<PAGE>

                                                                 Exhibit 10.1.19
                             TERRA INDUSTRIES INC.

                          INCENTIVE AWARD PROGRAM FOR
                           OFFICERS & KEY EMPLOYEES

                                     2001


I.     Purpose of the Plan

       The purpose of this Incentive Award Program is to motivate and reward
       officers and key employees of the Company toward achievement of goals and
       improved results.

II.    Eligibility in the Plan

       Participation in this Incentive Award Program is limited to officers and
       key employees of Terra Industries Inc. and subsidiaries whose efforts are
       expected to contribute significantly to the success and accomplishment of
       the Company's goals.

III.   Special Provisions and Considerations

       Terra's incentive plan year coincides with the Company's fiscal year. The
       Chief Executive Officer will establish corporate financial goals, which
       are approved by the Board of Directors, which will be used to establish
       the 2001 incentive pool. Each officer and key employee participating in
       this plan will be assigned a target incentive expressed as a percentage
       of year-end base salary.

       The Chief Executive Officer and appropriate Senior Officer are
       responsible for approving each plan participant's individual goals as
       soon as practicable in 2001 (See Section IV below). The importance of
       each goal is reflected in the weight assigned to it; each participant's
       goals will sum to one hundred percent (100%). These individual goals will
       be used in determining the participant's final incentive payment. Each
       plan participant must periodically report on his/her goal achievement to
       the Chief Executive Officer.
<PAGE>


IV.    Funding the Officers and Key Employees Incentive Award Program

       The 2001 Plan divides the incentive awards between a portion based upon
       Company financial performance and a portion based upon individual
       performance on personal goals (up to 34% of each participant's target
       bonus). However, awards for achieving individual performance goals may
       not be paid if the Personnel Committee of the Board of Directors and the
       Chief Executive Officer determine that the Company's financial
       performance does not justify such awards.

       The funding for the Company's financial performance portion of the
       incentive award pool is based on Terra Industries Inc.'s actual 2001 net
       income. Budgeted 2001 net income, which is based on forecasts of nitrogen
       products and methanol selling prices and natural gas costs, represents a
       low return on investment and does not justify an award. Consequently, the
       Company's financial performance portion of the pool starts to fund at
       fifty percent (50%) when the Company's actual 2001 net income is $20
       million and increases by one percent (1%) for each additional $0.5
       million of net income. Any funding for actual 2001 net income which is
       more than $95 million is at the discretion of the Personnel Committee of
       the Board of Directors and the Chief Executive Officer.

       Each participant will develop up to five goals that will be used as the
       measurement in determining payments under the personal goals section.
       These goals should be reviewed and approved by the appropriate Senior
       Officer and the Chief Executive Officer. Accordingly, a participant could
       earn the portion of his or her bonus based on achieving personal goals
       even if there is no funding of the Company performance portion of the
       pool. However, funding of the individual performance awards pool is at
       the discretion of the Personnel Committee of the Board of Directors and
       the Chief Executive Officer.

V.     Basis of the Incentive Award

       The starting point in determining each participant's incentive award is
       the evaluation of the individual goals. The participant's individual raw
       award is calculated by taking each participant's year-end salary times
       his/her targeted incentive percentage and then times his/her individual
       goal achievement.


                                      -2-

<PAGE>

       The sum of all participants' adjusted raw awards creates an adjusted raw
       pool. This adjusted raw pool is compared with the sum of the plan
       participant's year-end salary, times their targeted percentage award (or
       a portion of his/her index used to calculate this pool) which is then
       adjusted by the Company's financial performance to form the incentive
       pool. This adjusted raw pool is adjusted up or down to match the
       incentive pool. All participant incentives are paid from the incentive
       pool.

       The Chief Executive Officer has the discretion to adjust any individual's
       participation up or down to reflect unusual or unplanned events or to
       reflect the degree of difficulty of the goals. He may adjust amounts
       between plan participants and may add amounts from any discretionary part
       of the pool. The Chief Executive Officer may also choose to award less
       than the full amount of the pool or add as much as 20% to the pool.

VI.    Review, Revision and Modification of the Goals

       Under normal business conditions, the Company goals or individual
       objectives will not be altered or revised once established for the year.
       Unexpected and unforeseen developments during the course of the year may
       prompt re-examination of an officer's or key employee's established
       goals. It is the responsibility of each officer and key employee to note
       the conditions of change which would prompt such a review and take timely
       action. Such action would include review with the Chief Executive Officer
       for the need for revision of an established goal as soon as possible
       after the detected change. All changes are subject to final approval of
       the Chief Executive Officer.

VII.   Payment of Award

       The incentive award will be paid to each officer and key employee by
       check as soon as possible after the close of the fiscal year and after
       approval of the Chief Executive Officer's recommendations by the
       Personnel Committee of the Board of Directors.

       To be eligible for full payment, the officer or key employee must have
       been in the employ of Terra Industries Inc. or one of its subsidiaries as
       of January 1 of the incentive plan year and must be actively employed by
       the Company on the date the incentive award is paid.



                                      -3-

<PAGE>

VIII.  Special Provision

       A newly elected officer or key employee will participate in this
       incentive program in proportion to the number of full months worked as an
       officer or key employee during the incentive program year.

       A participant who retires, becomes permanently disabled or dies shall
       cease to participate in this program as of the end of the month
       coincident with retirement, disability or death. The proportionate
       incentive award will be paid as soon as possible after the close of the
       fiscal year. While it is the intent of the Company to make awards under
       this plan and to continue the plan from year to year, it reserves the
       right to amend or terminate the plan entirely at its discretion.















                                      -4-