##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 (Amendment No. 1)
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-8520
 Terra Industries Inc.
  Maryland
(State or other jurisdiction of 
incorporation or organization)
    
    52-1145429
(I.R.S. Employer Identification No.)Terra Centre 
600 Fourth Street
    
    51102-6000
(Zip Code)P. O. Box 6000
Sioux City, Iowa
(Address of principal executive offices)
    
    (712) 277-1340
(Registrants telephone number)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Shares, without par value
    
    New York Stock Exchange
 Securities registered pursuant to section 12(g) of the Act:
 o þ
 o þ
 þ o
 o
 o o
 Large accelerated
filer þ
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o
 o þ




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Documents Incorporated by Reference
  Explanatory Note
    Forward-Looking Information is Subject to Risk and Uncertainty
   
    
    changes in financial markets,
    
    general economic conditions within the agricultural industry,
    
    competitive factors and price changes (principally, sales prices of nitrogen
and methanol products and natural gas costs),
    
    changes in product mix,
    
    changes in the seasonality of demand patterns,
    
    changes in weather conditions,
    
    changes in environmental and other government regulation,
    
    changes in agricultural regulations, and
    
    other risks detailed in the section of this report entitled Risk Factors.




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##### 



Table of Contents
 Part IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    4Item 11.
    
    Executive Compensation
    
    
    9Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    50Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    52Item 14.
    
    Principal Accountant Fees and Services
    
    
    53Part IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    55Signatures
    
    
    65EX-31.1EX-31.2EX-32.1EX-32.2




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Part III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
 DIRECTORS AND EXECUTIVE OFFICERS
  Present Positions and Offices with
Terra, Principal Occupation During the Past Five Years
    
    First Year asName and Age
    
    and Other Public Company Boards
    
    DirectorMartha O. Hesse (66)
    
    Ms. Hesse has been a private investor since 2003. Prior to
this, 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.
    
    
    2001Henry R. Slack (59)
    
    Mr. Slack has served as Chairman of Terra since April 2001.
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
worlds 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.
    
    
    1983
 
 4




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Present Positions and Offices with
Terra, Principal Occupation During the Past Five Years
    
    First Year asName and Age
    
    and Other Public Company Boards
    
    DirectorDennis McGlone (59)
    
    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.
    
    
    2006David E. Fisher (66)
    
    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.
    
    
    1993Dod A. Fraser (58)
    
    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.
    
    
    2003Peter S. Janson (61)
    
    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.
    
    
    2005
 
 5




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Present Positions and Offices with
Terra, Principal Occupation During the Past Five Years
    
    First Year asName and Age
    
    and Other Public Company Boards
    
    DirectorMichael L. Bennett (55)
    
    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.
    
    
    2001James R. Kroner (47)
    
    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.
    
    
    2006
  CORPORATE GOVERNANCE
    
 6




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COMMITTEES OF THE BOARD OF DIRECTORS
 Audit Committee.
  
 7




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Compensation Committee.
 Nominating and Corporate Governance Committee.
   MEETINGS OF THE BOARD OF DIRECTORS
  SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
  
 8




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Item 11.
    
    Executive Compensation
 
 
 Executive Compensation and Other Information
 
 Compensation Discussion and Analysis
 I. Background
  
    
    Michael L. Bennett, President and Chief Executive Officer;
    
    Daniel D. Greenwell, Senior Vice President and Chief Financial Officer;
    
    Joseph D. Giesler, Senior Vice President  Commercial Operations;
    
    Richard S. Sanders, Jr., Vice President  Manufacturing; and
    
    John W. Huey, Vice President, General Counsel and Corporate Secretary.
  II. Overview
 Objectives
  
 9




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Elements of Compensation
  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-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.
  Role of Peer Groups and Competitive Benchmarking
  
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Internal Pay Equity
    III. Role of Our Compensation Consultant
   IV. 2008 Executive Compensation Program
  
 11




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Base Salaries
   Executive
    
    2007 Base Salary
    
    2008 Base SalaryBennett
    
    $
    550,000
    
    
    $
    600,000Greenwell
    
    $
    300,000
    
    
    $
    330,000Giesler
    
    $
    232,000
    
    
    $
    240,000Sanders
    
    $
    220,000
    
    
    $
    242,000Huey
    
    $
    275,000
    
    
    $
    285,000
 Annual Incentive Compensation
   
  
 
  
 
  
 
  
 
  
 
  
  12




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Target
    
    Actual
    
    Target
    
    Actual
    
    Target
    
    Actual2005
    
    2005
    
    2006
    
    2006
    
    2007
    
    2007
    
    Target 2008
    
    Actual 2008Annual
    
    Annual
    
    Annual
    
    Annual
    
    Annual
    
    Annual
    
    Annual
    
    AnnualExecutive
    
    Incentives
    
    Incentives
    
    Incentives
    
    Incentives
    
    Incentives
    
    Incentives
    
    Incentives
    
    IncentivesBennett
    
    $
    315,000
    
    
    $
    200,000
    
    
    $
    575,000
    
    
    $
    0
    
    
    $
    825,000
    
    
    $
    1,468,500
    
    
    $
    900,000
    
    
    $
    1,710,000Greenwell
    
    $
    78,750
    
    
    $
    52,000
    
    
    $
    116,000
    
    
    $
    0
    
    
    $
    150,000
    
    
    $
    300,000
    
    
    $
    198,000
    
    
    $
    396,000Giesler
    
    $
    86,000
    
    
    $
    54,000
    
    
    $
    134,400
    
    
    $
    0
    
    
    $
    139,200
    
    
    $
    230,000
    
    
    $
    144,000
    
    
    $
    275,000Sanders
    
    $
    64,750
    
    
    $
    50,000
    
    
    $
    98,500
    
    
    $
    0
    
    
    $
    132,000
    
    
    $
    245,000
    
    
    $
    145,200
    
    
    $
    290,000Huey
    
    
    N/A
    
    
    
    N/A
    
    
    $
    132,500
    (1)
    
    $
    0
    
    
    $
    137,500
    
    
    $
    265,000
    
    
    $
    142,500
    
    
    $
    275,000
 
 (1)
    
    Mr. Hueys 2006 target incentive amount was prorated to reflect that he was
hired on October 25, 2006.   
    
    If Terras 2008 ROCE was less than 7%, the incentive pool would not have been
funded.
    
    If Terras 2008 ROCE was equal to 7%, 50% of the target annual incentive pool
would have been funded.
    
    For each 0.06% by which Terras 2008 ROCE was greater than 7%, an additional 1%
of the target annual incentive pool would have been funded.
   
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Long-Term Incentives
  
 
  
 
  
 
  
 14




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2008 Performance Share Awards
   Level of Payout forActual
    
    Actual Average
    
    Performance SharePerformance
    
    Target
    
    Achievement of
    
    Annual ROCE (as
    
    Awards (as a % ofPeriod
    
    ROCE
    
    ROCE (by year)
    
    of 12/31/08)
    
    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 determined2008
    
    
    
    73.186
    %
    
    
    after 12/31/092008-2010
    
    
    10
    %
    
    
    2008
    
    
    
    73.1863
    %
    
    
    73.186
    %
    
    To be determined after 12/31/10
  
    
    If Terras annualized average ROCE for the period is less than 5%, no shares
will be delivered.
    
    If Terras 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.
 
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
    
    If Terras 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.
    
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2008 Restricted Share Awards
  Changes to Incentive Compensation Programs for 2009
     
    
    If Terras 2009 ROCE is less than 9%, the incentive pool will not be funded.
 
 17




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
    
    If Terras 2009 ROCE is equal to 9%, 50% of the target annual incentive pool will be
funded.
    
    For each 0.07% by which Terras 2009 ROCE is greater than 9%, an additional 1% of
the target annual incentive pool will be funded.
   
    
    If Terras annualized average ROCE for the period is less than 7.5%, no shares will
be delivered.
    
    If Terras 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 Terras 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.
   Severance
  
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Defined Benefit Pension Plans
   19




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Defined Contribution Plans
   Employee Welfare and Fringe Benefit Plans
  Perquisites
  20




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V. Other Matters
 Stock Ownership/Retention Guidelines
  Chief Executive Officer
    
    4 times annual base salarySenior Vice Presidents
    
    3 times annual base salaryVice Presidents
    
    1 times annual base salary
    Indemnity Agreements
  Role of Executive Officers in Determining Compensation
  
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Deductibility of Executive Compensation
   
 22




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Compensation Committee Report
 
  
 
 
 23




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Executive Compensation
 Summary Compensation Table
  Change inPension Value& Non-qualifiedNon-Equity
    
    DeferredStock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All OtherName & Principal
    
    
    
    
    
    
    
    
    
    
    
    Bonus
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    CompensationPosition
    
    
    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
    
    
    
    $
    5,390,994President & CEO
    
    
    
    2007
    
    
    
    $
    540,385
    
    
    $
    
    
    
    $
    2,770,201
    
    
    $
    
    
    
    $
    1,468,500
    
    
    $
    96,713
    
    
    $
    24,166
    
    
    
    $
    4,899,9652006
    
    
    
    $
    492,308
    
    
    $
    
    
    
    $
    1,147,153
    
    
    $
    
    
    
    $
    
    
    
    $
    80,572
    
    
    $
    22,421
    
    
    
    $
    1,742,453D. Greenwell,
    
    
    
    2008
    
    
    
   $
    325,385
    
    
    $
    
    
    
    $
    586,218
    
    
    $
    
    
    
    $
    396,000
    
    
    $
    
    
    
    $
    23,800
    
    
    
    $
    1,331,403SVP & CFO (7)
    
    
    
    2007
    
    
    
    $
    268,404
    
    
    $
    1,250
    
    
    $
    377,773
    
    
    $
    
    
    
    $
    298,750
    
    
    $
    
    
    
    $
    35,285
    
    
    
    $
    981,4622006J. Giesler,
    
    
    
    2008
    
    
    
    $
    238,769
    
    
    $
    
    
    
    $
    481,653
    
    
    $
    
    
    
    $
    275,000
    
    
    $
    31,359
    
    
    $
    21,460
    
    
    
    $
    1,048,241SVP Commercial Operations
    
    
    
    2007
    
    
    
    $
    230,462
    
    
    $
    
    
    
    $
    559,488
    
    
    $
    
    
    
    $
    230,000
    
    
    $
    26,366
    
    
    $
    20,578
    
    
    
    $
    1,066,8942006
    
    
    
    $
    222,615
    
    
    $
    
    
    
    $
    295,988
    
    
    $
    
    
    
    $
    
    
    
    $
    31,718
    
    
    $
    24,248
    
    
    
    $
    574,570R. Sanders, Jr.
    
    
    
    2008
    
    
    
    $
    238,615
    
    
    $
    
    
    
    $
    450,186
    
    
    $
    
    
    
    $
    290,000
    
    
    $
    28,185
    
    
    $
    23,066
    
    
    
    $
    1,030,053VP Manufacturing
    
    
    
    2007
    
    
    
    $
    216,154
    
    
    $
    
    
    
    $
    456,517
    
    
    $
    
    
    
    $
    245,000
    
    
    $
    18,420
    
    
    $
    21,777
    
    
    
    $
    957,8682006
    
    
    
    $
    197,692
    
    
    $
    
    
    
    $
    233,094
    
    
    $
    
    
    
    $
    
    
    
    $
    20,077
    
    
    $
    23,540
    
    
    
    $
    474,403J. Huey
    
    
    
    2008
    
    
    
    $
    283,462
    
    
    $
    
    
    
    $
    407,612
    
    
    $
    
    
    
    $
    275,000
    
    
    $
    
    
    
    $
    21,403
    
    
    
    $
    987,476VP, General Counsel
    
    
    
    2007
    
    
    
    $
    273,077
    
    
    $
    
    
    
    $
    217,079
    
    
    $
    
    
    
    $
    265,000
    
    
    $
    
    
    
    $
    26,919
    
    
    
    $
    782,075& Corporate Secretary (7)
    
    
    
    2006
 
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(1)
    
    Represents annual incentive plan payments in excess of the named executive officers 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 Terras Original Filing 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 individuals 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 officers 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 36. 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. 25




---



##### Table of Contents



All Other Compensation Table
  RegistrantPerquisites &
    
    ContributionsOther
    
    to Defined
    
    
    
    
    
    TaxPersonal
    
    Contribution
    
    Insurance
    
    ReimbursementsName
    
    
    Benefits(1)
    
    Plans(2)
    
    Premiums(3)
    
    (4)
    
    Other(5)
    
    
    TotalM. Bennett,
President & CEO
    
    
    $
    6,885
    
    
    $
    10,800
    
    
    $
    2,798
    
    
    $
    4,484
    
    
    $
    60
    
    
    
    $
    25,028D. Greenwell,
SVP & CFO
    
    
    $
    6,885
    
    
    $
    11,118
    
    
    $
    496
    
    
    $
    5,241
    
    
    $
    60
    
    
    
    $
    23,800J. Giesler, SVP
Commercial
Operations
    
    
    $
    5,773
    
    
    $
    11,230
    
    
    $
    521
    
    
    $
    3,876
    
    
    $
    60
    
    
    
    $
    21,460R. Sanders,
VP Manufacturing
    
    
    $
    7,306
    
    
    $
    10,333
    
    
    $
    521
    
    
    $
    4,846
    
    
    $
    60
    
    
    
    $
    23,066J. 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 executives 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. 
 26




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##### Table of Contents



Grants of Plan-Based Awards in 2008
 
  
 All OtherAll Other
    
    OptionStock
    
    Awards:Awards:
    
    Number
    
    
    ExerciseEstimated Future Payouts Under
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number
    
    of
    
    
    or Base
    
    
    
    
    
    
    Grant DateType
    
    
    Non-Equity Incentive Plan
    
    
    Estimated Future Payouts Under
    
    
    of Shares
    
    Securities
    
    
    Price of
    
    Market
    
    
    Fair Valueof
    
    
    Awards(4)
    
    
    Equity Incentive Plan Awards(5)
    
    
    of Stock
    
    Underlying
    
    
    Option
    
    Price on
    
    
    of Stock &Grant
    
    Date of
    
    
    Award
    
    
    Threshold
    
    Target
    
    Maximum
    
    
    Threshold
    
    Target
    
    Maximum
    
    
    or Units
    
    Options
    
    
    Awards
    
    Grant
    
    
    OptionName
    
    
    Date(1)
    
    Action(2)
    
    
    (3)
    
    
    ($)
    
    ($)
    
    ($)
    
    
    (#)
    
    (#)
    
    (#)
    
    
    (#)(6)
    
    (#)
    
    
    ($ / Sh)
    
    Date
    
    
    Awards(7)M. Bennett,
    
    
    16-Jul-08
    
    15-Jul-08
    
    
    RS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,100
    
    
    
    
    
    
    
    NA
    
    
    $
    46.44
    
    
    
    $
    561,924President & CEO
    
    
    22-Feb-08
    
    13-Feb-08
    
    
    PS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,000
    
    
    
    56,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47.75
    
    
    
    $
    2,674,00022-Feb-08
    
    
    
    
    
    
    AI
    
    
    
    450,000
    
    
    
    900,000
    
    
    
    1,800,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NAD. Greenwell,
    
    
    16-Jul-08
    
    15-Jul-08
    
    
    RS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,300
    
    
    
    
    
    
    
    NA
    
    
    $
    46.44
    
    
    
    $
    199,692SVP & CFO
    
    
    22-Feb-08
    
    13-Feb-08
    
    
    PS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,900
    
    
    
    9,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47.75
    
    
    
    $
    467,95022-Feb-08
    
    
    
    
    
    
    AI
    
    
    
    99,000
    
    
    
    198,000
    
    
    
    396,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NAJ. Giesler,
    
    
    16-Jul-08
    
    15-Jul-08
    
    
    RS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    
    
    
    
    NA
    
    
    $
    46.44
    
    
    
    $
    148,608SVP Commercial
Operations
    
    
    22-Feb-08
    
    13-Feb-08
    
    
    PS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,600
    
    
    
    7,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47.75
    
    
    
    $
    343,80022-Feb-08
    
    
    
    
    
    
    AI
    
    
    
    72,000
    
    
    
    144,000
    
    
    
    288,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NAR. Sanders,
    
    
    16-Jul-08
    
    15-Jul-08
    
    
    RS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    
    
    
    
    NA
    
    
    $
    46.44
    
    
    
    $
    148,608VP Manufacturing
    
    
    22-Feb-08
    
    13-Feb-08
    
    
    PS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,600
    
    
    
    7,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47.75
    
    
    
    $
    343,80022-Feb-08
    
    
    
    
    
    
    AI
    
    
    
    72,600
    
    
    
    145,200
    
    
    
    290,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NAJ. Huey,
    
    
    16-Jul-08
    
    15-Jul-08
    
    
    RS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,700
    
    
    
    
    
    
    
    NA
    
    
    $
    46.44
    
    
    
    $
    171,828VP, Gen. Counsel &
Corp. Secretary
    
    
    22-Feb-08
    
    13-Feb-08
    
    
    PS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,300
    
    
    
    8,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47.75
    
    
    
    $
    410,65022-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 Terras 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 Terras 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. 27




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##### Table of Contents



Employment Severance Agreements
 Background
  Term
  Severance and Post-Termination Benefits
 
  
 Excise Tax Gross-Up
 
  
 Restrictive Covenants
 
  
 28




---



##### Table of Contents



Annual Incentive Compensation
 2008 Officer and Key Employee Incentive Plan
    
    
    Mr. Bennetts 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. Hueys target annual incentive award was equal to 50% of base salary.
  Long-Term Incentive Awards
  
 29




---



##### Table of Contents



2008 Long-Term Incentive Grants
  
    
    Mr. Bennetts 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.
   
    
    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 executives 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
 
 30




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##### Table of Contents



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 holders
performance shares.
    
    Forfeiture. Upon an executives 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.
 Pre-2008 Long-Term Incentive Grants
  
 31




---



##### Table of Contents



Retirement Benefits
 Defined Benefit Pension Plans
 
  
 Defined Contribution Plans
  32




---



##### Table of Contents



Outstanding Equity Awards at 2008 Fiscal Year-End
  Option Awards
    
    
    Stock AwardsEquityEquity Incentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Incentive Plan
    
    Equity IncentivePlan Awards:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards:
    
    Plan Awards:Number of
    
    Number of
    
    Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of
    
    Market or PayoutSecurities
    
    Securities
    
    Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market Value
    
    Unearned
    
    Value ofUnderlying
    
    Underlying
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Number of
    
    of Shares or
    
    Shares, Units
    
    Unearned Shares,Unexercised
    
    Unexercised
    
    Unexercised
    
    Option
    
    Option
    
    
    Shares or Units of
    
    Units of Stock
    
    or Other Rights
    
    Units or OtherOptions (#)
    
    Options (#) Un-
    
    Unearned
    
    Exercise
    
    Expiration
    
    
    Stock That Have Not
    
    That Have Not
    
    That Have Not
    
    Rights That HaveName
    
    
    Exercisable
    
    exercisable
    
    Options (#)
    
    Price ($)
    
    Date
    
    
    Vested (#)
    
    Vested ($)(1)
    
    Vested (#)
    
    Not Vested ($)(1)M. Bennett,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,000
    (2)
    
    $
    1,283,590President & CEO
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,400
    (3)
    
    $
    340,06812,100
    (4)
    
    $
    201,707138,000
    (5)
    
    $
    2,300,46056,000
    (6)
    
    $
    933,520D. Greenwell,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,400
    (2)
    
    $
    356,738SVP & CFO
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,200
    (3)
    
    $
    120,0244,300
    (4)
    
    $
    71,68120,800
    (5)
    
    $
    346,7369,800
    (6)
    
    $
    163,366J. Giesler,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,100
    (2)
    
    $
    401,747SVP Commercial
Operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,600
    (3)
    
    $
    93,3523,200
    (4)
    
    $
    53,34418,800
    (5)
    
    $
    313,3967,200
    (6)
    
    $
    120,024R. Sanders,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    (2)
    
    $
    333,400VP Manufacturing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,300
    (3)
    
    $
    88,3513,200
    (4)
    
    $
    53,34417,800
    (5)
    
    $
    296,7267,200
    (6)
    
    $
    120,024J. Huey,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    (2)
    
    $
    400,080VP, General Counsel &
Corporate Secretary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,600
    (3)
    
    $
    110,0223,700
    (4)
    
    $
    61,67922,400
    (5)
    
    $
    373,4088,600
    (6)
    
    $
    143,362
  
 33




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##### Table of Contents



(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. 
 34




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##### Table of Contents



Option Exercises and Stock Vested
  Option Awards
    
    
    Stock AwardsNumber ofShares
    
    
    
    
    
    
    Number of SharesAcquired on
    
    Value Realized
    
    
    Acquired on Vesting
    
    Value RealizedName
    
    
    Exercise (#)
    
    on Exercise ($)
    
    
    (#)
    
    on Vesting ($)M. Bennett,
    
    
    
    
    
    
    
    
    
    
    
    
    54,000
    (1)
    
    
    3,008,880President & CEO
    
    
    
    
    
    
    
    
    
    
    
    
    308,000
    (2)
    
    
    5,134,360D. Greenwell,
    
    
    
    
    
    
    
    
    
    
    
    
    9,579
    (3)
    
    
    380,957SVP & CFO
    
    
    
    
    
    
    
    
    
    
    
    
    7,500
    (1)
    
    
    417,900
    
    
    
    
    
    
    
    
    42,800
    (2)
    
    
    713,476J. Giesler,
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    (1)
    
    
    1,393,000SVP
Commercial Operations
    
    
    
    
    
    
    
    
    
    
    
    
    48,200
    (2)
    
    
    803,494R. Sanders,
    
    
    
    
    
    
    
    
    
    
    
    
    18,500
    (1)
    
    
    1,030,820VP Manufacturing
    
    
    
    
    
    
    
    
    
    
    
    
    40,000
    (2)
    
    
    666,800J. 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. 
 35




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##### Table of Contents



Pension Benefits in Fiscal Year 2008
  Present ValueNumber of
    
    of
    
    PaymentsYears Credited
    
    Accumulated
    
    During LastName
    
    Plan Name
    
    Service (#)(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 Operations
    
    Terra Industries Inc. Employees Retirement Plan
    
    
    21
    
    
    $
    219,454
    
    
    $
    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 executives 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.
Gieslers 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.
   
 36




---



##### Table of Contents



Retirement Plan
 Benefit Accrual Formula
   
    
    1.55% of the highest 60-month average pensionable compensation by
    
    Years of credited service and
  
    
    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).
  Vesting
  Early Retirement
 
  
 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
 37




---



##### Table of Contents




    
    Social Security level income benefit.
  SERP
  
 38




---



##### Table of Contents



Nonqualified Deferred Compensation
 AggregateExecutive
    
    Registrant
    
    Aggregate
    
    Withdrawals
    
    AggregateContributions
    
    Contributions
    
    Earnings
    
    /
    
    Balance atin Last FY
    
    in Last FY
    
    in Last FY
    
    Distributions
    
    Last FYEName
    
    ($)(1)
    
    ($)(1)
    
    ($)(1)
    
    ($)
    
    ($)M. Bennett,
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    President & CEOD. Greenwell,
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    SVP & CFOJ. Giesler,
    
    $
    
    
    
    $
    
    
    
    $
    976
    
    
    $
    
    
    
    $
    39,847SVP Commercial OperationsR. Sanders,
    
    $
    
    
    
    $
    
    
    
    $
    (88,448
    )
    
    $
    
    
    
    $
    135,694VP ManufacturingJ. 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.    
 39




---



##### Table of Contents



Post-Employment Payments
  M. Bennett, President & CEO
 QualifyingTermination
    
    Change in
    
    Change inUnrelated to a
    
    Control
    
    Control &Change in
    
    Without
    
    QualifyingDeath
    
    Disability
    
    For Cause
    
    Voluntary
    
    Control
    
    Termination
    
    TerminationCash Severance
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,250,000
    
    
    $
    
    
    
    $
    3,000,000EquityRestricted Shares
    
    $
    1,825,365
    
    
    $
    1,825,365
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,623,658
    
    
    $
    1,825,365Performance Share Awards
    
    $
    3,233,980
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,233,980
    
    
    $
    3,233,980Unexercisable Options
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    5,059,345
    
    
    $
    1,825,365
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,857,638
    
    
    $
    5,059,345Retirement BenefitsDB Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    357,090DC Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    357,090Unvested Deferred
Compensation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other BenefitsHealth & Welfare
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    21,583
    
    
    $
    
    
    
    $
    21,583Outplacement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    72,000
    
    
    $
    
    
    
    $
    72,000Perquisites
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-Term Disability
    
    $
    
    
    
    $
    1,878,390
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Tax Gross-Ups
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2,117,608Total
    
    $
    
    
    
    $
    1,878,390
    
    
    $
    
    
    
    $
    
    
    
    $
    93,583
    
    
    $
    
    
    
    $
    2,211,191Total
    
    $
    5,059,345
    
    
    $
    3,703,755
    
    
    $
    
    
    
    $
    
    
    
    $
    2,343,583
    
    
    $
    4,857,638
    
    
    $
    10,627,626
 
 40




---



##### Table of Contents



D. Greenwell, SVP & CFO
 
 Qualifying
    
    Change in
    
    Change inTermination
    
    Control
    
    Control &For
    
    
    
    
    
    Unrelated to a
    
    Without
    
    QualifyingDeath
    
    Disability
    
    Cause
    
    Voluntary
    
    Change in Control
    
    Termination
    
    TerminationCash Severance
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    792,000
    
    
    $
    
    
    
    $
    1,056,000EquityRestricted Shares
    
    $
    548,443
    
    
    $
    548,443
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    476,762
    
    
    $
    548,443Performance Share Awards
    
    $
    510,102
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    510,102
    
    
    $
    510,102Unexercisable Options
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    1,058,545
    
    
    $
    548,443
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    986,864
    
    
    $
    1,058,545Retirement BenefitsDB Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    DC Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Unvested Deferred
Compensation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other BenefitsHealth & Welfare
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    28,510
    
    
    $
    
    
    
    $
    28,510Outplacement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    39,600
    
    
    $
    
    
    
    $
    39,600Perquisites
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-Term Disability
    
    $
    
    
    
    $
    2,368,971
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Tax Gross-Ups
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    701,757Total
    
    $
    
    
    
    $
    2,368,971
    
    
    $
    
    
    
    $
    
    
    
    $
    68,110
    
    
    $
    
    
    
    $
    769,867Total
    
    $
    1,058,545
    
    
    $
    2,917,414
    
    
    $
    
    
    
    $
    
    
    
    $
    860,110
    
    
    $
    986,864
    
    
    $
    2,884,412
 J. Giesler, SVP Commercial Operations
 Qualifying
    
    Change in
    
    Change inTermination
    
    Control
    
    Control &For
    
    
    
    
    
    Unrelated to a
    
    Without
    
    QualifyingDeath
    
    Disability
    
    Cause
    
    Voluntary
    
    Change in Control
    
    Termination
    
    TerminationCash Severance
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    576,000
    
    
    $
    
    
    
    $
    768,000EquityRestricted Shares
    
    $
    548,443
    
    
    $
    548,443
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    495,099
    
    
    $
    548,443Performance Share Awards
    
    $
    433,420
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    433,420
    
    
    $
    433,420Unexercisable Options
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    981,863
    
    
    $
    548,443
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    928,519
    
    
    $
    981,863Retirement BenefitsDB Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    79,131DC Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    79,131Unvested Deferred
Compensation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other BenefitsHealth & Welfare
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    15,252
    
    
    $
    
    
    
    $
    15,252Outplacement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    28,800
    
    
    $
    
    
    
    $
    28,800Perquisites
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-Term Disability
    
    $
    
    
    
    $
    983,356
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Tax Gross-Ups
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    983,356
    
    
    $
    
    
    
    $
    
    
    
    $
    44,052
    
    
    $
    
    
    
    $
    44,052Total
    
    $
    981,863
    
    
    $
    1,531,799
    
    
    $
    
    
    
    $
    
    
    
    $
    620,052
    
    
    $
    928,519
    
    
    $
    1,873,046
 
 41




---



##### Table of Contents



R. Sanders, VP Manufacturing
 Qualifying
    
    Change in
    
    Change inTermination
    
    Control
    
    Control &For
    
    
    
    
    
    Unrelated to a
    
    Without
    
    QualifyingDeath
    
    Disability
    
    Cause
    
    Voluntary
    
    Change in Control
    
    Termination
    
    TerminationCash Severance
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    580,800
    
    
    $
    
    
    
    $
    774,400EquityRestricted Shares
    
    $
    475,095
    
    
    $
    475,095
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    421,751
    
    
    $
    475,095Performance Share Awards
    
    $
    416,750
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    416,750
    
    
    $
    416,750Unexercisable Options
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    891,845
    
    
    $
    475,095
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    838,501
    
    
    $
    891,845Retirement BenefitsDB Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    58,844DC Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    58,844Unvested Deferred Compensation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other BenefitsHealth & Welfare
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    21,583
    
    
    $
    
    
    
    $
    21,583Outplacement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    34,200
    
    
    $
    
    
    
    $
    34,200Perquisites
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-Term Disability
    
    $
    
    
    
    $
    1,189,613
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Tax Gross-Ups
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    1,189,613
    
    
    $
    
    
    
    $
    
    
    
    $
    55,783
    
    
    $
    
    
    
    $
    55,783Total
    
    $
    891,845
    
    
    $
    1,664,708
    
    
    $
    
    
    
    $
    
    
    
    $
    636,583
    
    
    $
    838,501
    
    
    $
    1,780,872
 J. Huey, VP, General Counsel & Corporate Secretary
 Qualifying
    
    Change in
    
    Change inTermination
    
    Control
    
    Control &Unrelated to a
    
    Without
    
    QualifyingDeath
    
    Disability
    
    For Cause
    
    Voluntary
    
    Change in Control
    
    Termination
    
    TerminationCash Severance
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    641,250
    
    
    $
    
    
    
    $
    855,000EquityRestricted Shares
    
    $
    571,781
    
    
    $
    571,781
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    510,102
    
    
    $
    571,781Performance Share Awards
    
    $
    516,770
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    516,770
    
    
    $
    516,770Unexercisable Options
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    1,088,551
    
    
    $
    571,781
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,026,872
    
    
    $
    1,088,551Retirement BenefitsDB Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    DC Plan
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Unvested Deferred Compensation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other BenefitsHealth & Welfare
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    28,510
    
    
    $
    
    
    
    $
    28,510Outplacement
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    29,040
    
    
    $
    
    
    
    $
    29,040Perquisites
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    LongTerm Disability
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Tax GrossUps
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    571,677Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    57,550
    
    
    $
    
    
    
    $
    629,227Total
    
    $
    1,088,551
    
    
    $
    571,781
    
    
    $
    
    
    
    $
    
    
    
    $
    698,800
    
    
    $
    1,026,872
    
    
    $
    2,572,778
 
 42




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##### Table of Contents



Named Executive Officers Employed by the Company as of December 31, 2008
  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
  
    
    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 employers
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
  
    
    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
  
    
    Immediate vesting of all unvested restricted shares; and
    
    Payment of monthly disability benefits.
 Change in Control Without a Qualifying Termination on December 31, 2008
  
    
    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.
 
 43




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##### Table of Contents



Involuntary Termination Without Cause or Voluntary Termination for Good Reason on December 31,
2008 During the Two-Year Period Following a Change in Control
  
    
    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;
    
    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 employers
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
     
 44




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##### Table of Contents



Release Requirement
  Post-Employment Covenants
  Methodologies and Assumptions Used for Calculating Other Potential Post-Employment Payments
  
    
    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
 
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##### Table of Contents



officer is entitled to cash severance equal to the sum of the named
executive officers 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 officers 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.
 
    
    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
(Employers 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
 
 46




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##### Table of Contents



executives 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 officers 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.
    
    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
officers 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 officers Section 280G base amount was
determined based on average W-2 compensation for the period from 2003-2007 (or the
period of the executives employment with Terra, if shorter); and
    
    the interest rate assumption was 120% of the applicable Federal rate
for December 2008.
 
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##### Table of Contents



Director Compensation
  Change in PensionNon-Equity
    
    Value &Fees Earned
    
    
    
    
    
    
    
    
    
    Incentive
    
    Nonqualifiedor Paid
    
    Stock
    
    Option
    
    Plan
    
    Deferred
    
    All Otherin Cash
    
    Awards
    
    Awards
    
    Compensation
    
    Compensation
    
    CompensationName
    
    ($)(1)
    
    ($)(2)(3)
    
    ($)
    
    ($)
    
    Earnings ($)
    
    ($)
    
    Total ($)Fisher, D.
    
    $
    57,500
    
    
    $
    166,242
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    223,742Fraser, D.
    
    $
    46,500
    
    
    $
    166,242
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    212,742Hesse, M.
    
    $
    50,250
    
    
    $
    166,242
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    216,492Janson, P.
    
    $
    46,250
    
    
    $
    166,242
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    212,492Kroner, J.
    
    $
    43,750
    
    
    $
    150,009
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    193,759McGlone, D.
    
    $
    41,250
    
    
    $
    150,009
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    191,259Slack, 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.  Director Fees Paid in Cash
  
 48




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##### Table of Contents



Director Stock Awards
 2008 Stock Awards
  Director Stock Ownership Guides
  Other Director Compensation
  
 49




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##### Table of Contents



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
 EQUITY SECURITY OWNERSHIP
 Principal
stockholders.
 Name and address of
    
    Title of
    
    Amount and nature of
    
    Percentagebeneficial owner
    
    class
    
    ownership(1)
    
    of classFMR LLC(2)
82 Devonshire Street
Boston, Massachusetts 02109
    
    Common Shares
    
    11,187,505 sole voting
and dispositive power
    
    11.22 %Barclays Global Investors NA.(3)
45 Fremont Street 
San Francisco, California 94105
    
    Common Shares
    
    5,246,187 sole voting
and investment power
    
    5.26 %TPG-Axon Capital Management, LP(4)
888 Seventh Avenue 
38th Floor 
New York, New York 10019
    
    Common Shares
    
    5,130,000 shared
voting and dispositive
power
    
    5.15 %
 
 (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 FMRs 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.(3)
    
    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.(4)
    
    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. 
 50




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##### Table of Contents



Directors
and Officers.
 Number of Common SharesName
    
    Beneficially Owned(1)D.E. Fisher
    
    
    47,970D.A. Fraser
    
    
    31,550M.O. Hesse
    
    
    49,228P.S. Janson
    
    
    20,000J.R. Kroner
    
    
    20,100D. McGlone
    
    
    18,100H.R. Slack
    
    
    41,900M.L. Bennett
    
    
    588,931D.D. Greenwell
    
    
    83,460J.D. Giesler
    
    
    115,634J.W. Huey
    
    
    34,367R.S. Sanders Jr.
    
    
    105,339Directors and all executive officers as a group (17 persons)
    
    
    1,269,580
 
 (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
1.27 percent of Terras 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 Terras Employees Savings and
Investment Plan. Change in Control.
 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
 Share Based Compensation Financial Statements and Supplementary Data
 
 51




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##### Table of Contents



Equity Compensation Plan Information as of December 31, 2008
 (a)
    
    (b)
    
    (c)Plan category
    
    Number of securities to be issued upon exercise of
outstanding options, warrants and rights
    
    Weighted-average
exercise price of outstanding options, warrants and rights
    
    Number of securities remaining available for future issuance under
equity compensation plans (excluding securities reflected in column (a))Equity compensation
plans approved by
security holders
    
    
    -0-
    
    
    
    -0-
    
    
    
    3,999,834Equity compensation
plans not approved
by security holders
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-Total
    
    
    -0-
    
    
    
    $-0-
    
    
    
    3,999,834
 
 Item 13.
    
    Certain Relationships and Related Transactions, and
Director Independence.
 TRANSACTIONS WITH RELATED PERSONS
  POLICIES AND PROCEDURES
   
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##### Table of Contents



Item 14.
    
    Principal Accountant Fees and Services
 Principal Accountant Audit Fees and Services Fees
  Type of Fee
    
    2008
    
    
    2007Audit Fees (1)
    
    $
    1,359,397
    
    
    $
    1,411,841Audit Related Fees (2) (4)
    
    
    146,980
    
    
    
    253,261Total Audit and Audit Related Fees
    
    
    1,506,377
    
    
    
    1,665,102Tax Fees (3) (4)
    
    
    462,443
    
    
    
    305,621All Other Fees (4)
    
    
    0
    
    
    
    0Total
    
    $
    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
Terras annual financial statements and review of financial statements included in Terras Form
10-Qs.(2)
    
    Audit Related Fees include the aggregate fees paid related to the audit of the Companys 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.  Audit Committee Pre-Approval Policies and Procedures
  
 53




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##### Table of Contents



54




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##### Table of Contents



Part IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
 (a) Documents Filed as a Part of this Report1.
    
    The consolidated financial statements required to be filed in our Annual Report on Form
10-K are included in Part II, Item 8 of the Original Filing.2.
    
    Index to Financial Statement Schedules, Reports and Consents
  3.
    
    Other Financial Statements
  (b) Exhibits
 
  2
.1

Stock Purchase Agreement dated as of August 6, 2004 among Terra
    Industries Inc., MissChem Acquisition Inc. and Mississippi
    Chemical Corporation, filed as Exhibit 99.2 to Terra Industries
    Inc.s Form 8-K dated August 9, 2004, is incorporated
    herein by reference.3
.1

Articles of Restatement of Terra Industries Inc. filed with the
    State Department of Assessments and Taxation of Maryland on
    August 3, 2005, restating the Charter of Terra Industries Inc.,
    filed as Exhibit 3.3 to Terra Industries Inc.s Form 8-K
    dated August 3, 2005, are incorporated herein by reference.3
.2

Amended and Restated By-Laws of Terra Industries Inc., effective
    as of August 3, 2005, filed as Exhibit 3.4 to Terra Industries
    Inc.s Form 8-K, dated August 3, 2005, are incorporated
    herein by reference. 
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##### Table of Contents



3
.3

A Certificate of Correction to correct errors and omissions to
    the August 3, 2005 Articles of Restatement for Terra Industries
    Inc., as filed with the State Department of Assessments and
    Taxation of Maryland on April 30, 2008, was included as Exhibit
    99.1 to Terra Industries Inc.s Form 8-K dated May 5, 2008,
    and is incorporated herein by reference.3
.4

Certificate of Incorporation of Terra Capital, Inc. filed as
    Exhibit 3.i.(a) to Terra Capital, Inc.s Registration
    Statement filed on Form S-4 on November 13, 2001, is
    incorporated herein by reference.3
.5

By-Laws of Terra Capital, Inc. filed as Exhibit 3.ii.(a) to
    Terra Capital, Inc.s Registration Statement filed on Form
    S-4 on November 13, 2001, is incorporated herein by reference.3
.6

Certificate of Incorporation of Terra Nitrogen GP Inc., filed as
    Exhibit 3.2 to Terra Nitrogen Company, L.P.s Form 8-K
    dated September 7, 2005, is incorporated herein by reference.3
.7

By-Laws of Terra Nitrogen GP Inc., filed as Exhibit 3.3 to Terra
    Nitrogen Company, L.P.s Form 8-K dated September 7, 2005,
    are incorporated herein by reference.4
.1

Indenture dated as of October 10, 2001 among Terra Capital,
    Inc., certain guarantors and U.S. Bank National Association, as
    trustee, including the form of note, filed as Exhibit 4.1 to
    Terra Industries Inc.s Form 8-K dated October 10,
    2001, is incorporated herein by reference.4
.2

Amendment No. 1 to the Amended and Restated Credit Agreement
    dated January 26, 2005, among Terra Capital, Inc., Mississippi
    Chemical Corporation and Terra Nitrogen (U.K.) Limited
    (collectively, Borrowers), Terra Industries Inc., Terra Capital
    Holdings, Inc., the financial institutions from time to time
    party thereto as issuing banks (Issuers) and Citicorp USA Inc.,
    as administrative agent and collateral agent for Lenders and
    Issuers, filed as Exhibit 4.3 to Terra Industries Inc.s
    Form 10-Q for the fiscal quarter ended September 30, 2005, is
    incorporated herein by reference.4
.3

Amendment No. 2 to the Amended and Restated Credit Agreement
    dated July 29, 2005, among Terra Capital, Inc., Terra
    Mississippi Holdings Corp. (f/k/a Mississippi Chemical
    Corporation) and Terra Nitrogen (U.K.) Limited (collectively,
    Borrowers), Terra Industries Inc., Terra Capital Holdings, Inc.,
    the Lenders party hereto and Citicorp USA Inc. as administrative
    agent and collateral agent for the Lenders and Issuers, filed as
    Exhibit 4.4 to Terra Industries Inc.s Form 10-Q for the
    fiscal quarter ended September 30, 2005, is incorporated herein
    by reference.4
.4

Amendment No. 3 to the Amended and Restated Credit Agreement
    dated October 30, 2006, among Terra Capital, Inc., Terra
    Mississippi Holdings Corp. (f/k/a/ Mississippi Chemical
    Corporation) and Terra Nitrogen (U.K.) Limited (collectively,
    Borrowers), Terra Industries Inc., Terra Capital Holdings, Inc.,
    the Lenders party hereto and Citicorp USA Inc. as administrative
    agent and collateral agent for the Lenders and Issuers, filed as
    Exhibit 4.1 to Terra Industries Inc.s Form 10-Q for the
    fiscal quarter ended September 30, 2006, is incorporated herein
    by reference. 
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4
.5

Amendment No. 4 to the Amended and Restated Credit Agreement
    dated February 2, 2007, among Terra Capital, Inc., Terra
    Mississippi Holdings Corp. (f/k/a Mississippi Chemical
    Corporation) and Terra Nitrogen (U.K.) Limited (collectively,
    Borrowers). Terra Industries Inc., Terra Capital Holdings, Inc.,
    the Lenders party hereto and Citicorp USA Inc. as administrative
    agent and collateral agent for the Lenders and Issuers, filed as
    Exhibit 4.5 to Terra Industries Inc.s Form 10-K for the
    year ended 2007, is incorporated by reference.4
.6

Amendment No. 5 to the Amended and Restated Credit Agreement
    dated July 11, 2007, among Terra Capital, Inc., Terra
    Mississippi Holdings Corp. (f/k/a Mississippi Chemical
    Corporation) and Terra Nitrogen (U.K.) Limited (collectively,
    Borrowers), Terra Industries Inc., Terra Capital Holdings, Inc.,
    the Lenders party hereto and Citicorp USA Inc. as administrative
    agent and collateral agent for the Lenders and Issuers, filed as
    Exhibit 4.6 to Terra Industries Inc.s Form 10-K for the
    year ended 2007, is incorporated by reference.4
.7

Amendment No. 6 to the Amended and Restated Credit Agreement
    dated August 28, 2007, among Terra Capital, Inc., Terra
    Mississippi Holdings Corp. (f/k/a Mississippi Chemical
    Corporation) and Terra Nitrogen (U.K.) Limited (collectively,
    Borrowers), Terra Industries Inc., Terra Capital Holdings, Inc.,
    the Lenders party hereto and Citicorp USA Inc. as administrative
    agent and collateral agent for the Lenders and Issuers, filed as
    Exhibit 4.7 to Terra Industries Inc.s Form 10-K for the
    year ended 2007, is incorporated by reference.4
.8

Amendment No. 1 to the Credit Agreement dated July 29, 2005
    among Terra Nitrogen, Limited Partnership (Borrower), Terra
    Nitrogen Company, L.P., the Lenders party hereto and Citicorp
    USA Inc. as administrative agent and collateral agent for the
    Lenders and Issuers, filed as Exhibit 4.5 to Terra Industries
    Inc.s Form 10-Q for the quarter ended September 30, 2005,
    is incorporated herein by reference.4
.9

Amendment No. 2 to the Credit Agreement dated February 2, 2007,
    among Terra Nitrogen, Limited Partnership (Borrower), Terra
    Nitrogen Company, L.P., the Lenders party hereto, and Citicorp
    USA, Inc. as administrative agent and collateral agent for the
    Lenders and Issuers, filed as Exhibit 4.8 to Terra Nitrogen
    Company, L.P.s Form 10-K for the year ended December 31,
    2007.4
.10

Indenture dated May 21, 2003 between the Company, the guarantors
    party hereto, and U.S. National Bank Association as Trustee,
    with respect to the
    111/2%
    Second Priority Senior Secured Notes due 2010 (including the
    form of
    111/2%
    Second Priority Senior Secured Notes), previously filed as
    Exhibit 4.i to Amendment No. 1 to the Registrants
    Registration Statement of Form S-4 filed on June 12, 2003 and
    incorporated by reference herein, filed as Exhibit 4.6 to Terra
    Industries Inc.s Form 10-Q for the quarter ended June 30,
    2003, is incorporated herein by reference. 
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4
.11

Articles Supplementary of Terra Industries Inc. relating to the
    Retirement of the Companys Trust Shares, filed as Exhibit
    3.1 to Terra Industries Inc.s Form 8-K dated August 3,
    2005, are incorporated herein by reference.4
.12

Articles Supplementary of Terra Industries Inc. relating to the
    Reclassification of the Companys Series B Cumulative
    Redeemable Preferred Shares, filed as Exhibit 3.2 to Terra
    Industries Inc.s Form 8-K August 3, 2005, are incorporated
    herein by reference.4
.13

Registration Rights Agreement dated as of October 7, 2004, among
    Terra and Citigroup Global Markets Inc., as Representative of
    the Initial Purchasers, filed as Exhibit 4.6 to Terras
    Form S-3 dated January 4, 2005, is incorporated herein by
    reference.4
.14

Registration Rights Agreement, dated as of August 6, 2004, among
    Terra Industries Inc., Taurus Investments S.A. and the other
    shareholders named therein, filed as Exhibit 99.1 to
    Terras Form 8-K dated August 16, 2004, is incorporated
    herein by reference.4
.15

Registration Rights Agreement, dated as of December 16, 2004,
    among Terra Industries Inc. and the initial purchasers named
    therein, filed as Exhibit 4.7 to Terras Form S-3/A filed
    February 9, 2005, is incorporated by reference.4
.16

Registration Rights Agreement, dated as of December 21, 2004,
    among Terra Industries Inc., Värde Investment Partners,
    L.P., Perry Principals Investments LLC, Citigroup Financial
    Products, Inc., filed as Exhibit 4.7 to Terras Form S-3
    dated March 17, 2005, is incorporated herein by reference.4
.17

Registration Rights Agreement, dated as of February 2, 2007, by
    and among Terra Capital, Inc., the guarantors named therein and
    Citigroup Global Markets Inc., relating to the 7% Senior
    Notes due 2017, filed as Exhibit 10.1 to Terra Industries
    Inc.s Form 8-K dated February 6, 2007, is incorporated
    herein by reference.4
.18

Form of Indenture relating to the 4.25% Convertible
    Subordinated Debentures, filed as Exhibit 4.7 to Terras
    Form S-3 dated January 4, 2005, is incorporated herein by
    reference.4
.19

Purchase Agreement, dated October 7, 2004, among Terra
    Industries Inc. and the initial purchasers named therein
    relating to the sale of Terras 4.25% Series A Cumulative
    Convertible Perpetual Preferred Shares, filed as Exhibit 1 to
    Terras Form S-3 dated January 4, 2005, is incorporated by
    reference.4
.20

Purchase Agreement, dated as of January 25, 2007, by and among
    Terra Capital, Inc., the guarantors named therein and Citigroup
    Global Markets Inc., relating to the 7% Senior Notes due
    2017, filed as Exhibit 10.1 to Terra Industries Inc.s Form
    8-K dated January 30, 2007, is incorporated herein by reference. 
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4
.21

$150,000,000 Amended and Restated Credit Agreement dated as of
    December 21, 2004, among Terra Capital, Inc., Terra Nitrogen
    (U.K.) Limited, Mississippi Chemical Corporation, as Borrowers;
    Terra Industries Inc. and Terra Capital Holdings, Inc., as
    Guarantors; and the Lenders and Issuers Party thereto; and
    Citicorp USA, Inc., as Administrative Agent and Collateral
    Agent, Citigroup Global Markets Inc. as Lead Arranger and Sole
    Book Runner, filed as Exhibit 4.18 to Terra Industries
    Inc.s Form 10-K for the fiscal year ended December 31,
    2004, is incorporated herein by reference.4
.22

$50,000,000 Credit Agreement dated as of December 21, 2004 among
    Terra Nitrogen, Limited Partnership, as Borrower; Terra Nitrogen
    Company, L.P., as a Guarantor; and the Lenders and Issuers Party
    thereto; and Citicorp USA, Inc., as Administrative Agent and
    Collateral Agent; and Citigroup Global Markets Inc., as Lead
    Arranger and Sole Book Runner, filed as Exhibit 4.19 to Terra
    Industries Inc.s Form 10-K for the fiscal year ended
    December 31, 2004, is incorporated herein by reference.4
.23

Third Supplement to Indenture, dated as of January 29, 2007, by
    and among Terra Capital, Inc., the guarantors named therein and
    U.S. Bank National Association, as trustee, with respect to the
    127/8% Senior
    Secured Notes due 2008, filed as Exhibit 4.1 to Terra Industries
    Inc.s Form 8-K dated January 30, 2007, is
    incorporated herein by reference.4
.24

Third Supplement to Indenture, dated as of January 29, 2007, by
    and among Terra Capital, Inc., the guarantors named therein and
    U.S. Bank National Association, as trustee, with respect to the
    11
    1/2%
    Second Priority Senior Secured Notes due 2010, filed as Exhibit
    4.2 to Terra Industries Inc.s Form 8-K dated January
    30, 2007, is incorporated herein by reference.4
.25

Indenture, dated February 2, 2007, by and among Terra Capital,
    Inc., Terra Industries Inc., the guarantors named therein and
    U.S. Bank National Association, as trustee, relating to the
    7% Senior Notes due 2017, filed as Exhibit 4.1 to Terra
    Industries Inc.s Form 8-K dated February 6, 2007, is
    incorporated herein by reference.4
.26

First Supplemental Indenture, dated January 9, 2008, by and
    among Terra Capital, Inc., Terra Industries Inc., Terra
    Environmental Technologies, Inc., the existing guarantors named
    therein and U.S. Bank National Association, as trustee filed as
    Exhibit 4.1 to Terra Industries Inc.s Form 8-K dated
    January 10, 2008, is incorporated herein by reference.10
.1.1

Excess Benefit Plan of Terra Industries Inc., as amended and
    restated effective as of January 1, 2008, was included as
    Exhibit 10.1 to Terra Industries Inc.s Form 10-Q filed
    with the Securities and Exchange Commission on April 29, 2008,
    and is incorporated herein by reference.10
.1.2

Terra Industries Inc. Supplemental Deferred Compensation Plan
    effective as of December 20, 1993 filed as Exhibit 10.1.9 to
    Terra Industries Inc.s Form 10-K for the year ended
    December 31, 1993, is incorporated herein by reference. 
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10
.1.3

Amendment No. 1 to the Terra Industries Inc. Supplemental
    Deferred Compensation Plan, filed as Exhibit 10.1.15 to Terra
    Industries Form 10-Q for the quarter ended June 30, 1995,
    is incorporated herein by reference.10
.1.4

Amendment No. 2 to the Terra Industries Inc. Supplemental
    Deferred Compensation Plan, dated July 26, 2000, filed as
    Exhibit 10.1.8.a to the Terra Industries Inc.s Form 10-K
    for the year ended December 31, 2000, is incorporated herein by
    reference.10
.1.5*

Amendment No. 3 to the Terra Industries Inc. Supplemental
    Deferred Compensation Plan, dated March 29, 2002.10
.1.6*

Amendment No. 4 to the Terra Industries Inc. Supplemental
    Deferred Compensation Plan, dated December 29, 2004.10
.1.7

Terra Industries Inc. Stock Incentive Plan of 2002, filed as
    Exhibit 10.1.18 to Terra Industries Inc.s Form 10-K for
    the year ended December 31, 2001, is incorporated herein by
    reference.10
.1.8

Form of Restricted Stock Award to Non-Employee Directors under
    the Terra Industries Inc. Stock Incentive Plan of 2002, filed as
    Exhibit 10.1.23 to Terra Industries Inc.s Form 10-K for
    the year ended December 31, 2002, is incorporated herein by
    reference.10
.1.9

Form of Restricted Stock Award to Officers and Other Key
    Employees under Terra Industries Inc. Stock Incentive Plan of
    2002, filed as Exhibit 10.1.24 to Terra Industries Inc.s
    Form 10-K for the year ended December 31, 2002, is incorporated
    herein by reference.10
.1.10

Revised Form of Restricted Stock Award of Terra Industries Inc.
    under its Stock Incentive Plan of 2002, filed as Exhibit 10.9 to
    Terra Industries Inc.s Form 10-Q for the fiscal quarter
    ended September 30, 2005, is incorporated herein by reference.10
.1.11

Form of Long-Term Incentive Award for Time and Performance Based
    Shares of Terra Industries Inc. under its Stock Incentive Plan
    of 2002, filed as Exhibit 10.10 to Terra Industries Inc.s
    10-Q for the fiscal quarter ended September 30, 2005, is
    incorporated herein by reference.10
.1.12

Form of Long-Term Incentive Award for Phantom Time and
    Performance Based Shares of Terra Industries Inc. under its
    Stock Incentive Plan of 2002, filed as Exhibit 10.11 to Terra
    Industries Inc.s Form 10-Q for the fiscal quarter ended
    September 30, 2005, is incorporated herein by reference.10
.1.13

Form of Long-Term Incentive Award for Performance Shares of
    Terra Industries Inc. under its Stock Incentive Plan of 2002
    filed as Exhibit 10.1.23 to Terra Industries Inc.s Form
    10-K for the year ended 2005, is incorporated by reference. 
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10
.1.14

Form of Long-Term Incentive Award for Phantom Performance Shares
    of Terra Industries Inc. under its Stock Incentive Plan of 2002
    filed as Exhibit 10.1.24 to Terra Industries Inc.s Form
    10-K for the year ended 2005, is incorporated by reference.10
.1.15

Form of Indemnity Agreement of Terra Industries Inc., filed as
    Exhibit 10.1 to Terra Industries Inc.s Form 8-K dated July
    7, 2006, is incorporated by reference.10
.1.16

Form of Unrestricted Annual Share Award to Non-Employee
    Directors under the Terra Industries Inc. Stock Incentive Plan
    of 2002, filed as Exhibit 99.1 to Terra Industries Inc.s
    Form 8-K dated August 10, 2006, is incorporated herein by
    reference.10
.1.17

Employment Severance Agreement between Terra Industries Inc. and
    Michael L. Bennett dated October 5, 2006, filed as Exhibit 10.1
    to Terra Industries Inc.s Form 8-K dated October 5, 2006,
    is incorporated herein by reference.10
.1.18

Form of Employment Severance Agreement for Section 16(b)
    Executive Officers, filed as Exhibit 10.2 to Terra Industries
    Inc.s Form 8-K dated October 5, 2006, is incorporated
    herein by reference.10
.1.19

Amendment to Employment Severance Agreement between Terra
    Industries Inc. and Mark A. Kalafut dated October 6, 2006, filed
    as Exhibit 10.1 to Terra Industries Inc.s Form 8-K dated
    October 6, 2006 is incorporated herein by reference.10
.1.20

2007 Omnibus Incentive Compensation Plan, adopted by the board
    of directors of Terra Industries Inc. (Terra) and subsequently
    approved by its stockholders at the annual meeting of Terra on
    May 8, 2007, reported on Terras Form 8-K filed May 10,
    2007 and attached as Appendix A to Terras Proxy Statement
    on Schedule 14A filed with the Securities and Exchange
    Commission on March 15, 2007, is incorporated herein by
    reference.10
.1.21

Amendment Number One to Employment Severance Agreement, filed as
    Exhibit 10.1.31 to Terra Industries Inc.s Form 10-K for
    the year ended 2007, is incorporated by reference.10
.1.22

Amendment to Restricted Share Agreement, filed as Exhibit
    10.1.32 to Terra Industries Inc.s Form 10-K for the year
    ended 2007, is incorporated by reference.10
.1.23

Amendment to Performance Share Award Agreement, filed as Exhibit
    10.1.33 to Terra Industries Inc.s Form 10-K for the year
    ended 2007, is incorporated by reference..10
.1.24

Amendment to Terra Long Term Incentive Award dated October 23,
    2007, for former Terra, now GrowHow UK Limited joint venture
    employees, filed as Exhibit 10.1.34 to Terra Industries
    Inc.s Form 10-K for the year ended 2007, is incorporated
    by reference.10
.1.25

Form of Phantom Performance Share Award agreement of February
    2008, filed as Exhibit 10.1 to Terra Industries Inc.s Form
    10-Q dated July 25, 2008, is incorporated herein by reference. 
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10
.1.26

Form of Performance Share Award agreement as of February 2008,
    filed as Exhibit 10.2 to Terra Industries Inc.s Form 10-Q
    dated July 25, 2008, is incorporated herein by reference.10
.2

First Amended and Restated Agreement of Limited Partnership of
    Terra Nitrogen, Limited Partnership dated September 1, 2005,
    filed as Exhibit 10.3 to Terra Nitrogen Company, L.P.s
    Form 8-K dated September 7, 2005, is incorporated herein by
    reference.10
.3

General and Administrative Services Agreement regarding Services
    by Terra Industries Inc. filed as Exhibit 10.11 to Terra
    Industries Inc. Form 10-Q for the quarter ended March 31, 1995,
    is incorporated herein by reference.10
.4

Amendment No. 1 to the General and Administrative Service
    Agreement regarding Services by Terra Industries Inc. dated
    September 1, 2005, filed as Exhibit 10.4 to the Terra Nitrogen
    Company, L.P.s Form 8-K dated September 7, 2005, is
    incorporated herein by reference.10
.5

Amendment No. 1 to the General and Administrative Services
    Agreement regarding Services by Terra Nitrogen Corporation dated
    September 1, 2005, filed as Exhibit 10.5 to Terra Nitrogen
    Company, L.P.s Form 8-K dated September 7, 2005, is
    incorporated herein by reference.10
.6

Amended and Restated General and Administrative Services
    Agreement between Terra Industries Inc., Terra Nitrogen
    Corporation, and Terra Nitrogen GP Inc., dated October 23, 2007,
    filed as Exhibit 10.1 to Terra Nitrogen Company, L.P.s
    Form 10-Q filed on October 29, 2007, is incorporated herein by
    reference.10
.7

Reorganization Agreement among Terra Nitrogen Company, L.P.,
    Terra Nitrogen, Limited Partnership and Terra Nitrogen
    Corporation dated September 1, 2005, filed as Exhibit 10.1 to
    Terra Nitrogen Company, L.P.s Form 8-K dated September 7,
    2005, is incorporated herein by reference.10
.8

Conveyance, Assignment and Assumption Agreement by and between
    Terra Nitrogen Corporation and Terra Nitrogen GP Inc. dated
    September 1, 2005, filed as Exhibit 10.2 to Terra Nitrogen
    Company, L.P.s Form 8-K dated September 7, 2005, is
    incorporated herein by reference.10
.9

Sale of Business Agreement dated November 20, 1997 between
    ICI Chemicals & Polymers Limited, Imperial Chemical
    Industries PLC, Terra Nitrogen (U.K.) Limited (f/k/a Terra
    Industries Limited) and Terra Industries Inc. filed as
    Exhibit 2 to Terra Industries Inc.s Form 8-K/A dated
    December 31, 1997, is incorporated herein by reference.10
.10

Ammonium Nitrate Agreement dated December 31, 1997 between Terra
    International (Canada) Inc and ICI Chemicals & Polymers
    Limited filed as Exhibit 99 to Terra Industries Inc.s Form
    8-K/A dated December 31, 1997, is incorporated herein by
    reference.10
.11

Asset Sale and Purchase Agreement dated as of May 3, 1999 by and
    between Terra Industries Inc. and Cenex/Land OLakes
    Agronomy Company, filed as Exhibit 10.12 to Terra
    Industries Form 8-K dated May 3, 1999, is incorporated
    herein by reference. 
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10
.12

Asset Purchase and Methanol Exclusivity Agreement among Terra
    Industries Inc., BMC Holdings Inc., and Methanex Methanol
    Company dated December 15, 2003, filed as Exhibit 10.9 to
    Terra Industries Form 10-K for the year ended December 31,
    2003, is incorporated herein by reference.10
.12.1

Services Agreement among Terra Industries Inc., BMC Holdings
    Inc., and Methanex Methanol Company dated December 15, 2003
    included as Schedule E to Exhibit 10.2 herein, filed as Exhibit
    10.9.1 to Terra Industries Inc.s Form
    10-K for the
    year ended December 31, 2003, is incorporated herein by
    reference.10
.13

First Amendment to Asset Purchase and Methanol Exclusivity
    Agreement dated February 20, 2004, filed as Exhibit 10.10 to
    Terra Industries Inc.s Form 10-K for the year ended
    December 31, 2003, is incorporated herein by reference.10
.14

Warrant Agreement dated December 21, 2004 among Terra Industries
    Inc., Perry Principals Investments LLC, Citigroup Financial
    Products Inc. and Värde Investment Partners, L.P., filed as
    Exhibit 10.11 to Terra Industries Inc.s Form 10-K for the
    year ended December 31, 2004, is incorporated herein by
    reference.10
.15

Ammonium Nitrate Supply Agreement between Terra Mississippi
    Nitrogen, Inc. and Orica USA Inc. dated July 21, 2005, filed as
    Exhibit 10.7 to Terra Industries Inc.s Form 10-Q for the
    fiscal quarter ended September 30, 2005, is incorporated herein
    by reference.10
.16

Conversion Agreement by and between Terra Mississippi Nitrogen,
    Inc. and Orica USA Inc. dated July 21, 2005, filed as exhibit
    10.8 to Terra Industries Inc. Form 10-Q for the fiscal quarter
    ended September 30, 2005, is incorporated herein by reference.10
.17

Option Agreement, dated as of July 18, 2007, by and between
    Terra Industries Inc. and Eastman Chemical Company, filed as
    Exhibit 10.1 to Terra Industries Inc.s Form 8-K dated July
    23, 2007, is incorporated herein by reference.10
.18

Joint Venture Contribution Agreement, dated September 14, 2007,
    by and among GrowHow UK Limited, Terra International (Canada),
    Inc., Kemira GrowHow Oyj and Terra Industries Inc., filed as
    Exhibit 10.1 to Terra Industries Inc.s Form 10-Q dated
    October 29, 2007, is incorporated herein for reference.10
.19

Shareholders Agreement, dated September 14, 2007, by and
    among Kemira GrowHow Oyj, Terra International (Canada), Inc.,
    Terra Industries Inc and GrowHow UK Limited filed as Exhibit
    10.2 to Terra Industries Inc.s Form 10-Q dated
    October 29, 2007, is incorporated herein for reference.10
.20

Consulting and Non-Competition Agreement between Terra
    Industries Inc. and Francis G. Meyer dated April 1, 2008, filed
    as Exhibit 10.1 to Terra Industries Inc.s Form 8-K dated
    April 1, 2008, is incorporated herein by reference.12
.1*

Ratio of Earnings to Financial Charges21
.1*

Subsidiaries of Terra Industries Inc. 
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23
.1*

Consent of Deloitte & Touche LLP31
.1**

Certification of Chief Executive Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.31
.2**

Certification of Chief Financial Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.32
.1**

Certification of Chief Executive Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.32
.2**

Certification of Chief Financial Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.99*


Financial Statements for Point Lisas Nitrogen Limited for the
    years ended December 31, 2008, 2007 and 2006.    *
    
    Filed in connection with the Original Filing.**
    
    Filed herewith.  
    
    Confidential treatment has been requested for portions of this
    document.   
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Signatures
  TERRA INDUSTRIES INC.Date: April 28, 2009
    By:
    /s/ DANIEL D. GREENWELLDaniel D. GreenwellSenior Vice President and Chief Financial
Officer and a duly authorized signatory
(Principal Financial Officer and Principal Accounting Officer) 
 65