Linkage Between Compensation and Performance

PotashCorp's board believes that the economic interests of directors should be aligned with those of shareholders. Therefore all directors, over a specified period of time, are expected to hold shares and/or deferred share units in the company equal to at least five times their annual retainer.

The CEO's annual salary is determined primarily on the basis of his performance and the performance of the company. The board's compensation committee considers all factors it deems relevant, including PotashCorp's financial results, corporate governance, certain sustainability goals and the CEO's performance relative to written objectives established at the beginning of each year. The goals and related achievements are set out in the annual proxy circular.

The company believes that aligning compensation with performance is in the best interests of all stakeholders. It places significant emphasis on pay-for-performance, with "at risk" components of total compensation linked to the enhancement of cash flow return and total shareholder return. The more senior the management position, the greater the proportion of compensation that is "at risk." In 2006, the number of employees with an "at risk" component in their total compensation was expanded from approximately 4 percent to approximately 31 percent.