exv10wn



 





Exhibit 10(n)



 



 



Short-Term Incentive Plan



Effective January 1, 2000



Potash Corporation of Saskatchewan Inc.





 









 






Contents




	 	 	 	 	 
	 
	Section 1—Establishment of the Plan
	 	 	1	 
	1.01     Purpose
	 	 	1	 
	1.02     Effective Date
	 	 	1	 
	Section 2—Definitions
	 	 	1	 
	2.01     Accrued Incentive Awards
	 	 	1	 
	2.02     Adjusted Cash Flow Return (ACFR)
	 	 	1	 
	2.03     Average Accumulated Amortization
	 	 	1	 
	2.04     Average Accumulated Depreciation
	 	 	2	 
	2.05     Average Assets
	 	 	2	 
	2.06     Average Non-Interest Bearing Current Liabilities
	 	 	2	 
	2.07     Award Payment
	 	 	3	 
	2.08     Award Percentage
	 	 	3	 
	2.09     Board
	 	 	3	 
	2.10     Cash Flow Return (CFR)
	 	 	3	 
	2.11     Current Taxes
	 	 	3	 
	2.12     CEO
	 	 	3	 
	2.13     Committee
	 	 	4	 
	2.14     Corporation
	 	 	4	 
	2.15     Depreciation and Amortization
	 	 	4	 
	2.16     Eligible Employee
	 	 	4	 
	2.17     Entitled Employee
	 	 	4	 
	2.18     Non-recurring/Atypical Items
	 	 	4	 
	2.19     Operating Income
	 	 	4	 
	2.20     PCS Inc.
	 	 	4	 
	2.21     Plan
	 	 	4	 
	2.22     Salary
	 	 	4	 
	2.23     Target CFR
	 	 	5	 
	2.24     Target Percentage
	 	 	5	 
	2.25     Year
	 	 	5	 
	Section 3—Participation
	 	 	5	 
	3.01     Participation Requirements
	 	 	5	 
	Section 4—Award Payments
	 	 	5	 
	4.01     Eligibility
	 	 	5	 
	4.02     Calculation of Award Payment
	 	 	5	 
	4.03     Entitled Operations Employees
	 	 	6	 
	4.04     Limitation of Award Payments and General Discretion
	 	 	6	 
	4.05     Timing of Award Payments
	 	 	7	 
	Section 5—Administration of the Plan
	 	 	7	 
	5.01     Administration
	 	 	7	 
	Section 6—Transfer of Employment
	 	 	7	 
	6.01     Transfer of Employment
	 	 	7	 
	Section 7—General Provisions
	 	 	8	 
	7.01     Assignment or Alienation
	 	 	8	 






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	7.02     Amendment or Termination
	 	 	8	 
	7.03     Effect of Amendment or Termination
	 	 	8	 
	7.04     No Enlargement of Contractual Rights
	 	 	8	 
	7.05     Interpretation
	 	 	8	 
	7.06     Withholding of Taxes
	 	 	8	 
	7.07     Binding on Successors
	 	 	9	 
	7.08     Currency
	 	 	9	 
	Appendix “A”—Award Percentage
	 	 	10	 






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Section 1—Establishment of the Plan




 






	1.01	 	Purpose 

This Annual Incentive Plan is established for the purpose of rewarding eligible
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.





Section 2—Definitions




 





The following terms, when capitalized, shall be defined as follows:




	2.01	 	Accrued Incentive Awards

“Accrued Incentive Awards” means the amounts accrued during the Year that represent
expected payments under this Plan, the Medium Term Incentive Plan, and other group incentive
plans as appropriate.
	 
	2.02	 	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.
	 
	2.03	 	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,




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	 	(b)	 	equals five (5).






	2.04	 	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).






	2.05	 	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).






	2.06	 	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).




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	2.07	 	Award Payment 

“Award Payment” means a cash payment to an Entitled Employee calculated pursuant to
Section 4 (Award Payments).
	 
	2.08	 	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.
	 
	2.09	 	Board

“Board” means the Board of Directors of PCS Inc.
	 
	2.10	 	Cash Flow Return (CFR)

“Cash Flow Return” or “CFR” means the amount derived from the following formula:






	 	(a)	 	Operating Income, plus
	 
	 	 	 	Non-recurring/Atypical items, plus
	 
	 	 	 	Accrued Incentive Awards, minus
	 
	 	 	 	Depreciation and Amortization, minus
	 
	 	 	 	Current 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.
	 
	2.11	 	Current Taxes 

“Current Taxes” means the current income taxes accrued for a given Year, less
provision for deferred income taxes as set out in the audited consolidated financial
statements of PCS Inc. for that Year.
	 
	2.12	 	CEO

“CEO” means the Chief Executive Officer of PCS Inc.




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	2.13	 	Committee

“Committee” means the Compensation Committee of the Board.
	 
	2.14 	 	Corporation

“Corporation” means Potash Corporation of Saskatchewan Inc. and its direct and
indirect subsidiaries.
	 
	2.15	 	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.
	 
	2.16	 	Eligible Employee 

“Eligible Employee” means an employee who has satisfied the eligibility requirements
set out in Section 4.01 (Eligibility).
	 
	2.17	 	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.






	2.18	 	Non-recurring/Atypical Items 

“Non-recurring/Atypical Items” means exceptional transactions that are considered
non-routine, unique, and not expected to be repeated in a normal course of the Corporation’s
operating cycle. Such items may result in a measurable charge or increase to income and may
or may not be triggered by a management decision.
	 
	2.19	 	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.
	 
	2.20	 	PCS Inc.

“PCS Inc.” means Potash Corporation of Saskatchewan Inc.
	 
	2.21	 	Plan

“Plan” means this Annual Incentive Plan, as amended from time to time.
	 
	2.22	 	Salary

“Salary” means:






	 	(a)	 	For Entitled Employees who are exempt from the overtime requirements of U.S.
wage and hour legislation, the annual base salary in effect at the end of a given Year.




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	 	(b)	 	For Entitled Employees who are non-exempt from the overtime requirements of
U.S. wage and hour legislation, total earned income, including overtime and shift
differentials, for the given Year.






	2.23	 	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.
	 
	2.24	 	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”.
	 
	2.25	 	Year 

“Year” means the fiscal year of PCS Inc.





Section 3—Participation




 






	3.01	 	Participation Requirements 

Participation in the Plan is limited to Eligible Employees.





Section 4—Award Payments




 






	4.01	 	Eligibility 

A full-time permanent 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 20% 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.




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	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, subject to achieving a threshold of at
least 25% of the operating facility’s targets, and thereafter dividing such amount by
two (2).






	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 reviewed and approved by the Board and Committee for the CEO
and the CEO and Committee for direct reports to the CEO. For all others, approval of
the CEO is required.
	 
	 	(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 employee who for part of the Year was a full-time active employee but for
part of the Year was on long-term disability or an approved or unpaid leave of absence,
may be considered an Entitled Employee and eligible for a pro-rata share of the Award
Payment based upon the fraction of the Year the employee was considered a full-time
active employee. However, in situations where the fractional portion of the Year
worked is less than one-twelfth, the employee will not be considered an Entitled
Employee unless the CEO recommends and the Committee approves the exception.
	 
	 	(e)	 	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.




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	 	(f)	 	An Entitled Employee who was, during a Year, promoted or demoted 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.
	 
	 	(g)	 	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 and no later than 2 1/2 months after the end of the Year.





Section 5—Administration of the Plan




 






	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. To the extent
applicable, the Plan shall be administered with respect to Entitled Employees subject to
U.S. law so as to avoid penalties pursuant to Section 409A of the Internal Revenue Code.





Section 6—Transfer of Employment




 






	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




 






	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.




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	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.




9









 











Appendix “A”—Award Percentage




 





 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Award Percentage	 	Award Percentage
	 	 	 	 	 	 	Award Percentage	 	When CFR Equals or	 	at Maximum CFR
	 	 	 	 	 	 	When CFR is Less	 	is Greater Than	 	(150% of Target
	Tier	 	Group	 	Than Target CFR	 	Target CFR	 	CFR)
	 
	 	1	 	 	Corporate President,
and CEO

	 	100% multiplied
by ACFR
	 	(200% multiplied
by ACFR) minus 100%
	 	 	200	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	2	 	 	Executive VP and COO, Executive VP
and CFO

	 	70% multiplied by
ACFR
	 	(140% multiplied by
ACFR) minus 70%
	 	 	140	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	3	 	 	Sr. VP Admin and Subsidiary Presidents

	 	55% multiplied
by ACFR
	 	(110% multiplied
by ACFR) minus 55%
	 	 	110	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	4	 	 	Sr. VP IT, Sr. VP General Counsel,
Sr. VP Fertilizer Sales; Selected
Corporate and Sales VP’s (Audit,
Controller, Procurement, SHE, T&D,
Industrial Sales-Trinidad,
Manufacturing and Technical,
Phosphate/Nitrogen Operations), and
GM Arab Potash

	 	40% multiplied by
ACFR
	 	(80% multiplied by
ACFR) minus 40%
	 	 	80	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	5	 	 	Selected Corporate VP’s

	 	35% multiplied by
ACFR
	 	(70% multiplied by
ACFR) minus 35%
	 	 	70	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	6	 	 	Selected GM’s (Aurora, WS and
Trinidad); Technical Deputy GM, APC;
Finance Deputy GM, APC; Selected
Corporate and Sales VP’s; Associate
General Counsel

	 	30% multiplied
by ACFR
	 	(60% multiplied
by ACFR) minus 30%
	 	 	60	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	7	 	 	General Managers Potash,
Selected VPs; Technical Managers;
Senior Counsel; Plant Managers
(Augusta, FFF, Geismar, Lima); Sr.
Directors

	 	25% multiplied
by ACFR
	 	(50% multiplied
by ACFR) minus 25%
	 	 	50	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	8	 	 	Corporate Directors, Plant Managers
(Marseilles, Joplin, Weeping Water);
Selected Managers

	 	20% multiplied
by ACFR
	 	(40% multiplied
by ACFR) minus 20%
	 	 	40	%






10









 





 





 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Award Percentage	 	Award Percentage
	 	 	 	 	 	 	Award Percentage	 	When CFR Equals or	 	at Maximum CFR
	 	 	 	 	 	 	When CFR is Less	 	is Greater Than	 	(150% of Target
	Tier	 	Group	 	Than Target CFR	 	Target CFR	 	CFR)
	 
	 	9	 	 	Selected Managers (775 + Hay Points)

	 	15% multiplied
by ACFR
	 	(30% multiplied
by ACFR) minus 15%
	 	 	30	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	10	 	 	Selected Salaried Staff (534 to 774
Hay Points)

	 	10% multiplied by
ACFR
	 	(20% multiplied by
ACFR) minus 10%
	 	 	20	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	11	 	 	Selected Salaried Staff (Up to 533
Hay Points)

	 	5% multiplied by
ACFR
	 	(10% multiplied by
ACFR) minus 5%
	 	 	10	%
	 






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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