Company: CF
Filing Date: 2025-03-25
Form Type: DEF 14A
Source: 0001104659-25-027767
Chunk: 67

Company: CF Industries Holdings, Inc.
Filing Date: 2025-03-25
Form: DEF 14A
Chunk 67
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 compensation and management development committee set the target performance level for the Financial Metric at $2.75 billion of Adjusted EBITDA. This target is about the same as the company’s 2023 performance, with projected lower product prices and higher natural gas costs partially offset by higher sales volume from increased production. Maximum performance for all three performance metrics were set at a level judged to be difficult to achieve and threshold performance was set at the lowest level that would justify a payout. Measured over an extended period, the objective of the committee is to select financial performance levels such that we have a roughly (i) 80% probability of exceeding the threshold level, (ii) 50% probability of exceeding the target level, and (iii) 20% probability of exceeding the maximum level. Although the compensation and management development committee considers management’s outlook as one of several factors in evaluating financial performance levels each year, the committee also recognizes that the outlook for any particular year represents only a single scenario from among a broad range of plausible alternatives, given the pronounced effects of highly volatile commodity prices upon our operating results. In general, the compensation and management development committee aims to achieve a larger payout under the program for years when our performance is superior by long-term industry standards, and a smaller payout (or none at all) for years when our performance is relatively weak, while creating incentives for improved performance under all conditions given the inherent cyclicality in our industry. Target levels of Adjusted EBITDA associated with our annual incentive program and our actual performance relative to these targets are consistent with expectations for a cyclical company. We have a track record of paying for performance and achieve this through setting targets that are rigorous and challenging. The chart below of our Adjusted EBITDA targets, actual results and percentage payouts for 2016 through 2024 demonstrates our pay for performance linkage in the annual incentive program. (1) Reflects payout percentage on the annual incentive program metric associated with Adjusted EBITDA. For 2016-2024, Adjusted EBITDA was the primary metric under the company’s annual incentive program (with a weighting of 50% in 2016, 75% in 2017 through 2020, 80% in 2021 and 2022 and 60% in 2023 and 2024). When considering appropriate performance metrics for the short-term incentive program, the compensation and management development committee also considers alternative metrics for 65 TABLE OF CONTENTS measuring company performance, such as achievement of operating