PotashCorp logo
Home | Contacts | FAQs  
Governance Principles
Goals and Performance
Charters
Position Descriptions
Core Values and Code of Conduct
Governance Policies
 
>  Governance Practices
 
>  Compliance with NYSE Rules
 
>  Compliance with Sarbanes-Oxley Reporting Standards
 
>  Corporate Disclosure Policy
Corporate Articles
Corporate Bylaws
Procedure for Reporting Complaints & Concerns
Insider Transactions
Contact Us
Library
E-mail Alerts
Governance FAQs
Home > Governance > Governance Policies > Governance Practices 
RSS Icon
 
Governance Policies
Governance Practices
PotashCorp, its Board and its management are committed to the highest standard of corporate governance. The Board, through its Corporate Governance and Nominating Committee continually evaluates and enhances the Corporation's corporate governance practices by monitoring Canadian and U.S. regulatory developments affecting corporate governance and transparency of public company disclosures.

As a Canadian reporting issuer with securities listed on the TSX and NYSE, the Corporation fully complies with the applicable regulatory requirements concerning corporate governance in both Canada and the United States.

In Canada, we comply with corporate governance rules of the Canadian securities regulatory authorities in all of the provinces and territories of Canada. The Corporation is required to disclose its corporate governance practices in accordance with National Instrument 58-101 "Disclosure of Corporate Governance Practicies" (NI-58-101) in reference to the benchmarks set out in National Policy 58-201 "Corporate Governance Guidelines" ("NP 58-201").

The following table discloses the Corporation's current corporate governance practices in accordance with the requirements of NI 58-101.


   
1. (a)
Anchor Arrow Disclose the identity of directors who are independent.
  (b)
Anchor Arrow Disclose the identity of directors who are not independent, and describe the basis of that determination.
  (c)
Anchor Arrow Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors (the board) does to facilitate its exercise of independent judgment in carrying out its responsibilities.
  (d)
Anchor Arrow If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.
  (e)
Anchor Arrow Disclose whether or not the independent directors hold regularly scheduled meetings at which members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held during the preceding 12 months. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.
  (f)
Anchor Arrow Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.
  (g)
Anchor Arrow Disclose the attendance record of each director for all board meetings held since the beginning of the issuer's most recently completed financial year.
     
2.
Anchor Arrow Disclose the text of the board's written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.
     
3. (a)
Anchor Arrow Disclose whether or not the board has developed written position descriptions for the chair and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position.
  (b)
Anchor Arrow Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.
     
4. (a)
Anchor Arrow Briefly describe what measures the board takes to orient new directors regarding the role of the board, its committees and its directors, and the nature and operation of the issuer's business.
  (b)
Anchor Arrow Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary for them to meet their obligations as directors.
     
5. (a)
(i)
Anchor Arrow Disclose whether or not the board has adopted a written code for its directors, officers and employees. If the board has adopted a written code, disclose how a person or company may obtain a copy of the written code.
(ii)
Anchor Arrow Describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board ensures compliance with its code.
(iii)
Anchor Arrow If the board has adopted a written code, provide a cross-reference to any material change report filed since the beginning of the issuer's most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.
  (b)
Anchor Arrow Describe any steps the board takes to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.
  (c)
Anchor Arrow Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.
     
6. (a)
Anchor Arrow Describe the process by which the board identifies new candidates for board nomination.
  (b)
Anchor Arrow Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.
  (c)
Anchor Arrow If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.
     
7. (a)
Anchor Arrow Describe the process by which the board determines the compensation for your company's directors and officers.
  (b)
Anchor Arrow Disclose whether or not the board has a compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation.
  (c)
Anchor Arrow If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.
  (d)
Anchor Arrow If a compensation consultant or advisor has, at any time since the beginning of the issuer's most recently completed financial year, been retained to assist in determining compensation for any of the issuer's directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.
     
8.
Anchor Arrow If the board has standing committees other than the audit, compensation and nominating committees, identify the committees and describe their function.
     
9.
Anchor Arrow Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that it, its committees, and individual directors are performing effectively.

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

1. (a) Disclose the identity of directors who are independent.

Yes

The Board has determined that all of the directors of the Corporation with the exception of Mr. Doyle, Ms. Paliza and Mr. Stromberg are independent. See disclosure under the "Director Independence and Other Relationships" section of this Management Proxy Circular.
  (b) Disclose the identity of directors who are not independent, and describe the basis of that determination.

Yes

See disclosure under the "Director Independence and Other Relationships" section of this Management Proxy Circular.
  (c) Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors (the board) does to facilitate its exercise of independent judgment in carrying out its responsibilities.

Yes

Nine of twelve, or 75%, of the Corporation's current directors are independent.
  (d) If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.

Yes

Such other directorships have been disclosed in the "Nominees for Election to the Board of Directors" section of this Management Proxy Circular.
  (e) Disclose whether or not the independent directors hold regularly scheduled meetings at which members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held during the preceding 12 months. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.

Yes

The Board has adopted a policy for the independent members of the Board to meet without management present at each regularly scheduled meeting of the Board. These sessions are of no fixed duration and participating directors are encouraged to raise and discuss any issues of concern. This policy was complied with for all meetings of the Board in 2007.
  (f) Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.

Yes

Dallas J. Howe serves as the Board Chair, and is an independent director. He has served as Board Chair since 2003. A position description for the Board Chair has been developed and approved by the Board. Amongst other things the Board Chair is expected to:

(a) provide leadership to ensure effective functioning of the Board;
(b) lead in the assessment of Board performance;
(c) assist the Compensation Committee in monitoring and evaluating the performance of the Chief Executive Officer and senior officers of the Corporation;
(d) lead the Board in ensuring succession plans are in place at the senior management level; and
(e) act as an effective liaison among the Board and management.
  (g) Disclose the attendance record of each director for all board meetings held since the beginning of the issuer's most recently completed financial year.

Yes

Attendance records are fully disclosed in the "Attendance of Directors" section of this Management Proxy Circular. Pursuant to the "Potash Corp Governance Principles", directors are expected to attend all meetings of the Board and Board committees upon which they serve, to come to such meetings fully prepared, and to remain in attendance for the duration of the meetings. Where a director's absence from a meeting is unavoidable, the director should, as soon as practicable after the meeting, contact the Board Chair, the Chief Executive Officer or the Corporate Secretary for a briefing on the substantive elements of the meeting.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

2. Disclose the text of the board's written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.

Yes

The Board of Directors Charter is attached to this Management Proxy Circular as Appendix E.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

3. (a) Disclose whether or not the board has developed written position descriptions for the chair and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position.

Yes

A position description for the Board Chair and each Board Committee Chair (which are attached to the relevant Board Committee Charters) has been developed and approved by the Board and can be found on the Corporation's website at www.potashcorp.com.
  (b) Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.

Yes

A written position description for the Chief Executive Officer has been developed and approved by the Board.

The Chief Executive Officer reports to the Board and has general supervision and control over the business and affairs of the Corporation. Amongst other things, the Chief Executive Officer is expected to:

(a) foster a corporate culture that promotes ethical practices, encourages individual integrity and fulfils social responsibility;
(b) develop and recommend to the Board a long-term strategy and vision for the Corporation that leads to creation of shareholder value;
(c) develop and recommend to the Board annual business plans and budgets that support the Corporation's long-term strategy; and
(d) consistently strive to achieve the Corporation's financial and operating goals and objectives.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

4. (a) Briefly describe what measures the board takes to orient new directors regarding the role of the board, its committees and its directors, and the nature and operation of the issuer's business.

Yes

The Board has adopted a written New Director Orientation Policy designed to:

(a) provide each new director with a baseline of knowledge about the Corporation that will serve as a basis for informed decision-making;
(b) tailor the program for each new director, taking into account his or her unique mix of skills, experience, education, knowledge and needs; and
(c) deliver information over a period of time to minimize the likelihood of overload and maximize the lasting educational impact.

The orientation program is tailored to the needs of each new director, and consists of a combination of written materials, one-on-one meetings with senior management, site visits and other briefings and training as appropriate.
  (b) Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary for them to meet their obligations as directors.

Yes

The Board recognizes the importance of ongoing director education and the need for each director to take personal responsibility for this process. To facilitate ongoing education, the Corporation:

(a) maintains a director's intranet site to facilitate the exchange of views and published information;
(b) maintains a membership for each director in an organization dedicated to corporate governance and ongoing director education;
(c) each year encourages and funds the attendance of each director at one seminar or conference of interest and relevance and funds the attendance of each Committee Chair at one additional seminar or conference. In all cases, approval for attendance is obtained, in advance, from the Board Chair;
(d) encourages presentations by outside experts to the Board or Committees on matters of particular import or emerging significance; and
(e) at least annually, schedules a site visit in conjunction with a Board meeting.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

5. (a) (i) Disclose whether or not the board has adopted a written code for its directors, officers and employees. If the board has adopted a written code, disclose how a person or company may obtain a copy of the written code.

Yes

The Board has adopted the "PotashCorp Code of Conduct". The complete text of the "PotashCorp Code of Conduct", as well as other governance related documents, can be found at www.potashcorp.com and are available in print to any shareholder who requests them.
    (ii) Describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board ensures compliance with its code.

Yes

The Audit Committee reviews the process for communicating the "PotashCorp Code of Conduct" to the Corporation's personnel, and for monitoring compliance therewith. The Board, through the Audit Committee, receives regular reports from management directly responsible for compliance-related matters (the General Counsel, Vice President Internal Audit and Senior Vice President Administration). In addition, annual compliance sign offs are sought from each employee.

The Board, through the Audit Committee Chair, also receives reports of all financial or accounting issues raised through the Corporation's anonymous toll-free hotline.
    (iii) If the board has adopted a written code, provide a cross-reference to any material change report filed since the beginning of the issuer's most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.

Yes

The Corporation has not filed any material change reports since the beginning of the 2007 financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the "PotashCorp Code of Conduct". Pursuant to the "PotashCorp Governance Principles", no waiver of the application of the "PotashCorp Code of Conduct" to directors or senior officers is permitted.
  (b) Describe any steps the board takes to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.

Yes

Pursuant to the "PotashCorp Governance Principles", each director of the Corporation must possess and exhibit the highest degree of integrity, professionalism and values, and must never be in a conflict of interest with the Corporation. A director who has a conflict of interest regarding any particular matter under consideration should advise the Board, refrain from debate on the matter and abstain from any vote regarding it. The Board has also developed categorical independence standards to assist it in determining when individual directors are free from conflicts of interests and are exercising independent judgment in discharging their responsibilities. All directors and senior officers are bound by the "PotashCorp Code of Conduct" and no waiver of the application of that Code to directors or senior officers is permitted.
  (c) Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.

Yes

The Corporation's "Statement of Core Values and Code of Conduct" was redistributed to all employees in December 2006 and is continually reinforced with on-line training programs. At the end of 2007, all directors and employees were asked to sign a written confirmation of their compliance with the Code of Conduct. The Board, through the Audit Committee, requires the management Compliance Committee to annually report on the status of the corporation's ethics and compliance programs, including receipt of the Compliance Risk Assessment, Summary of Ethics and Compliance Training during the current year and plans for ethics and compliance training in the coming year.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

6. (a) Describe the process by which the board identifies new candidates for board nomination.

Yes

The Corporate Governance and Nominating Committee (the "CG&N Committee") is responsible for recruiting and proposing to the full Board new nominees for directors. The CG&N Committee, in the discharge of its duties:

(a) in consultation with the Board and Chief Executive Officer and, on an ongoing basis, identifies the mix of expertise and qualities required for the Board;
(b) assesses the attributes new directors should have for the appropriate mix to be maintained;
(c) in consultation with the Board and Chief Executive Officer and, on an ongoing basis, maintains a database of potential candidates;
(d) has implemented a procedure to identify, with as much advance notice as practicable, impending Board vacancies, so as to allow sufficient time for recruitment and for introduction of proposed nominees to the existing Board;
(e) develops a "short-list" of candidates and arranges for each candidate to meet with the CG&N Committee, the Board Chair and the Chief Executive Officer;
(f) recommends to the Board as a whole proposed nominee(s) and arranges for their introduction to as many Board members as practicable;
(g) ensures that prospective candidates are informed of the degree of energy and commitment the Corporation expects of its directors; and
(h) encourages diversity in the composition of the Board.
  (b) Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.

Yes

The Corporation has a standing CG&N Committee.

Each of the directors who comprise the CG&N Committee is independent. Please refer to "Director Independence and Other Relationships" and the "Report on Corporate Governance and Nominating Matters" sections of this Management Proxy Circular for additional information.
  (c) If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.

Yes

The responsibilities, powers and operation of the CG&N Committee are set out in its charter, which is available on the Corporation's website at www.potashcorp.com. Pursuant to the CG&N Committee Charter, the purpose of the CG&N Committee is to identify the individuals qualified to become members of the Board, to recommend to the Board nominees for election to the Board at each annual meeting of shareholders or to fill vacancies on the Board and to address related matters. Please refer to the "Report on Corporate Governance and Nominating Matters" section of this Management Proxy Circular for additional information.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

7. (a) Describe the process by which the board determines the compensation for your company's directors and officers.

Yes

Director and officer compensation is established on the advice of independent consultants, with a view to establishing target compensation at the median of the applicable comparator group. Please refer to the "Compensation Discussion and Analysis" and the "Director Compensation" sections of this Management Proxy Circular, as well as the response to 7(d) below for additional information.
  (b) Disclose whether or not the board has a compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation.

Yes

The Corporation has a standing Compensation Committee. Each of the four directors who comprise the Compensation Committee is independent. Please refer to the "Director Independence and Other Relationships" and "Compensation Discussion and Analysis" sections of this Management Proxy Circular for additional information.
  (c) If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.

Yes

The responsibilities, powers and operation of the Compensation Committee are set out in its charter, which is available on the Corporation's website at www.potashcorp.com. Pursuant to the Compensation Committee Charter, the purpose of the Compensation Committee is to carry out the Board's responsibility for: (i) executive compensation (including philosophy and programs); (ii) management development and succession; (iii) Board compensation; and (iv) broadly applicable compensation and benefit programs. Please refer to the "Compensation Discussion and Analysis" section of this Management Proxy Circular for additional information.
  (d) If a compensation consultant or advisor has, at any time since the beginning of the issuer's most recently completed financial year, been retained to assist in determining compensation for any of the issuer's directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.

Yes

In 2005, the Compensation Committee of the Board of Directors engaged Watson Wyatt as executive compensation consultants. Watson Wyatt provides input to the Committee on the philosophy and competitiveness of the design and award values for certain executive and director compensation programs. In addition, Watson Wyatt assists in the evaluation of compensation arrangements associated with certain strategic opportunities. In accordance with the Committee's adherence to the best practice of retaining independent executive compensation consulting, Watson Wyatt does not perform any other consulting services for the Corporation. Any work other than executive compensation consulting services performed for the Corporation by Watson Wyatt must be approved in advance by the Chair of the Committee. Additionally, Hewitt Associates has historically provided executive compensation and human resources consulting services for the Corporation, including actuarial consulting, employee benefits design, finance consulting and recordkeeping services. The Committee continues to use Hewitt Associates' proprietary Total Compensation Measurement data services to provide specific compensation data for selected executive and director positions. This information has been and will continue to be supplemented with other compensation survey data available through Watson Wyatt.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

8. If the board has standing committees other than the audit, compensation and nominating committees, identify the committees and describe their function.

Yes

In addition to the Audit Committee, Compensation Committee and CG&N Committee, the Board also has a Safety, Health and Environment Committee. The Safety, Health and Environment Committee assists the Board review and recommend for approval policies, management systems and performance with respect to safety, health and environment matters affecting the Corporation.
  back to top arrow Top

Disclosure Requirement under Form 58-101F1

PotashCorp Compliance

Comments & Discussion

9. Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that it, its committees, and individual directors are performing effectively.

Yes

Pursuant to the "PotashCorp Governance Principles", which is available on the Corporation's website at www.potashcorp.com, the Board has adopted the following five-part effectiveness evaluation program:

1.

Annual Board Assessment by all Members of the Board

Each year Board members complete a detailed questionnaire which a) provides for quantitative ratings in key areas and b) seeks subjective comment in each of those areas. The questionnaire is administered by the Corporate Secretary. Responses are reviewed by the Corporate Secretary and the Chair of the CG&N Committee. A summary report is then prepared and provided to the Board Chair, the CG&N Committee and the Chief Executive Officer, and then reported to the full Board by the CG&N Committee Chair. Attribution of comments to individual directors in the summary report is made only if authorized by that director. In assessing the responses to the questionnaire, the focus is on continuous improvement. Matters requiring follow-up are identified, action plans are developed and there is ongoing monitoring by the CG&N Committee to ensure satisfactory results. As part of the annual Board assessment, the Board reviews and considers any proposed changes to the Board of Directors Charter.

 

 

2.

Annual Assessment of each Committee by Members of that Committee

Each year members of each Committee complete a detailed questionnaire designed to allow Committee members to evaluate how well each Committee is operating and to make suggestions for improvement. The questionnaire is administered by the Corporate Secretary who receives responses and reviews them with the appropriate Committee Chair. A summary report is then prepared and provided to the Board Chair, the Chair of the CG&N Committee, the appropriate Committee and the Chief Executive Officer and then reported to the full Board by the appropriate Committee Chair. As part of the annual Committee assessment, the Board reviews and considers any proposed changes to the Committee Charters.

As with the Board assessment, the focus is on continuous improvement. Chairs of each Committee are expected to follow up on matters raised in the Committee assessments and take such action as appropriate.

 

 

3.

Annual Assessment of the Board Chair by Members of the Board

Each year members of the Board are asked to assess and comment on the discharge, by the Board Chair, of his duties. Individual responses are received by the Chair of the CG&N Committee. A summary report is then provided to the Board Chair and the full Board, with no attribution of comments to individual directors without their consent. As part of the annual Board Chair assessment, the Board reviews and considers any proposed changes to the Board Chair position description.

 

 

4.

Annual Assessment of Each Committee Chair by Members of each Committee

Each year, members of each Committee are asked to assess and comment on the discharge, by each Committee Chair, of his or her duties. Responses are received by the Corporate Secretary and the Committee Chair under review. A summary report is then provided to the appropriate Committee and to the full Board, with no attribution of comments to individual directors without their consent. As part of the annual Committee Chair assessment, the Board reviews and considers any proposed changes to the Committee Chair position descriptions.

   
5.

Annual Assessment of Individual Directors

Each year during the period from May to September, the Board Chair (and, as in the opinion of the Board Chair is desirable, the Chair of the CG&N Committee) formally meets with each director individually to engage in full and frank two-way discussion of any and all issues that either wish to raise, with a focus on maximizing the contribution of each director to the Board and Committees. In completing the review, the Board Chair will employ a checklist, discuss both short-term and long-term goals, and establish action items to allow individual directors to enhance both his or her personal contributions and overall Board effectiveness. The Board Chair will share peer feedback with each director as appropriate and will review progress and action taken. Each director, during such formal review, shall be prepared to discuss with the Board Chair how the directors, both individually and collectively, could operate more effectively. The Board Chair will discuss the results of the individual evaluations with the Chair of the CG&N Committee and report summary findings to both that Committee and to the full Board at the November meeting.

  back to top arrow Top