Exhibit 10(cc)
2005 PERFORMANCE OPTION PLAN
1.     Purpose of Plan
     Potash Corporation of Saskatchewan Inc. (the “Corporation”) by resolution
of its Board of Directors (the “Board”) has established, subject to shareholder
approval at the Corporation’s 2005 Annual and Special Meeting of shareholders,
this Potash Corporation of Saskatchewan Inc. 2005 Performance Option Plan (the
“Plan”) to support the Corporation’s compensation philosophy of providing
selected employees and officers with an opportunity to: promote the growth and
profitability of the Corporation; align their interests with shareholders; and,
earn compensation commensurate with corporate performance. The Corporation
believes this Plan will directly assist in supporting the Corporation’s
compensation philosophy by providing participants with the opportunity through
stock options, which will vest, if at all, based on corporate performance over a
three-year period, to acquire Common Shares of the Corporation (“Common
Shares”).
2.     Duration of this Plan
     This Plan was adopted by the Board on February 28, 2005 to be effective as
of January 1, 2005 (the “Effective Date”), subject to shareholder approval at
the Corporation’s 2005 Annual and Special Meeting of shareholders, and shall
remain in effect, unless sooner terminated as provided herein, until one
(1) year from the Effective Date, at which time it will terminate. After this
Plan is terminated, no stock options may be granted but stock options previously
granted shall remain outstanding in accordance with their applicable terms and
conditions and this Plan’s terms and conditions.
3.     Administration
     This Plan shall be administered by the Compensation Committee of the Board
or any other committee designated by the Board to administer this Plan (the
“Committee”). The Committee shall be responsible for administering this Plan,
subject to this Section 3 and the other provisions of this Plan. The Committee
may employ attorneys, consultants, accountants, agents, and other individuals,
any of whom may be an employee, and the Committee, the Corporation, and its
officers and directors shall be entitled to rely upon the advice, opinions, or
valuations of any such individuals. All actions taken and all interpretations
and determinations made by the Committee shall be made in the Committee’s sole
discretion and shall be final and binding upon the participants, the
Corporation, and all other interested individuals.
4.     Authority of the Committee
     The Committee shall have full and exclusive discretionary power to
interpret the terms and the intent of this Plan and any Stock Option Award
Agreement or other agreement or document ancillary to or in connection with this
Plan, to determine eligibility for stock options and to adopt such rules,
regulations, forms, instruments, and guidelines for administering this Plan as
the Committee may deem necessary or proper. Such authority shall include
adopting modifications and amendments to any Stock Option Award Agreement that
are necessary to comply with the laws of the countries and other jurisdictions
in which the Corporation and/or its subsidiaries operate.
5.     Shares Subject to Stock Options
     The aggregate number of Common Shares issuable after February 28, 2005
pursuant to stock options under this Plan may not exceed 1,200,000 Common
Shares. The aggregate number of Common Shares in respect of which stock options
have been granted to any one person pursuant to this Plan and which remain
outstanding shall not at any time exceed 300,000. The authorized limits under
this Plan shall be subject to adjustment under Sections 12 and 13.
     If any stock option granted under this Plan, or any portion thereof,
expires or terminates for any reason without having been exercised in full, the
Common Shares with respect to which such option has not been exercised shall
again be available for further stock options under this Plan; provided, however,
that any stock option that is granted under this Plan that does not vest as a
result of a failure to satisfy the Performance Measures, shall not be again
available for grant under this Plan.

 

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6.     Grant of Stock Options
     From time to time the Board may designate individual officers and employees
of the Corporation and its subsidiaries eligible to be granted options to
purchase Common Shares and the number of Common Shares which each such person
will be granted a stock option to purchase; provided that the aggregate number
of Common Shares subject to such stock options may not exceed the number
provided for in Section 5 of this Plan. Non-employee directors and other
non-employee contractors and third party vendors are not eligible to participate
in this Plan.
7.     Option Price
     The option price for any option granted under this Plan to any optionee
shall be fixed by the Board when the option is granted and shall be not less
than the fair market value of the Common Shares at such time which, for
optionees resident in the United States and any other optionees designated by
the Board, shall be deemed to be the closing price per Common Share on the New
York Stock Exchange on the last trading day immediately preceding the day the
option is granted and, for all other optionees, shall be deemed to be the
closing price per Common Share on the Toronto Stock Exchange on the last trading
day immediately preceding the day the option is granted; provided that, in
either case, if the Common Shares did not trade on such exchange on such day the
option price shall be the closing price per share on such exchange on the last
day on which the Common Shares traded on such exchange prior to the day the
option is granted.
8.     Vesting of Stock Options
     Subject to achievement of Performance Measures as certified and approved by
the Audit Committee of the Board, stock options granted under this Plan will
vest no later than thirty (30) days after the audited financial statements for
the applicable Performance Period have been approved by the Board.
9.     Performance Measures for Vesting of Stock Options

(a)   The Performance Measures which will be used to determine the degree to
which stock options will vest over the three-year period beginning the first day
of the fiscal year in which they are granted (the “Performance Period”) shall be
cash flow return on investment (“CFROI”) and weighted average cost of debt and
equity capital (“WACC”).

  (i)   CFROI is the ratio of after tax operating cash flow to average gross
investment over the fiscal year, calculated as A divided by B, where (1) A
equals operating income plus nonrecurring or unusual items plus accrued
incentive awards plus depreciation and amortization less cash taxes, and (2) B
equals the average of total assets plus accumulated depreciation plus
accumulated amortization less cash and cash equivalents less non interest
bearing current liabilities.     (ii)   WACC is the weighted average cost of
debt and equity capital, calculated as [A times the product of B divided by C]
plus [D times the product of E divided by C], where (1) A equals the after-tax
market yield cost of debt, (2) B equals the market value of debt less cash and
cash equivalents (3) C equals the market value of debt less cash and cash
equivalents, plus the market value of equity, (4) D equals the cost of equity,
and (5) E equals the market value of equity.

 

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(b)   In determining the number of stock options that will actually vest based
on the degree to which the Performance Measures have been attained during the
applicable Performance Period, the following chart shall be utilized which shows
the three year average excess of CFROI being greater than WACC and the
respective portion of the stock option that will vest:

      Performance Measure   Vesting Scale 3 year average excess of   % of Stock
Option CFROI > WACC   Grant Vesting  
<0%
  0%
0.20%
  30%
1.20%
  70%
2.20%
  90%
2.50%
  100%

(c)   In assessing the portion of the stock options that shall vest in
accordance with the above chart, the following shall be done:

  (i)   Each year, the CFROI and WACC will be calculated in accordance with the
definitions herein, based on the audited financial statements and approved by
the Audit Committee.     (ii)   In each Performance Period, the average of the
three fiscal years shall be calculated by taking the simple average of the
individual years’ results.     (iii)   The resulting three-year average will
then be applied, using the scale above to determine the number of stock options,
if any, that will vest as of the end of the Performance Period.     (iv)   For
results falling between the reference points in the chart above, the level of
vesting shall be mathematically interpolated between the reference points.

10.     Terms of Stock Options
     The period during which a stock option is exercisable may not exceed
10 years from the date the stock option is granted, and the Stock Option Award
Agreement may contain provisions limiting the number of Common Shares with
respect to which the stock option may be exercised in any one year. Each stock
option agreement shall contain provisions to the effect that:

(a)   if the employment of an optionee as an officer or employee of the
Corporation or a subsidiary terminates, by reason of his or her death, or if an
optionee who is a retiree pursuant to Section 10(b) dies, the legal personal
representatives of the optionee will be entitled to exercise any unexercised
vested options, including such stock options that may vest after the date of
death, during the period ending at the end of the twelfth calendar month
following the calendar month in which the optionee dies, failing which exercise
the stock options terminate;   (b)   subject to the terms of Section 10(a)
above, if the employment of an optionee as an officer or employee of the
Corporation or a subsidiary terminates, by reason of retirement in accordance
with the then prevailing retirement policy of the Corporation or subsidiary, the
optionee will be entitled to exercise any unexercised vested stock options,
including such stock options that may vest after the date of retirement, during
the period ending at the end of the 36th month following the calendar month in
which the optionee retires, failing which exercise the stock options terminate;
  (c)   if the employment of an optionee as an officer or employee of the
Corporation or a subsidiary terminates, for any reason other than as provided in
Sections 10(a) or (b), the optionee will be entitled to exercise any unexercised
vested stock options, to the extent exercisable at the date of such event,
during the period ending at the end of the calendar month immediately following
the calendar month in which the event occurs, failing which exercise the stock
options terminate;

 

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(d)   for greater certainty and for these purposes, an optionee’s employment
with the Corporation or a subsidiary shall be considered to have terminated
effective on the last day of the optionee’s actual and active employment with
the Corporation or subsidiary whether such day is selected by agreement with the
optionee or unilaterally by the Corporation or subsidiary and whether with or
without advance notice to the optionee. For the avoidance of doubt, no period of
notice that is given or ought to have been given under applicable law in respect
of such termination of employment will be utilized in determining an optionee’s
entitlement under the Plan. The employment of an optionee with the Corporation
shall be deemed to have terminated for all purposes of the Plan if such person
is employed by or provides services to a person that is a subsidiary of the
Corporation and such person ceases to be a subsidiary of the Corporation, unless
the Committee determines otherwise; and   (e)   each stock option is personal to
the optionee and is not assignable, except (i) as provided in Section 10(a), and
(ii) at the election of the Board, a stock option may be assignable to the
spouse, children and grandchildren of the original optionee and to a trust,
partnership or limited liability company, the entire beneficial interest of
which is held by one or more of the foregoing.

     Nothing contained in Sections 10(a), (b) or (c) shall extend the period
during which a stock option may be exercised beyond its stipulated expiration
date or the date on which it is otherwise terminated in accordance with the
provisions of this Plan.
     If a stock option is assigned pursuant to Section 10(e)(ii), the references
in Sections 10(a), (b) and (c) to the termination of employment or death of an
optionee shall not relate to the assignee of a stock option but shall relate to
the original optionee. In the event of such assignment, legal personal
representatives of the original optionee shall not be entitled to exercise the
assigned stock option, but the assignee of the stock option or the legal
personal representatives of the assignee may exercise the stock option during
the applicable specified period.
11.     Exercise of Stock Options
     Subject to the provisions of this Plan, a vested stock option may be
exercised from time to time by delivering to the Corporation at its registered
office a written notice of exercise specifying the number of Common Shares with
respect to which the stock option is being exercised and accompanied by payment
in cash or certified cheque in full of the purchase price of the Common Shares
then being purchased.
12.     Adjustments
     Appropriate adjustments to the authorized limits set forth in Section 5, in
the number, class and/or type of Common Shares optioned and in the option price
per share, both as to stock options granted or to be granted, shall be made by
the Board to give effect to adjustments in the number of Common Shares which
result from subdivisions, consolidations or reclassifications of the Common
Shares, the payment of share dividends by the Corporation, the reconstruction,
reorganization or recapitalization of the Corporation or other relevant changes
in the capital of the Corporation.
13.     Mergers
     If the Corporation proposes to amalgamate or merge with another body
corporate, the Corporation shall give written notice thereof to optionees in
sufficient time to enable them to exercise outstanding vested stock options, to
the extent they are otherwise exercisable by their terms, prior to the effective
date of such amalgamation or merger if they so elect. The Corporation shall use
its best efforts to provide for the reservation and issuance by the amalgamated
or continuing corporation of an appropriate number of Common Shares, with
appropriate adjustments, so as to give effect to the continuance of the stock
options to the extent reasonably practicable. In the event that the Board
determines in good faith that such continuance is not in the circumstances
practicable, it may upon 30 days’ notice to optionees terminate the stock
options.

 

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14.     Change of Control
     If a “change of control” of the Corporation occurs, each then outstanding
stock option granted under this Plan may be exercised, in whole or in part, even
if such option is not otherwise exercisable by its terms. For purposes of this
Plan, a change of control of the Corporation shall be deemed to have occurred if
any of the following occur, unless the Board adopts a plan after the Effective
Date of this Plan that has a different definition (in which case such definition
shall be applied), or the Committee decides to modify or amend the following
definition through an amendment of this Plan:

(a)   within any period of two consecutive years, individuals who at the
beginning of such period constituted the Board and any new directors whose
appointment by the Board or nomination for election by shareholders of the
Corporation was approved by a vote of at least a majority of the directors then
still in office who either were directors at the beginning of the period or
whose appointment or nomination for election was previously so approved, cease
for any reason to constitute a majority of the Board;   (b)   there occurs an
amalgamation, merger, consolidation, wind-up, reorganization or restructuring of
the Corporation with or into any other entity, or a similar event or series of
such events, other than any such event or series of events which results in
securities of the surviving or consolidated corporation representing 50% or more
of the combined voting power of the surviving or consolidated corporation’s then
outstanding securities entitled to vote in the election of directors of the
surviving or consolidated corporation being beneficially owned, directly or
indirectly, by the persons who were the holders of the Corporation’s outstanding
securities entitled to vote in the election of directors of the Corporation
prior to such event or series of events in substantially the same proportions as
their ownership immediately prior to such event of the Corporation’s then
outstanding securities entitled to vote in the election of directors of the
Corporation;   (c)   50% or more of the fixed assets (based on book value as
shown on the most recent available audited annual or unaudited quarterly
consolidated financial statements) of the Corporation are sold or otherwise
disposed of (by liquidation, dissolution, dividend or otherwise) in one
transaction or series of transactions within any twelve month period;   (d)  
any party, including persons acting jointly or in concert with that party,
becomes (through a take-over bid or otherwise) the beneficial owner, directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation’s then outstanding securities entitled
to vote in the election of directors of the Corporation, unless in any
particular situation the Board determines in advance of such event that such
event shall not constitute a change of control; or   (e)   the Board approves
and/or recommends that shareholders accept, approve or adopt any transaction
that would constitute a change of control under clause b, c or d above and
determines that the change of control resulting from such transaction will be
deemed to have occurred as of a specified date earlier than the date under b, c
or d, as applicable.

15.     Amendment or Discontinuance of this Plan
     The Board may amend or discontinue the Plan at any time, without obtaining
the approval of shareholders of the Corporation unless required by the relevant
rules of the Toronto Stock Exchange, provided that, subject to Sections 12, 13,
and 14, no such amendment may increase the aggregate maximum number of Common
Shares that may be subject to stock options under this Plan, change the manner
of determining the minimum option price, extend the option period under any
option beyond 10 years, expand the assignment provisions of the Plan, permit
non-employee directors to participate in the Plan or, without the consent of the
holder of the option, alter or impair any option previously granted to an
optionee under this Plan; and, provided further, for greater certainty, that,
without the prior approval of the Corporation’s shareholders, stock options
issued under this Plan shall not be repriced, replaced, or regranted through
cancellation, or by lowering the option price of a previously granted stock
option. Pre-clearance of the Toronto Stock Exchange of amendments to the Plan
will be required to the extent provided under the relevant rules of the Toronto
Stock Exchange.
16.     Evidence of Stock Options
     Each stock option granted under this Plan shall be evidenced by a written
stock option agreement between the Corporation and the optionee which shall give
effect to the provisions of this Plan and include such other terms as the
Committee shall determine (“Stock Option Award Agreement”).

 

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(Potash Logo) [o34597o3459768.gif]
  Potash Corporation of Saskatchewan Inc.

This certificate evidences and confirms the grant to [     ] (the “Optionee”) of
options to purchase the number of Common Shares of the Corporation specified
under Paragraph (1) on the terms and subject to the conditions of the Potash
Corporation of Saskatchewan Inc. 2005 Performance Option Plan (the “2005 Plan”)
and the terms and conditions set forth below. In the event of any inconsistency
between the terms of the 2005 Plan and those set forth below, the terms of the
2005 Plan shall control. Capitalized terms used below that are not defined in
this certificate shall have the meanings specified in the 2005 Plan.

  1.   Number of Shares: The Optionee is hereby granted options under the 2005
Plan to Purchase [     ] Common Shares.     2.   Option Exercise Price: The
exercise price for each Common Share is $[     ].     3.   Time and Conditions
to Vesting: The options will become vested following the end of the Performance
Period January 1, 2005 through December 31, 2007 if, and to the extent, the
applicable Performance Measures for the Performance Period are achieved. Subject
to applicable conditions under the 2005 Plan with respect to continued
employment during the Performance Period and achievement of the minimum
Performance Measures, the date for vesting will be determined but will not be
later than 30 days after the audited financial statements of the Corporation for
the 2007 fiscal year of the Corporation have been approved by the Board. Upon
vesting, the Optionee will have the right to purchase a number of Common Shares
covered by the option equal to the percentage determined in accordance with the
performance matrix and vesting scale provided under the 2005 Plan.     4.   Once
vested, the options will continue to be exercisable until the expiry date for
the options of May 5, 2015.     5.   Notwithstanding the provisions of paragraph
4 above, this option will terminate as provided in paragraph 10 of the 2005 Plan
in the event that the actual and active employment of the Optionee ceases. The
option is personal to the Optionee and is not assignable, except in accordance
with the conditions attached hereto as Appendix I.     6.   Notice of exercise
of the option is to be given in accordance with paragraph 11 of the 2005 Plan.  
  7.   Adjustments to the option may be made as provided in paragraph 12 of the
2005 Plan, the provisions of paragraph 13 of the 2005 Plan shall apply in the
event of a proposed amalgamation or merger of the Corporation, and the
provisions of paragraph 14 of the 2005 Plan will apply in the event of a “change
of control” of the Corporation as defined in that paragraph.     8.   This grant
of option is subject to receipt of any necessary regulatory approvals and shall
be governed by the laws of Saskatchewan.  

            Potash Corporation of Saskatchewan Inc.

      by:        President and    Date: May 5, 2005  Chief Executive Officer