(Number of Members)
|Management Director — Not Independent|
|William J. Doyle|
|Outside Director — Not Independent|
|E. Robert Stromberg (family business relationship)||x|
|Elena Viyella de Paliza (family business relationship)||x|
|Outside Director — Independent|
|Christopher M. Burley||x||x|
|John W. Estey||Chair||x|
|C. Steven Hoffman||x||x|
|Dallas J. Howe (Board Chair)||x|
|Alice D. Laberge (3)||Chair||x|
|Keith G. Martell (3)||x||x|
|Jeffrey J. McCaig||x||x|
|Paul J. Schoenhals||x||Chair|
|(1)||All members are independent. All Audit Committee members are Independent under additional regulatory requirements applicable to them|
|(2)||A majority of the Safety, Health and Environment Committee members are independent.|
|(3)||Audit Committee financial expert under the rules of the SEC.|
The Board has determined that all of the directors of the Corporation and proposed nominees, with the exception of Mr. Doyle, Ms. Paliza and Mr. Stromberg, are independent within the meaning of the "PotashCorp Governance Principles", National Instrument 58-101 "Disclosure of Corporate Governance Practices" ("NI 58-101"), applicable rules of the SEC and the New York Stock Exchange ("NYSE") corporate governance rules.
For a director to be considered independent, the Board must determine that the director does not have any material relationship with the Corporation, either directly or indirectly (e.g. as a partner, shareholder or officer of an organization that has a relationship with the Corporation). Pursuant to the "PotashCorp Governance Principles" and the "PotashCorp Core Values and Code of Conduct", directors and executive officers of the Corporation inform the Board as to their relationships with the Corporation and provide other pertinent information pursuant to questionnaires that they complete, sign and certify on an annual basis. The Board reviews such relationships to identify impairments to director independence and in connection with disclosure obligations under Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934 (the "Exchange Act").
As permitted by the NYSE corporate governance rules, the Board has adopted categorical standards to assist it in making determinations of director independence. These standards are set out in the "PotashCorp Governance Principles", the full text of which is available on the Corporation's website, www.potashcorp.com. The independence standards established by the Board are as follows:
|(a)||A Director will not be considered independent if, currently or within the preceding three years, as applicable:|
|(i)||the Director is, or was, an employee or executive officer of the Corporation, including any affiliated entity of the Corporation;|
|(ii)||an immediate family member of the Director is, or was, an executive officer of the Corporation, including any affiliated entity of the Corporation;|
|(iii)||the Director is, or was, a partner of, employed by or affiliated with any of the Corporation's present or former internal or external auditors;|
|(iv)||an immediate family member of the Director is, or was, a partner of any of the Corporation's present or former internal or external auditors;|
|(v)||an immediate family member of the Director is an employee of the Corporation's internal or external auditors and participates in its audit, assurance or tax compliance (but not tax planning) practice, or is or was employed or affiliated with any of the Corporation's present or former internal or external auditors and personally works or worked on the Corporation's audit within such time; or|
|(vi)||an executive officer of the Corporation serves or served on the compensation committee of an entity which, in turn, employs or employed either (a) the particular Director as an executive officer or (b) an immediate family member of such Director as an executive officer.|
|(b)||A Director will not be considered independent if the Director received any direct compensation, or an immediate family member of the Director received more than Cdn$75,000 in direct compensation, during any 12 month period within the past three fiscal years from the Corporation, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided that such compensation is not contingent in any way on continued service).|
|(c)||A Director will not be considered independent if the Director has any of the following commercial or charitable relationships:|
|(i)||the Director currently serves as an executive officer or employee of, or any of his or her immediate family members currently serves as an executive officer of, another company that makes payments to, or receives payments from, the Corporation for property or services in an amount that, in any one of the three most recent fiscal years, exceeds the greater of (x) US$1,000,000 or (y) 2 percent of the annual consolidated gross revenues of the company for which such Director, or any of his or her immediate family members, serves as an executive officer (or as an employee in the case of the Director); or|
|(ii)||the Director currently serves as an officer, director or trustee of a charitable organization, and the Corporation's discretionary charitable contributions to that organization (or in the case of a foundation, the foundation together with the organization or entity to which the foundation supports) exceeds the greater of (x) US$1,000,000 or (y) 2 percent of that organization's total annual consolidated gross revenues within any one of the three most recent fiscal years (provided that the Corporation's matching of employee charitable contributions will not be included in the amount of the Corporation's contributions for this purpose).|
|(d)||Where a relationship exists as a result of a Director who is a limited partner, a non-managing member or who occupies a similar position in an entity that does business with the Corporation, or who has a shareholding in such entity which is not significant, and who, in each case, has no active role in sales to, purchases from, or in providing services to the Corporation and derives no direct material benefit from same, such relationship shall be considered not to be material.|
Mr. Doyle is the Chief Executive Officer ("CEO") of the Corporation and is therefore not independent. Mr. Doyle is also Chairman of Canpotex Limited. The Corporation had sales of approximately $613.7 million to Canpotex Limited in 2009.
A son of Mr. Stromberg, David Stromberg, is a director and a major indirect shareholder of Micro Oil Inc. ("Micro Oil"), a privately held process oil blender and supplier based in Saskatoon, Saskatchewan. David Stromberg is also the president of Micro Oil. Another son of Mr. Stromberg, Jeffrey Stromberg, is a shareholder of Micro Oil. In 2009, receipts and payments in the amount of Cdn$751, 603 were transacted between the Corporation and Micro Oil. In 2008, receipts and payments in the amount of Cdn $2,014,601 were transacted between the Corporation and Micro Oil, which exceeded 2% of Micro Oil's gross revenues in 2008. Micro Oil and the Corporation have also entered into a confidentiality agreement relating to the development of oil processes used by the Corporation. Purchases from Micro Oil are made in the ordinary course of business. Mr. Stromberg has no interest in the business of his adult sons. Through his prominence in the Saskatchewan business community and his professional qualifications and experience, Mr. Stromberg has been and continues to be a valued member of the Board. His presence on the Board plays no role in the Corporation's decision to transact business with Micro Oil. The Corporation has and will continue to make this decision on the basis of the best interests of the Corporation.
Ms. Paliza's father and brother are executive officers of Fertilizantes Santo Domingo, C. por A ("Fersan"), a fertilizer bulk blender and distributor of agrichemicals based in the Dominican Republic, which is a customer of the Corporation. Although representing less than 1% of the Corporation's consolidated sales in 2009, sales to Fersan exceeded 2% of Fersan's 2009 consolidated gross revenues. As such, Ms. Paliza does not meet the Corporation's categorical independence standards which incorporate in relevant part the NYSE corporate governance rules. Ms. Paliza has no direct or indirect interest in the Corporation's sales to and purchases by Fersan and all such transactions are completed on normal trade terms. Even though she does not meet the aforementioned independence standards, Ms. Paliza provides a valuable contribution to the Board through her industry knowledge and experience, and international business perspective.
In determining the independence of its other directors, the Board evaluated business and other relationships that each director had with the Corporation. In doing so, it determined as immaterial (i) any relationship falling below the thresholds in paragraph (c)(i) or covered pursuant to paragraph (d) above, and not otherwise required to be disclosed pursuant to Item 404(a) of Regulation S-K under the Exchange Act, including certain relationships of Mr. Estey and Mr. McCaig, (ii) any relationships falling below the thresholds in paragraph 3(c)(ii) above, including certain relationships of Mr. Burley, Mr. Estey, Ms. Laberge and Mr. Martell and (iii) any business relationship between the Corporation and an entity as to which the director in question has no relationship other than as a director thereof, including certain directorships of Mr. Estey, Mr. Howe, Ms. Laberge and Mr. McCaig.
In addition to the independence requirements set out above, the Corporation has established an additional requirement that there shall be no more than two board interlocks at any given time. As of the date of this Management Proxy Circular, there are no interlocking public company directorships among the Board members.