exv10wnn



 






  





Exhibit 10(nn)



POTASH CORPORATION OF SASKATCHEWAN INC.


2005 PERFORMANCE
OPTION PLAN




	1.	 	Purpose of Plan





Potash Corporation of Saskatchewan Inc. (the
“Corporation”) by resolution of its Board of Directors (the “Board”) has
established, subject to shareholder approval at the Corporation’s 2005
Annual and Special Meeting of shareholders, this Potash Corporation of
Saskatchewan Inc. 2005 Performance Option Plan (the “Plan”) to support
the Corporation’s compensation philosophy of providing selected
employees and officers with an opportunity to: promote the growth and
profitability of the Corporation; align their interests with
shareholders; and, earn compensation commensurate with corporate
performance. The Corporation believes this Plan will directly assist in
supporting the Corporation’s compensation philosophy by providing
participants with the opportunity through stock options, which will
vest, if at all, based on corporate performance over a three-year
period, to acquire Common Shares of the Corporation (“Common Shares”).




	2.	 	Duration of this Plan





This Plan was adopted by the Board on February 28,
2005 to be effective as of January 1, 2005 (the “Effective
Date”), subject to shareholder approval at the Corporation’s 2005 Annual
and Special Meeting of shareholders, and shall remain in effect, unless
sooner terminated as provided herein, until one (1) year from the
Effective Date, at which time it will terminate. After this Plan is
terminated, no stock options may be granted but stock options previously
granted shall remain outstanding in accordance with their applicable
terms and conditions and this Plan’s terms and conditions.




	3.	 	Administration





This Plan shall be administered by the
Compensation Committee of the Board or any other committee designated by
the Board to administer this Plan (the “Committee”). The Committee shall
be responsible for administering this Plan, subject to this Section 3
and the other provisions of this Plan. The Committee may employ
attorneys, consultants, accountants, agents, and other individuals, any
of whom may be an employee, and the Committee, the Corporation, and its
officers and directors shall be entitled to rely upon the advice,
opinions, or valuations of any such individuals. All actions taken and
all interpretations and determinations made by the Committee shall be
made in the Committee’s sole discretion and shall be final and binding
upon the participants, the Corporation, and all other interested
individuals.




	4.	 	Authority of the Committee





The Committee shall have full and exclusive
discretionary power to interpret the terms and the intent of this Plan
and any Stock Option Award Agreement or other agreement or document
ancillary to or in connection with this Plan, to determine eligibility
for stock options and to adopt such rules, regulations, forms,
instruments, and guidelines for administering this Plan as the Committee
may deem necessary or proper. Such authority shall include adopting
modifications and amendments to any Stock Option Award Agreement that
are necessary to comply with the laws of the countries and other
jurisdictions in which the Corporation and/or its subsidiaries operate.




	5.	 	Shares Subject to Stock Options





The aggregate number of Common Shares issuable
after February 28, 2005 pursuant to stock options under this Plan
may not exceed 1,200,000 Common Shares. The aggregate number of
Common Shares in respect of which stock options have been granted to any
one person pursuant to this Plan and which remain outstanding shall not
at any time exceed 300,000. The authorized limits under this Plan shall
be subject to adjustment under Sections 12 and 13.



If any stock option granted under this Plan, or
any portion thereof, expires or terminates for any reason without having
been exercised in full, the Common Shares with respect to which such
option has not been exercised shall again be available for further stock
options under this Plan; provided, however, that any stock option that
is granted under this Plan that does not vest as a result of a failure
to satisfy the Performance Measures, shall not be again available for
grant under this Plan.



	6.	 	Grant of Stock Options





From time to time the Board may designate
individual officers and employees of the Corporation and its
subsidiaries eligible to be granted options to purchase Common Shares
and the number of Common Shares which each such person will be granted a
stock









 





C-2

option to purchase; provided that the aggregate number of Common
Shares subject to such stock options may not exceed the number provided
for in Section 5 of this Plan. Non-employee directors and other
non-employee contractors and third party vendors are not eligible to
participate in this Plan.




	7.	 	Option Price





The option price for any option granted under
this Plan to any optionee shall be fixed by the Board when the option is
granted and shall be not less than the fair market value of the Common
Shares at such time which, for optionees resident in the United States
and any other optionees designated by the Board, shall be deemed to be
the closing price per Common Share on the New York Stock Exchange on the
last trading day immediately preceding the day the option is granted
and, for all other optionees, shall be deemed to be the closing price
per Common Share on the Toronto Stock Exchange on the last trading day
immediately preceding the day the option is granted; provided that, in
either case, if the Common Shares did not trade on such exchange on such
day the option price shall be the closing price per share on such
exchange on the last day on which the Common Shares traded on such
exchange prior to the day the option is granted.




	8.	 	Vesting of Stock Options





Subject to achievement of Performance Measures
as certified and approved by the Audit Committee of the Board, stock
options granted under this Plan will vest no later than thirty (30) days
after the audited financial statements for the applicable
Performance Period have been approved by the Board.




	9.	 	Performance Measures for Vesting of Stock Options






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






	 	(i)	 	CFROI is the ratio of after tax operating cash flow to average gross investment over
the fiscal year, calculated as A divided by B, where (1) A equals operating income
plus nonrecurring or unusual items plus accrued incentive awards plus depreciation and
amortization less cash taxes, and (2) B equals the average of total assets plus
accumulated depreciation plus accumulated amortization less cash and cash equivalents
less non interest bearing current liabilities.

	 
	 	(ii)	 	WACC is the weighted average cost of debt and equity capital, calculated as [A times
the product of B divided by C] plus [D times the product of E divided by C], where (1) A
equals the after-tax market yield cost of debt, (2) B equals the market
value of debt less cash and cash equivalents (3) C equals the market value of debt
less cash and cash equivalents, plus the market value of equity, (4) D equals the
cost of equity, and (5) E equals the market value of equity.






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





	 	 	 	 	 	 	 	 
	 
	 	Performance Measure	 	 	Vesting Scale	 
	 	3 year average excess of

CFROI > WACC

	 	 	% of Stock Option Grant

Vesting
	 
	 	<0%

	 	 	 	0	%	 
	 	0.20%

	 	 	 	30	%	 
	 	1.20%

	 	 	 	70	%	 
	 	2.20%

	 	 	 	90	%	 
	 	2.50%

	 	 	 	100	%	 
	 






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






	 	(i)	 	Each year, the CFROI and WACC will be calculated in accordance with the definitions
herein, based on the audited financial statements and approved by the Audit Committee.

	 
	 	(ii)	 	In each Performance Period, the average of the three fiscal years shall be calculated
by taking the simple average of the individual years’ results.













 






 C-3


	 	(iii)	 	The resulting three-year average will then be applied, using the scale above to
determine the number of stock options, if any, that will vest as of the end of the
Performance Period.

	 
	 	(iv)	 	For results falling between the reference points in the chart above, the level of
vesting shall be mathematically interpolated between the reference points.






	10.	 	Terms of Stock Options





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




	(a)	 	if the employment of an optionee as an officer or employee of the Corporation or a
subsidiary terminates, by reason of his or her death, or if an optionee who is a retiree
pursuant to Section 10(b) dies, the legal personal representatives of the optionee will
be entitled to exercise any unexercised vested options, including such stock options that
may vest after the date of death, during the period ending at the end of the twelfth
calendar month following the calendar month in which the optionee dies, failing which
exercise the stock options terminate;

	 
	(b)	 	subject to the terms of Section 10(a) above, if the employment of an optionee as an
officer or employee of the Corporation or a subsidiary terminates, by reason of retirement
in accordance with the then prevailing retirement policy of the Corporation or subsidiary,
the optionee will be entitled to exercise any unexercised vested stock options, including
such stock options that may vest after the date of retirement, during the period ending at
the end of the 36th month following the calendar month in which the optionee retires,
failing which exercise the stock options terminate;

	 
	(c)	 	if the employment of an optionee as an officer or employee of the Corporation or a
subsidiary terminates, for any reason other than as provided in Sections 10(a) or (b),
the optionee will be entitled to exercise any unexercised vested stock options, to the
extent exercisable at the date of such event, during the period ending at the end of the
calendar month immediately following the calendar month in which the event occurs, failing
which exercise the stock options terminate;

	 
	(d)	 	for greater certainty and for these purposes, an optionee’s employment with the
Corporation or a subsidiary shall be considered to have terminated effective on the last day
of the optionee’s actual and active employment with the Corporation or subsidiary whether
such day is selected by agreement with the optionee or unilaterally by the Corporation or
subsidiary and whether with or without advance notice to the optionee. For the avoidance of
doubt, no period of notice that is given or ought to have been given under applicable law in
respect of such termination of employment will be utilized in determining an optionee’s
entitlement under the Plan. The employment of an optionee with the Corporation shall be
deemed to have terminated for all purposes of the Plan if such person is employed by or
provides services to a person that is a subsidiary of the Corporation and such person ceases
to be a subsidiary of the Corporation, unless the Committee determines otherwise; and

	 
	(e)	 	each stock option is personal to the optionee and is not assignable, except (i) as
provided in Section 10(a), and (ii) at the election of the Board, a stock option may
be assignable to the spouse, children and grandchildren of the original optionee and to a
trust, partnership or limited liability company, the entire beneficial interest of which is
held by one or more of the foregoing.





Nothing contained in Sections 10(a), (b) or
(c) shall extend the period during which a stock option may
be exercised beyond its stipulated expiration date or the date on which
it is otherwise terminated in accordance with the provisions of this
Plan.



If a stock option is assigned pursuant to
Section 10(e)(ii), the references in Sections 10(a), (b) and
(c) to the termination of employment or death of an optionee shall
not relate to the assignee of a stock option but shall relate to the
original optionee. In the event of such assignment, legal personal
representatives of the original optionee shall not be entitled to
exercise the assigned stock option, but the assignee of the stock option
or the legal personal representatives of the assignee may exercise the
stock option during the applicable specified period.



	11.	 	Exercise of Stock Options





Subject to the provisions of this Plan, a
vested stock option may be exercised from time to time by delivering to
the Corporation at its registered office a written notice of exercise
specifying the number of Common Shares with respect to which the stock
option is being exercised and accompanied by payment in cash or
certified cheque in full of the purchase price of the Common Shares then
being purchased.










 






 C-4


	12.	 	Adjustments





Appropriate adjustments to the authorized
limits set forth in Section 5, in the number, class and/or type of
Common Shares optioned and in the option price per share, both as to
stock options granted or to be granted, may be made by the Board in its
discretion to give effect to adjustments in the number of Common Shares
which result from subdivisions, consolidations or reclassifications of
the Common Shares, the payment of share dividends by the Corporation,
the reconstruction, reorganization or recapitalization of the
Corporation or other relevant changes in the capital of the Corporation.




	13.	 	Mergers





If the Corporation proposes to amalgamate or
merge with another body corporate, the Corporation shall give written
notice thereof to optionees in sufficient time to enable them to
exercise outstanding vested stock options, to the extent they are
otherwise exercisable by their terms, prior to the effective date of
such amalgamation or merger if they so elect. The Corporation shall use
its best efforts to provide for the reservation and issuance by the
amalgamated or continuing corporation of an appropriate number of Common
Shares, with appropriate adjustments, so as to give effect to the
continuance of the stock options to the extent reasonably practicable.
In the event that the Board determines in good faith that such
continuance is not in the circumstances practicable, it may upon 30 days’
notice to optionees terminate the stock options.




	14.	 	Change of Control





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




	(a)	 	within any period of two consecutive years, individuals who at the beginning of such
period constituted the Board and any new directors whose appointment by the Board or
nomination for election by shareholders of the Corporation was approved by a vote of at
least a majority of the directors then still in office who either were directors at the
beginning of the period or whose appointment or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;

	 
	(b)	 	there occurs an amalgamation, merger, consolidation, wind-up, reorganization or
restructuring of the Corporation with or into any other entity, or a similar event or series
of such events, other than any such event or series of events which results in securities of
the surviving or consolidated corporation representing 50% or more of the combined voting
power of the surviving or consolidated corporation’s then outstanding securities entitled to
vote in the election of directors of the surviving or consolidated corporation being
beneficially owned, directly or indirectly, by the persons who were the holders of the
Corporation’s outstanding securities entitled to vote in the election of directors of the
Corporation prior to such event or series of events in substantially the same proportions as
their ownership immediately prior to such event of the Corporation’s then outstanding
securities entitled to vote in the election of directors of the Corporation;

	 
	(c)	 	50% or more of the fixed assets (based on book value as shown on the most recent available
audited annual or unaudited quarterly consolidated financial statements) of the Corporation
are sold or otherwise disposed of (by liquidation, dissolution, dividend or otherwise) in
one transaction or series of transactions within any twelve month period;

	 
	(d)	 	any party, including persons acting jointly or in concert with that party, becomes
(through a take-over bid or otherwise) the beneficial owner, directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting power of the
Corporation’s then outstanding securities entitled to vote in the election of directors of
the Corporation, unless in any particular situation the Board determines in advance of such
event that such event shall not constitute a change of control; or

	 
	(e)	 	the Board approves and/or recommends that shareholders accept, approve or adopt any
transaction that would constitute a change of control under clause b, c or d above and
determines that the change of control resulting from such transaction will be deemed to have
occurred as of a specified date earlier than the date under b, c or d, as applicable.






	15.	 	Amendment or Discontinuance of this Plan





The Board may amend or discontinue the Plan at
any time but, subject to Sections 12, 13, and 14, no such
amendment may increase the aggregate maximum number of Common Shares
that may be subject to stock options under this Plan, change the manner
of determining the minimum option price, extend the option period under
any option beyond 10 years or, without the consent of the holder of
the option, alter or impair any option previously granted to an optionee
under this Plan; and, provided further, that, without the prior approval
of the Corporation’s shareholders, stock options issued under this Plan
shall not be repriced, replaced, or










 






 C-5





regranted through cancellation, or
by lowering the option price of a previously granted stock option.
Pre-clearance of the Toronto Stock Exchange of amendments to the Plan
will be required to the extent provided under the relevant rules of the
Toronto Stock Exchange.




	16.	 	Evidence of Stock Options





Each stock option granted under this Plan shall
be evidenced by a written stock option agreement between the Corporation
and the optionee which shall give effect to the provisions of this Plan
and include such other terms as the Committee shall determine (“Stock
Option Award Agreement”).









 









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



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





		
	 	
    Potash Corporation of Saskatchewan
    Inc.







			
	 	by: 	




		
	 	
    

	 	
    President and
    
	 	
    Chief Executive Officer
    





Date: May
[          ],
2005







 






Potash Corporation of Saskatchewan Inc.

2005 Performance Option Plan






	1.	 	Purpose of Plan

Potash Corporation of Saskatchewan Inc. (the “Corporation”) by resolution of its Board of
Directors (the “Board”) has established, subject to shareholder approval at the Corporation’s
2005 Annual and Special Meeting of shareholders, this Potash Corporation of Saskatchewan Inc.
2005 Performance Option Plan (the “Plan”) to support the Corporation’s compensation philosophy of
providing selected employees and officers with an opportunity to: promote the growth and
profitability of the Corporation; align their interests with shareholders; and, earn compensation
commensurate with corporate performance. The Corporation believes this Plan will directly assist
in supporting the Corporation’s compensation philosophy by providing participants with the
opportunity through stock options, which will vest, if at all, based on corporate performance
over a three-year period, to acquire Common Shares of the Corporation (“Common Shares”).

	 
	2.	 	Duration of this Plan

This Plan was adopted by the Board on February 28, 2005 to be effective as of January 1, 2005
(the “Effective Date”), subject to shareholder approval at the Corporation’s 2005 Annual and
Special Meeting of shareholders, and shall remain in effect, unless sooner terminated as provided
herein, until one (1) year from the Effective Date, at which time it will terminate. After this
Plan is terminated, no stock options may be granted but stock options previously granted shall
remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms
and conditions.

	 
	3.	 	Administration

This Plan shall be administered by the Compensation Committee of the Board or any other committee
designated by the Board to administer this Plan (the “Committee”). The Committee shall be
responsible for administering this Plan, subject to this Section 3 and the other provisions of
this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other
individuals, any of whom may be an employee, and the Committee, the Corporation, and its officers
and directors shall be entitled to rely upon the advice, opinions, or valuations of any such
individuals. All actions taken and all interpretations and determinations made by the Committee
shall be made in the Committee’s sole discretion and shall be final and binding upon the
participants, the Corporation, and all other interested individuals.

	 
	4.	 	Authority of the Committee

The Committee shall have full and exclusive discretionary power to interpret the terms and the
intent of this Plan and any Stock Option Award Agreement or other agreement or document ancillary
to or in connection with this Plan, to determine eligibility for stock options and to adopt such
rules, regulations, forms, instruments, and guidelines for administering this Plan as the
Committee may deem necessary or proper. Such authority shall include adopting modifications and
amendments to any Stock Option Award Agreement that are necessary to comply with the laws of the
countries and other jurisdictions in which the Corporation and/or its subsidiaries operate.

	 
	5.	 	Shares Subject to Stock Options

The aggregate number of Common Shares issuable after February 28, 2005 pursuant to stock options
under this Plan may not exceed 1,200,000 Common Shares. The aggregate number of Common Shares in
respect of which stock options have been granted to any one person pursuant to this Plan and
which remain outstanding shall not at any time exceed 300,000. The authorized limits under this
Plan shall be subject to adjustment under Sections 12 and 13.

	 
	 	 	If any stock option granted under this Plan, or any portion thereof, expires or terminates for
any reason without having been exercised in full, the Common Shares with respect to which such
option has not been exercised shall again be available for further stock options under this Plan;
provided, however, that any stock option that is granted under this Plan that does not vest as a
result of a failure to satisfy the Performance Measures, shall not be again available for grant
under this Plan.

	 
	6.	 	Grant of Stock Options

From time to time the Board may designate individual officers and employees of the Corporation
and its subsidiaries eligible to be granted options to purchase Common Shares and the number of
Common Shares which each such person will be granted a stock option to purchase; provided that
the aggregate number of Common Shares subject to such stock options may not exceed the number
provided for in Section 5 of this Plan. Non-employee directors and other non-employee contractors
and third party vendors are not eligible to participate in this Plan.

	 
	7.	 	Option Price

The option price for any option granted under this Plan to any optionee shall be fixed by the
Board when the option is granted and shall be not less than the fair market value of the Common
Shares at such time which, for optionees resident in the United States and any other optionees
designated by the Board, shall be deemed to be the closing price per Common Share on the New York
Stock Exchange on the last trading day immediately preceding the day the option is granted and,
for all other optionees, shall be deemed to be the closing price per Common Share on the Toronto
Stock Exchange on the last trading day immediately preceding the day the option is granted;
provided that, in either case, if the Common Shares did not trade on such exchange on such day
the option price shall be the closing price per share on such exchange on the last day on which
the Common Shares traded on such exchange prior to the day the option is granted.

	 
	8.	 	Vesting of Stock Options

Subject to achievement of Performance Measures as certified and approved by the Audit Committee
of the Board, stock options granted under this Plan will vest no later than thirty (30) days
after the audited financial statements for the applicable Performance Period have been approved
by the Board.

	 
	9.	 	Performance Measures for Vesting of Stock Options




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




	 	i)	 	CFROI is the ratio of after tax operating cash flow to average gross investment over
the fiscal year, calculated as A divided by B, where (1) A equals operating income plus
nonrecurring or unusual items plus accrued incentive awards plus depreciation and
amortization less cash taxes, and (2) B equals the average of total assets plus
accumulated depreciation plus accumulated amortization less cash and cash equivalents less
non interest bearing current liabilities.

	 	ii)	 	WACC is the weighted average cost of debt and equity capital, calculated as [A times the
product of B divided by C] plus [D times the product of E divided by C], where (1) A equals
the after-tax market yield cost of debt, (2) B equals the market value of debt less cash and
cash equivalents (3) C equals the market value of debt less cash and cash equivalents, plus
the market value of equity, (4) D equals the cost of equity, and (5) E equals the market
value of equity.




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







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








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




	 	i)	 	Each year, the CFROI and WACC will be calculated in accordance with the definitions
herein, based on the audited financial statements and approved by the Audit Committee.

	 	ii)	 	In each Performance Period, the average of the three fiscal years shall be calculated by taking the simple average of the individual years’ results.

	 	iii)	 	The resulting three-year average will then be applied, using the scale above to determine the number of stock options, if any, that will vest as of the end
of the Performance Period.

	 	iv)	 	For results falling between the reference points in the chart above, the level of vesting shall be mathematically interpolated between the reference points.








	10.	 	Terms of Stock Options

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




	 	a.	 	if the employment of an optionee as an officer or employee of the Corporation or a
subsidiary terminates, by reason of his or her death, or if an optionee who is a retiree
pursuant to Section 10(b) dies, the legal personal representatives of the optionee will be
entitled to exercise any unexercised vested options, including such stock options that may
vest after the date of death, during the period ending at the end of the twelfth calendar
month following the calendar month in which the optionee dies, failing which exercise the
stock options terminate;

	 	b.	 	subject to the terms of Section 10(a) above, if the employment of an optionee as an
officer or employee of the Corporation or a subsidiary terminates, by reason of retirement
in accordance with the then prevailing retirement policy of the Corporation or subsidiary,
the optionee will be entitled to exercise any unexercised vested stock options, including
such stock options that may vest after the date of retirement, during the period ending at
the end of the 36th month following the calendar month in which the optionee retires,
failing which exercise the stock options terminate;

	 	c.	 	if the employment of an optionee as an officer or employee of the Corporation or a
subsidiary terminates, for any reason other than as provided in Sections 10(a) or (b), the
optionee will be entitled to exercise any unexercised vested stock options, to the extent
exercisable at the date of such event, during the period ending at the end of the calendar
month immediately following the calendar month in which the event occurs, failing which
exercise the stock options terminate;

	 	d.	 	for greater certainty and for these purposes, an optionee’s employment with the
Corporation or a subsidiary shall be considered to have terminated effective on the last day
of the optionee’s actual and active employment with the Corporation or subsidiary whether
such day is selected by agreement with the optionee or unilaterally by the Corporation or
subsidiary and whether with or without advance notice to the optionee. For the avoidance of
doubt, no period of notice that is given or ought to have been given under applicable law in respect of such termination of employment will be utilized in
determining an optionee’s entitlement under the Plan. The employment of an optionee with the
Corporation shall be deemed to have terminated for all purposes of the Plan if such person is
employed by or provides services to a person that is a subsidiary of the Corporation and such
person ceases to be a subsidiary of the Corporation, unless the Committee determines otherwise;
and

	 	e.	 	each stock option is personal to the optionee and is not assignable, except (i) as
provided in Section 10(a), and (ii) at the election of the Board, a stock option may be
assignable to the spouse, children and grandchildren of the original optionee and to a
trust, partnership or limited liability company, the entire beneficial interest of which is
held by one or more of the foregoing.

	 



	 	 	Nothing contained in Sections 10(a), (b) or (c) shall extend the period during which a stock
option may be exercised beyond its stipulated expiration date or the date on which it is
otherwise terminated in accordance with the provisions of this Plan.

	 
	 	 	If a stock option is assigned pursuant to Section 10(e)(ii), the references in Sections 10(a),
(b) and (c) to the termination of employment or death of an optionee shall not relate to the
assignee of a stock option but shall relate to the original optionee. In the event of such
assignment, legal personal representatives of the original optionee shall not be entitled to
exercise the assigned stock option, but the assignee of the stock option or the legal personal
representatives of the assignee may exercise the stock option during the applicable specified
period.

	 
	11.	 	Exercise of Stock Options

Subject to the provisions of this Plan, a vested stock option may be exercised from time to time
by delivering to the Corporation at its registered office a written notice of exercise specifying
the number of Common Shares with respect to which the stock option is being exercised and
accompanied by payment in cash or certified cheque in full of the purchase price of the Common
Shares then being purchased.

	 
	12.	 	Adjustments

Appropriate adjustments to the authorized limits set forth in Section 5, in the number, class
and/or type of Common Shares optioned and in the option price per share, both as to stock options
granted or to be granted, may be made by the Board in its discretion to give effect to
adjustments in the number of Common Shares which result from subdivisions, consolidations or
reclassifications of the Common Shares, the payment of share dividends by the Corporation, the
reconstruction, reorganization or recapitalization of the Corporation or other relevant changes
in the capital of the Corporation.

	 
	13.	 	Mergers

If the Corporation proposes to amalgamate or merge with another body corporate, the Corporation
shall give written notice thereof to optionees in sufficient time to enable them to exercise
outstanding vested stock options, to the extent they are otherwise exercisable by their terms,
prior to the effective date of such amalgamation or merger if they so elect. The Corporation
shall use its best efforts to provide for the reservation and issuance by the amalgamated or
continuing corporation of an appropriate number of Common Shares, with appropriate adjustments,
so as to give effect to the continuance of the stock options to the extent reasonably
practicable. In the event that the Board determines in good faith that such continuance is not in
the circumstances practicable, it may upon 30 days’ notice to optionees terminate the stock
options.

	 
	14.	 	Change of Control

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




	 	a.	 	within any period of two consecutive years, individuals who at the beginning of such
period constituted the Board and any new directors whose appointment by the Board or
nomination for election by shareholders of the Corporation was approved by a vote of at
least a majority of the directors then still in office who either were directors at the
beginning of the period or whose appointment or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;

	 	b.	 	there occurs an amalgamation, merger, consolidation, wind-up, reorganization or
restructuring of the Corporation with or into any other entity, or a similar event or series
of such events, other than any such event or series of events which results in securities of
the surviving or consolidated corporation representing 50% or more of the combined voting
power of the surviving or consolidated corporation’s then outstanding securities entitled to
vote in the election of directors of the surviving or consolidated corporation being
beneficially owned, directly or indirectly, by the persons who were the holders of the
Corporation’s outstanding securities entitled to vote in the election of directors of the
Corporation prior to such event or series of events in substantially the same proportions as
their ownership immediately prior to such event of the Corporation’s then outstanding
securities entitled to vote in the election of directors of the Corporation;

	 	c.	 	50% or more of the fixed assets (based on book value as shown on the most recent
available audited annual or unaudited quarterly consolidated financial statements) of the
Corporation are sold or otherwise disposed of (by liquidation, dissolution, dividend or
otherwise) in one transaction or series of transactions within any twelve month period;

	 	d.	 	any party, including persons acting jointly or in concert with that party, becomes
(through a take-over bid or otherwise) the beneficial owner, directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting power of the
Corporation’s then outstanding securities entitled to vote in the election of directors of
the Corporation, unless in any particular situation the Board determines in advance of such
event that such event shall not constitute a change of control; or

	 	e.	 	the Board approves and/or recommends that shareholders accept, approve or adopt any
transaction that would constitute a change of control under clause b, c or d above and
determines that the change of control resulting from such transaction will be deemed to have
occurred as of a specified date earlier than the date under b, c or d, as applicable.

	 



	15.	 	Amendment or Discontinuance of this Plan

	 	 	The Board may amend or discontinue the Plan at any time but, subject to Sections 12, 13, and 14,
no such amendment may increase the aggregate maximum number of Common Shares that may be subject
to stock options under this Plan, change the manner of determining the minimum option price,
extend the option period under any option beyond 10 years or, without the consent of the holder
of the option, alter or impair any option previously granted to an optionee under this Plan; and,
provided further, that, without the prior approval of the Corporation’s shareholders, stock
options issued under this Plan shall not be repriced, replaced, or regranted through
cancellation, or by lowering the option price of a previously granted stock option. Pre-clearance
of the Toronto Stock Exchange of amendments to the Plan will be required to the extent provided
under the relevant rules of the Toronto Stock Exchange.

	 
	16.	 	Evidence of Stock Options

Each stock option granted under this Plan shall be evidenced by a written stock option agreement
between the Corporation and the optionee which shall give effect to the provisions of this Plan and
include such other terms as the Committee shall determine (“Stock Option Award Agreement”).





















 




APPENDIX I



This option may be assigned, in whole or in part,
only if the following conditions are satisfied:




			
	 	1.	
    No consideration may be paid in connection with
    the assignment.
    
	 
	 	2.	
    An assignment may be made only to one or more
    persons or entities included in the following: the original
    Optionee’s spouse, children and grandchildren and a trust,
    partnership or limited liability company, the entire beneficial
    interest of which is held by one or more of the foregoing.
    
	 
	 	3.	
    Prior to any such assignment,
    





			
	 	(a)	
    the assignor shall advise the Corporation, in a
    writing delivered to Potash Corporation of Saskatchewan Inc.,
    122 1st Avenue South, Saskatoon, Saskatchewan, Canada
    S7K 7G3, Attention: General Counsel, of all pertinent
    information concerning the proposed assignment, including the
    date of the assignment, the number of shares involved, the
    relationship of the assignee to the original Optionee and the
    address and telephone number of the assignee; and
    
	 
	 	(b)	
    the assignee shall agree in a writing so
    delivered to advise the Corporation in writing of any change in
    the name, address or telephone number of the assignee.
    





The decision to assign all or part of this option
involves complex tax and financial considerations. An Optionee
should consult the Optionee’s own tax and financial
advisors before such assignment.