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EXHIBIT 10(Z)
SHORT-TERM INCENTIVE PLAN
Effective January 2000
Potash Corporation of Saskatchewan Inc.
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CONTENTS
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SECTION 1 -- ESTABLISHMENT OF THE PLAN...................... 1
1.01 Purpose............................................ 1
1.02 Effective Date..................................... 1
SECTION 2 -- DEFINITIONS.................................... 2
2.01 Adjusted Cash Flow Return (ACFR)................... 2
2.02 Average Accumulated Amortization................... 2
2.03 Average Accumulated Depreciation................... 2
2.04 Average Assets..................................... 2
2.05 Average Non-Interest Bearing Current Liabilities... 3
2.06 Award Payment...................................... 3
2.07 Award Percentage................................... 3
2.08 Board.............................................. 3
2.09 Cash Flow Return (CFR)............................. 3
2.10 Cash Taxes......................................... 3
2.11 CEO................................................ 3
2.12 Committee.......................................... 4
2.13 Corporation........................................ 4
2.14 Depreciation and Amortization...................... 4
2.15 Eligible Employee.................................. 4
2.16 Entitled Employee.................................. 4
2.17 Operating Income................................... 4
2.18 PCS Inc............................................ 4
2.19 Plan............................................... 4
2.20 Salary............................................. 4
2.21 Target CFR......................................... 4
2.22 Target Percentage.................................. 4
2.23 Year............................................... 4
SECTION 3 -- PARTICIPATION.................................. 5
3.01 Participation Requirements......................... 5
SECTION 4 -- AWARD PAYMENTS................................. 6
4.01 Eligibility........................................ 6
4.02 Calculation of Award Payment....................... 6
4.03 Entitled Operations Employees...................... 6
4.04 Limitation of Award Payments and General
Discretion......................................... 7
4.05 Timing of Award Payments........................... 7
SECTION 5 -- ADMINISTRATION OF THE PLAN..................... 8
5.01 Administration..................................... 8
SECTION 6 -- TRANSFER OF EMPLOYMENT......................... 9
6.01 Transfer of Employment............................. 9
SECTION 7 -- GENERAL PROVISIONS............................. 10
7.01 Assignment or Alienation........................... 10
7.02 Amendment or Termination........................... 10
7.03 Effect of Amendment or Termination................. 10
7.04 No Enlargement of Contractual Rights............... 10
7.05 Interpretation..................................... 10
7.06 Withholding of Taxes............................... 10
7.07 Binding on Successors.............................. 10
7.08 Currency........................................... 10
APPENDIX "A" -- AWARD PERCENTAGE............................ 11
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SECTION 1 -- ESTABLISHMENT OF THE PLAN
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1.01 PURPOSE
This Annual Incentive Plan is established for the purpose of rewarding key
employees on an annual basis for their efforts and contributions in the
attainment of certain performance measures that contribute materially to
the success of the business interests of Potash Corporation of Saskatchewan
Inc.
1.02 EFFECTIVE DATE
Subject to Section 7.02 (Amendment or Termination), this Plan shall be
effective on and after January 1, 2000.
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SECTION 2 -- DEFINITIONS
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The following terms, when capitalized, shall be defined as follows:
2.01 ADJUSTED CASH FLOW RETURN (ACFR)
"Adjusted Cash Flow Return" or "ACFR" means an amount derived from the
following formula:
ACFR = (CFR divided by Target CFR) multiplied by 100,
and used in the table at Appendix "A" to calculate an Entitled Employee's
Award Percentage for a given Year.
2.02 AVERAGE ACCUMULATED AMORTIZATION
"Average Accumulated Amortization" means the average consolidated
accumulated amortization of PCS Inc. during a given Year, calculated by
dividing (a) by (b) where:
(a) equals the sum of the consolidated accumulated amortization of PCS
Inc. at the beginning of the Year, the consolidated accumulated
amortization of PCS Inc. at the beginning of the second quarter of
the Year, the consolidated accumulated amortization of PCS Inc. at
the beginning of the third quarter of the Year, the consolidated
accumulated amortization of PCS Inc. at the beginning of the
fourth quarter of the Year and the consolidated accumulated
amortization of PCS Inc. at the end of the Year; and,
(b) equals five (5).
2.03 AVERAGE ACCUMULATED DEPRECIATION
"Average Accumulated Depreciation" means the average consolidated
accumulated depreciation of PCS Inc. during a given Year, calculated by
dividing (a) by (b) where:
(a) equals the sum of consolidated accumulated depreciation of PCS
Inc. at the beginning of the Year, consolidated accumulated
depreciation of PCS Inc. at the beginning of the second quarter of
the Year, the consolidated accumulated depreciation of PCS Inc. at
the beginning of the third quarter of the Year, the consolidated
accumulated depreciation of PCS Inc. at the beginning of the
fourth quarter of the Year and the consolidated accumulated
depreciation of PCS Inc. at the end of the Year; and,
(b) equals five (5).
2.04 AVERAGE ASSETS
"Average Assets" means the average book value of PCS Inc.'s consolidated
assets during a given Year, calculated by dividing (a) by (b) where:
(a) equals the sum of the book value of the consolidated assets of PCS
Inc. at the beginning of the Year, the book value of the
consolidated assets of PCS Inc. at the beginning of the second
quarter of the Year, the book value of the consolidated assets of
PCS Inc. at the beginning of the third quarter of the Year, the
book value of the consolidated assets of PCS Inc. at the beginning
of the fourth quarter of the Year and the book value of the
consolidated assets of PCS Inc. at the end of the Year; and,
(b) equals five (5).
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2.05 AVERAGE NON-INTEREST BEARING CURRENT LIABILITIES
"Average Non-Interest Bearing Current Liabilities" means the average
consolidated non-interest bearing current liabilities of PCS Inc. during a
given Year, calculated by dividing (a) by (b) where:
(a) equals the sum of the consolidated non-interest bearing current
liabilities of PCS Inc. at the beginning of the Year, the
consolidated non-interest bearing current liabilities of PCS Inc.
at the beginning of the second quarter of the Year, the
consolidated non-interest bearing current liabilities of PCS Inc.
at the beginning of the third quarter of the Year, the
consolidated non-interest bearing current liabilities of PCS Inc.
at the beginning of the fourth quarter of the Year and the
consolidated non-interest bearing current liabilities of PCS Inc.
at the end of the Year; and,
(b) equals five (5).
2.06 AWARD PAYMENT
"Award Payment" means a cash payment to an Entitled Employee calculated
pursuant to Section 4 (Award Payments).
2.07 AWARD PERCENTAGE
"Award Percentage" means the percentage of an Entitled Employee's Salary
derived from the table contained in Appendix "A". The Award Percentages
applicable to an Entitled Employee, as set out in the table in Appendix
"A", shall be recommended by the CEO and approved by the Committee.
2.08 BOARD
"Board" means the Board of Directors of PCS Inc.
2.09 CASH FLOW RETURN (CFR)
"Cash Flow Return" or "CFR" means the amount derived from the following
formula:
(a) Operating Income, plus
Depreciation and Amortization, minus
Cash Taxes
DIVIDED BY
(b) Average Assets, plus
Average Accumulated Depreciation, plus
Average Accumulated Amortization, minus
Average Non-Interest Bearing Current Liabilities,
and used in the table at Appendix "A" to calculate an Entitled Employee's
Award Percentage for a given Year.
2.10 CASH TAXES
"Cash Taxes" means the cash income tax expense for a given Year, as set out
in the audited consolidated financial statements of PCS Inc. for that Year.
2.11 CEO
"CEO" means the Chief Executive Officer of PCS Inc.
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2.12 COMMITTEE
"Committee" means the Compensation Committee of the Board.
2.13 CORPORATION
"Corporation" means Potash Corporation of Saskatchewan Inc. and its direct
and indirect subsidiaries.
2.14 DEPRECIATION AND AMORTIZATION
"Depreciation and Amortization" means the depreciation and amortization
expense for a given Year, as set out in the audited consolidated financial
statements of PCS Inc. for that Year.
2.15 ELIGIBLE EMPLOYEE
"Eligible Employee" means an employee who has satisfied the eligibility
requirements set out in Section 4.01 (Eligibility).
2.16 ENTITLED EMPLOYEE
"Entitled Employee" means an Eligible Employee who is recommended by the
CEO and approved by the Committee to participate in this Plan.
(A) ENTITLED OPERATIONS EMPLOYEE
"Entitled Operations Employee" means an Entitled Employee who is
attached to one of the operating facilities of PCS Inc. or its
direct or indirect subsidiaries.
2.17 OPERATING INCOME
"Operating Income" means the operating income for a given Year, as set out
in the audited consolidated financial statements of PCS Inc. for that Year.
2.18 PCS INC.
"PCS Inc." means Potash Corporation of Saskatchewan Inc.
2.19 PLAN
"Plan" means this Annual Incentive Plan, as amended from time to time.
2.20 SALARY
"Salary" means the annual base salary in effect for an Entitled Employee at
the end of a given Year.
2.21 TARGET CFR
"Target CFR" means the CFR projected in the annual budget approved by the
Board and used in the table at Appendix "A" to calculate an Entitled
Employee's Award Percentage for a given Year.
2.22 TARGET PERCENTAGE
"Target Percentage" means the Award Percentage of an Entitled Employee when
CFR equals Target CFR, as shown in the table contained in Appendix "A".
2.23 YEAR
"Year" means the fiscal year of PCS Inc.
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SECTION 3 -- PARTICIPATION
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3.01 PARTICIPATION REQUIREMENTS
Participation in the Plan is limited to Eligible Employees.
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SECTION 4 -- AWARD PAYMENTS
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4.01 ELIGIBILITY
An employee of the Corporation who is employed for at least three months
during a Year, and who is in the employ of the Corporation at the end of a
Year shall become an Eligible Employee.
4.02 CALCULATION OF AWARD PAYMENT
Subject to Section 4.04 (Limitation of Award Payments and General
Discretion), an Entitled Employee, other than Entitled Operations
Employees, shall receive an Award Payment equal to the Entitled Employee's
Award Percentage multiplied by his or her Salary.
The Award Payment calculated in accordance with this Section 4.02 is
subject to an adjustment of plus or minus 10% depending upon the Entitled
Employee's job performance, as determined by his or her supervisor, and
approved in accordance with the provisions of this Plan.
4.03 ENTITLED OPERATIONS EMPLOYEES
Subject to Section 4.04 (Limitation of Award Payments and General
Discretion), an Entitled Operations Employee shall be entitled to an Award
Payment equal to the sum of paragraphs (a) and (b) below:
(a) the award calculated pursuant to Section 4.02 (Calculation of
Award Payment), divided by two (2); and,
(b) an amount equal to the Target Percentage of the Salary of the
Entitled Operations Employee, adjusted by applying a formula to be
developed from time to time by the CEO in consultation with the
Senior Vice-President, Administration and the appropriate
subsidiary President which formula shall reasonably reflect the
actual results of the operating facility to which the employee is
attached compared to the approved target for that operating
facility, and thereafter dividing such amount by two (2).
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4.04 LIMITATION OF AWARD PAYMENTS AND GENERAL DISCRETION
(a) Generally, no Award Payment shall be granted under this Plan with
respect to any Year in which the CFR is less than 50% of the
Target CFR. However, the Committee may elect, in its discretion,
to grant Award Payments in any Year, regardless of the CFR.
(b) The Award Payment for any Entitled Employee may exceed or be below
the amount calculated in accordance with this Section 4. Award
Payments falling outside the established range shall be
recommended by the CEO and shall be approved by the Committee in
the normal course of administering this Plan.
(c) An Entitled Employee who has been employed by the Corporation for
less than one year shall have his or her Award Payment prorated in
accordance with his or her period of employment.
(d) An Entitled Employee who was, during a Year, promoted to a
position included in a Group set forth in Appendix "A", shall have
his or her Award Payment prorated in accordance with the period of
time he or she held such position.
(e) An Entitled Employee who was, during a Year, promoted from one
Group to another Group set forth in Appendix "A", shall have his
or her Award Payment calculated on the basis of his or her Group
as at the end of the Year.
(f) Notwithstanding the Groups established in Appendix "A", the
Committee may on the recommendation of the CEO, designate an
Eligible Employee for inclusion in one of such Groups when, but
for such designation, the Eligible Employee would not otherwise be
included in such Group.
4.05 TIMING OF AWARD PAYMENTS
The Committee shall, on the recommendation of the CEO and within 30 days of
the end of a Year, approve the amount of Award Payments for each Entitled
Employee for any given Year. The Award Payments shall be paid to Entitled
Employees within 30 days of the approval thereof by the Committee.
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SECTION 5 -- ADMINISTRATION OF THE PLAN
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5.01 ADMINISTRATION
The Committee shall conclusively interpret the provisions of this Plan and
decide all questions of fact arising in the application of the Plan.
Determinations and interpretations in individual cases may be made by the
CEO with due regard to consistency with any prior action by the Committee
and such determination shall be binding and conclusive upon the individual
employees concerned and persons claiming under them. The Committee shall be
advised of any such determination or interpretation made by the CEO.
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SECTION 6 -- TRANSFER OF EMPLOYMENT
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6.01 TRANSFER OF EMPLOYMENT
If an Entitled Employee's employment is transferred, during a Year, within
the Corporation the Senior Vice-President, Administration and the CEO shall
determine whether the Entitled Employee's Award Payment is calculated in
accordance with Section 4.02 (Calculation of Award Payment), Section 4.03
(Entitled Operations Employees), or a combination of those sections.
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SECTION 7 -- GENERAL PROVISIONS
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7.01 ASSIGNMENT OR ALIENATION
Except as required by applicable laws, the right of an Entitled Employee to
receive an Award Payment under this Plan shall not be:
(a) given as security;
(b) subject to transfer, anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation; or
(c) subject to execution, attachment, levy or similar process or
assignment by operation of law,
and any attempt to effect any such action shall be null and void and of no
effect.
7.02 AMENDMENT OR TERMINATION
Subject to Section 7.03 (Effect of Amendment or Termination), this Plan may
be amended in whole or in part from time to time or terminated by the
Corporation. Any amendment or termination shall be binding on the
Corporation, Entitled Employees, Eligible Employees and their respective
beneficiaries.
7.03 EFFECT OF AMENDMENT OR TERMINATION
Notwithstanding Section 7.02 (Amendment or Termination), no amendment or
termination of any provision of this Plan shall directly or indirectly
deprive any Entitled Employee or beneficiary of all or any portion of an
Award Payment earned with respect to any Year ending prior to the date of
the amendment or termination.
7.04 NO ENLARGEMENT OF CONTRACTUAL RIGHTS
This Plan shall not give any Entitled Employee or Eligible Employee the
right to be retained in the service of the Corporation nor shall it
interfere with the right of the Corporation to terminate the employment of
the Entitled Employee or Eligible Employee. Participation in this Plan
shall not give any Entitled Employee or Eligible Employee any right or
claim to any benefit, except to the extent provided in this Plan.
7.05 INTERPRETATION
This Plan shall be interpreted pursuant to the laws of the Province of
Saskatchewan. Section headings are for convenience only and shall not be
considered provisions of the Plan. Words in the singular shall include the
plural, and vice versa, unless qualified by the context.
7.06 WITHHOLDING OF TAXES
The Corporation shall withhold all applicable taxes from any amounts paid
pursuant to this Plan.
7.07 BINDING ON SUCCESSORS
This Plan shall be binding on any successor or successors of PCS Inc.
whether by merger, consolidation or otherwise.
7.08 CURRENCY
The benefits payable pursuant to this Plan shall be paid in the same
currency as the Entitled Employee receives his or her Salary.
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APPENDIX "A" -- AWARD PERCENTAGE
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AWARD PERCENTAGE AWARD PERCENTAGE AWARD PERCENTAGE
WHEN CFR IS WHEN CFR EQUALS AT MAXIMUM CFR
LESS THAN OR IS GREATER THAN (150% OF
TIER GROUP TARGET CFR TARGET CFR TARGET CFR)
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I Corporate President, 50% multiplied (100% multiplied by 100%
and CEO by ACFR ACFR) minus 50%
II Corporate Sr. VPs, 40% multiplied (80% multiplied by 80%
Subsidiary Presidents by ACFR ACFR) minus 40%
III Corporate VPs, 30% multiplied (60% multiplied by 60%
Subsidiary Executive VPs, by ACFR ACFR) minus 30%
Selected Subsidiary VPs
IV Selected Subsidiary VPs, 25% multiplied (50% multiplied by 50%
Selected Corporate Executive by ACFR ACFR) minus 25%
employees
V Subsidiary General Managers 20% multiplied (40% multiplied by 40%
Operations, by ACFR ACFR) minus 20%
Selected Subsidiary VPs,
Selected Directors
VI Corporate Director, 15% multiplied (30% multiplied by 30%
Subsidiary Director, by ACFR ACFR) minus 15%
Selected Subsidiary Superintendents
VII Selected Key Manager 10% multiplied (20% multiplied by 20%
by ACFR ACFR) minus 10%
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NOTES:
1. Where the ACFR is greater than 150 (i.e. the maximum CFR), the ACFR is
deemed to be 150.
2. Subject to Section 4.04 (Limitation of Award Payments and General
Discretion) where the CFR is less than 50, the ACFR is deemed to be zero
(0).
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