Document:

Exhibit 10.1

 

CF INDUSTRIES HOLDINGS, INC.

2005 EQUITY AND INCENTIVE PLAN

Annual Incentive Program

Effective January 1, 2007

 

TABLE OF CONTENTS

	
  Purpose

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Participation
  Eligibility

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Award Opportunities

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Company Performance
  Metric & Award Pool

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Determination of
  Individual Awards

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Payment of Awards

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AIP Awards and Employee
  Benefits

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other Provisions

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  8

  	
   

  

 

 2
 

CF
INDUSTRIES HOLDINGS, INC.

2005
EQUITY AND INCENTIVE PLAN

Annual
Incentive Program

Purpose

The purpose of the Annual Incentive Program (“AIP”),
established under the Company’s 2005 Equity and Incentive Plan, is to support
the accomplishment of the Company’s financial objectives. In doing so the AIP
is designed to:

·                  Closely
align the compensation of AIP participants with the financial interests and
expectations of the Company’s stockholders.

·                  Provide
opportunities, when combined with base salaries, for participants to earn
competitive levels of direct cash compensation in order to attract and retain
high-performing management employees.

·                  Define
an appropriate portion of management compensation as being “at risk”, thereby
providing enhanced opportunities for pay for performance.

Participation Eligibility

Participation in the AIP is limited to corporate
officers and other management positions that have the ability to contribute
meaningfully to the Company’s business results.

Participation in the AIP by non-officers must be
approved by the Chairman & Chief Executive Officer of the Company.  Participation by proxy-named officers and
other officers reporting directly to the Chairman & Chief Executive Officer
must be approved by the Compensation Committee of the Board of Directors.

Award Opportunities

Each approved participant is
assigned to a specific Target Award Group. A participant’s assigned Group
reflects a combination of his/her position’s relative responsibility level and
competitive compensation level. Each Group has a target award level stated as a
percent of base earnings as defined as payroll earnings received during the
plan year.  Each year all participants
will receive award agreements that reflect the award opportunity for that
specific plan year.

 3
 

The Target Award level as
of January 1, 2007 for each Group is as follows:

	
   

  	
   

  	
  Target Award

  
	
  Group

  	
   

  	
   

  	
   

  	
  % of Base

  Earnings

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Chairman & CEO

  	
   

  	
  90%

  
	
  2.

  	
   

  	
  Selected Sr. Vice Presidents

  	
   

  	
  55%

  
	
  3.

  	
   

  	
  Selected Sr. Vice
  Presidents

  	
   

  	
  50%

  
	
  4.

  	
   

  	
  Selected Vice
  Presidents

  	
   

  	
  45%

  
	
  5.

  	
   

  	
  Selected Vice
  Presidents

  	
   

  	
  40%

  
	
  6.

  	
   

  	
  Selected Vice
  Presidents

  	
   

  	
  35%

  
	
  7.

  	
   

  	
  Gen. Mgrs. &
  Selected Dirs.

  	
   

  	
  30%

  
	
  8.

  	
   

  	
  Selected Directors
  & Mgrs.

  	
   

  	
  24%

  
	
  9.

  	
   

  	
  Selected Directors
  & Mgrs.

  	
   

  	
  20%

  
	
  10.

  	
   

  	
  Selected Directors & Mgrs.

  	
   

  	
  16%

  
							

 

Company Performance Metric & Award Pool

The performance metric used to determine the aggregate
award pool is Cash Flow Return on Average Gross Capital Employed (CFROC).  The Company’s performance standard at the
Target level is a CFROC of 13%.  The
attached Exhibit I presents the definition of CFROC.

The determination of the
aggregate award pool is based upon the following Company performance schedule:

	
  Cash Flow Return on

  Average Gross Capital

  Employed

  	
   

  	
  Aggregate

  Award Pool

  	
   

  
	
  21% (Maximum)

  	
   

  	
  200% of Target

  	
   

  
	
  13% (Target)

  	
   

  	
  100% of Target

  	
   

  
	
    5% (Threshold)

  	
   

  	
  50% of Target

  	
   

  

 

The aggregate award pool
for performance levels between Threshold and Target and between Target and
Maximum are determined proportionately. 
In addition, if the Company’s performance is below Threshold, an award
pool equal to 15% of the target awards at the 100% of target level of all
program participants in aggregate (excluding proxy-named officers) will be available
for distribution based on management discretion.  In such circumstances, it is possible that
none, some or all of the award pool will be paid to participants.

 4
 

Determination
of Individual Awards

The
determination of actual individual awards from the pool is based on the
following provisions:

·                  The
Company’s CFROC performance (rounded to one decimal point) will be used to
determine the percent of target (rounded to the nearest whole percent)
available to participants.

·                  The
awards for the Chairman & CEO and all other proxy-named officers are equal
to their respective target awards multiplied by the percent of target attained
by applying the Company’s CFROC against the performance schedule.  No awards are granted to these executives if
Company performance is below the Threshold level.

·                  The
pool of award dollars available for distribution to all other participants is
equal to these participants’ target awards in aggregate multiplied by the
percent of target attained based on Company performance.  The award for an individual participant is
equal to 85% of the amount determined by multiplying his/her target award by
the percent of target attained based on Company performance.  The remaining 15% of the pool is distributed
based on management discretion.

·                  When
Company performance does not meet the CFROC threshold level, an award pool
equal to 15% of the target awards of all participants, other than the
proxy-named officers, may be distributed on a discretionary basis.

Payment of Awards

Payment of approved awards is made no later than March
15 of the calendar year following completion of the Program Year.

Participants, if eligible, may elect to defer all or a
portion of their AIP awards under the provisions of the Company’s non-qualified
deferred compensation plans if such elections are in place prior to January 1
of the Program year or within 30 days of participation date if participation
starts after the first of the year. 
Deferrals are subject to applicable taxes.

Payment of awards to participants whose employment
with the Company terminates is as follows:

·                  Due
to Retirement, Disability, Death or Job Elimination (As defined below)

Awards are pro-rated based on the participant’s base earnings through
the date of termination or disability and are determined and paid out after the
close of the Program Year if applicable performance is achieved.

 5
 

·                  For
Cause (As defined below)

Awards for the current Program Year (the year of termination) and
awards not yet paid out for the previous Program Year are forfeited.

·                  For
Any Other Reason

Awards for the current Program Year (the year of termination) are
forfeited.  Awards for a completed
Program Year not yet paid are paid out after the close of the Program Year if
applicable performance is achieved.

“Retirement”
shall mean the Participant’s termination of employment, other than for Cause,
death or Disability, following the attainment by the Participant of at least
age fifty-five.

“Disability”
shall have the meaning ascribed to such term in the Participant’s individual
employment, severance or other agreement with the Company or, if the
Participant is not party to such an agreement, “Disability” shall mean
Participant’s inability because of ill health, physical or mental disability,
to perform Participant’s duties for a period of 180 days in any twelve month
period.

“Job
Elimination” shall mean the Participant’s termination of employment resulting
from the Company’s determination that the job held by the participant is
obsolete.

“Cause”
shall have the meaning ascribed to such term in the Participant’s individual
employment, severance or other agreement with the Company or, if the
Participant is not party to such an agreement, “Cause” shall mean (i)
dishonesty in the performance of the Participant’s duties and (ii) the Participant’s
malfeasance or misconduct in connection with the Participant’s duties or any
act or omission which is injurious to the Company or its Subsidiaries or
affiliates, monetarily or otherwise.

Awards forfeited under the AIP will not be distributed to other
participants.

AIP Awards and Employee
Benefits

Participants’ AIP awards,
whether paid out or deferred, are included in the definition of Compensation
for the purpose of calculating pension benefits for eligible participants in
the CF Industries, Inc. Retirement Income Plan and the CF Industries, Inc.
Supplemental Benefit and Deferral Plan. 
AIP awards are not used in the calculation of any other employee
benefits.

Other Provisions

Benefits
paid to Plan participants in the form of salary continuation under CF’s
Short-Term Disability Plan are included in base earnings for the purpose of
determining awards under the AIP.

 6
 

Any
conflict between the AIP provisions stated in this document and the provisions
stated in the 2005 Equity and Incentive Plan will be governed by the 2005
Equity and Incentive Plan.

The AIP is administered
by the Compensation Committee of the Company’s Board of Directors, or by such
person or persons as the Compensation Committee may delegate to administer the
Program.  Such administrator has the
authority to make all necessary or desirable interpretations under the AIP,
which are final and binding on all AIP participants.

The
Company may modify or terminate the AIP at any time. In the event of plan
termination, the performance results will be determined from the beginning of
the current plan year to the effective date of plan termination. Based on these
results, any awards earned will be paid in cash to participants on a pro-rata
basis within 45 days after the date of the plan termination.

 7
 

Exhibit I

Definition of Cash Flow Return on Average Gross Capital Employed

The Company Performance Metric for the Annual
Incentive Program is Cash Flow Return on Average Gross Capital Employed (CFROC)
defined as follows:

 

	
  CFROC 

  	
  =

  	
  Cash Flow

  	
   

  
	
  Average Gross
  Capital Employed

  	
   

  

 

Where:

Cash
Flow =

Cash Flow from Operating Activities

	
  Less:

  	
  Additions to Property, Plant & Equipment
  (excluding major capital expenditures)

  
	
  Less:

  	
  Minority Interest in CFL

  
	
  Less:

  	
  Changes in Net Operating Working Capital*

  
	
  Less:

  	
  Increase (Decrease) in Customer Advances

  
	
  Plus:

  	
  Interest Expense

  

 

Gross Capital Employed =

Total Stockholders’ Equity
(Book Equity) + Interest Bearing Debt (Gross Debt)

Average
Gross Capital Employed =

Gross
Capital Employed as of 12/31 for current Program Year, plus Gross Capital
Employed as of 12/31 of previous Program Year divided by 2.

*Net
Operating Working Capital =

Inventories

	
  Plus:

  	
  Accounts Receivable

  
	
  Plus:

  	
  Positive Exchange Positions

  
	
  Plus:

  	
  Margin Deposits

  
	
  Plus:

  	
  Prepaid Expenses

  
	
  Less:

  	
  Accounts Payable & Accrued Expenses excluding
  Accruals related to Asset Retirement Obligations

  
	
  Less:

  	
  Negative Exchange Positions

  

 

Company
performance will be calculated to two decimal points.

 8Exhibit 10.2

CF
INDUSTRIES HOLDINGS, INC.

ANNUAL INCENTIVE PROGRAM

AWARD AGREEMENT

This award
opportunity is granted pursuant and subject to the CF Industries Holdings, Inc.
(the “Company”) 2005 Equity Incentive Plan (the “Plan”) and the Annual
Incentive Program (the “AIP”) promulgated thereunder.  Capitalized terms not defined herein shall
have the meaning set forth in the Plan and the AIP. Please review this Award
Agreement and promptly return a signed copy to William G. Eppel in order to
render the award opportunity effective.

The Company hereby grants
the individual whose name is set forth below (the “Participant”) an award
opportunity (the “Award”) pursuant to the Plan and the AIP:

	
  Program Year:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Award Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Participation Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Participant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

The performance
goals applicable to this Award and potential payment levels with respect to
achievement of such performance goals are set forth below and in the AIP.  The Participant has been provided with, read
and understood the Plan and the AIP and acknowledges that the terms thereof
govern this Award.

	
  Award:

  	
  Threshold: (e.g. 10% of base earnings)

  	
  Target: (e.g. 20% of base earnings)

  
	
   

  	
  Maximum: (e.g. 40% of base earnings)

  	
   

  

 

Without limiting the
generality of the foregoing, the Participant also acknowledges that:

1.                                       Pursuant
to Section 7(b) of the Plan, in the event of a Change in Control, the
performance goals applicable to this Award shall be deemed to be achieved at
the target or actual performance which ever is higher.

2.                                       Except
as set forth in the preceding acknowledgement, if the threshold level of
Company performance set forth in the AIP is not achieved an award pool equal to
15% of the target awards at the 100% of target level for all program
participants in the aggregate (excluding executive officers who are named in
the summary compensation table in the proxy statement, referred to as the “named
executive officers”) will be available for 

 1
 

distribution based on management discretion.  In such circumstances, it is possible that
none, some or all of the award pool will be paid to participants.

3.                                       The
Participant’s Award will be calculated based upon “base earnings,” defined as
salary actually paid to the Participant during the program year starting with
the participation date (i.e., the award is not calculated based upon an
annualized rate of base salary).

4.                                       The
Company may modify or terminate the AIP at any time. In the event of program
termination, the performance results will be determined from the beginning of
the current program year to the effective date of program termination. Based on
these results, any awards earned will be paid in cash to participants on a pro-rata
basis within 45 days after the date of the program termination.

5.                                       As
provided in the plan, the AIP is administered by the Compensation Committee of
the Company’s Board of Directors, or by such person or persons as the
Compensation Committee may delegate to administer the Program.  The Compensation Committee of the Board of
Directors has the sole discretion and authority to make equitable adjustments
to the AIP if an event occurs which, in the determination of the Committee make
such an adjustment necessary or appropriate, including with respect to the
performance goals set forth in the AIP; provided, however, that if the Award is
intended to qualify as “performance-based compensation” for purposes of Section
162(m) of the Internal Revenue Code, no adjustment shall be permitted which
would cause the Award to fail to so qualify. 
The Committee’s determination of any adjustment shall be final and
binding on the Participant.

6.                                       Payment
of approved Awards is made in cash during the first quarter of the calendar
year following the completion of the program year, unless the Participant has
timely elected a deferral of such Award.

7.                                       Upon
termination of the Participant’s employment due to Retirement, death, Job
Elimination or Disability (as defined below), Awards are pro-rated based on the
Participant’s base earnings (as described in 3 above) through the date of
termination and paid out after the close of the Program Year, if applicable
performance is achieved. Upon a termination for Cause (as defined below), Awards
for the program year in which the termination occurs and Awards not yet paid
out for the previous program year are forfeited.   Upon termination of employment for any other
reason, Awards for the program year in which the termination occurs are
forfeited, and Awards for a completed program year which have not yet been paid
out are in accordance with the terms of the Award and the AIP.

“Retirement” is defined
as the Participant’s termination of employment, other than for Cause, death or
Disability, following the Participant’s attainment of at least age fifty-five.

“Job
Elimination” shall mean the Participant’s termination of employment resulting
from the Company’s determination that the job held by the participant is
obsolete.

 2
 

“Disability” shall have
the meaning ascribed to such term in the Participant’s individual employment,
severance or other agreement with the Company or, if the Participant is not
party to such an agreement, “Disability” shall mean Participant’s inability
because of ill health, or physical or mental disability, to perform Participant’s
duties for a period of 180 days in any twelve month period.

“Cause” shall have the
meaning ascribed to such term in the Participant’s individual employment,
severance or other agreement with the Company or, if the Participant is not
party to such an agreement, Cause shall mean (i) dishonesty in the performance
of the Participant’s duties, or (ii) the Participant’s malfeasance or
misconduct in connection with the Participant’s duties or (iii) any act or
omission which is injurious to the Company or its Subsidiaries or affiliates,
monetarily or otherwise.

8.                                       Awards,
whether paid in cash or deferred, are included in the definition of earnings
for the purpose of calculating pension benefits under the CF Industries, Inc.
Retirement Income Plan and the CF Industries, Inc. Supplemental Benefit and
Deferral Plan and are subject to all applicable taxes. Awards are not used for
calculating any other employee benefits.

9.                                       For
purposes of this Award Agreement, Participant shall be considered to be in the
employment of the Company so long as Participant remains as an employee or
consultant for either the Company or an affiliate of the Company or for a
corporation (or an affiliate thereof) that assumes or substitutes a new award
for this Award. A Participant shall not be considered to be in the employment
of the Company if the affiliate which employs the Participant ceases to be an
affiliate of the Company. Any question as to whether and when there has been a
termination of such employment, and the cause of such termination, shall be
determined by the Committee or its delegate, as appropriate, and such
determination shall be final.

10.                                 The
Plan is incorporated herein by reference. 
The Plan and this Award Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and the
Participant with respect to the subject matter hereof, and may not be modified
except by means of a writing signed by the Company and the Participant.  If there is a conflict between the terms and
conditions of the Plan and the terms and conditions of this Award Agreement,
the terms and conditions of the Plan shall govern. This Award Agreement is
governed by the internal substantive laws, but not the choice of law rules, of
the State of Delaware.

11.                                 The
Participant acknowledges and agrees that this Award Agreement and the
transactions contemplated hereunder do not constitute an express or implied
promise of continued engagement as an employee or as a service provider for any
period and shall not interfere with the Participant’s right or the Company’s
right to terminate the Participant’s relationship as an employee or as a
service provider at any time, with or without Cause.

*                              *                              *                              *                              *

 3
 

By
your signature and the signature of the Company’s representative below, the
Participant and the Company agree that this Award is granted under and governed
by the terms and conditions of the Plan and this Award Agreement.  The Participant has reviewed the Plan and
this Award Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Award Agreement and fully understands
all provisions of the Plan and Award Agreement. 
The Participant hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Committee upon any questions relating
to the Plan and Award Agreement. 

	
  PARTICIPANT

  	
   

  	
  CF INDUSTRIES HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By: William G. Eppel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Title: Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

 4

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