
|
February 17, 2009
|
|
|
121,000
|
|
|
|
(7
|
)
|
|
|
February 17, 2009
|
|
|
308,000
|
|
|
|
(8
|
)
|
|
|
February 17, 2009
|
|
|
(126,389
|
)
|
|
|
(4
|
)
|
|
|
July 15, 2009
|
|
|
25,500
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(32,687
|
)
|
|
|
(4
|
)
|
Debra J. Bliven
|
|
None
|
|
|
|
|
|
|
|
|
Edward J. Dillon
|
|
September 25, 2008
|
|
|
200
|
|
|
|
(13
|
)
|
|
|
September 29, 2008
|
|
|
100
|
|
|
|
(13
|
)
|
|
|
November 3, 2008
|
|
|
4,600
|
|
|
|
(3
|
)
|
|
|
February 17, 2009
|
|
|
12,600
|
|
|
|
(7
|
)
|
|
|
July 15, 2009
|
|
|
5,400
|
|
|
|
(3
|
)
|
Joe A. Ewing
|
|
July 25, 2007
|
|
|
5,100
|
|
|
|
(3
|
)
|
|
|
December 24, 2007
|
|
|
(4,285
|
)
|
|
|
(4
|
)
|
|
|
February 22, 2008
|
|
|
6,800
|
|
|
|
(5
|
)
|
|
|
February 22, 2008
|
|
|
19,000
|
|
|
|
(6
|
)
|
|
|
February 22, 2008
|
|
|
(6,432
|
)
|
|
|
(4
|
)
|
|
|
March 4, 2008
|
|
|
(1,800
|
)
|
|
|
(2
|
)
|
|
|
March 5, 2008
|
|
|
(1,200
|
)
|
|
|
(2
|
)
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Transaction
|
Name
|
|
Transaction
Date
|
|
Common
Shares
|
|
Footnote
|
|
|
|
March 6, 2008
|
|
|
(2,000
|
)
|
|
|
(9
|
)
|
|
|
July 16, 2008
|
|
|
3,000
|
|
|
|
(3
|
)
|
|
|
July 30, 2008
|
|
|
(4,033
|
)
|
|
|
(4
|
)
|
|
|
August 28, 2008
|
|
|
(1,000
|
)
|
|
|
(2
|
)
|
|
|
February 17, 2009
|
|
|
15,200
|
|
|
|
(7
|
)
|
|
|
February 17, 2009
|
|
|
36,400
|
|
|
|
(8
|
)
|
|
|
February 17, 2009
|
|
|
(12,005
|
)
|
|
|
(4
|
)
|
|
|
July 15, 2009
|
|
|
6,400
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(7,726
|
)
|
|
|
(4
|
)
|
David E. Fisher
|
|
July 30, 2007
|
|
|
(3,000
|
)
|
|
|
(4
|
)
|
|
|
August 1, 2007
|
|
|
7,000
|
|
|
|
(10
|
)
|
|
|
August 1, 2007
|
|
|
(3,000
|
)
|
|
|
(4
|
)
|
|
|
September 5, 2007
|
|
|
18,000
|
|
|
|
(11
|
)
|
|
|
September 5, 2007
|
|
|
(5,400
|
)
|
|
|
(4
|
)
|
|
|
September 11, 2007
|
|
|
(12,600
|
)
|
|
|
(9
|
)
|
|
|
July 30, 2008
|
|
|
(3,000
|
)
|
|
|
(4
|
)
|
|
|
August 1, 2008
|
|
|
3,100
|
|
|
|
(10
|
)
|
|
|
August 1, 2008
|
|
|
(930
|
)
|
|
|
(4
|
)
|
|
|
August 3, 2009
|
|
|
5,547
|
|
|
|
(10
|
)
|
|
|
August 3, 2009
|
|
|
(1,664
|
)
|
|
|
(4
|
)
|
Dod A. Fraser
|
|
August 1, 2007
|
|
|
10,000
|
|
|
|
(10
|
)
|
|
|
October 30, 2007
|
|
|
(10,000
|
)
|
|
|
(9
|
)
|
|
|
February 25, 2008
|
|
|
(2,000
|
)
|
|
|
(9
|
)
|
|
|
February 25, 2008
|
|
|
(3,000
|
)
|
|
|
(2
|
)
|
|
|
August 1, 2008
|
|
|
3,100
|
|
|
|
(10
|
)
|
|
|
August 14, 2008
|
|
|
(1,550
|
)
|
|
|
(9
|
)
|
|
|
August 21, 2008
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
August 3, 2009
|
|
|
5,547
|
|
|
|
(10
|
)
|
Joseph D. Giesler
|
|
May 2, 2007
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
June 5, 2007
|
|
|
(4,500
|
)
|
|
|
(9
|
)
|
|
|
July 30, 2007
|
|
|
(9,735
|
)
|
|
|
(4
|
)
|
|
|
August 1, 2007
|
|
|
5,600
|
|
|
|
(3
|
)
|
|
|
August 3, 2007
|
|
|
3,600
|
|
|
|
(11
|
)
|
|
|
August 3, 2007
|
|
|
(3,600
|
)
|
|
|
(9
|
)
|
|
|
August 15, 2007
|
|
|
(6,000
|
)
|
|
|
(9
|
)
|
|
|
October 30, 2007
|
|
|
(7,000
|
)
|
|
|
(9
|
)
|
|
|
February 22, 2008
|
|
|
7,200
|
|
|
|
(5
|
)
|
|
|
February 22, 2008
|
|
|
50,000
|
|
|
|
(6
|
)
|
|
|
February 22, 2008
|
|
|
(19,613
|
)
|
|
|
(4
|
)
|
|
|
February 26, 2008
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
March 3, 2008
|
|
|
(5,300
|
)
|
|
|
(9
|
)
|
|
|
April 30, 2008
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
July 16, 2008
|
|
|
3,200
|
|
|
|
(3
|
)
|
|
|
July 30, 2008
|
|
|
(10,613
|
)
|
|
|
(4
|
)
|
|
|
August 13, 2008
|
|
|
(10,000
|
)
|
|
|
(9
|
)
|
|
|
September 17, 2008
|
|
|
(11,022
|
)
|
|
|
(12
|
)
|
|
|
February 17, 2009
|
|
|
15,000
|
|
|
|
(7
|
)
|
|
|
February 17, 2009
|
|
|
48,200
|
|
|
|
(8
|
)
|
|
|
February 17, 2009
|
|
|
(16,257
|
)
|
|
|
(4
|
)
|
|
|
July 15, 2009
|
|
|
6,300
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(10,231
|
)
|
|
|
(4
|
)
|
Daniel D. Greenwell
|
|
July 25, 2007
|
|
|
7,200
|
|
|
|
(3
|
)
|
|
|
February 22, 2008
|
|
|
9,800
|
|
|
|
(5
|
)
|
|
|
February 22, 2008
|
|
|
15,000
|
|
|
|
(6
|
)
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Transaction
|
Name
|
|
Transaction
Date
|
|
Common
Shares
|
|
Footnote
|
|
|
|
February 22, 2008
|
|
|
(4,902
|
)
|
|
|
(4
|
)
|
|
|
July 16, 2008
|
|
|
4,300
|
|
|
|
(3
|
)
|
|
|
July 30, 2008
|
|
|
(3,184
|
)
|
|
|
(4
|
)
|
|
|
August 29, 2008
|
|
|
(3,800
|
)
|
|
|
(9
|
)
|
|
|
February 17, 2009
|
|
|
23,000
|
|
|
|
(7
|
)
|
|
|
February 17, 2009
|
|
|
42,800
|
|
|
|
(8
|
)
|
|
|
February 17, 2009
|
|
|
(14,040
|
)
|
|
|
(4
|
)
|
|
|
July 15, 2009
|
|
|
9,700
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(9,085
|
)
|
|
|
(4
|
)
|
Martha O. Hesse
|
|
August 2, 2007
|
|
|
10,000
|
|
|
|
(10
|
)
|
|
|
November 7, 2007
|
|
|
(15,000
|
)
|
|
|
(9
|
)
|
|
|
August 5, 2008
|
|
|
3,100
|
|
|
|
(10
|
)
|
|
|
August 3, 2009
|
|
|
5,547
|
|
|
|
(10
|
)
|
John W. Huey
|
|
July 25, 2007
|
|
|
6,600
|
|
|
|
(3
|
)
|
|
|
February 22, 2008
|
|
|
8,600
|
|
|
|
(5
|
)
|
|
|
July 16, 2008
|
|
|
3,700
|
|
|
|
(3
|
)
|
|
|
February 17, 2009
|
|
|
17,800
|
|
|
|
(7
|
)
|
|
|
July 15, 2009
|
|
|
7,500
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(7,788
|
)
|
|
|
(4
|
)
|
Peter S. Janson
|
|
August 1, 2007
|
|
|
10,000
|
|
|
|
(10
|
)
|
|
|
February 22, 2008
|
|
|
(10,000
|
)
|
|
|
(9
|
)
|
|
|
August 1, 2008
|
|
|
3,100
|
|
|
|
(10
|
)
|
|
|
August 21, 2008
|
|
|
(8,100
|
)
|
|
|
(9
|
)
|
|
|
December 8, 2008
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
August 3, 2009
|
|
|
5,547
|
|
|
|
(10
|
)
|
James R. Kroner
|
|
August 1, 2007
|
|
|
10,000
|
|
|
|
(10
|
)
|
|
|
August 29, 2007
|
|
|
(2,000
|
)
|
|
|
(2
|
)
|
|
|
October 31, 2007
|
|
|
(1,500
|
)
|
|
|
(2
|
)
|
|
|
February 26, 2008
|
|
|
(1,500
|
)
|
|
|
(9
|
)
|
|
|
August 1, 2008
|
|
|
3,100
|
|
|
|
(10
|
)
|
|
|
October 28, 2008
|
|
|
2,000
|
|
|
|
(13
|
)
|
|
|
August 3, 2009
|
|
|
5,547
|
|
|
|
(10
|
)
|
Kim L. Mathers
|
|
None
|
|
|
|
|
|
|
|
|
Dennis McGlone
|
|
August 1, 2007
|
|
|
10,000
|
|
|
|
(10
|
)
|
|
|
December 4, 2007
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
August 1, 2008
|
|
|
3,100
|
|
|
|
(10
|
)
|
|
|
August 3, 2009
|
|
|
5,547
|
|
|
|
(10
|
)
|
Geoffrey J. Obeney
|
|
February 22, 2008
|
|
|
6,000
|
|
|
|
(5
|
)
|
|
|
July 16, 2008
|
|
|
2,600
|
|
|
|
(3
|
)
|
|
|
February 17, 2009
|
|
|
12,600
|
|
|
|
(7
|
)
|
|
|
July 15, 2009
|
|
|
5,300
|
|
|
|
(3
|
)
|
Richard S. Sanders, Jr.
|
|
May 30, 2007
|
|
|
(4,000
|
)
|
|
|
(9
|
)
|
|
|
June 4, 2007
|
|
|
(10,782
|
)
|
|
|
(12
|
)
|
|
|
June 5, 2007
|
|
|
3,600
|
|
|
|
(11
|
)
|
|
|
July 25, 2007
|
|
|
5,300
|
|
|
|
(3
|
)
|
|
|
July 30, 2007
|
|
|
(8,113
|
)
|
|
|
(4
|
)
|
|
|
August 24, 2007
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
September 4, 2007
|
|
|
(5,000
|
)
|
|
|
(9
|
)
|
|
|
October 30, 2007
|
|
|
(10,000
|
)
|
|
|
(9
|
)
|
|
|
December 5, 2007
|
|
|
(3,642
|
)
|
|
|
(9
|
)
|
|
|
February 22, 2008
|
|
|
7,200
|
|
|
|
(5
|
)
|
|
|
February 22, 2008
|
|
|
37,000
|
|
|
|
(6
|
)
|
|
|
February 22, 2008
|
|
|
(14,126
|
)
|
|
|
(4
|
)
|
|
|
May 16, 2008
|
|
|
(6,000
|
)
|
|
|
(9
|
)
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Transaction
|
Name
|
|
Transaction
Date
|
|
Common
Shares
|
|
Footnote
|
|
|
|
July 16, 2008
|
|
|
3,200
|
|
|
|
(3
|
)
|
|
|
July 30, 2008
|
|
|
(7,854
|
)
|
|
|
(4
|
)
|
|
|
August 20, 2008
|
|
|
(1,770
|
)
|
|
|
(9
|
)
|
|
|
August 21, 2008
|
|
|
(8,230
|
)
|
|
|
(9
|
)
|
|
|
February 17, 2009
|
|
|
15,200
|
|
|
|
(7
|
)
|
|
|
February 17, 2009
|
|
|
40,000
|
|
|
|
(8
|
)
|
|
|
February 17, 2009
|
|
|
(13,168
|
)
|
|
|
(4
|
)
|
|
|
July 15, 2009
|
|
|
6,400
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(8,490
|
)
|
|
|
(4
|
)
|
Henry R. Slack
|
|
August 1, 2007
|
|
|
15,000
|
|
|
|
(10
|
)
|
|
|
November 6, 2007
|
|
|
(30,000
|
)
|
|
|
(9
|
)
|
|
|
November 8, 2007
|
|
|
20,000
|
|
|
|
(11
|
)
|
|
|
November 9, 2007
|
|
|
(20,000
|
)
|
|
|
(9
|
)
|
|
|
August 1, 2008
|
|
|
4,650
|
|
|
|
(10
|
)
|
|
|
August 22, 2008
|
|
|
(40,000
|
)
|
|
|
(9
|
)
|
|
|
August 3, 2009
|
|
|
8,321
|
|
|
|
(10
|
)
|
Earl B. Smith
|
|
February 8, 2008
|
|
|
100
|
|
|
|
(13
|
)
|
|
|
February 22, 2008
|
|
|
6,200
|
|
|
|
(5
|
)
|
|
|
July 16, 2008
|
|
|
2,800
|
|
|
|
(3
|
)
|
|
|
February 17, 2009
|
|
|
13,400
|
|
|
|
(7
|
)
|
|
|
July 15, 2009
|
|
|
5,600
|
|
|
|
(3
|
)
|
Douglas M. Stone
|
|
July 25, 2007
|
|
|
5,300
|
|
|
|
(3
|
)
|
|
|
February 22, 2008
|
|
|
8,000
|
|
|
|
(5
|
)
|
|
|
July 16, 2008
|
|
|
3,500
|
|
|
|
(3
|
)
|
|
|
February 17, 2009
|
|
|
18,200
|
|
|
|
(7
|
)
|
|
|
July 15, 2009
|
|
|
7,600
|
|
|
|
(3
|
)
|
|
|
August 3, 2009
|
|
|
(6,307
|
)
|
|
|
(4
|
)
|
William L. Watson
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Sale
of shares pursuant to a 10b5-1 plan.
|
(2)
|
|
Gift
of shares.
|
(3)
|
|
Restricted
share award.
|
(4)
|
|
Payment
of tax liability by withholding of securities received upon the
vesting or exercise, as applicable, of an award of restricted
shares, performance shares, fully-vested shares or stock options.
|
(5)
|
|
Grant
of performance shares for the
2008-2010
performance cycle. Number represents the maximum number of
performance shares that may be earned, which is 200% of the
target level of performance.
|
(6)
|
|
Vesting
of performance shares for the
2005-2007
cycle at the 200% level.
|
(7)
|
|
Grant
of performance shares for the
2009-2011
performance cycle. Number represents the maximum number of
performance shares that may be earned, which is 200% of the
target level of performance.
|
(8)
|
|
Vesting
of performance shares for the
2006-2008
cycle at the 200% level.
|
(9)
|
|
Open
market sale of shares.
|
(10)
|
|
Annual
award of shares to directors.
|
(11)
|
|
Exercise
of non-qualified stock options.
|
(12)
|
|
Sale
of shares in participants 401(k) plan.
|
(13)
|
|
Open
market purchase of shares.
|
72
Miscellaneous
Information Concerning Participants
Except as described in this Annex A or otherwise disclosed
in this Proxy Statement,
|
|
|
|
|
No associate of any Participant beneficially owns, directly or
indirectly, any securities of the Company.
|
|
|
|
No Participant beneficially owns, directly or indirectly, any
securities of any subsidiary of the Company.
|
|
|
|
Since the beginning of the Companys last fiscal year, no
Participant or any of his or her associates or immediate family
members was a party to any transaction, or is to be a party to
any currently proposed transaction, in which (i) the
Company was or is to be a participant, (ii) the amount
involved exceeded or exceeds $120,000, and (iii) any such
Participant, associate or immediate family member had or will
have a direct or indirect material interest.
|
|
|
|
No Participant or any of his or her associates has any
arrangement or understanding with any person with respect to any
future employment by the Company or its affiliates, or with
respect to any future transactions to which the Company or any
of its affiliates will or may be a party.
|
|
|
|
No Participant is, or was within the past year, a party to any
contract, arrangement or understanding with any person with
respect to any securities of the Company, including, but not
limited to, joint ventures, loan or option arrangements, puts or
calls, guarantees against loss or guarantees of profit, division
of losses or profits, or the giving or withholding of proxies.
|
|
|
|
No Participant has any substantial interest, direct or indirect,
by security holdings or otherwise, in any matter to be acted
upon at the annual meeting.
|
73
Proxy Solicited on Behalf of Terra Industries Inc. Board of Directors
2009 Annual Meeting of Terra Industries Inc. Stockholders
Friday,
November 20, 2009, 10:00 AM Eastern Time
Credit Suisse
11 Madison Avenue, Floor 2B Auditorium
New York, New York 10010
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your common shares of Terra
Industries Inc. for the upcoming Annual Meeting of Stockholders.
PLEASE REVIEW THE PROXY STATEMENT
AND VOTE TODAY IN ONE OF THREE WAYS
(See reverse side for instructions)
WHITE
PROXY CARD
Proxy Solicited on Behalf of Terra Industries Inc. Board of Directors
2009 Annual Meeting of Terra Industries Inc. Stockholders
The undersigned hereby acknowledges receipt of the Notice of the 2009 Annual Meeting of
Stockholders and Proxy Statement, each dated October 13, 2009, and revoking all prior proxies, herby
appoints HENRY R. SLACK, MICHAEL L. BENNETT and DANIEL D. GREENWELL, and each or either of them as
Proxy Holders with power of substitution, to vote the common shares
which the undersigned is entitled to vote at the Annual Meeting of Stockholders (including
any adjournments or postponements) of TERRA INDUSTRIES INC. to be held on November 20, 2009, 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.
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 Proxy Holders cannot vote your shares unless you sign and return this card.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
THERE ARE THREE WAYS TO VOTE: BY INTERNET, TELEPHONE OR MAIL
Internet and telephone voting is available 24 hours a day, 7 days a week
through 11:59 PM Eastern Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
INTERNET
www.cesvote.com
|
|
Go to the website listed above. |
|
|
Have your WHITE PROXY CARD ready. |
|
|
|
Follow the simple instructions that appear on your computer screen. |
TELEPHONE
1-888-693-8683
|
|
Use any touch-tone telephone. |
|
|
Have your WHITE PROXY CARD ready. |
|
|
Follow the simple recorded instructions. |
MAIL
|
|
Mark, sign and date your WHITE PROXY CARD. |
|
|
Detach your WHITE PROXY CARD. |
|
|
Return your WHITE PROXY CARD in the postage-paid envelope provided. |
Please Vote, Sign, Date and Return Promptly in the Enclosed Postage-
Paid Envelope
(continued from other side)
6 DETACH PROXY CARD HERE TO VOTE BY MAIL 6
WHITE
PROXY CARD
The Board of Directors recommends a vote FOR all the nominees listed and FOR
Proposal 2.
PROPOSAL 1
To elect 1 Martha O. Hesse, 2 Dennis McGlone, 3 Henry R. Slack to the Board of
Directors.
|
|
|
|
|
FOR ALL
|
|
WITHHOLD FROM ALL
|
|
FOR ALL, WITH
EXCEPTIONS |
|
|
|
|
|
o
|
|
o
|
|
o
|
INSTRUCTIONS: To withhold authority to vote for any individual
Nominee(s) mark the FOR ALL, WITH EXCEPTIONS box and
Write the number of the excepted nominee(s) in the space below.
|
|
|
|
|
|
|
PROPOSAL 2 Ratification of Audit Committees
selection of Deloitte & Touche LLP as independent accountants for 2009.
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
|
|
o
|
|
o
|
|
o
|
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
sing in full partnership name by an authorized person.
|
|
|
|
|
Dated:
|
|
|
|
, 2009 |
|
|
|
|
|
|
|
|
|
|
Signature: |
|
|
|
|
|
|
|
|
|
|
|
|
Title or Authority: |
|
|
|
|
|
|
|
|
|
|
|
|
Signature (if held jointly): |
|
|
|
|
|
|
|
PLEASE SIGN, DATE AND RETURN THIS PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE TODAY.