exv10w1









    Exhibit 10.1




 




    2010
    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 2010 Annual and Special
    Meeting of shareholders, this Potash Corporation of Saskatchewan
    Inc. 2010 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 19, 2010 to
    be effective as of January 1, 2010 (the “Effective
    Date”), subject to shareholder approval at the
    Corporation’s 2010 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. To the extent applicable, the
    Plan shall be administered with respect to optionees subject to
    the laws of the U.S. so as to avoid the application of
    penalties pursuant to Section 409A of the Internal Revenue
    Code, and stock options hereunder may be subject to such
    restrictions as the Committee determines are necessary to avoid
    application of such Section 409A.



 


		
	
    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 19, 2010 pursuant to stock options under this Plan
    may not exceed 1,000,000 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 250,000. 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 net 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 less/plus
    nonrecurring or unusual items less/plus change in unrealized
    gains/losses on derivative instruments included in net income
    plus accrued incentive awards plus depreciation and amortization
    less current taxes, and (2) B equals the average of total
    assets less/plus the fair value adjustment for investments in
    available for sale securities less the fair value of derivative
    instrument assets plus accumulated depreciation plus accumulated
    amortization less cash and cash equivalents less non interest
    bearing current liabilities excluding derivatives.

	 
	 	    (ii) 
	
    WACC is the weighted average cost of net 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

    
	
 

	
 
	
 
	

    CFROI > WACC


	
 
	
 
	
 
	
 
	
    Grant Vesting
	
 

	 

	
 
	
 
	
 
	
    <0%
	
 
	
 
	
 
	
 
	
 
	
    0%
	
 

	
 
	
 
	
 
	
    0.20%
	
 
	
 
	
 
	
 
	
 
	
    30%
	
 

	
 
	
 
	
 
	
    1.20%
	
 
	
 
	
 
	
 
	
 
	
    70%
	
 

	
 
	
 
	
 
	
    2.20%
	
 
	
 
	
 
	
 
	
 
	
    90%
	
 

	
 
	
 
	
 
	
    2.50%
	
 
	
 
	
 
	
 
	
 
	
    100%
	
 









 


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




 


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

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















 






 


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

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




 


		
	
    10. 
	
    TERMS OF STOCK
    OPTIONS




 



    The period during which a stock option is exercisable (the
    “Term”) may not exceed 10 years from the date the
    stock option is granted (the “Initial Exercise
    Period”), plus any Additional Exercise Period (as defined
    below). If such Initial Exercise Period would otherwise expire
    (i) during a Blackout Period (as defined below) applicable
    to the relevant optionee or (ii) within 10 trading days
    after the expiration of the Blackout Period applicable to the
    relevant optionee, the Term of the related stock option shall
    expire on the date that is the tenth trading day after the end
    of such Blackout Period (an “Additional Exercise
    Period”). For purposes of this Plan, “Blackout
    Period” means any period during which the relevant optionee
    is prohibited by the Corporation’s trading policy from
    trading in the Corporation’s securities. The Stock Option
    Award Agreement may contain provisions limiting the number of
    Common Shares with respect to which stock options 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) 
	
    subject to the terms of Section 14 below, 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, directly or indirectly, by one or more of the optionee or
    the spouse, children or grandchildren of the optionee (each, a
    “Permitted Assignee”). If a stock option is assigned
    to one or more Permitted Assignees, nothing contained in this
    section 10(e) shall prohibit a subsequent assignment of
    such stock option to one or more other Permitted Assignees or
    back to the optionee.




 



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



 



    If a stock option is assigned pursuant to
    Section 10(e)(ii), the references in Sections 10(a),
    (b) and (c) to the termination of employment or death
    of an optionee shall not relate to the assignee of a stock
    option but shall relate to















 







    the original optionee. In the event of such assignment, legal
    personal representatives of the original optionee shall not be
    entitled to exercise the assigned stock option, but the assignee
    of the stock option or the legal personal representatives of the
    assignee may exercise the stock option during the applicable
    specified period.



 


		
	
    11. 
	
    EXERCISE OF STOCK
    OPTIONS




 



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



 


		
	
    12. 
	
    ADJUSTMENTS




 



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



 


		
	
    13. 
	
    MERGERS




 



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



 


		
	
    14. 
	
    CIRCUMSTANCES FOR
    ACCELERATED VESTING




 



    If a “change of control” of the Corporation occurs and
    at least one of the two additional circumstances described below
    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.



 


			
	 	    (a) 
	
    Additional circumstances include:




 


			
	 	    (i) 
	
    Upon a “change of control” the potential successor
    fails to assume the obligations with respect to each option or
    fails to convert or replace the options with equivalent
    options; or

	 
	 	    (ii) 
	
    During the two-year period following the effective date of a
    change of control, the optionee is terminated without Cause (as
    defined below) or the optionee resigns employment for Good
    Reason (as defined below).




 


			
	 	    (b) 
	
    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:




 


			
	 	    (i) 
	
    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;

	 
	 	    (ii) 
	
    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;




 


			
	 	    (iii) 
	
    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;

	 
	 	    (iv) 
	
    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

	 
	 	    (v) 
	
    the Board approves
    and/or
    recommends that shareholders accept, approve or adopt any
    transaction that would constitute a change of control under
    clause (ii), (iii) or (iv) of this Section 14(b) 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 (ii), (iii) or (iv), as
    applicable.




 


			
	 	    (c) 
	
    For purposes of this Plan, “Cause” means dishonest or
    willful misconduct or lack of good faith resulting in material
    harm to the Corporation, financial or otherwise.

	 
	 	    (d) 
	
    For purposes of this Plan, “Good Reason” means:




 


			
	 	    (i) 
	
    a substantial diminution in the optionee’s authorities,
    duties, responsibilities, status (including offices, titles, and
    reporting requirements) from those in effect immediately prior
    to the change of control;

	 
	 	    (ii) 
	
    the Corporation requires the optionee to be based at a location
    in excess of fifty (50) miles from the location of the
    optionee’s principal job location or office immediately
    prior to the change of control, except for required travel on
    Corporation business to an extent substantially consistent with
    the optionee’s business obligations immediately prior to
    the change of control;

	 
	 	    (iii) 
	
    a reduction in the optionee’s base salary, or a substantial
    reduction in optionee’s target compensation under any
    incentive compensation plan, as in effect as of the date of the
    change of control;

	 
	 	    (iv) 
	
    the failure to increase the optionee’s base salary in a
    manner consistent (both as to frequency and percentage increase)
    with practices in effect immediately prior to the change of
    control or with practices implemented subsequent to the change
    of control with respect to similarly positioned
    employees; or

	 
	 	    (v) 
	
    the failure of the Corporation to continue in effect the
    optionee’s participation in the Corporation’s short-
    and long-term incentive plans, stock option plans, and employee
    benefit and retirement plans, policies or practices, at a level
    substantially similar or superior to and on a basis consistent
    with the relative levels of participation of other
    similarly-positioned employees, as existed immediately prior to
    the change of control.




 



    A termination of employment by the optionee for one of the
    reasons set forth in clause (i), (ii), (iii), (iv) or
    (v) of this Section 14(d), will not constitute Good
    Reason unless, within the
    30-day
    period immediately following the occurrence of such Good Reason
    event, the optionee has given written notice to the Corporation
    of the event relied upon for such termination and the
    Corporation has not remedied such event within 30 days (the
    “Cure Period”) of the receipt of such notice. For the
    avoidance of doubt, the optionee’s employment shall not be
    deemed to terminate for Good Reason unless and until the Cure
    Period has expired and the Corporation has not remedied the
    applicable Good Reason event. The Corporation and the optionee
    may mutually waive in writing any of the foregoing provisions
    with respect to an event that otherwise would constitute Good
    Reason.



 


		
	
    15. 
	
    RECOUPMENT
    POLICY




 



    Each stock option granted under this Plan to an optionee that,
    as of the date the option is granted, participates in the
    Corporation’s Medium-Term Incentive Plan shall be subject
    to the terms and conditions of the Corporation’s Policy on
    Recoupment of Unearned Compensation (as previously adopted and,
    from time to time, amended by the Board) attached to such
    optionee’s Stock Option Award Agreement (as defined below).



 


		
	
    16. 
	
    AMENDMENT OR
    DISCONTINUANCE OF THIS PLAN




 



    The Board may amend or discontinue the Plan at any time, without
    obtaining the approval of shareholders of the Corporation unless
    required by the relevant rules of the Toronto Stock Exchange,
    provided that, subject to















 







    Sections 12, 13, and 14, no such amendment may increase the
    aggregate maximum number of Common Shares that may be subject to
    stock options under this Plan, change the manner of determining
    the minimum option price, extend the Term under any option
    beyond 10 years (plus any Additional Exercise Period) or
    the date on which the option would otherwise expire under the
    Plan, expand the assignment provisions of the Plan, permit
    non-employee directors to participate in the Plan or, without
    the consent of the holder of the option, alter or impair any
    option previously granted to an optionee under this Plan; and,
    provided further, for greater certainty, that, without the prior
    approval of the Corporation’s shareholders, stock options
    issued under this Plan shall not be repriced, replaced, or
    regranted through cancellation, or by lowering the option price
    of a previously granted stock option. Pre-clearance of the
    Toronto Stock Exchange of amendments to the Plan will be
    required to the extent provided under the relevant rules of the
    Toronto Stock Exchange.



 


		
	
    17. 
	
    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”).



 


		
	
    18. 
	
    WITHHOLDING




 



    To the extent that the Corporation is required to withhold
    federal, provincial, state, local or foreign taxes in connection
    with any payment made or benefit realized by an optionee or
    other person hereunder, and the amounts available to the
    Corporation for such withholding are insufficient, it shall be a
    condition to the receipt of such payment or the realization of
    such benefit that the optionee or such other person make
    arrangements satisfactory to the Corporation for payment of the
    balance of such taxes required to be withheld, which
    arrangements (in the discretion of the Board) may include
    relinquishment of a portion of such benefit. Participants shall
    also make such arrangements in connection with the disposition
    of Common Shares acquired upon the exercise of option rights
    with respect to this Plan.














 








	 	 	 	 	 
	
	 	Potash Corporation of Saskatchewan Inc.
	 	 





This
certificate evidences and confirms the grant to                      (the “Optionee”) of options to purchase the number of Common Shares of the Corporation specified under Paragraph
(1) on the terms and subject to the conditions of the Potash Corporation of Saskatchewan Inc. 2010 Performance Option Plan (the “2010 Plan”) and the terms and conditions set forth below. In
the event of any inconsistency between the terms of the 2010 Plan and those set forth below, the terms of the 2010 Plan shall control. Capitalized terms used below that are not defined in
this certificate shall have the meanings specified in the 2010 Plan.





	1.	 	Number of Shares: The Optionee is is hereby granted options under the 2010 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, 2010 through December 31, 2012 if, and to the extent, the
applicable Performance Measures for the Performance Period are achieved. Subject to applicable conditions under the 2010 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 2012 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 2010 Plan.
	 
	4.	 	Once vested, the options will continue to be exercisable until the expiry date for the options of May 6, 2020.
	 
	5.	 	Notwithstanding the provisions of paragraph 4 above, this option will terminate as provided in paragraph 10 of the 2010 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 2010 Plan.
	 
	7.	 	Adjustments to the option may be made as provided in paragraph 12 of the 2010 Plan, the provisions of paragraph 13 of the 2010 Plan shall apply in the event of a proposed
amalgamation or merger of the Corporation, and the provisions of paragraph 14 of the 2010 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.	 	 
	 
	 	 	 	 	 	 
	Date:                     

	 	By:	 	 	 	 
	 

	 	 	 	 

President and Chief Executive Officer
	 	 











 









 








Potash Corporation of Saskatchewan Inc.

2010 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 2010 Annual and Special Meeting
of shareholders, this Potash Corporation of Saskatchewan Inc. 2010 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 19, 2010 to be effective
as of January 1, 2010 (the “Effective Date”), subject to shareholder approval at the Corporation’s
2010 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. To the extent applicable, the
Plan shall be administered with respect to optionees subject to the laws of the U.S. so as to avoid
the application of penalties pursuant to Section 409A of the Internal Revenue Code, and stock
options hereunder may be subject to such restrictions as the Committee determines are necessary to
avoid application of such Section 409A.



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 19, 2010 pursuant to stock options under this Plan may not exceed 1,000,000 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 250,000.
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 net 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 less/plus nonrecurring or
unusual items less/plus change in unrealized gains/losses on derivative instruments included in net
income plus accrued incentive awards plus depreciation and amortization less current taxes, and
(2) B equals the average of total assets less/plus the fair value adjustment for investments in
available for sale securities less the fair value of derivative instrument assets plus accumulated
depreciation plus accumulated amortization less cash and cash equivalents less non interest bearing
current liabilities excluding derivatives.



(ii) WACC is the weighted average cost of net 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
	CFROI > WACC	 	Grant Vesting
	<0%
	 	0%
	0.20%
	 	30%
	1.20%
	 	70%
	2.20%
	 	90%
	2.50%
	 	100%





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



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



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



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



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



10. TERMS OF STOCK OPTIONS. The period during which a stock option is exercisable (the “Term”) may
not exceed 10 years from the date the stock option is granted (the “Initial Exercise Period”), plus
any Additional Exercise Period (as defined below). If such Initial Exercise Period would otherwise
expire (i) during a Blackout Period (as defined below) applicable to the relevant optionee or
(ii) within 10 trading days after the expiration of the Blackout Period applicable to the relevant
optionee, the Term of the related stock option shall expire on the date that is the tenth trading
day after the end of such Blackout Period (an “Additional Exercise Period”). For purposes of this
Plan, “Blackout Period” means any period during which the relevant optionee is prohibited by the
Corporation’s trading policy from trading in the Corporation’s securities. The Stock Option Award
Agreement may contain provisions limiting the number of Common Shares with respect to which stock
options 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) subject to the terms of Section 14 below, 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, directly or indirectly, by one
or more of the optionee or the spouse, children or grandchildren of the optionee (each, a
“Permitted Assignee”). If a stock option is assigned to one or more Permitted Assignees, nothing
contained in this section 10(e) shall prohibit a subsequent assignment of such stock option to one
or more other Permitted Assignees or back to the optionee.




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



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


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



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



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



14. CIRCUMSTANCES FOR ACCELERATED VESTING. If a “change of control” of the Corporation occurs and
at least one of the two additional circumstances described below 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:



(a) Additional circumstances include:



(i) Upon a “change of control” the potential successor fails to assume the obligations with respect
to each option or fails to convert or replace the options with equivalent options; or



(ii) During the two-year period following the effective date of a change of control, the optionee
is terminated without Cause (as defined below) or the optionee resigns employment for Good Reason
(as defined below).



(b) 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:



(i) 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;



(ii) 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;



(iii) 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;



(iv) 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



(v) the Board approves and/or recommends that shareholders accept, approve or adopt any transaction
that would constitute a change of control under clause (ii), (iii) or (iv) of this Section 14(b)
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 (ii), (iii) or (iv), as applicable.



(c) For purposes of this Plan, “Cause” means dishonest or willful misconduct or lack of good faith
resulting in material harm to the Corporation, financial or otherwise.



(d) For purposes of this Plan, “Good Reason” means:



(i) a substantial diminution in the optionee’s authorities, duties, responsibilities, status
(including offices, titles, and reporting requirements) from those in effect immediately prior to
the change of control;



(ii) the Corporation requires the optionee to be based at a location in excess of fifty (50) miles
from the location of the optionee’s principal job location or office immediately prior to the
change of control, except for required travel on Corporation business to an extent substantially
consistent with the optionee’s business obligations immediately prior to the change of control;



(iii) a reduction in the optionee’s base salary, or a substantial reduction in optionee’s target
compensation under any incentive compensation plan, as in effect as of the date of the change of
control;



(iv) the failure to increase the optionee’s base salary in a manner consistent (both as to
frequency and percentage increase) with practices in effect immediately prior to the change of
control or with practices implemented subsequent to the change of control with respect to similarly
positioned employees; or



(v) the failure of the Corporation to continue in effect the optionee’s participation in the
Corporation’s short- and long-term incentive plans, stock option plans, and employee benefit and
retirement plans, policies or practices, at a level substantially similar or superior to and on a
basis consistent with the relative levels of participation of other similarly-positioned employees,
as existed immediately prior to the change of control.




     A termination of employment by the optionee for one of the reasons set forth in clause (i),
(ii), (iii), (iv) or (v) of this Section 14(d), will not constitute Good Reason unless, within the
30-day period immediately following the occurrence of such Good Reason event, the optionee has
given written notice to the Corporation of the event relied upon for such termination and the
Corporation has not remedied such event within 30 days (the “Cure Period”) of the receipt of such
notice. For the avoidance of doubt, the optionee’s employment shall not be deemed to terminate for
Good Reason unless and until the Cure Period has expired and the Corporation has not remedied the
applicable Good Reason event. The Corporation and the optionee may mutually waive in writing any of
the foregoing provisions with respect to an event that otherwise would constitute Good Reason.


15. RECOUPMENT POLICY Each stock option granted under this Plan to an optionee that, as of the
date the option is granted, participates in the Corporation’s Medium-Term Incentive Plan shall be
subject to the terms and conditions of the Corporation’s Policy on Recoupment of Unearned
Compensation (as previously adopted and, from time to time, amended by the Board) attached to such
optionee’s Stock Option Award Agreement (as defined below).



16. AMENDMENT OR DISCONTINUANCE OF THIS PLAN. The Board may amend or discontinue the Plan at any
time, without obtaining the approval of shareholders of the Corporation unless required by the
relevant rules of the Toronto Stock Exchange, provided that, subject to Sections 12, 13, and 14, no
such amendment may increase the aggregate maximum number of Common Shares that may be subject to
stock options under this Plan, change the manner of determining the minimum option price, extend
the Term under any option beyond 10 years (plus any Additional Exercise Period) or the date on
which the option would otherwise expire under the Plan, expand the assignment provisions of the
Plan, permit non-employee directors to participate in the Plan or, without the consent of the
holder of the option, alter or impair any option previously granted to an optionee under this Plan;
and, provided further, for greater certainty, that, without the prior approval of the Corporation’s
shareholders, stock options issued under this Plan shall not be repriced, replaced, or regranted
through cancellation, or by lowering the option price of a previously granted stock option.
Pre-clearance of the Toronto Stock Exchange of amendments to the Plan will be required to the
extent provided under the relevant rules of the Toronto Stock Exchange.



17. 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”).



18. WITHHOLDING. To the extent that the Corporation is required to withhold federal, provincial,
state, local or foreign taxes in connection with any payment made or benefit realized by an
optionee or other person hereunder, and the amounts available to the Corporation for such
withholding are insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the optionee or such other person make arrangements satisfactory
to the Corporation for payment of the balance of such taxes required to be withheld, which
arrangements (in the discretion of the Board) may include relinquishment of a portion of such
benefit. Participants shall also make such arrangements in connection with the disposition of
Common Shares acquired upon the exercise of option rights with respect to this Plan.








 









 








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, directly or indirectly, by one or more of the Optionee or the Optionee’s spouse,
children and grandchildren (each a “Permitted Assignee”). If this option is assigned
to one or more Permitted Assignees, nothing contained herein shall prohibit a
subsequent assignment of this option to one or more Permitted Assignees or to the
original Optionee.
	 
	 	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.