Our Philosophy, Reward Structure and Oversight

Our executive compensation policies are designed to attract and keep world-class talent that drives PotashCorp forward and maximizes long-term shareholder value. In accordance with the underlying “pay for performance” principle, most compensation is variable and fluctuates according to individual and corporate performance. An annual study by Watson Wyatt in 2008 found that over the previous three years, consistent with PotashCorp’s performance, the realized pay of our executive officers was within the top quartile of our peer group.

Executive compensation is comprised of base salary, short-term incentives, performance units granted under a Medium-Term Incentive Plan (MTIP) and performance stock options. About 60 percent of the compensation package is medium- and long-term variable components like the MTIP and performance stock options; short-term incentives account for about 15 percent and base salary 25 percent. We do not have non-qualified arrangements that allow management to elect to defer compensation.

The compensation committee, comprised of independent directors, oversees our executive compensation program. It carefully monitors the proportion of remuneration that is performance-related on a short-, medium- and long-term basis, as well as the total value of all forms of compensation.

Performance stock options are awarded once per year, following shareholder approval of the plan and with an exercise price no lower than the closing market price on the day before the options are granted.

Performance Options: Aligning Executive Compensation, Shareholder Interests

We emphasize pay-for-performance, with “at risk” components of total compensation linked directly to the enhancement of cash flow return and total shareholder return. The following chart is an example of the performance conditions that must be achieved before vesting will occur in our performance option plans. For additional information, please see our 2009 proxy circular on our website.