DEF 14A of CF Industries Holdings, Inc.
Filed Mar 7, 2024 · FY20230001104659-24-031807
OUR DIRECTOR NOMINEES
OUR DIRECTOR NOMINEES Our corporate governance and nominating committee regularly reviews the overall composition of the Board and its committees to assess whether each reflects the appropriate mix of experience, qualifications, attributes, and skills that are relevant to CF Industries’ current and future global strategy, business, and governance.
OUR DIRECTOR NOMINEES
| Nominee Primary Occupation | Age | Director Since | Independent | Other Public Boards | Committee Memberships(1) | | | | | | | | | | AC | CC | GC | EC | | Javed Ahmed Former CEO of Tate & Lyle PLC | 64 | 2018 | Yes | 0 | | ● | ● | | | Robert C. Arzbaecher Former Chairman and CEO of Actuant Corporation | 64 | 2005 | Yes | 0 | ● | | | C | | Christopher D. Bohn Executive Vice President and COO of CF Industries | 56 | 2024 | COO | 0 | | | | | | Deborah L. DeHaas Former Vice Chairman and Managing Partner Center for Board Effectiveness, Deloitte | 64 | 2021 | Yes | 1 | ● | | | ● | | John W. Eaves Executive Chairman of Arch Resources, Inc. | 66 | 2017 | Yes | 1 | ● | C | | ● | | Susan A. Ellerbusch Former CEO, Air Liquide North America, LLC | 56 | 2023 | Yes | 1 | | | | ● | | Stephen J. Hagge Former President and CEO of AptarGroup, Inc. | 72 | 2010 | Yes | 1 | | ● | ● | | | Jesus Madrazo CEO and President of Reiter Affiliated Companies | 54 | 2021 | Yes | 0 | | | ● | ● | | Anne P. Noonan President and CEO of Summit Materials, Inc. | 60 | 2015 | Yes | 1 | | ● | C | | | Michael J. Toelle Owner, T & T Farms | 61 | 2017 | Yes | 0 | | ● | | ● | | Theresa E. Wagler CFO and EVP of Steel Dynamics, Inc. | 53 | 2014 | Yes | 0 | C | | | ● | | Celso L. White Former Global Chief Supply Chain Officer of Molson Coors Brewing Company | 62 | 2018 | Yes | 1 | | | ● | ● | | W. Anthony Will President and CEO of CF Industries | 58 | 2014 | CEO | 1 | | | | |
OUR DIRECTOR NOMINEES
| (1) AC | = Audit Committee | | CC | = Compensation and Management Development Committee | | GC | = Corporate Governance and Nominating Committee | | EC | = Environmental Sustainability and Community Committee | | C | = Committee Chair |
OUR DIRECTOR NOMINEES
Based on specific areas of focus or expertise that are particularly relevant to a director nominee’s service on the Board. It should not be inferred that other director nominees do not also possess meaningful experience or skills in these areas.
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS
DIRECTOR NOMINEES
DIRECTOR NOMINEES The Board has nominated the thirteen individuals named in this Proxy Statement as director nominees for election at the Annual Meeting. All of the director nominees are present directors of the company standing for re-election. Each director elected at the Annual Meeting will serve until our next annual meeting of shareholders and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation or retirement. Each nominee has consented to being named in this Proxy Statement and to serve if elected. If any nominee becomes unavailable to serve, an event that the Board does not presently expect, we will vote the shares represented by proxies for the election of directors for the election of such other person as the Board may recommend, unless the Board decides to reduce its total size. If all thirteen director nominees are elected, the Board will consist of thirteen directors, each of whom other than our CEO and COO will be “independent” under the listing standards of the New York Stock Exchange (the “NYSE”).
Majority Vote Standard for Election of Directors
Majority Vote Standard for Election of Directors Our directors are elected by a majority of the votes cast in uncontested elections, which means that, for a director nominee to be elected in an uncontested election, the number of shares voted “for” that director nominee must exceed the number of votes cast “against” that director nominee. In a contested election, directors are elected by receiving a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. A contested election is a situation in which the number of nominees for election exceeds the number of directors to be elected. Whether an election is contested is determined fourteen days in advance of the date we file our definitive proxy statement with the SEC.
Snapshot of Director Nominees
Snapshot of Director Nominees
Snapshot of Director Nominees
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BOARD RECOMMENDATION
BOARD RECOMMENDATION In connection with the Annual Meeting and in accordance with the above guidelines, the corporate governance and nominating committee recommended that the Board nominate the thirteen individuals named in this Proxy Statement for election to the Board. The Board believes these nominees provide CF Industries with the combined depth and breadth of skills, experience and qualities required to contribute to an effective and well-functioning Board. Our thirteen director nominees offer a diverse set of qualifications and perspectives and possess a wealth of leadership and professional experience in areas relevant to our current and future global strategy, business, and governance. The Board unanimously recommends that you vote FOR the election of the nominees presented in Proposal 1.
DIRECTOR NOMINEE BIOGRAPHIES
DIRECTOR NOMINEE BIOGRAPHIES The following biographical information about each of our director nominees highlights the particular experiences, qualifications, attributes, and skills possessed by each director nominee that led the Board to determine that he or she is qualified to serve as a public company director and that he or she should serve as member of the Board. All director nominee biographical information is as of February 23, 2024.
DIRECTOR NOMINEE BIOGRAPHIES
| | | Javed Ahmed Javed Ahmed served as chief executive officer of Tate & Lyle PLC, a British-headquartered, global provider of solutions and ingredients for food, beverage and industrial markets with facilities and offices in over 30 locations worldwide whose products are sold or distributed in over 120 countries, from October 2009 until April 2018. Prior to this role, he spent 17 years with Benckiser NV (later Reckitt Benckiser Group plc), a leading consumer products group, in a number of senior roles. He began his career with The Procter & Gamble Company before spending five years with Bain & Co. Qualifications As the former chief executive officer of Tate & Lyle PLC, Mr. Ahmed brings public company governance, agriculture and food industry focus, human capital management, strategic initiative, environmental sustainability, risk management, environmental, health and safety aspects of operations, and accounting and financial expertise to the Board. Other Public Company Directorships (within the past 5 years) • None | | Age 64 | Director Since 2018 | | | CF Industries Committees • Compensation and management development • Corporate governance and nominating | | | | Qualifications • Accounting and Finance • Agriculture and Food Industry • CEO • EHS Aspects of Operations • Environmental Sustainability • Human Capital • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Robert C. Arzbaecher Robert C. Arzbaecher served as chief executive officer of Actuant Corporation, a diversified manufacturer and marketer of industrial products and systems with operations in more than 30 countries, from 2000 until January 2014 and as interim president and chief executive officer of Actuant from August 2015 until March 2016. He served as a director of Actuant from 2000 until January 2017 and as chairman of the board of Actuant from 2001 until March 2016. From 1992 until 2000, he held various financial positions with Applied Power, Inc., Actuant’s predecessor, the most recent of which was chief financial officer. Prior to 1992, Mr. Arzbaecher held various financial positions with Grabill Aerospace Industries Ltd., Farley Industries Inc., and Grant Thornton LLP, a public accounting firm. Mr. Arzbaecher is a certified public accountant and he is also a director of Fiduciary Management, Inc. mutual funds. Qualifications As the former chairman and chief executive officer of Actuant, Mr. Arzbaecher brings public company governance, human capital, operations, strategic initiative, and risk management expertise to the Board. As a certified public accountant who has served as a financial executive, he is an “audit committee financial expert” within the meaning of SEC rules. Other Public Company Directorships (within the past 5 years) • None | | Age 64 | Director Since 2005 | | | CF Industries Committees • Audit • Environmental sustainability and community (Chair) | | | | Qualifications • Accounting and Finance • CEO • Human Capital • Operations • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Christopher D. Bohn Christopher D. Bohn has served as our executive vice president and chief operating officer since February 2024 and leads global manufacturing, distribution, sales and supply chain, including our clean energy initiatives. He was previously our executive vice president and chief financial officer, with responsibility for strategic planning, business development and investor relations. Prior to that role, he was our senior vice president and chief financial officer, from September 2019 to July 2023, our senior vice president, manufacturing and distribution, from May 2016 to September 2019, our senior vice president, manufacturing, from January 2016 to May 2016, our senior vice president, supply chain, from January 2015 to December 2015, our vice president, supply chain, from January 2014 to December 2014, our vice president, corporate planning, from October 2010 to January 2014 and our director, corporate planning and analysis, from September 2009 to October 2010. Prior to joining CF Industries, Mr. Bohn served as chief financial officer for Hess Print Solutions from August 2007 to September 2009. Earlier in his career, Mr. Bohn was vice president global financial planning and analysis for Merisant Worldwide, Inc. Qualifications As the executive vice president and chief operating officer of CF Industries, and with his previous chief financial officer, manufacturing, distribution, supply chain and corporate planning positions over his nearly 15 year tenure with our company, Mr. Bohn brings substantial accounting and finance, operations, fertilizer and chemical industry, strategic initiative, environmental sustainability, environmental, health and safety of operations and risk management expertise to the Board. Other Public Company Directorships (within the past 5 years) • None | | Age 56 | Director Since 2024 | | | CF Industries Committees • None | | | | Qualifications • Accounting and Finance • CFO, COO • EHS Aspects of Operations • Environmental Sustainability • Fertilizer / Chemical Industry • Operations • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Deborah L. DeHaas Deborah L. DeHaas retired from Deloitte as a vice chairman and the managing partner of the Center for Board Effectiveness in September 2020. She held numerous leadership roles at Deloitte during her 18 years of service to the firm, including as the firm’s first chief inclusion officer, as the regional managing partner for the midwest and central regions of Deloitte — in which role she led the quality, client satisfaction, growth, marketplace and talent initiatives for over 10,000 professionals in fourteen states — as the Chicago office managing partner, as a member of the Deloitte US board of directors, and as a member of the Deloitte US Executive Committee. Before joining Deloitte, Ms. DeHaas was a partner at Arthur Andersen LLP. She has served as the chief executive officer of Corporate Leadership Center, an executive leadership development organization, since November 2020. She previously served on the board and executive committee of the Value Reporting Foundation Board (formerly known as the Sustainability Accounting Standards Board Foundation Board) until it was consolidated into the IFRS Foundation in August 2022. She is also a trustee and chair of the audit committee at both Northwestern University and the University of Denver. Since February 2021, Ms. DeHaas has also been a member of the board of directors of Dover Corporation, a diversified global manufacturer and solutions provider. Qualifications With her roles and responsibilities at Deloitte, Corporate Leadership Center, and the Value Reporting Foundation Board, Ms. DeHaas brings substantial environmental sustainability, human capital management, public company governance, risk management, and strategic initiative expertise to the Board. Ms. DeHaas is a certified public accountant and is an “audit committee financial expert” within the meaning of SEC rules. Other Public Company Directorships (within the past 5 years) • Dover Corporation (Feb. 2021 – Present) | | Age 64 | Director Since 2021 | | | CF Industries Committees • Audit • Environmental Sustainability and Community | | | | Qualifications • Accounting and Finance • Environmental Sustainability • Human Capital • Public Company Governance • Senior Executive Leadership • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | John W. Eaves John W. Eaves is the executive chairman of Arch Resources, Inc. (formerly Arch Coal, Inc.), a top coal producer for the global steel and power generation industries, and served as president and chief executive officer of Arch Resources from 2012 to April 2020. He has been a member of its board of directors since 2006. Mr. Eaves has more than 30 years of experience in the coal industry. During his tenure with Arch Resources, he has held positions of president and chief operating officer; senior vice president of marketing; and vice president of marketing and president of Arch Coal Sales, the company’s marketing subsidiary. Mr. Eaves joined Arch Resources in 1987 after serving in various marketing-related positions at Diamond Shamrock Coal Company and Natomas Coal Company. He serves on the boards of the National Association of Manufacturers and the National Mining Association. On January 11, 2016, Arch Resources filed a voluntary petition for reorganization under the provisions of Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Missouri. On October 5, 2016, Arch Resources’s reorganization plan became effective, and it emerged from Chapter 11. Qualifications As the executive chairman and former president and chief executive officer of Arch Resources, Mr. Eaves brings substantial energy industry, operations, strategic initiative, human capital management, environmental sustainability and environmental, health and safety of operations expertise to the Board. Mr. Eaves has extensive experience in risk management and accounting and finance expertise through his active supervision of those performing financial accounting and reporting at Arch Resources and he is an “audit committee financial expert” within the meaning of SEC rules. Other Public Company Directorships (within the past 5 years) • Arch Resources, Inc. (2006 – Present) | | Age 66 | Director Since 2017 | | | CF Industries Committees • Audit • Compensation and management development (Chair) • Environmental sustainability and community | | | | Qualifications • Accounting and Finance • CEO • EHS Aspects of Operations • Energy Industry • Environmental Sustainability • Human Capital • Operations • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Susan A. Ellerbusch Susan A. Ellerbusch served as chief executive officer of Air Liquide North America LLC., the U.S. subsidiary of Air Liquide S.A., a world leader in gases, technologies and services for industry and health, with a presence in 80 countries, from September 2019 to January 2022. Ms. Ellerbusch was also a member of Air Liquide’s Executive Committee during this time. As head of Air Liquide’s operations in the U.S., Ms. Ellerbusch led the company’s Large Industries, Electronics, Hydrogen Energy and Canadian Industrial Merchant and Healthcare businesses. From September 2015 to September 2019, Ms. Ellerbusch served as president of Air Liquide Large Industries U.S., where she led the restructuring of the business to enable a greater focus on operational performance and customer engagement. Prior to Air Liquide, Ms. Ellerbusch worked at British Petroleum, or BP, where she held roles of increasing responsibility, including most recently as President, BP Biofuels North America, from 2008 to 2015. Qualifications With her roles and responsibilities at Air Liquide and BP, Ms. Ellerbusch brings substantial chemicals and energy industries, accounting and finance, operations, environmental, health and safety of operations, public company governance, risk management and strategic initiative expertise to the Board. Other Public Company Directorships (within the past 5 years) • Summit Materials, Inc. (Aug. 2018 – Present) | | Age 56 | Director Since 2023 | | | CF Industries Committee • Environmental Sustainability and Community | | | | Qualifications • Accounting and Finance • Chemicals and Energy Industries • EHS Aspects of Operations • Operations • Public Company Governance • Senior Executive Leadership • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Stephen J. Hagge Stephen J. Hagge served as president and chief executive officer of AptarGroup, Inc., a leading global supplier of a broad range of innovative dispensing systems for the beauty, personal care, home care, prescription drug, consumer health care, injectables, food and beverage markets with manufacturing facilities in North America, Europe, Asia and Latin America, from 2012 until January 2017 and as special advisor to the chief executive officer of AptarGroup from February 2017 to March 2017. He served as chief operating officer of AptarGroup from 2008 to 2011, as chief financial officer of AptarGroup from 1993 to 2011 and as an executive vice president and secretary of AptarGroup from 1993 to 2011. Mr. Hagge served as a director of AptarGroup from 2001 to 2019 and as a director of Crown Holdings, Inc. since 2019. He is also a member of the board of directors of Transcendia Topco Holdings, Inc., a privately held specialty package company, since 2018. Qualifications Through his experience as a director, chief executive officer, chief financial officer, and chief operating officer of AptarGroup, Mr. Hagge brings substantial public company governance, operations, human capital management, strategic initiative, environmental, health and safety of operations, and risk management expertise to the Board. Mr. Hagge has served as a financial executive and is an “audit committee financial expert” within the meaning of SEC rules. Other Public Company Directorships (within the past 5 years) • AptarGroup, Inc. (2001 – 2019) • Crown Holdings, Inc. (2019 – Present) | | Age 72 | Director Since 2010 | | | Chairman of the Board and Lead Independent Director | | | | CF Industries Committees • Compensation and management development • Corporate governance and nominating | | | | Qualifications • Accounting and Finance • CEO • EHS Aspects of Operations • Human Capital • Operations • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Jesus Madrazo Jesus Madrazo Yris has served as the chief executive officer and president of Reiter Affiliated Companies, a privately held company and the largest fresh multi-berry producer in the world, since November 2023. From August 2018 to November 2019, Mr. Madrazo was the executive vice president of public affairs and sustainability of Bayer AG’s Crop Science division. Prior to that role, Mr. Madrazo held numerous leadership positions during his 19 years of service at Monsanto Company, including as the executive vice president, operations, Europe, Middle East, Asia, Africa and global supply chain — in which role he had oversight of more than 9,000 employees and held responsibility for planning, production, manufacturing, procurement, engineering and customer care — as vice president of global corporate engagement, and as vice president of the International Row Crops Business. Mr. Madrazo is the founder and chairman of Kompali Farms, a large wine venture in Mexico renowned for its innovation in uniting technology and sustainability to deliver value to consumers while minimizing environmental impact. He also serves as a member of the boards of Reiter Affiliated Companies and Monte Xanic, a premium winery in Mexico. Qualifications With his leadership roles and responsibilities at Reiter Affiliated Companies, Bayer AG’s Crop Science division, Kompali Farms and Monsanto Company, Mr. Madrazo brings agricultural industry, environmental sustainability, human capital, operations, and risk management expertise to the Board. Other Public Company Directorships (within the past 5 years) • None | | Age 54 | Director Since 2021 | | | CF Industries Committees • Corporate governance and nominating • Environmental sustainability and community | | | | Qualifications • Agriculture Industry • Environmental Sustainability • Human Capital • Operations • Risk Management • Senior Executive Leadership | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Anne P. Noonan Anne P. Noonan has served as president and chief executive officer and as a director of Summit Materials, Inc., a leading vertically integrated construction materials company that supplies aggregates, cement, ready-mix concrete and asphalt paving mix in the United States and western Canada, since September 2020. From December 2016 to April 2020, Ms. Noonan served as president and chief executive officer of OMNOVA Solutions Inc., a global provider of emulsion polymers, specialty chemicals, and engineered surfaces for a variety of commercial, industrial, and residential end uses with manufacturing, technical, and other facilities located in North America, Europe, China, and Thailand. She served as OMNOVA’s president, performance chemicals from 2014 until December 2016. Ms. Noonan previously held several positions of increasing responsibility with Chemtura Corporation, a global specialty chemicals company, from 1987 through 2014, including most recently as senior vice president and president of Chemtura’s Industrial Engineered Products business and Corporate Development function. Qualifications As the president and chief executive officer of Summit Materials, former president and chief executive officer of OMNOVA Solutions and with previous executive operating positions at both OMNOVA Solutions and Chemtura, Ms. Noonan brings operations, chemical industry, environmental, health and safety of operations, environmental sustainability, human capital, public company governance, risk management and strategic initiative expertise to the Board. Other Public Company Directorships (within the past 5 years) • Summit Materials, Inc. (Sept. 2020 – Present) • OMNOVA Solutions Inc. (Dec. 2016 – Apr. 2020) | | Age 60 | Director Since 2015 | | | CF Industries Committees • Compensation and management development • Corporate governance and nominating (Chair) | | | | Qualifications • CEO • Chemical Industry • EHS Aspects of Operations • Environmental Sustainability • Human Capital • Operations • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Michael J. Toelle Michael J. Toelle is the owner of T & T Farms, a diversified farming company. He has been a member of the board of Nationwide Mutual Insurance Company, one of the largest insurance and financial services companies in the world, since 2013. He is a former board chairman and former longtime board member of CHS Inc., a diversified global agribusiness cooperative. He also served as a board member for Cenex, Inc., before it merged with Harvest States Cooperatives to create CHS in 1998. Mr. Toelle is past chairman of the CHS Foundation and previously served as a director for the Agricultural Council of America and Country Partners Cooperative. Since June 2020, Mr. Toelle has served as a member of the board of directors of CIBO, a privately-owned science-based software company that applies science and technology to the scaling of environmentally and economically sustainable agriculture. Qualifications As the owner and operator of a major diversified farming company, a director of Nationwide Mutual Insurance Company and CIBO and former chairman and director of CHS, Mr. Toelle brings agricultural industry, accounting and financial, risk management and strategic initiative expertise to the Board. Other Public Company Directorships (within the past 5 years) • None | | Age 61 | Director Since 2017 | | | CF Industries Committees • Compensation and management development • Environmental sustainability and community | | | | Qualifications • Accounting and Finance • Agriculture Industry • Risk Management • Senior Executive Leadership • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Theresa E. Wagler Theresa E. Wagler has served as chief financial officer and executive vice president of Steel Dynamics, Inc., one of the largest domestic steel producers and metals recyclers in the United States, since 2007 and 2009, respectively. She serves as Steel Dynamics’ principal accounting officer and also has oversight responsibility for information technology and cybersecurity, human resources, business development and strategy, decarbonization and other ESG initiatives, and several operating joint ventures. She has held various positions of increasing responsibility since joining Steel Dynamics in 1998. Prior to joining Steel Dynamics, she served as assistant corporate controller for Fort Wayne National Bank and as a certified public accountant with Ernst & Young LLP. Qualifications With her roles and responsibilities at Steel Dynamics, Ms. Wagler brings substantial public company governance, accounting and finance, strategic initiative, risk management, human capital, operations, environmental, health and safety of operations and environmental sustainability expertise to the Board. Her background also brings an understanding of information technology and cyber risk to the Board to help ensure proper risk oversight. Ms. Wagler is a certified public accountant and an “audit committee financial expert” within the meaning of SEC rules. Other Public Company Directorships (within the past 5 years) • None | | Age 53 | Director Since 2014 | | | CF Industries Committees • Audit (Chair) • Environmental sustainability and community | | | | Qualifications • Accounting and Finance • CFO • EHS Aspects of Operations • Environmental Sustainability • Human Capital • Operations • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | Celso L. White Celso L. White served as global chief supply chain officer at Molson Coors Brewing Company, one of the largest global brewers with breweries in the United States, Canada, Europe and India and worldwide distribution, from January 2013 to December 2019. From September 2010 to January 2013, he was vice president of international supply chain at Molson Coors. Prior to joining Molson Coors, he was Pepsi Cola’s vice president and general manager of Concentrate Operations, responsible for the Americas and parts of Asia, from 2004 to 2010. In January 2020, Mr. White co-founded Igniting Business Growth LLC, a consultancy business. Mr. White serves on the board of Colorado UpLift based in Denver, Colorado, the Board of Trustees of the Children Center in Hilton Head, South Carolina, and is a member of the Bradley University Board of Trustees. He is also a member of the board of directors of Armada Acquisition Corp. I, a newly formed acquisition company concentrating in the FinTech industry, since 2021. Qualifications As the global chief supply chain officer at Molson Coors Brewing Company, Mr. White was responsible for all aspects of the supply chain from grain fields to finished product retailer distribution, including procurement; operations; planning; logistics and distribution; environmental health and safety; engineering; and technical innovation. Mr. White brings operational, agricultural industry, strategic initiative, risk management, human capital management, environmental sustainability and environmental, health and safety of operations expertise to the Board. Other Public Company Directorships (within the past 5 years) • Armada Acquisition Corp. I (Aug. 2021 – Present) | | Age 62 | Director Since 2018 | | | CF Industries Committees • Corporate governance and nominating • Environmental sustainability and community | | | | Qualifications • Agriculture Industry • EHS Aspects of Operations • Environmental Sustainability • Human Capital • Global Chief Supply Chain Officer • Operations • Risk Management • Strategic Initiatives | | |
DIRECTOR NOMINEE BIOGRAPHIES
| | | W. Anthony Will W. Anthony Will has served as our president and chief executive officer and as a member of the Board since January 2014. He was previously our senior vice president, manufacturing and distribution, from January 2012 to January 2014, our vice president, manufacturing and distribution, from March 2009 to December 2011, and our vice president, corporate development, from April 2007 to March 2009. Before joining CF Industries, Mr. Will was a partner at Accenture Ltd., a global management consulting, technology services, and outsourcing company. Earlier in his career, he held positions as vice president, business development at Sears, Roebuck and Co. and vice president, strategy and corporate development at Fort James Corporation. Prior to that, Mr. Will was a manager with the Boston Consulting Group, a global management consulting firm. He is also a member of the board of directors of Olin Corporation, a global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition, since 2021. Qualifications As the president and chief executive officer of CF Industries and with his previous executive operations and corporate development positions, Mr. Will brings public company governance, operations, fertilizer and chemical industry, strategic initiative, environmental sustainability and environmental, health and safety of operations expertise to the Board. Mr. Will has extensive experience and expertise in risk management, accounting and finance and human capital management through his active supervision of individuals performing those functions at CF Industries. Other Public Company Directorships (within the past 5 years) • Olin Corporation (Sept. 2021 – Present) | | Age 58 | Director Since 2014 | | | CF Industries Committees • None | | | | Qualifications • Accounting and Finance • CEO • EHS Aspects of Operations • Environmental Sustainability • Fertilizer / Chemical Industry • Human Capital • Operations • Public Company Governance • Risk Management • Strategic Initiatives | | |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Non-employee directors receive compensation, including fees and reimbursements of expenses, for their service and dedication to the company. We recognize the substantial time and effort required to serve as a director of a large public company like ours. We believe that compensation for non-employee directors should be competitive and should encourage increased ownership of CF Industries stock through the payment of a portion of director compensation in shares of our stock. In order to further align the interests of our directors with the interests of our shareholders, our non-employee directors are required to achieve and maintain stock ownership with a market value equal to five times their annual cash retainer. Our compensation and management development committee is responsible for reviewing director compensation and making recommendations to the Board. The committee reviews the compensation of our non-employee directors annually. In connection with its annual review of the compensation of our non-employee directors, the committee also authorizes its compensation consultant, Exequity LLP (“Exequity”), to work with our human resources department to compare the compensation of our non-employee directors with compensation paid to comparable directors at peer companies and the overall market based on the then most recent National Association of Corporate Directors survey on director compensation. See “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Other Compensation Governance Practices and Considerations — Role of the Compensation Consultant.” Based on this review, in May 2023, the Board, upon the recommendation of the compensation and management development committee, approved an increase of $10,000 in the amount of the annual cash retainers paid to all non-employee directors and the chair of the Board and an increase of $10,000 in the value of the annual restricted stock grant to non-employee directors and to the chair of the Board. Such $10,000 increases are included in the annual cash retainer amounts and the annual restricted stock grant amounts set forth under the headings “Annual Cash Retainer” and “Annual Restricted Stock Grant” below. The Board, upon the recommendation of the compensation and management development committee, decided to maintain at the 2022 level the additional annual cash retainer amounts paid to the chairs of the Board committees.
2023 Total Director Compensation
2023 Total Director Compensation The following table sets forth cash and non-cash compensation with respect to the year ended December 31, 2023, for our non-employee directors. Mr. Will receives no additional compensation for his service as a director. Mr. Bohn, who joined the Board in February 2024, will also not receive any additional compensation for his service as a director.
2023 Total Director Compensation
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | Javed Ahmed | 112,500 | 160,033 | 3,228 | 275,761 | | Robert C. Arzbaecher | 130,000 | 160,033 | 3,228 | 293,261 | | Deborah L. DeHaas | 112,500 | 160,033 | 3,228 | 275,761 | | John W. Eaves | 130,000 | 160,033 | 3,228 | 293,261 | | Susan A. Ellerbusch(4) | 57,500 | 160,031 | 740 | 218,271 | | Stephen J. Hagge | 192,500 | 260,026 | 5,271 | 457,797 | | Jesus Madrazo | 112,500 | 160,033 | 3,228 | 275,761 | | Anne P. Noonan | 130,000 | 160,033 | 3,228 | 293,261 | | Michael J. Toelle | 112,500 | 160,033 | 3,228 | 275,761 | | Theresa E. Wagler | 135,000 | 160,033 | 3,228 | 298,261 | | Celso L. White | 112,500 | 160,033 | 3,228 | 275,761 |
2023 Total Director Compensation
(1) Amounts in this column represent the annual cash retainers that our non-employee directors earned during 2023. (2) Amounts in this column represent the grant date fair value computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 of the restricted stock awards that we granted to the non-employee directors during 2023 pursuant to our 2022 Equity and Incentive Plan. Our assumptions with respect to the FASB ASC Topic 718 valuation of these equity awards are described in the footnotes to our audited financial statements as of and for the year ended December 31, 2023. Additional information with respect to these restricted stock awards is set forth above under the heading “Annual Restricted Stock Grant.” Outstanding unvested restricted stock awards as of December 31, 2023 were as follows: 2,167 shares for each of directors Ahmed, Arzbaecher, DeHaas, Eaves, Madrazo, Noonan, Toelle, Wagler and White, 1,849 shares for Ms. Ellerbusch and 3,521 shares for Mr. Hagge, chair of the Board. (3) Amounts in this column represent dividends on restricted stock. Ms. Ellerbusch was elected to the Board in October 2023. Her fee amount reflects the partial year she served on the Board.
NAMED EXECUTIVE OFFICERS
| OVERVIEW OF OUR BUSINESS AND STRATEGY | 49 | | Business Overview and Corporate Strategy | 49 | | Our Approach to Human Capital Management | 51 | | 2023 Performance Highlights | 53 | | COMPENSATION PROGRAM OVERVIEW | 56 | | Compensation Program Highlights | 56 | | 2023 Target Total Compensation | 57 | | Shareholder Engagement | 58 | | COMPENSATION DISCUSSION AND ANALYSIS: IN DETAIL | 58 | | Compensation Philosophy | 58 | | Key Elements of NEO Compensation Program | 59 | | The Compensation Process | 61 | | Review and Approval of 2023 Cash Compensation | 63 | | Review and Approval of 2023 Long-Term Incentives | 71 | | 2024 Compensation Actions | 76 | | Change of Control, Severance, and Retirement Benefits | 77 | | Use of Industry Reference Group | 81 | | Other Compensation Governance Practices and Considerations | 82 |
Annual Incentive Plan Performance Metrics
Annual Incentive Plan Performance Metrics
Annual Incentive Plan Performance Metrics
| Financial Metric | Clean Energy Metric | Sustainability Initiative Metric | Process Safety Metric | | | Adjusted EBITDA(2) | Clean Energy Milestones(3) | Process, Technology and Reporting Capabilities Milestones(4) | Behavioral Safety Gate Threshold(5) | Timely Completion Percentage(6) | | $2.75 Billion | Achieved 5 milestones | Achieved 4 milestones | Achieved 99.2% | Achieved 99.8% | | Target: $4.0 Billion | Target: 3 milestones | Target: 2 milestones | Threshold: ≥ 95% | Target: 95% |
Annual Incentive Plan Performance Metrics
In 2022, market conditions led to very high prices for nitrogen products, leading to expanded margins and very strong financial performance. Going into 2023, the company expected global nitrogen market conditions to lead to lower product prices and a corresponding contraction of margins and financial performance compared to 2022. Despite that downward pressure on prices and margins, it was projected that nitrogen industry fundamentals would remain positive compared to conditions over years prior to 2022. High crop prices and the need to replenish global grain stocks were expected to support strong global fertilizer demand, while global nitrogen supply was expected to remain constrained with production in Europe and Asia affected by high energy prices. While energy spreads between North America producers and marginal production in Europe had compressed from the highs seen during 2022 as a result of Russia’s invasion of Ukraine, they remained above historical levels and forward energy curves continued to suggest the wider differentials would persist for an extended period. The company also expected decreased production from its network, based on increased turnaround and maintenance activity planned for 2023 compared to 2022. As a result, the compensation and management development committee set the target performance level for the Financial Metric at $4.0 billion of Adjusted EBITDA, which reflected the lower product pricing and production expected for 2023 compared to 2022 but still consistent with strong industry fundamentals. Actual financial results in 2023 reflect continued strong execution by the CF Industries team, a constructive global nitrogen supply and demand balance and energy spreads favoring North American production. The company’s 2023 financial performance did not meet the company’s expectations as a result of lower selling prices driven by lower energy spreads between North American producers and marginal production in Europe and Asia which increased global supply availability due to higher global inventories entering 2023 and higher operating rates in high-cost regions. Lower pricing was partially offset by higher sales volumes as positive farm economics increased demand. Our natural gas costs were lower than planned due to greater domestic supply availability as warmer-than-normal temperatures decreased the demand for natural gas and supply remained strong due to few weather-related production disruptions and maintenance and outages at liquefied natural gas facilities that limited total gas exports. The company’s facilities ran extremely well in 2023 and we exceeded our production expectations. Additionally, the company continued to deliver on its strategic priorities and create long-term shareholder value.
Annual Incentive Plan Performance Metrics
| Safety | As of December 31, 2023, the company’s 12-month rolling average recordable incident rate was 0.36 incidents per 200,000 work hours — an industry leading result | | Operational Excellence | Long-term asset utilization over the last five years is approximately 10 percent higher than the average utilization rate of our North American competitors | | Efficiency | SG&A costs as a percentage of sales remained among the lowest in both the chemicals and fertilizer industries in 2023 | | Return to Shareholders | Returned $891 million to shareholders in 2023 through $580 million in share repurchases and $311 million in dividend payments | | Clean Energy Commitment | We are taking significant steps to decarbonize our own production network and support a global hydrogen and clean fuel economy, through the production of green and low-carbon ammonia | | Comprehensive ESG Goals | In line with our commitment to the clean energy economy and our focus on sustainability, we have published comprehensive environmental, social and governance (“ESG”) goals covering critical environmental, societal, and workforce imperatives |
Annual Incentive Plan Performance Metrics
(1) EBITDA is defined as net earnings attributable to common stockholders plus interest expense-net, income taxes and depreciation and amortization. Adjusted EBITDA as reported is EBITDA adjusted for selected items as shown in Appendix A. See Appendix A for a reconciliation of EBITDA and adjusted EBITDA as reported to the most directly comparable GAAP measure. (2) See “— Compensation Discussion and Analysis: In Detail — Key Elements of NEO Compensation Program — Our Metrics Defined” for the definition of Adjusted EBITDA for purposes of our annual incentive plan. Adjusted EBITDA as defined under our annual incentive plan may differ from the company’s adjusted EBITDA as reported due to further adjustments permitted under the terms of the annual incentive plan and approved by the compensation and management development committee. For 2023, the difference between Adjusted EBITDA as reported of $2.76 billion and Adjusted EBITDA as defined under our annual incentive plan of $2.75 billion was due to $12 million of EBITDA associated with the Waggaman acquisition that was excluded from the calculation of Adjusted EBITDA under our annual incentive plan calculation. (3) The completion of specified clean energy milestones relating to the production of green and low-carbon ammonia, the demand for hydrogen and ammonia from low-carbon sources, our long-term decarbonization plan and the implementation of projects that reduce carbon emissions across our global network in furtherance of the company’s greenhouse gas (GHG) emission goals. (4) The completion of specified sustainability goals related to key initiatives that continue to advance efforts to streamline, automate and integrate process technology and reporting capabilities for our long-term growth and sustainability. (5) The Process Safety Metric has a behavioral safety gate threshold. If at least 95% of all individual safety scores of all employees at manufacturing sites were “80 points” or better for the year, the safety performance gating requirement would be achieved. If the safety performance gating requirement was not achieved, there would be no payout under the Process Safety Metric. The completion of scheduled safety critical equipment inspections on schedule and timely management of changes (MOCs).
Shareholder Returns
Shareholder Returns The global nitrogen industry is inherently cyclical, and our financial results can be significantly impacted by the pronounced effects of highly volatile commodity prices for our products as well as for natural gas, which is our principal feedstock. Additionally, we execute our strategy and evaluate our performance over a full cycle for our industry, which typically occurs over multiple years. As a result, we believe it is important to view total shareholder return over a longer time horizon than just one year. The following table shows the cumulative total shareholder return (“TSR”), assuming the reinvestment of dividends, for our common stock and a peer group index for the 1-, 3-, 5-, 7-, and 10-year periods ended December 31, 2023. Each of the peer group companies is or was a publicly traded manufacturer of agricultural chemical fertilizers. The companies comprising the peer group are:
Shareholder Returns
* Agrium, Inc. (“Agrium”) and Potash Corporation of Saskatchewan Inc. (“Potash Corp”) are included in the peer group from December 31, 2013 through December 31, 2017. On January 2, 2018, Agrium and Potash Corp completed a merger of equals transaction to form Nutrien, Ltd. The cumulative investment in each of Agrium and Potash Corp, assuming dividend reinvestments up to December 31, 2017, was converted into shares of Nutrien, Ltd. on January 2, 2018 using the exchange ratio in the merger of equals transaction consummated on that date. Nutrien, Ltd. is included in the peer group for the period from January 2, 2018 through December 31, 2023. For purposes of calculating the TSR of CF Industries and the peer group index for the 1-, 3-, 5-, 7-, and 10-year periods ending December 31, 2023, the beginning stock price for each peer group company was established by its respective closing price on the last trading day immediately preceding January 1 of the first fiscal year of the applicable measurement period. The returns of the peer group companies were weighted according to their respective market capitalizations as of the beginning of each period for which a return is indicated. For Yara International ASA, Incitec Pivot Limited and OCI N.V., we used their respective home exchange stock prices, converted into U.S. dollars, for TSR calculation purposes.
Compensation Program Highlights
| | Summary | | More Details | | Compensation Philosophy | Our compensation philosophy seeks to align the interests of our employees and our shareholders through focusing on the total compensation (base salary, short-term incentives, long-term incentives, and benefits) of our employees, including our executive officers. We seek to benefit from this strategy by attracting key talent, retaining strong performers, increasing productivity, and maximizing operational and financial results, while also implementing compensation programs that are cost effective, market competitive, and sustainable across business cycles. | | P. 58 | | Key Elements of Compensation Program | Salary | Paid in line with individual performance and contribution to company goals and aligned to competitive market data | P. 59; 63 | | | Annual Cash Incentives | The amount of the actual incentive earned is determined based on our level of achievement of four performance metrics: • 60%: level of achievement of Adjusted EBITDA* (Financial Metric) • 20%: level of achievement of the completion of specified clean energy goals (Clean Energy Metric) • 10%: level of achievement of the completion of specified process, technology and reporting capabilities milestones (Sustainability Initiative Metric) • 10%: level of achievement of the completion of safety critical equipment inspections on schedule and timely management of changes, subject to first achieving a gating level of behavioral safety practices goals (Process Safety Metric) | P. 59; 63-70 | | | Long-Term Equity Incentives | A specified cash value amount is split between two equity award types: • 60%: performance vesting restricted stock units (“PRSUs”) (3-year cliff vesting based on average return on net assets (“RONA”)* over three one-year periods, and a TSR modifier that can decrease or increase payout by up to 20%) • 40%: restricted stock units (“RSUs”) (3-year ratable vesting) | P. 59; 71-76 | | Rigorous Benchmarking and Incentive Target Setting | Benchmarking | Our total direct compensation is targeted at the 50th percentile of our Industry Reference Group, which is composed of 19 companies in related industries, and the overall general industry market data. | P. 62 | | | Incentive Metrics and Performance Levels | • We utilize performance metrics for our incentive compensation programs that align executive interests with those of our shareholders. • Executives are focused on achieving top performance across metrics that are directly tied to shareholder value creation and our core strategic objectives. • The compensation and management development committee considers the previous year’s financial performance, market trends and the company’s annual business plan when setting goals and targets for our incentive compensation programs. • The performance metrics and target performance levels reflect the inherent cyclicality of our business. | P. 59-62; 63-70; 71-75 |
Compensation Program Highlights
For the definitions of Adjusted EBITDA and RONA, see “— Compensation Discussion and Analysis: In Detail — Key Elements of NEO Compensation Program — Our Metrics Defined.” Adjusted EBITDA as defined under our annual incentive plan may differ from the company’s adjusted EBITDA as reported due to further adjustments permitted under the terms of the annual incentive plan and approved by the compensation and management development committee.
2023 Target Total Direct Compensation Mix
2023 Target Total Direct Compensation Mix The following graphs illustrate the mix of total target direct compensation for our chief executive officer and for the other NEOs for 2023: AIP: Annual Incentive Plan (annual bonus), cash settled LTIP: Long-Term Incentive Plan, denominated in equity
2023 CEO Target Total Compensation
| Pay Element | 2023 | 2022 | % Change | | Salary | $1,350,000 | $1,300,000 | 4% | | Target Annual Incentive | $2,025,000 | $1,755,000 | 15% | | Target Long-Term Incentive | $7,000,000 | $6,500,000 | 8% | | CEO Total Target Compensation | $10,375,000 | $9,555,000 | 9% |
Compensation Metrics Tie to Business Strategy
| Annual Incentives | | | Metric | Alignment | | Adjusted EBITDA | Adjusted EBITDA is the primary metric by which we measure our profitability and by which investors measure our performance | | Completion of specified clean energy milestones | Aligns with the company’s focus on decarbonizing its existing ammonia production network, creating low-carbon ammonia capacity and supporting and accelerating the global transition to a clean energy economy | | Completion of specified process, technology and reporting capabilities milestones | Relates to key initiatives that continue to advance efforts to streamline, automate and integrate process, technology and reporting capabilities for our long-term growth and sustainability | | Timely Completion Percentage for Inspections and MOCs, Subject to Behavioral Safety Practices | Underscores our focus on safely operating our facilities, our commitment to CF Industries’ “Do It Right” culture, and our constant efforts to drive workplace safety. Operating in a safe and responsible manner is a core value and an integral part of what sets CF Industries apart to all our stakeholders |
Compensation Metrics Tie to Business Strategy
| Long-Term Incentives | | | Metric | Alignment | | Return on Net Assets (RONA) | RONA is correlated with long-term TSR performance and is viewed as an indicator of the results of management’s operating decisions | | Total Shareholder Return | Explicitly links executive incentives with shareholder value creation |
Compensation Benchmarking
Compensation Benchmarking Our total direct compensation is targeted at the 50th percentile of our Industry Reference Group and the overall general industry market data from the outside compensation consultant’s market assessment. The compensation and management development committee considers skills, performance, capabilities, experience, criticality of the role, and the future potential of each NEO in setting actual compensation; therefore, total direct compensation can be above or below the 50th percentile for different NEOs.
Review of the Short-term Incentive Program
Review of the Short-term Incentive Program The compensation and management development committee seeks to ensure that the compensation program aligns with the company’s financial performance and strategic objectives. Our primary short-term incentive program metric for each of the last seven years prior to 2023 was Adjusted EBITDA at a weighting of 50% to 80%. Over time, the committee has refined the program, notably the incentive plan metrics, to align executives’ focus areas with strategic imperatives that have evolved along with market conditions and our operations. Since 2018, one of the secondary metrics our short-term incentive program has incorporated is behavioral safety practices goals. The compensation and management development committee believed a focus on operational excellence would drive the company to safely maximize operational execution and asset utilization. The “safety gate” also demonstrated our commitment to safety and the “Do It Right” culture. The behavioral safety gate has continued to be a focus of our annual incentive plan and, for 2021 and 2022, we incorporated this element as part of our process safety metric. In 2021 and 2022, the company also had additional secondary metrics for the short-term incentive program. In 2021, the additional secondary metric related to greenhouse gas (GHG) emission reduction opportunities, which aligned with our long-term corporate ESG goals and reflected our continued commitment to improving energy efficiency and reducing GHG emissions intensity. In 2022, the additional secondary metric related to an enterprise-wide project to increase automation and better integrate our processes, technology and reporting systems to strengthen and expand our capabilities for our long-term growth and sustainability. During its review of our short-term incentive program for 2023, the compensation and management development committee considered the following general goals: • The use of properly structured short-term incentives in order to align the interests of management and shareholders, provide context for management decisions, reward management for decisions that drive short-term results and support long-term strategy, and focus all members of management on the same corporate goals (financial, operational, and strategic); and • The need to create a framework for the program that can remain in effect for a significant period of time, while ensuring the compensation and management development committee has the flexibility to revise the secondary metric(s) to reflect our evolving strategic priorities. The compensation and management development committee also considered the following factors specific to our company: • The difficulty in establishing appropriate short-term performance measures for CF Industries, given the inherent cyclicality in our industry as well as the pronounced effects that highly volatile commodity prices for raw materials and nitrogen products have upon our operating results; and • The outlook for our short-term performance and the broad range of possible actual outcomes. In addition, the compensation and management development committee reviewed a report from Exequity, the committee’s outside compensation consultant, regarding competitive market practices with respect to the use of short-term incentives. The compensation and management development committee considered all of this information in the context of the goals and objectives of our executive compensation plans. As noted above, we use short-term incentives to provide executive officers and other employees with the opportunity to earn additional annual compensation beyond base salary. The role of short-term incentives is to reward and encourage the achievement of annual financial results and other specified corporate performance goals. In the aggregate our short-term incentive awards are targeted at the median of the peer group companies in our Industry Reference Group and the overall general industry market data from the outside compensation consultant’s market assessment. Additional information regarding these goals and objectives is set forth above under the headings “Compensation Philosophy” and “Key Elements of NEO Compensation Program.” Selection of Primary and Secondary Performance Metrics for 2023 Based on its review and the other factors discussed above, the compensation and management development committee determined that the annual incentive awards to our NEOs for 2023 would be based upon our level of achievement of the following four performance metrics: • 60% of each executive’s annual incentive payment opportunity was based upon our level of achievement of Adjusted EBITDA for 2023 (the “Financial Metric”); • 20% of each executive’s annual incentive payment opportunity was based upon our level of achievement of specified clean energy goals (the “Clean Energy Metric”); • 10% of each executive’s annual incentive payment opportunity was based upon our level of achievement of the completion of specified sustainability goals related to key initiatives that continue to advance efforts to streamline, automate and integrate process technology and reporting capabilities (the “Sustainability Initiative Metric”); and • 10% of each executive’s annual incentive payment opportunity was based upon our level of achievement of the completion of safety critical equipment inspections on schedule and timely management of changes (MOCs), subject to first achieving a gating level of behavioral safety practices goals (the “Process Safety Metric”). Adjusted EBITDA — the primary metric we use and that is used by our investors to evaluate our profitability — was retained as our primary metric. Our Adjusted EBITDA or Financial Metric, which has been part of our annual incentive performance metrics since 2016 at a weighting of 50% to 80%, was weighted at 60% for 2023. The weighting of our Financial Metric was reduced to accommodate the introduction to our short-term incentive program of a fourth performance metric, the Clean Energy Metric, with a weighting that reflects the extensive resources and employee effort focused on this core strategic objective. The compensation and management development committee determined that it was appropriate to have 20% of the 2023 short-term incentive program’s payout be based on achievement of a new Clean Energy Metric because it aligns with our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy and reflects the significant steps we are taking to support a global hydrogen and clean fuel economy through the production of green and low-carbon ammonia. It also supports our long-term goal of reducing carbon emissions across our global network to achieve net-zero carbon emissions by 2050. The Sustainability Initiative Metric builds on our enterprise-wide project implemented in 2022 (which was part of our short-term incentive program metrics in 2022) and continues to emphasize the importance of investing in and enhancing our processes, technology and reporting capabilities to facilitate our long-term growth. The Process Safety Metric, which was introduced as a performance metric in 2021, retains our “behavioral safety gate,” which has been an element of our annual incentive performance metrics since 2018. The Process Safety Metric reflects our continued focus on safely operating our facilities and our constant efforts to drive workplace safety. The Clean Energy Metric, the Sustainability Initiative Metric and the Process Safety Metric were selected by the compensation and management development committee for 2023 because of their alignment with the strategic imperatives of the company and our corporate values of safety and our “Do It Right” culture and their impact on the long-term growth and sustainability of the company. Selection of Performance Levels for the Financial Performance Metric for 2023
Review of the Short-term Incentive Program
The compensation and management development committee established the following performance levels and corresponding percentages of target opportunity earned with respect to the Financial Metric for 2023:
Review of the Short-term Incentive Program
| Performance Level | Financial Metric Adjusted EBITDA Achieved | Percentage of Financial Metric Target Award Earned | | Below Threshold | Less than $2.0 billion | 0% | | Threshold | $2.0 billion | 50% | | Target | $4.0 billion | 100% | | Maximum | $6.0 billion | 200% |
Review of the Short-term Incentive Program
Straight line interpolation is used to determine the achievement percentage for the Financial Metric between threshold and target and between target and maximum performance levels. If the Threshold Performance Level is not met, there is no payout under the Financial Metric. Selection of Performance Levels for the Clean Energy Metric for 2023 The Clean Energy Metric reflects our commitment to a clean energy economy and the extensive resources and employee effort focused on green and low-carbon ammonia as well as progress toward our 2030 and 2050 GHG emission goals. Payout under the Clean Energy Metric was determined by completion of specified clean energy milestones relating to the production of green and low-carbon ammonia, the demand for hydrogen and ammonia from low-carbon sources, our long-term decarbonization plan, and the implementation of projects that reduce carbon emissions across our global network in furtherance of the company’s GHG emission goals. The compensation and management development committee established the following performance levels relating to completion of the specified clean energy milestones and corresponding percentages of target opportunity earned with respect to the Clean Energy Metric for 2023:
Review of the Short-term Incentive Program
| Performance Level | Clean Energy Metric Milestone Completion | Percentage of Clean Energy Metric Target Award Earned | | Below Threshold | Less than 2 milestones | 0% | | Threshold | 2 milestones | 50% | | Target | 3 milestones | 100% | | Intermediate | 4 milestones | 150% | | Maximum | 5 milestones | 200% |
Review of the Short-term Incentive Program
If the Clean Energy Metric milestone completion is less than the 2 milestones threshold performance level, there is no payout under the Clean Energy Metric. Selection of Performance Levels for the Sustainability Initiative Metric for 2023 The Sustainability Initiative Metric reflects the continued importance of, and the extensive resources and employee effort involved with, key initiatives that continue to advance efforts to streamline, automate and integrate process, technology and reporting capabilities for our long-term growth and sustainability. Payout under the Sustainability Initiative Metric was determined by completion of specified milestones relating to expanding functionality and enhancing capabilities of our systems, the migration and implementation of new systems and the retirement of legacy systems. The compensation and management development committee established the following performance levels relating to completion of the specified milestones and corresponding percentages of target opportunity earned with respect to the Sustainability Initiative Metric for 2023:
Review of the Short-term Incentive Program
| Performance Level | Sustainability Initiative Process, Technology and Reporting Capabilities Milestone Completion | Percentage of Sustainability Initiative Metric Target Award Earned | | Below Threshold | Less than 1 milestone | 0% | | Threshold | 1 milestone | 50% | | Target | 2 milestones | 100% | | Intermediate | 3 milestones | 150% | | Maximum | 4 milestones | 200% |
Review of the Short-term Incentive Program
If the Sustainability Initiative milestone completion is less than the 1 milestone threshold performance level, there is no payout under the Sustainability Initiative Metric. Selection of Performance Levels for the Process Safety Performance Metric for 2023 The Process Safety Metric reflects our focus on safely operating our facilities in a way that benefits a broad set of stakeholders: employees, shareholders, customers and the communities in which we operate. The Process Safety Metric has a behavioral safety gate, whereby each of our production and distribution facilities develops and implements specific behavioral safety objectives that are pertinent and meaningful to each work group at the site. Each employee is involved in developing and taking ownership for completing objectives that make their workplace safer and effect a positive change in the safety culture. Each quarter, evaluations are conducted and an overall achievement score (0-100 points) for each hourly group and individual manager is assigned. Under the Process Safety Metric, the quarterly scores issued to all site employees were aggregated. If at least 95% of all individual safety scores were “80 points” or better for the year, the safety performance gating requirement would be achieved. If the safety performance gating requirement was not achieved, there would be no payout under the Process Safety Metric. The compensation and management development committee established the following completion percentages for the completion of safety critical equipment inspections on schedule and timely management of changes performance (MOCs) levels and corresponding percentages of target opportunity earned with respect to the Process Safety Metric for 2023, subject to first achieving the safety performance gating requirement:
Review of the Short-term Incentive Program
| Performance Level | Process Safety Metric Timely Completion Percentage for Inspections and MOCs | Percentage of Process Safety Metric Target Award Earned | | Below Threshold | <90% | 0% | | Threshold | 90% | 50% | | Target | 95% | 100% | | Maximum | 98% | 200% |
Review of the Short-term Incentive Program
For 2023, the compensation and management development committee maintained the 90% threshold, 95% target and 98% maximum levels of timely completion percentages established for the Process Safety Metric in 2022. Straight line interpolation is used to determine the achievement percentage for the Process Safety Metric between threshold and target and between target and maximum performance levels. If the safety performance gating requirement is not achieved, or if the completion percentage of safety critical equipment inspections on schedule and timely MOCs is less than the 90% threshold performance level, there is no payout under the Process Safety Metric. Additional Target-Setting Considerations for the Short-Term Incentive Program As described above, when setting performance levels for the short-term incentive program, the compensation and management development committee considers the previous year’s financial performance, market trends and the company’s annual business plan. In 2022, market conditions led to very high prices for nitrogen products, leading to expanded margins and very strong financial performance. Going into 2023, the company expected global nitrogen market conditions to lead to lower product prices and a corresponding contraction of margins and financial performance compared to 2022. Despite that downward pressure on prices and margins, it was projected that nitrogen industry fundamentals would remain positive compared to conditions over years prior to 2022. High crop prices and the need to replenish global grain stocks were expected to support strong global fertilizer demand, while global nitrogen supply was expected to remain constrained with production in Europe and Asia affected by high energy prices. While energy spreads between North America producers and marginal production in Europe had compressed from the highs seen during 2022 as a result of Russia’s invasion of Ukraine, they remained above historical levels and forward energy curves continued to suggest the wider differentials would persist for an extended period. The company also expected decreased production from its network, based on increased turnaround and maintenance activity planned for 2023 compared to 2022. As a result, the compensation and management development committee set the target performance level for the Financial Metric at $4.0 billion of Adjusted EBITDA, which reflected the lower product pricing and production expected for 2023 compared to 2022 but still consistent with strong industry fundamentals. Maximum performance for all three performance metrics were set at a level judged to be difficult to achieve and threshold performance was set at the lowest level that would justify a payout. Measured over an extended period, the objective of the committee is to select financial performance levels such that we have a roughly (i) 80% probability of exceeding the threshold level, (ii) 50% probability of exceeding the target level, and (iii) 20% probability of exceeding the maximum level. Although the compensation and management development committee considers management’s outlook as one of several factors in evaluating financial performance levels each year, the committee also recognizes that the outlook for any particular year represents only a single scenario from among a broad range of plausible alternatives, given the pronounced effects of highly volatile commodity prices upon our operating results. In general, the compensation and management development committee aims to achieve a larger payout under the program for years when our performance is superior by long-term industry standards, and a smaller payout (or none at all) for years when our performance is relatively weak, while creating incentives for improved performance under all conditions given the inherent cyclicality in our industry. Target levels of Adjusted EBITDA associated with our annual incentive program and our actual performance relative to these targets are consistent with expectations for a cyclical company. We have a track record of paying for performance and achieve this through setting targets that are rigorous and challenging. The chart below of our Adjusted EBITDA targets, actual results and percentage payouts for 2016 through 2023 demonstrates our pay for performance linkage in the annual incentive program. Reflects payout percentage on the annual incentive program metric associated with Adjusted EBITDA. For 2016-2023, Adjusted EBITDA was the primary metric under the company’s annual incentive program (with a weighting of 50% in 2016, 75% in 2017 through 2020, 80% in 2021 and 2022 and 60% in 2023). When considering appropriate performance metrics for the short-term incentive program, the compensation and management development committee also considers alternative metrics for measuring company performance, such as achievement of operating efficiency goals, continued emphasis on the establishment of a behavioral-based safety culture, progress towards strategic objectives, or performance relative to a variable budget, as well as alternative plan designs that emphasize the personal accomplishment of individual or shared goals. The objective in each case is to incentivize strong operational performance in an inherently cyclical business. The compensation and management development committee determined for 2023 that using our Financial Metric, Clean Energy Metric, Sustainability Initiative Metric and Process Safety Metric for performance goals in our annual incentive plan would align the interests of our executive officers with the interests of our shareholders and reflect our team-based culture. The committee also determined that the Clean Energy Metric aligns with the company’s core strategic objectives and focus on decarbonizing its existing ammonia production network, creating low-carbon ammonia capacity and supporting and accelerating the global transition to a clean energy economy. The committee considered that the Sustainability Initiative Metric would reflect the importance of continuing to advance efforts to streamline, automate and integrate process, technology and reporting capabilities for our long-term growth and sustainability. The committee also determined that the Process Safety Metric, including to condition payout on the Process Safety Metric to first achieving the “safety gate”, and to measure the completion percentage of safety critical equipment inspections on schedule and the timely management of changes, underscores the company’s commitment to our “Do It Right” culture and complements our efforts to drive workplace safety. Operating in a safe and responsible manner is a core value and an integral part of what sets CF Industries apart to all our stakeholders. Our safety culture permeates our business in three key ways: • Engaged culture that empowers consistent behaviors that drive toward excellence. • Robust systems that provide a clear, repeatable direction toward excellence. • Our commitment to safety never takes a day off, and we have demonstrated that our focus on this priority is yielding positive results. We believe that focusing on leading indicators such as the process safety metrics we have incorporated into our annual incentive plan to drive and measure activities that prevent and control safety incidents, results in our industry-leading safety record. During 2023, our trailing 12 month recordable injury rate was 0.36 for the twelve months ended December 31, 2023, an industry-leading result and one of the lowest year-end rates we have ever achieved as a company.
Approval of Base Salaries and Target Annual Incentive Awards for 2023
Approval of Base Salaries and Target Annual Incentive Awards for 2023 Based on its review of the general, company-specific, and competitive considerations described above, in December 2022, the compensation and management development committee approved base salaries and target annual incentive awards for our NEOs for calendar year 2023. In setting compensation levels for 2023, the compensation and management development committee considered a competitive market assessment performed by Exequity and the goals and objectives for our executive compensation plans. These new amounts are in line with our Industry Reference Group (described in greater detail below) and the overall general industry survey data. Mr. Will’s base salary increased by 4% from 2022 to 2023 and, for the first time in seven years, his target annual incentive level was changed, increasing from 135% to 150% of his base salary. The average base salaries of all other named executive officers as a group increased by 5% from 2022 to 2023 in connection with the annual base salary review and there were no changes in the target annual incentive levels for any of the other named executive officers. The table below shows the base salaries and target annual incentive levels, as a percentage of base salary, for our NEOs for 2023 and 2022:
Approval of Base Salaries and Target Annual Incentive Awards for 2023
| | Base Salary | | | Target Annual Incentive Level | | | | Name | 2023 | 2022 | Increase | 2023 | 2022 | Increase | | W. Anthony Will | $1,350,000 | $1,300,000 | 4% | 150% | 135% | 11% | | Christopher D. Bohn | $700,000 | $660,000 | 6% | 80% | 80% | 0% | | Douglas C. Barnard | $600,000 | $585,000 | 3% | 80% | 80% | 0% | | Bert A. Frost | $670,000 | $640,000 | 5% | 80% | 80% | 0% | | Susan L. Menzel(1) | $580,000 | $550,000 | 5% | 80% | 80% | 0% |
Approval of Base Salaries and Target Annual Incentive Awards for 2023
(1) In connection with her promotion to executive vice president and chief administrative officer on July 7, 2023 and the addition of oversight of the legal function to her existing responsibilities for human resources and information technology, Ms. Menzel’s annual base salary increased from $580,000 to $630,000. Her target annual incentive level remained unchanged at 80% of her base salary. The base salary variable for Ms. Menzel’s 2023 annual incentive payout was based on a blended rate reflecting the base salary Ms. Menzel earned during 2023 prior to and after her promotion.
Approval of Annual Incentive Payments for 2023
Approval of Annual Incentive Payments for 2023 Following the end of 2023, management prepared a report on our level of achievement of the Financial Metric (Adjusted EBITDA), the Clean Energy Metric (completion of specified clean energy milestones), the Sustainability Initiative Metric (completion of process, technology and reporting capabilities milestones), and the threshold gate of behavioral safety performance, and the Process Safety Metric (Timely Completion Percentage for Inspections and MOCs) under the short-term incentive program. The compensation and management development committee reviewed the report and approved final performance results. Based on the results, the committee determined that each of our NEOs earned 121.2% of the executive’s target opportunity with respect to the executive’s annual incentive award for 2023. This result is based on our attainment of Adjusted EBITDA of $2.75 billion, which resulted in a payout percentage for the Financial Metric of 69%, the achievement of the completion of 5 clean energy milestones, which resulted in a payout percentage for the Clean Energy Metric of 200%, the achievement of the completion of 4 process, technology and reporting capabilities milestones, which resulted in a payout percentage for the Sustainability Initiative Metric of 200% and, after first achieving the gating level of behavioral safety practices goals, our completion of 99.8% of safety critical equipment inspections on schedule and timely MOCs, which resulted in a payout percentage for the Process Safety Metric of 200%.
Review and Approval of 2023 Long-Term Incentives
Review and Approval of 2023 Long-Term Incentives The compensation and management development committee reviewed our long-term incentive program during 2022 and granted long-term stock-based incentive awards to our NEOs in January 2023. During its review of our long-term incentive program, the compensation and management development committee considered the following general factors: • the use of properly structured long-term incentives in order to align the interests of senior management and shareholders; • the advantages and disadvantages of using stock options, shares of restricted stock, RSUs, and/or PRSUs for such purposes; and • the array of available vesting parameters for each type of long-term incentive award and the treatment of death, disability, retirement, resignation, and termination, with or without cause. The compensation and management development committee also considered the difficulty in establishing appropriate long-term performance measures for the company, other than stock price appreciation and total shareholder return (including dividends), given the inherent cyclicality in our industry as well as the pronounced effects of highly volatile commodity prices for raw materials and nitrogen products upon our operating results. In addition, the compensation and management development committee reviewed a report from Exequity regarding competitive market practices with respect to the use of long-term incentives. The compensation and management development committee considered all of this information in the context of the goals and objectives of our executive compensation plans. As noted above, our long-term incentives focus on enterprise value creation and employee retention. Long-term incentives are provided through annual awards that vest over a period of subsequent years. Our 2022 Equity and Incentive Plan allows the use of stock options, stock appreciation rights, restricted stock and restricted stock units and other stock-based awards, which in each case may be conditioned on performance criteria. Participation is extended to executive officers and other key employees. Participation guidelines with award ranges related to position responsibilities levels are updated annually. In consideration of these guidelines, there is individual variation in long-term incentives based on performance level, potential contribution, and value to the business.
Design of Target Awards for 2023
Design of Target Awards for 2023 Based on its review of general, company-specific, and competitive considerations, the compensation and management development committee determined that, consistent with the practice since 2018, the long-term incentive awards granted to our NEOs for 2023 would again be composed of 60% PRSUs (assuming target performance) and 40% RSUs. In selecting a mixture of PRSUs and RSUs for our target long-term incentive awards, the compensation and management development committee noted that: • RSU and PRSU awards align the executive officers’ interests with those of shareholders; • RSU and PRSU awards provide value for executive officers that fluctuates with total shareholder return (including dividends); • RSU and PRSU awards foster stock ownership by executive officers; and • RSU and PRSU awards are subject to time vesting provisions and therefore create an additional retention mechanism for executive officers. The compensation and management development committee also approved the metrics used for measuring performance with respect to the PRSUs granted in 2023: Return on net assets (RONA) measured over three one-year periods against a threshold, target and maximum level of performance (with payouts determined based on the average of the three years); and TSR modifier adjusting the number of shares earned based on RONA up or down by 20% based on our three-year TSR performance against a threshold, target and maximum level of performance. These metrics are consistent with the metrics measured for the PRSUs granted annually since 2018 and reflect the committee’s view that RONA serves as an indicator of the results of management’s operating decisions and its expected correlation with long-term TSR performance. The target TSR performance level for the modifier in the 2023 PRSUs was set to reflect a compound annual TSR equal to 7%, which is the approximate average annual real total return for the S&P 500 Index since inception. Maximum performance was set at a level well above the average, and threshold performance was set at a level below which a maximum reduction was appropriate. In structuring the TSR modifier, the compensation and management development committee determined not to use a relative TSR benchmark because there are not enough similarly sized companies with comparable business lines from which the committee could assemble a peer group for meaningful TSR performance purposes, and the committee considered that basing the TSR modifier on a broad market comparison (e.g., the S&P 500) over a three-year period would not be appropriate given the pronounced cyclicality of our business.
How We Determine the Number of PRSUs Earned
How We Determine the Number of PRSUs Earned The number of PRSUs earned is determined based the company’s average RONA performance over three one-year periods and subject to a three-year TSR modifier, as follows: • At the beginning of each year (e.g., 2023, 2024, and 2025) during the three-year performance period, the compensation and management development committee establishes RONA performance levels for that year and the corresponding percentage payout of the target number of PRSUs based on our performance. • The threshold, target and maximum performance levels that are set will result in a payout percentage ranging from 50% to 200% of the target number of PRSUs. Straight line interpolation is used to determine the applicable payout percentage between threshold and target and between target and ceiling performance levels. RONA performance levels below the threshold performance level have a payout percentage of 0%. • Following the completion of each fiscal year, the compensation and management development committee will determine the payout percentage that was attained for such year and following the completion of the third fiscal year, the committee will determine the 3-year average payout percentage attained for the three-year performance period. For fiscal 2023, our actual RONA performance of 32.4% resulted in a 65% payout percentage. • Once the total number of PRSUs earned based on our RONA performance is determined at the end of the third year, the total is multiplied by a percentage ranging from 80% to 120% depending on our TSR performance for the three-year performance period. For the 2021 PRSUs, our TSR performance for the three-year performance period ending December 31, 2023 was 115.6%, resulting in a TSR modifier percentage of 120%. The combined impact of these performance criteria is that the final payout percentages range from 0% to 240% of target PRSUs. The number of PRSUs earned at the end of the three-year performance period will be determined as follows for the 2021, 2022 and 2023 PRSU awards: (1) The TSR Modifier Percentage is determined in accordance with the following table. Straight line interpolation is used to determine the TSR Modifier Percentage between threshold and target and between target and maximum TSR performance levels.
Approval of Target Awards for 2023
| | Target Performance RSUs | | Time Vesting RSUs | | Total Target Grant Value | | Name | Number | Grant Value | Number | Grant Value | | | W. Anthony Will | 44,375 | $4,200,000 | 29,583 | $2,800,000 | $7,000,000 | | Christopher D. Bohn | 11,411 | $1,080,000 | 7,607 | $720,000 | $1,800,000 | | Douglas C. Barnard | 8,241 | $780,000 | 5,494 | $520,000 | $1,300,000 | | Bert A. Frost | 10,777 | $1,020,000 | 7,185 | $680,000 | $1,700,000 | | Susan L. Menzel | 7,607 | $720,000 | 5,071 | $480,000 | $1,200,000 |
Approval of Target Awards for 2023
On the grant date, the compensation and management development committee approved dollar-denominated RSU and PRSU awards for each of our individual NEOs. The 2023 total target grant value for our CEO’s long-term incentive awards increased by 8% as compared to 2022 in dollar value and represented approximately the same percentage (67-68%) of the CEO’s total direct compensation mix as in 2022. On average, the total target grant value for our other NEO’s long-term incentive awards increased by 16% as compared to 2022 in dollar value and by 3% (to 57%) of the percentage of each other NEO’s total direct compensation mix. In setting the dollar-denominated values of the individual awards, the committee considered our Industry Reference Group and the competitive general industry survey data presented by Exequity. The committee also considered the recommendations from our chief executive officer for the long-term incentive awards to each of the NEOs other than himself. These recommendations took into account the chief executive officer’s assessment of each individual’s operating responsibilities, management level, tenure and performance in the position, and potential. On the grant date, the dollar-denominated awards were translated into an actual number of RSUs and PRSUs using the unweighted average of the NYSE closing price for the twenty (20) trading days preceding the grant date. The number of PRSUs at target represented 60% of the total value on the grant date and the number of RSUs represented 40%. In connection with Ms. Menzel’s promotion to executive vice president and chief administrative officer on July 7, 2023 and the addition of oversight of the legal function to her existing responsibilities for human resources and information technology, the compensation and management development committee approved a RSU award for Ms. Menzel. All of the RSUs will vest on the second anniversary of the date of grant. The dollar-denominated award of $250,000 was translated into an actual number of RSUs, 3,584, using the unweighted average of the NYSE closing price for the twenty (20) trading days preceding the grant date.
Target Values versus Accounting Values
Target Values versus Accounting Values Because of the accounting rules governing preparation of the Summary Compensation Table on page 86, the grant date value for RSUs and PRSUs awarded in 2023 as reported in the Summary Compensation Table are different than the target award values set forth in the table above. As discussed above, the compensation and management development committee approves dollar-denominated target award values, which are translated into an actual number of RSUs and PRSUs using the unweighted average of the NYSE closing price for the twenty (20) trading days preceding the grant date. With respect to RSUs, the values reflected in the Summary Compensation Table are computed as the product of the number of RSUs awarded multiplied by the closing stock price on the date of grant. As described above with respect to PRSUs, at the beginning of each year of the PRSUs’ three-year performance period, the compensation and management development committee establishes RONA performance levels for such year. The target grant values set forth in the table above reflect the value of the entire 2023 PRSUs, without regard for when the performance goals are established. Under the applicable accounting rules, the Summary Compensation Table only reflects the value of grants made during the year for which applicable performance goals have been set. With respect to the 2023 PRSUs, only the RONA performance goals for the 2023 fiscal year, the first of three one-year periods, were approved at the time the PRSUs were awarded in 2023. As a result, for the 2023 PRSUs, the Summary Compensation Table does not include the value of the PRSUs based on the annual RONA goals for fiscal 2024 or fiscal 2025. Such amounts will be included as equity compensation in the Summary Compensation Table for fiscal 2024 and fiscal 2025, respectively, when the RONA goals are established. With respect to the 2021 PRSUs and the 2022 PRSUs, the RONA performance goals for the 2023 fiscal year, the third of three one-year periods and the second of three one-year periods, respectively, were also approved in 2023. As a result, the Summary Compensation Table also includes the value of the portion of the 2021 PRSUs and the 2022 PRSUs that is based on the annual RONA goals for the 2023 fiscal year.
Vesting and Other Terms of RSUs and PRSUs
Vesting and Other Terms of RSUs and PRSUs The RSUs granted to our NEOs in January 2023 will vest in three equal annual installments following the date of grant, subject to earlier forfeiture or accelerated vesting (as described below). The RSUs granted to Ms. Menzel on July 7, 2023 will vest on the second anniversary of the date of the grant, subject to earlier forfeiture or accelerated vesting (as described below). Until vested, the RSUs may not be sold, assigned, transferred, donated, pledged, or otherwise disposed of (except by will or the laws of descent and distribution). At the vesting dates, the RSUs give the holder the right to receive one share of common stock with respect to each vested RSU. We will pay dividend equivalents in cash with respect to the RSUs to our NEOs during the vesting period. The PRSUs granted to our NEOs in 2023 will vest upon the certification by the compensation and management development committee of the attainment of the performance goals following the end of the three-year performance period, subject to earlier forfeiture or accelerated vesting (as described below). The PRSUs are settled in shares of our common stock. The PRSUs accrue dividend equivalents during the performance and vesting period. Upon vesting, holders of PRSUs will be paid a cash equivalent of the dividends paid on our common stock during the performance and vesting period based on the number of shares of stock, if any, delivered in settlement of the PRSUs. As discussed below under the heading “Change in Control, Severance, and Retirement Benefits,” upon a change in control, the restrictions, limitations, and conditions applicable to RSUs and PRSUs will lapse, the performance goals with respect to the PRSUs will be deemed fully achieved at the greater of target or actual performance to-date (as determined under the award agreement), and all of the awards will become fully vested. Upon death or disability, RSUs become fully vested and the PRSUs become fully vested at the target level of performance. NEOs who retire upon having reached age 60 with at least five years of service at the time of retirement will receive a pro-rated number of RSUs and PRSUs based on their length of service between the grant date of such award and the NEO’s retirement date, provided that, in each case, the NEO has provided us with at least six months’ notice prior to such retirement. Additional information with respect to the compensation and management development committee’s grants of RSUs and PRSUs to our NEOs during 2023 is set forth below under the heading “Executive Compensation — Grants of Plan-based Awards.”
Determination of 2021-2023 Performance Period PRSU Awards
Determination of 2021-2023 Performance Period PRSU Awards The three-year performance period for PRSU awards granted in 2021 ended on December 31, 2023. The performance metrics for PRSUs granted in 2021 were (i) return on net assets (RONA) measured over three one-year periods (with payouts determined based on the average payout percentage of the three years) and (ii) TSR modifier adjusting the number of shares earned based on RONA up or down by 20% based on our three-year TSR performance against a threshold, target and maximum level of performance. The payout percentages for the first, second and third one-year performance periods were 200%, 200% and 65%, respectively, resulting in a 3-year average payout performance of 155% attained for the three-year performance period. As shown in the “How We Determine the Number of PRSUs Earned” graphic above, our TSR performance of 115.6% for the three-year performance period was greater than 29.5%, resulting in a TSR modifier percentage of 120%. As a result, in accordance with the terms of the awards, the committee approved a payout of 186% of the PRSUs from these grants.
2024 Compensation Actions
| Name | Base Salary | Target Annual Incentive Level | Target PRSUs | Target RSUs | | W. Anthony Will | $1,400,000 | 150% | $4,500,000 | $3,000,000 | | Christopher D. Bohn(1) | $750,000 | 85% | $1,380,000 | $920,000 | | Douglas C. Barnard(2) | $600,000 | 80% | — | — | | Bert A. Frost | $700,000 | 85% | $1,260,000 | $840,000 | | Susan L. Menzel | $675,000 | 80% | $900,000 | $600,000 |
2024 Compensation Actions
(1) In connection with his promotion to executive vice president and chief operating officer effective February 1, 2024, Mr. Bohn’s annual base salary increased from $750,000 to $800,000 and his target annual incentive level was increased from 80% to 100% of his base salary. Mr. Bohn was also granted a RSU award of 12,897 restricted stock units on February 1, 2024 in connection with his promotion, which is scheduled to vest on January 3, 2027, subject to continued service requirements. Such RSU award is not included in the Target RSUs column of the table above. Mr. Barnard’s retirement from the company was effective January 12, 2024, and therefore, he did not receive a base salary increase or any long-term incentive awards for 2024. In addition, Mr. Barnard’s annual incentive award earned in 2024 will be prorated based on his period of employment in 2024.
Performance Metrics for Annual Incentive Payments for 2024
Performance Metrics for Annual Incentive Payments for 2024 The annual incentive awards payable to our NEOs for 2024 will be determined based upon our level of achievement of the following performance metrics: • 60% of each executive’s annual incentive payment opportunity is based upon our level of achievement of adjusted EBITDA for 2024 (the “Adjusted EBITDA Metric”); • 20% of each executive’s annual incentive payment opportunity is based upon our level of achievement of specified clean energy strategy goals (the “Clean Energy Metric”); • 10% of each executive’s annual incentive payment opportunity is based upon our level of achievement of the completion of specified sustainability goals related to key initiatives that continue to advance efforts to streamline, automate and integrate process technology and reporting capabilities (the “Sustainability Metric”); and • 10% of each executive’s annual incentive payment opportunity is based upon our level of achievement of the completion of safety critical equipment inspections on schedule and timely management of changes, subject to first achieving a gating level of behavioral safety practices goals (the “Process Safety Metric”). Our Adjusted EBITDA Metric, which has been a part of our annual incentive performance metrics since 2016, remains the cornerstone of our annual incentive plan with a weighting of 60% for 2024. The Clean Energy Metric aligns with the company’s focus on decarbonizing its existing ammonia production network, creating low-carbon ammonia capacity and supporting and accelerating the global transition to a clean energy economy. The Sustainability Metric reflects the continued importance of, and the extensive resources and employee effort involved with, key initiatives that continue to advance efforts to streamline, automate and integrate process technology and reporting capabilities for our long-term growth and sustainability. The Process Safety Metric, which was added to our annual incentive performance metrics in 2021 and maintains a behavioral safety practice goal that was since 2018 also part of our annual incentive performance metrics as a gating standard (“safety gate”), reflects our focus on safely operating our facilities in a way that benefits a broad set of stakeholders: employees, shareholders, customers and the communities in which we operate. The inclusion of the Clean Energy Metric, the Sustainability Metric and the Process Safety Metric with the safety gate component in our performance metrics for the annual incentive payment opportunity demonstrate our commitment to our “Do It Right” culture and further integrate strategic corporate goals into executive compensation. The performance levels and corresponding percentages of target opportunity earned with respect to the 2024 performance metrics established by the compensation and management development committee will be disclosed in the proxy statement for our 2025 annual meeting of shareholders.
Performance Metrics for PRSUs Granted in 2024
Performance Metrics for PRSUs Granted in 2024 The performance metrics for the PRSUs granted in 2024 are structured in the same manner as the PRSUs granted every year since 2018. The number of PRSUs earned under the PRSUs granted in 2024 will be determined based on the company’s average RONA performance over three one-year periods and subject to a three-year TSR modifier. The RONA performance levels for fiscal 2024 and corresponding payout percentages for the year established by the compensation and management development committee will be disclosed in the proxy statement for our 2025 annual meeting of shareholders.
Change in Control, Severance, and Retirement Benefits
Change in Control, Severance, and Retirement Benefits The compensation and management development committee reviewed our change in control, severance, and retirement benefits during 2023 as described below. Based on its review, and after considering the factors noted below, the compensation and management development committee determined that our change in control, severance, and retirement benefits continue to serve the best interests of the company and our shareholders and are consistent with competitive market practices.
Change in Control Benefits
Change in Control Benefits With respect to our change in control benefits, the compensation and management development committee noted that we have change in control agreements with our executive officers, as well as certain change in control benefits for all of the participants (including the executive officers) under our annual incentive plans and our equity and incentive plans. Additional information regarding these benefits is set forth below under the heading “Executive Compensation — Potential Payments Upon Termination or Change in Control.” In connection with its review, the compensation and management development committee noted that the change in control agreements with our executive officers are: • Intended to provide some level of income continuity for an executive officer should his or her employment be terminated by us without cause or by him or her for good reason in connection with a change in control; • Designed to avoid unwanted management turnover in the event of a potential change in control; and • Designed to ensure that the executive officer’s personal interests will remain aligned with the interests of our shareholders in the event of a potential change in control. The compensation and management development committee also noted that our change in control agreements require both (i) a change in control and (ii) a qualifying termination of the executive officer’s employment (sometimes referred to as a “double trigger”), before any benefits will be owing to the executive officer under the agreement. The compensation and management development committee noted that our annual incentive plan and our equity and incentive plans also include provisions in the event of a change in control. Our annual incentive plan, a short-term cash based incentive program, provides that in the event of a change in control the performance goals applicable to any annual incentive plan bonus payment will be determined based on the greater of actual and target level of performance and the performance period will be deemed to end on the date of the change in control and the annual incentive plan bonuses will be deemed vested and earned. Our 2014 Equity and Incentive Plan and 2022 Equity and Incentive Plan provide that the restrictions, limitations, and conditions applicable to all outstanding awards will lapse, performance goals will be deemed fully achieved at the greater of target or actual performance to-date, and the awards will become fully vested (and in the case of stock options, exercisable) upon a change in control (sometimes referred to as a “single trigger”), unless the committee determines otherwise with respect to a particular award at the time of grant and reflects this determination in the applicable award agreement. In this regard, the compensation and management development committee noted it would be difficult to preserve the original performance and vesting goals in our plan-based awards following a change in control, given the fundamental changes in our organization, capital structure, and operations that would typically result from such a transaction. Accordingly, all of our plan-based awards have included this change in control provision for the benefit of our executive officers and the other participants. In addition, the 2022 Equity and Incentive Plan provides that for stock-based awards granted pursuant to the plan, our compensation and management development committee may, in its discretion, provide such holders the consideration provided to similarly situated shareholders in such change in control. As part of its review, the compensation and management development committee reviewed “tally sheets,” estimating these benefits for our chief executive officer and the other NEOs under various assumptions and scenarios. Based on its review, and the other factors noted above, the compensation and management development committee determined that our change in control benefits serve the best interests of the company and our shareholders and are consistent with competitive market practices.
Excise Tax Gross-Ups
Excise Tax Gross-Ups In December 2014, the Board adopted a policy whereby the company will not in the future enter into any new agreements with its NEOs that include Internal Revenue Code Section 280G excise tax “gross-up” provisions with respect to payments contingent on a change in control of the company.
Severance Benefits
Severance Benefits With respect to our severance benefits, the compensation and management development committee noted that none of our executive officers has any employment or severance agreement, and none of our executive officers is entitled to receive any other severance benefits, except for (i) the change in control agreements and change in control benefits discussed above, (ii) such severance benefits as we may provide under our standard policies applicable to all employees, (iii) such severance benefits as we may be required to pay under applicable law in certain jurisdictions, and (iv) such additional severance benefits as our compensation and management development committee may approve in certain instances. Based on its review, and the other factors noted above, the compensation and management development committee determined that our severance benefits serve the best interests of the company and our shareholders and are consistent with competitive market practices.
Mr. Barnard’s Retirement
Mr. Barnard’s Retirement Mr. Barnard retired from the company on January 12, 2024. In connection with his retirement, Mr. Barnard’s outstanding RSUs and PRSUs vested on a pro-rata basis on January 12, 2024 in accordance with their underlying award agreements. Because Mr. Barnard’s retirement occurred less than one full month after the respective anniversaries of the grant dates of the RSUs awarded to him in 2021, 2022 and 2023, no additional RSUs vested upon his retirement. The pro-rata portion of Mr. Barnard’s outstanding PRSUs that vested on his retirement date were: 36,674 of the PRSUs that were awarded to him in 2021, 9,579 of the PRSUs that were awarded to him in 2022, and 1,780 of the PRSUs that were awarded to him in 2023. The remainder of Mr. Barnard’s outstanding RSUs and PRSUs were forfeited. In addition, Mr. Barnard’s annual incentive award earned in 2024 will be prorated based on his period of employment in 2024.
Use of Industry Reference Group
Use of Industry Reference Group As noted above, the compensation and management development committee has adopted an Industry Reference Group for use in establishing compensation and incentive levels. The compensation and management development committee’s consultant, Exequity, leads a review of the companies in the peer group annually and proposes changes based on quantitative and qualitative assessments of comparability. Two companies were added to our Industry Reference Group for 2023 compared with 2022: Corteva, Inc., an agricultural chemical and seed company, and The Chemours Company, a provider of industrial and specialty chemical products. The compensation and management development committee determined to add such companies to the Industry Reference Group in consultation with Exequity to make the peer group more robust. These companies are comparable in size and industry to other companies in our Industry Reference Group. No companies were removed from the Industry Reference Group for 2023, compared with 2022. The 19 companies in our Industry Reference Group for 2023 are listed in the following table:
Role of the Compensation Consultant
Role of the Compensation Consultant The compensation and management development committee has authority under its charter to retain, approve fees for, and terminate advisors, consultants, and agents as it deems necessary to assist in the fulfillment of its responsibilities. Pursuant to this authority, the compensation and management development committee engaged Exequity, an independent executive compensation consulting firm, to assist the committee in making recommendations and decisions regarding compensation for our directors and executive officers based on market and industry practices. Exequity provides no other services to the company. The compensation consultant regularly attends meetings of our compensation and management development committee and meets regularly with the committee in executive sessions without management present. The compensation and management development committee reviews the materials and recommendations provided by Exequity, but exercises independent judgment in determining the compensation payable to our NEOs. Any recommendations of the compensation and management development committee with respect to non-employee director compensation are subject to approval by the Board. The compensation and management development committee has determined, after appropriate inquiry, including consideration of Exequity’s independence in light of the factors set forth under Rule 10C-1 of the Exchange Act, that no conflicts of interest exist with respect to the firm’s engagement as the committee’s independent compensation consultant.
Summary Compensation Table
Summary Compensation Table The following table sets forth the total compensation we provided with respect to the years ended December 31, 2021, 2022, and 2023 for (i) our principal executive officer, (ii) our principal financial officer and (iii) our three other most highly compensated executive officers (as determined on the basis of their total compensation for the applicable fiscal year other than changes in pension value and nonqualified deferred compensation earnings). We refer to these individuals in this Proxy Statement as our “named executive officers.” Their principal positions are stated in the table as the positions that were in effect as of December 31, 2023.
Summary Compensation Table
| Name and Principal Position | Year | Salary(1) ($) | Stock Awards(2)(3) ($) | Non-equity Incentive Plan Compen- sation(1)(4) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(5)(6) ($) | All Other Compensation(7) ($) | Total ($) | | W. Anthony Will President and Chief Executive Officer | 2023 | 1,350,000 | 8,754,185 | 2,454,300 | 39,712 | 301,362 | 12,899,559 | | | 2022 | 1,300,000 | 9,198,580 | 3,510,000 | 40,080 | 230,366 | 14,279,027 | | | 2021 | 1,250,000 | 6,767,986 | 3,375,000 | 72,771 | 219,913 | 11,685,670 | | Christopher D. Bohn Executive Vice President and Chief Financial Officer | 2023 | 700,000 | 2,207,317 | 678,720 | 17,767 | 115,899 | 3,719,703 | | | 2022 | 660,000 | 2,166,292 | 1,056,000 | 8,714 | 76,842 | 3,967,848 | | | 2021 | 625,000 | 1,619,154 | 1,000,000 | 34,919 | 72,491 | 3,351,564 | | Douglas C. Barnard Executive Vice President, Corporate Development and Legal Advisor | 2023 | 600,000 | 1,666,127 | 581,760 | 18,687 | 148,600 | 3,015,174 | | | 2022 | 585,000 | 1,733,295 | 936,000 | 45,426 | 77,782 | 3,377,503 | | | 2021 | 575,000 | 1,307,681 | 920,061 | 45,279 | 75,698 | 2,923,719 | | Bert A. Frost Executive Vice President, Sales, Market Development and Supply Chain | 2023 | 670,000 | 2,154,976 | 649,632 | 20,132 | 133,790 | 3,628,530 | | | 2022 | 640,000 | 2,203,206 | 1,024,000 | 16,049 | 88,859 | 3,972,114 | | | 2021 | 625,000 | 1,686,754 | 1,000,000 | 37,051 | 73,918 | 3,422,723 | | Susan L. Menzel Executive Vice President and Chief Administrative Officer | 2023 | 604,231 | 1,678,211 | 585,862 | 6,802 | 105,360 | 2,980,466 | | | 2022 | 550,000 | 1,366,959 | 880,000 | 18,771 | 56,594 | 2,872,324 | | | 2021 | 525,000 | 999,090 | 840,000 | 20,945 | 53,275 | 2,438,310 |
Summary Compensation Table
(1) Amounts in these two columns represent base salary and non-equity incentive plan compensation earned in 2021, 2022, and 2023 regardless of when such amounts are paid in cash. Amounts in this column represent the grant date fair value computed in accordance with FASB ASC Topic 718 of the RSU and PRSU awards that we granted to the named executive officers pursuant to our 2014 Equity and Incentive Plan in 2021 and 2022 and pursuant to our 2022 Equity Incentive Plan in 2023. As described in footnote 3 below and consistent with the applicable accounting rules, the amounts shown in the table above in 2023 represent (w) the value of the RSUs granted in 2023, (x) the value of one-third of the target number of 2023 PRSUs awarded at grant, as only the first-year goal of the three-year performance period beginning in 2023 was communicated to award holders in 2023, (y) the value of one-third of the target number of 2022 PRSUs, as the second-year goal of the three-year performance period beginning in 2022 was communicated to grant holders in 2023 and (z) the value of one-third of the target number of 2021 PRSUs, as the third-year goal of the three-year performance period beginning in 2021 was communicated to grant holders in 2023. The compensation and management development committee considered the full value of the 2023 PRSU award when making the 2023 PRSU grant and the amounts shown below represent the grant date fair (full) values for the 2023 RSU and PRSU awards using a fair value of $81.95 per RSU (the closing price on the NYSE on the grant date) and $84.16 per PRSU at target level of performance (computed as the product of the number of shares of stock to be delivered assuming target level performance multiplied by $84.16 per share, the grant date fair value) and $81.95 per PRSU at maximum level of performance (computed as the product of the number of shares of stock to be delivered assuming maximum level of performance multiplied by $81.95 per share, the closing price on the NYSE on the grant date):
Summary Compensation Table
| | Will | Bohn | Barnard | Frost | Menzel* | | RSUs ($) | 2,424,327 | 623,394 | 450,233 | 588,811 | 415,568 | | PRSUs at Target Level of Performance ($) | 3,734,600 | 960,350 | 693,563 | 906,992 | 640,205 | | 2023 Stock Awards (Full Grant Date Fair Value) ($) | 6,158,927 | 1,583,744 | 1,143,796 | 1,495,803 | 1,055,773 | | PRSUs at Maximum Level of Performance ($) | 8,727,675 | 2,244,315 | 1,620,840 | 2,119,620 | 1,496,145 |
Summary Compensation Table
* In addition to the annual equity grant of RSUs and PRSUs presented in the table above, on July 7, 2023 the compensation and management development committee granted Ms. Menzel RSUs in connection with her promotion to executive vice president and chief administrative officer. The grant date fair value of such award was $257,510, using a fair value of $71.85 per RSU (the closing price on the NYSE on the grant date). Our assumptions with respect to the FASB ASC Topic 718 valuation of these equity awards are described in the footnotes to our audited financial statements as of and for the year ended December 31, 2023. Additional information with respect to the outstanding RSU and PRSU awards is set forth below under the headings “Grants of Plan-based Awards” and “Outstanding Equity Awards at Fiscal Year End.” In accordance with SEC rules, the aggregate grant date fair value of the RSUs in the Summary Compensation Table is calculated as the product of the number of RSUs multiplied by the closing price for our stock on the NYSE on the grant date. Because the grant date for the PRSUs under accounting rules occurs when the applicable performance goals are set and our 2021 PRSUs (awarded in 2021 for the performance period 2021-2023), 2022 PRSUs (awarded in 2022 for the performance period 2022-2024) and 2023 PRSUs (awarded in 2023 for the performance period 2023-2025) are composed of three one-year periods with performance goals set annually, the “target” amount shown in 2023 represents one-third of the total 2021 PRSUs, one-third of the total 2022 PRSUs and one-third of the total 2023 PRSUs. In accordance with SEC rules, the aggregate grant date fair value of the PRSUs is calculated based on the probable outcome of the performance conditions as of the grant date, which, for the PRSUs reflected in this table, was target level performance. Therefore, values in the table for PRSU awards are computed as the product of the number of shares of stock to be delivered assuming target level performance multiplied by the grant date fair value of each PRSU ($100.38 for the 2021 PRSUs, $89.72 for the 2022 PRSUs and $84.16 for the 2023 PRSUs). If maximum level performance were assumed to be achieved, based on the units included here (1/3 of the total target number of 2021 PRSUs awarded, 1/3 of the total target number of 2022 PRSUs awarded and 1/3 of the total target number of 2023 PRSUs awarded), then the grant date fair value of the PRSUs with an accounting grant date in 2023 (computed as the product of the number of shares of stock to be delivered assuming maximum level performance multiplied by the closing price for our stock ($81.95 per share) on the NYSE on the grant date) would have been as follows: $13,281,800 for Mr. Will; $3,318,778 for Mr. Bohn, $2,545,236 for Mr. Barnard; $3,277,279 for Mr. Frost; and $2,111,360 for Ms. Menzel. Amounts in this column represent amounts that the named executive officers earned with respect to the years ended December 31, 2021, 2022, and 2023 as the result of annual incentive awards we granted to the named executive officers pursuant to our non-equity incentive plan. Additional information with respect to these annual incentive awards for 2023 is set forth above under the heading “Compensation Discussion and Analysis — Review and Approval of 2023 Cash Compensation” and below under the heading “Grants of Plan-based Awards.” (5) Amounts in this column represent only the change during the particular year in the actuarial present value of the named executive officer’s accumulated pension benefits under our New Retirement Plan (a tax-qualified defined benefit pension plan) and our Supplemental Benefit and Deferral Plan (a nonqualified benefits restoration and deferred compensation plan). Our assumptions with respect to the determination of this value are described in the footnotes to our audited financial statements as of and for the year ended December 31, 2023. For this purpose, we have also assumed retirement at age 65. Additional information with respect to our defined benefit pension plans is set forth below under the heading “Pension Benefits.” This column does not include any above-market or preferential earnings with respect to nonqualified deferred compensation, since all earnings were determined by a third-party plan administrator and set to equal the published total return on notional capital market investments selected in advance by the named executive officers. Additional information with respect to the named executive officers’ nonqualified deferred compensation earnings is set forth below under the heading “Nonqualified Deferred Compensation.” Amounts in this column for 2023 represent (i) employer contributions and credits to the company 401(k) plan and to our Supplemental Benefit and Deferral Plan, some of which were earned for service in 2023 and paid in 2024, (ii) employer-paid term life insurance premiums, (iii) dividend equivalents on RSUs, and (iv) in the case of (x) Mr. Barnard, perquisites consisting of certain financial advisory services, an executive physical examination, and a $25,000 donation to a charity designated by Mr. Barnard in connection with his retirement and in recognition of his 20 years of service with the company, (y) Mr. Frost, perquisites consisting of certain financial advisory services and an executive physical examination, and (z) Ms. Menzel, perquisites consisting of certain financial advisory services, in each case as set forth in the following table:
Summary Compensation Table
| Name | Employer Contributions and Credits to our 401k plan* ($) | Employer Contributions and Credits to our Supplemental Benefit and Deferral Plan** ($) | Employer- paid Life Insurance Premiums ($) | Dividend Equivalents on RSUs ($) | Perquisites and Other Personal Benefits*** ($) | Total ($) | | W. Anthony Will | 42,900 | 132,600 | 1,371 | 124,491 | — | 301,362 | | Christopher D. Bohn | 39,600 | 44,400 | 960 | 30,939 | — | 115,899 | | Douglas C. Barnard | 42,900 | 35,100 | 823 | 23,523 | 46,254 | 148,600 | | Bert A. Frost | 39,600 | 41,573 | 919 | 30,264 | 21,434 | 133,790 | | Susan L. Menzel | 36,300 | 30,165 | 796 | 22,866 | 15,233 | 105,360 |
Summary Compensation Table
* Amounts in this column include both employer matching contributions and employer annual service credits. For all of the named executive officers, the employer matching contribution was $19,800. For Messrs. Will, Bohn, Barnard and Frost, and Ms. Menzel, the employer annual service credits were $23,100, $19,800, $23,100, $19,800 and $16,500, respectively. The year ended December 31, 2023 is the first year for which the annual service credit was applied to the 401(k) plan and the Supplemental Benefit and Deferral Plan. Prior to 2023, the annual service credit was applied to the New Retirement Plan. ** Amounts in this column include both employer matching contributions and employer annual service credits. For Messrs. Will, Bohn, Barnard and Frost, and Ms. Menzel, the employer matching contribution were $61,200, $22,200, $16,200, $20,400 and $16,454, respectively. For Messrs. Will, Bohn, Barnard and Frost, and Ms. Menzel, the employer annual service credits were $71,400 $22,200, $18,900, $21,173 and $13,712, respectively. The year ended December 31, 2023 is the first year for which the annual service credit was applied to the 401(k) plan and the Supplemental Benefit and Deferral Plan. Prior to 2023, the annual service credit was applied to the New Retirement Plan. *** For each named executive officer, excludes perquisites and other personal benefits unless the total value of all perquisites and other personal benefits for that named executive officer is $10,000 or more. Mr. Will received no additional compensation for service as a director. Mr. Bohn, who was elected to the Board of Directors in 2024, will also not receive additional compensation for his service as a director.
Grants of Plan-based Awards
Grants of Plan-based Awards The following table shows all plan-based awards that we granted for the year ended December 31, 2023 to each of the named executive officers. Additional information regarding these awards is set forth above under the heading “Summary Compensation Table.”
2023 Grants of Plan-based Awards Table
2023 Grants of Plan-based Awards Table
2023 Grants of Plan-based Awards Table
| | | | Estimated Future Payouts Under Non-equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units(4) (#) | Grant Date Fair Value of Stock Awards(5) ($) | | Name | Type of Award(1) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | W. Anthony Will | STI | 12/13/2022 | 1,012,500 | 2,025,000 | 4,050,000 | — | — | — | — | — | | | PRSU1 | 1/3/2023 | — | — | — | 5,916 | 14,791 | 35,498 | — | 1,244,811 | | | PRSU2 | 1/3/2023 | — | — | — | 7,838 | 19,596 | 47,030 | — | 1,758,153 | | | PRSU3 | 1/3/2023 | — | — | — | 13,257 | 33,143 | 79,543 | — | 3,326,894 | | | RSU | 1/3/2023 | — | — | — | — | — | — | 29,583 | 2,424,327 | | Christopher D. Bohn | STI | 12/13/2022 | 280,000 | 560,000 | 1,120,000 | — | — | — | — | — | | | PRSU1 | 1/3/2023 | — | — | — | 1,521 | 3,803 | 9,127 | — | 320,060 | | | PRSU2 | 1/3/2023 | — | — | — | 1,809 | 4,522 | 10,853 | — | 405,714 | | | PRSU3 | 1/3/2023 | — | — | — | 3,420 | 8,549 | 20,518 | — | 858,149 | | | RSU | 1/3/2023 | — | — | — | — | — | — | 7,607 | 623,394 | | Douglas C. Barnard | STI | 12/13/2022 | 240,000 | 480,000 | 960,000 | — | — | — | — | — | | | PRSU1 | 1/3/2023 | — | — | — | 1,099 | 2,747 | 6,593 | — | 231,188 | | | PRSU2 | 1/3/2023 | — | — | — | 1,447 | 3,618 | 8,683 | — | 324,607 | | | PRSU3 | 1/3/2023 | — | — | — | 2,630 | 6,576 | 15,782 | — | 660,099 | | | RSU | 1/3/2023 | — | — | — | — | — | — | 5,494 | 450,233 | | Bert A. Frost | STI | 12/13/2022 | 268,000 | 536,000 | 1,072,000 | — | — | — | — | — | | | PRSU1 | 1/3/2023 | — | — | — | 1,437 | 3,592 | 8,621 | — | 302,303 | | | PRSU2 | 1/3/2023 | — | — | — | 1,809 | 4,522 | 10,853 | — | 405,714 | | | PRSU3 | 1/3/2023 | — | — | — | 3,420 | 8,549 | 20,518 | — | 858,149 | | | RSU | 1/3/2023 | — | — | — | — | — | — | 7,185 | 588,811 | | Susan L. Menzel | STI | 12/13/2022 | 232,000 | 464,000 | 928,000 | — | — | — | — | — | | | PRSU1 | 1/3/2023 | — | — | — | 1,014 | 2,535 | 6,084 | — | 213,346 | | | PRSU2 | 1/3/2023 | — | — | — | 1,176 | 2,939 | 7,054 | — | 263,687 | | | PRSU3 | 1/3/2023 | — | — | — | 2,104 | 5,261 | 12,626 | — | 528,099 | | | RSU | 1/3/2023 | — | — | — | — | — | — | 5,071 | 415,568 | | | RSU | 7/7/2023 | — | — | — | — | — | — | 3,584 | 257,510 |
2023 Grants of Plan-based Awards Table
(1) The Short-Term Incentive program award was granted under the Company’s Annual Incentive Plan. All other awards included in this table were granted under the 2022 Equity and Incentive Plan. The types of awards granted include: STI Short-Term Incentive PRSU1 Performance Vesting Restricted Stock Unit, Year 1 of 2023-2025 PRSU Award PRSU2 Performance Vesting Restricted Stock Unit, Year 2 of 2022-2024 PRSU Award PRSU3 Performance Vesting Restricted Stock Unit, Year 3 of 2021-2023 PRSU Award RSU Restricted Stock Unit In December 2022, Messrs. Will, Bohn, Barnard and Frost and Ms. Menzel were assigned target award opportunities equal to 150%, 80%, 80%, 80% and 80% of their respective base salaries for 2023. The threshold level shown is the minimum amount payable if the threshold level of each of the performance metrics are met. The terms and conditions of these awards are described above under the heading “Compensation Discussion and Analysis — Review and Approval of 2023 Cash Compensation.” We recently determined the amounts that each of the named executive officers had earned with respect to these awards, based on our corporate performance for 2023, as set forth above under the heading “Compensation Discussion and Analysis — Review and Approval of 2023 Cash Compensation — Approval of Annual Incentive Payments for 2023” and “Summary Compensation Table.” The amounts in the “Threshold,” “Target,” and “Maximum” columns with the January 3, 2023 grant date reflect the PRSU opportunity granted during 2023 for the 2023 performance period (the first of three one-year performance periods for the 2023 PRSUs, the second of three one-year performance periods for the 2022 PRSUs and the third of three one-year performance periods for the 2021 PRSUs). The terms and conditions of these PRSU awards are described above under the heading “Compensation Discussion and Analysis — Review and Approval of 2023 Long-term Incentives.” As stated in that section, on the award grant date, the compensation and management development committee approved dollar-denominated 2023 PRSU awards for the individual executive officers and then the dollar-denominated awards were translated into an actual number of PRSUs (at target) by dividing the award values by the unweighted average closing price of our stock on the NYSE for the twenty trading days preceding the award grant date. As further described in that section, subject to earlier forfeiture or accelerated vesting, these awards will vest upon the certification by the compensation and management development committee of the attainment of the performance goals following the end of the applicable three-year performance period. The performance metrics for each of the 2021 PRSUs, the 2022 PRSUs and the 2023 PRSUs are composed of two measures: average return on net assets (“RONA”) over three one-year periods and a modifier pursuant to which the number of shares earned based on RONA performance may be increased or decreased by up to 20% based on our three-year TSR performance. The PRSUs accrue dividend equivalents during the performance and vesting period. Upon vesting, holders of PRSUs will be paid a cash equivalent of the dividends paid on our common stock during the performance and vesting period based on the number of shares of stock, if any, delivered upon the settlement of the PRSUs. Because the grant date for the PRSUs under accounting rules occurs when the applicable performance goals are set, the “target” amount shown represents one-third of the total 2021 PRSUs awarded in 2021 for the performance period 2021-2023, one-third of the total 2022 PRSUs awarded in 2022 for the performance period 2022-2024 and one-third of the total 2023 PRSUs awarded in 2023 for the performance period 2023-2025. See the Summary Compensation Table footnote 2 for further information on the full value of the 2023 PRSU grant. (4) The amounts shown in this column represent the RSUs granted to our named executive officers in 2023. Subject to earlier forfeiture or accelerated vesting, all of the RSUs granted on January 3, 2023 will vest in three equal annual installments following the date of grant. Ms. Menzel’s RSUs granted on July 7, 2023 will vest on the second anniversary of the date of the grant. We will pay dividend equivalents in cash on the RSUs to the named executive officers during the vesting period. The terms and conditions of these RSU awards are described above under the heading “Compensation Discussion and Analysis — Review and Approval of 2023 Long-term Incentives.” Amounts in this column represent the grant date fair value computed in accordance with FASB ASC Topic 718 of the RSU and PRSU awards that we granted to the named executive officers during 2023. The grant date fair value for the RSUs is calculated using the closing price of our stock on the NYSE on the date of grant ($81.95 per share for January 3, 2023 and $71.85 per share for July 7, 2023). The grant date fair value for the PRSUs are calculated using a Monte Carlo simulation valuation performed as of the date of grant by an independent third party. The dollar value of the PRSU1s at the time of grant was $84.16 per unit, the dollar value of the PRSU2s at the time of grant was $89.72 per unit and the dollar value of the PRSU3s at the time of grant was $100.38 per unit. The aggregate grant date fair value of the PRSUs is calculated based on the probable outcome of the performance conditions as of the grant date. Our assumptions with respect to the FASB ASC Topic 718 valuation of these equity awards are described in the footnotes to our audited financial statements as of and for the year ended December 31, 2023.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth certain information concerning the outstanding equity awards held as of December 31, 2023 by each of the named executive officers. Additional information with respect to the equity awards granted during 2023 is set forth above under the heading “Grants of Plan-based Awards.”
2023 Outstanding Equity Awards at Fiscal Year End Table
2023 Outstanding Equity Awards at Fiscal Year End Table
2023 Outstanding Equity Awards at Fiscal Year End Table
| | | Stock Awards(2)(3) | | | | | Name | Grant Date/ Performance Period(1) | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(6) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(6) | | W. Anthony Will | 1/4/2021 | 22,096 | 1,756,632 | — | — | | | 1/4/2022 | 26,128 | 2,077,176 | — | — | | | 1/3/2023 | 29,583 | 2,351,849 | — | — | | | 1/1/21-12/31/23 | 184,838 | 14,694,621 | — | — | | | 1/1/22-12/31/24 | — | — | 141,089 | 11,216,560 | | | 1/1/23-12/31/25 | — | — | 44,375 | 3,527,813 | | Christopher D. Bohn | 1/4/2021 | 5,700 | 453,150 | — | — | | | 1/4/2022 | 6,030 | 479,385 | — | — | | | 1/3/2023 | 7,607 | 604,757 | — | — | | | 1/1/21-12/31/23 | 47,675 | 3,790,163 | — | — | | | 1/1/22-12/31/24 | — | — | 32,558 | 2,588,393 | | | 1/1/23-12/31/25 | — | — | 11,411 | 907,175 | | Douglas C. Barnard(7) | 1/4/2021 | 4,384 | 348,528 | — | — | | | 1/4/2022 | 4,824 | 383,508 | — | — | | | 1/3/2023 | 5,494 | 436,773 | — | — | | | 1/1/21-12/31/23 | 36,674 | 2,915,583 | — | — | | | 1/1/22-12/31/24 | — | — | 26,047 | 2,070,752 | | | 1/1/23-12/31/25 | — | — | 8,241 | 655,160 | | Bert A. Frost | 1/4/2021 | 5,700 | 453,150 | — | — | | | 1/4/2022 | 6,030 | 479,385 | — | — | | | 1/3/2023 | 7,185 | 571,208 | — | — | | | 1/1/21-12/31/23 | 47,675 | 3,790,163 | — | — | | | 1/1/22-12/31/24 | — | — | 32,558 | 2,588,393 | | | 1/1/23-12/31/25 | — | — | 10,777 | 856,772 | | Susan L. Menzel | 1/4/2021 | 3,508 | 278,886 | — | — | | | 1/4/2022 | 3,920 | 311,640 | — | — | | | 1/3/2023 | 5,071 | 403,145 | — | — | | | 7/7/2023 | 3,584 | 284,928 | — | — | | | 1/1/21-12/31/23 | 29,338 | 2,332,371 | — | — | | | 1/1/22-12/31/24 | — | — | 21,163 | 1,682,474 | | | 1/1/23-12/31/25 | — | — | 7,607 | 604,757 |
2023 Outstanding Equity Awards at Fiscal Year End Table
This column includes the grant dates of RSU awards and the performance periods for the PRSU awards. The performance metrics for each of the 2021 PRSUs, the 2022 PRSUs and the 2023 PRSUs are composed of two measures: average return on net assets (“RONA”) over three one-year periods and a modifier pursuant to which the number of shares earned based on RONA performance may be increased or decreased by up to 20% based on our three-year TSR performance. Because the grant date for the PRSUs under accounting rules occurs when the applicable performance goals are set, each of our 2021 PRSUs, 2022 PRSUs and 2023 PRSUs will have three “grant dates,” one for each year of the three-year performance period. At each such grant date one-third of the full PRSU award will be granted. Amounts shown in this table represent the full awards for each of the 2021 PRSUs, the 2022 PRSUs and the 2023 PRSUs. RSUs and PRSUs have been granted to our executive officers since 2014. Commencing in 2018 and for each year thereafter, the compensation and management development committee has determined that stock options would not be awarded and that the long-term incentive awards to our named executive officers should be composed 60% in PRSUs (at target) and 40% in RSUs. None of the named executive officers have any options outstanding as of December 31, 2023. (3) Subject to earlier forfeiture or accelerated vesting, all of the RSU awards granted in January 2021, 2022 and 2023 will vest in three equal annual installments following the date of grant and Ms. Menzel’s RSUs granted on July 7, 2023 will vest on the second anniversary of the date of the grant. Subject to earlier forfeiture or accelerated vesting, the PRSU awards granted in 2021, 2022 and 2023 will vest upon the certification by the compensation and management development committee of the attainment of the performance goals following the end of the three-year performance period. Dividend equivalents will be paid in cash on the RSUs during the vesting period. The PRSUs accrue dividend equivalents during the performance and vesting period and upon vesting, holders of PRSUs will be paid a cash equivalent of the dividends paid on our common stock during the performance and vesting period based on the number of shares of stock, if any, delivered in settlement of the PRSUs. The accelerated vesting provisions and the other terms and conditions of the stock awards granted in 2023 are described above under the heading “Compensation Discussion and Analysis — Review and Approval of 2023 Long-term Incentives.” (4) Reflects RSUs awarded in 2021, 2022 and 2023 and PRSUs awarded in 2021 (for which the performance period ended on December 31, 2023). In accordance with SEC rules, the number of PRSUs reported is based on the actual number of shares underlying the PRSUs that were earned at the end of the three-year performance period, subject to continued time vesting until the certification of the attainment of the performance goals no later than the last day of the fiscal quarter immediately following the end of the three-year performance period. The performance goals actually attained were above the target level, resulting in the vesting of 186% of the target PRSUs awarded in 2021. (5) Reflects PRSUs awarded in 2022 (for which the performance period ends on December 31, 2024) and 2023 (for which the performance period ends on December 31, 2025). With respect to the units awarded in 2022, actual performance through December 31, 2023 was above the target level and, in accordance with SEC rules, the number of 2022 units reported assumes achievement of the maximum performance level. With respect to the units awarded in 2022, the amount shown represents the full 2022 PRSU award. For the 2023 PRSUs, actual performance through December 31, 2023 was above the threshold level, but below the target level, and, in accordance with SEC rules, the number of 2023 units reported assumes achievement of the target performance level. With respect to the units awarded in 2023, the amount shown represents the full 2023 PRSU award. See the Summary Compensation Table footnote 2 for further information on the full value of the 2023 PRSU grant. (6) The value shown is based on the closing price for our stock ($79.50 per share) on the NYSE on December 29, 2023 (the last trading day of 2023). Mr. Barnard’s equity awards that were outstanding as of December 31, 2023 are disclosed in the 2023 Outstanding Equity Awards at Fiscal Year End Table on a basis consistent with that described in footnotes 1 through 6. However, as described below under the heading “Potential Payments Upon Termination or Change in Control” and above under the heading “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Change in Control, Severance, and Retirement Benefits — Mr. Barnard’s Retirement,” Mr. Barnard retired from the company on January 12, 2024 and his outstanding RSUs and PRSUs vested on a pro-rata basis on January 12, 2024 in accordance with their underlying award agreements. Because Mr. Barnard’s retirement occurred less than one full month after the respective anniversaries of the grant dates of the RSUs awarded to him in 2021, 2022 and 2023, no additional RSUs vested upon his retirement. The pro-rata portion of Mr. Barnard’s outstanding PRSUs that vested on his retirement date were: 36,674 of the PRSUs that were awarded to him in 2021, 9,579 of the PRSUs that were awarded to him in 2022, and 1,780 of the PRSUs that were awarded to him in 2023. The remainder of Mr. Barnard’s outstanding RSUs and PRSUs reported in the 2023 Outstanding Equity Awards at Fiscal Year End Table were forfeited.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth certain information concerning stock option exercises by each of the named executive officers and the vesting of RSUs and PRSUs held by each of the named executive officers during the year ended December 31, 2023.
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | W. Anthony Will | 203,234 | 17,265,327 | | Christopher D. Bohn | 45,130 | 3,831,139 | | Douglas C. Barnard | 37,610 | 3,194,190 | | Bert A. Frost | 47,931 | 4,070,582 | | Susan L. Menzel | 27,876 | 2,366,166 |
2023 Option Exercises and Stock Vested Table
The value realized on vesting of stock awards was computed by multiplying the number of shares of stock vesting by the closing price for our stock on the NYSE on the vesting date and, if the vesting date was not a trading day, the first trading day after the vesting date.
Pension Benefits
Pension Benefits The following table sets forth certain information concerning accumulated retirement benefits as of December 31, 2023, for each of the named executive officers.
2023 Pension Benefits Table
2023 Pension Benefits Table
2023 Pension Benefits Table
| Name | Plan Name(1) | Number of Years Credited Service(2) (#) | Present Value of Accumulated Benefit(2)(3) ($) | | W. Anthony Will | New Retirement Plan | 16.7 | 174,097 | | | Supplemental Benefit and Deferral Plan | 16.7 | 508,712 | | Christopher D. Bohn | New Retirement Plan | 14.3 | 158,051 | | | Supplemental Benefit and Deferral Plan | 14.3 | 129,528 | | Douglas C. Barnard | New Retirement Plan | 20 | 204,935 | | | Supplemental Benefit and Deferral Plan | 20 | 189,839 | | Bert A. Frost | New Retirement Plan | 15.1 | 169,433 | | | Supplemental Benefit and Deferral Plan | 15.1 | 183,783 | | Susan L. Menzel | New Retirement Plan | 6.2 | 67,034 | | | Supplemental Benefit and Deferral Plan | 6.2 | 50,056 |
2023 Pension Benefits Table
(1) We maintain a defined benefit pension plan named the CF Industries Holdings, Inc. Pension Plan (the “Pension Plan”). Supplement A of the Pension Plan, which we refer to herein as the New Retirement Plan, is a tax qualified defined benefit pension plan. Effective December 31, 2022, the New Retirement Plan was closed to new hires and frozen with respect to active participants, including the NEOs. Our Supplemental Benefit and Deferral Plan is a nonqualified benefits restoration and deferred compensation plan. (2) The annual pension benefit under our New Retirement Plan assuming retirement at age 65 is equal to the actuarial equivalent of a participant’s cash balance account expressed as a single-life annuity payable monthly. Because the New Retirement Plan is frozen with respect to active participants, including the NEOs, the company no longer provides an annual credit to each participant’s cash balance account equal to a percentage of the participant’s eligible compensation (which was limited to base salary for the NEOs) determined based on a participant’s years of service. However, each participant’s cash balance account continues to earn an annual return based on the greater of (i) the annual yield on 10-year treasury nominal securities and (ii) 3% annual interest. Benefits under our New Retirement Plan are paid in a straight life annuity or qualified joint and survivor annuity for unmarried and married participants, respectively, unless the participant has elected another form of annuity payment permitted under our New Retirement Plan or a lump sum payment. In the event of a participant’s death while an active employee, a benefit is payable to a participant’s beneficiary as a lump sum to the extent the beneficiary is not the participant’s spouse and solely with respect to spousal beneficiaries, either a lump sum or an annuity. A participant who has not reached the age of 65, but has completed three years of vesting service may be eligible to receive a monthly retirement benefit under the New Retirement Plan. Amounts in this column represent the actuarial present value of the named executive officers’ accumulated pension benefits under our New Retirement Plan and our Supplemental Benefit and Deferral Plan. Our assumptions with respect to the determination of this value are described in the footnotes to our audited financial statements as of and for the year ended December 31, 2023. For this purpose, we have also assumed retirement at age 65. Additional information with respect to the aggregate change over the past year in the actuarial present value of the named executive officers’ accumulated pension benefits under these plans is set forth above under the heading “Summary Compensation Table.”
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table sets forth certain information concerning nonqualified deferred compensation arrangements under our Supplemental Benefit and Deferral Plan for each of the named executive officers with respect to fiscal year 2023.
2023 Nonqualified Deferred Compensation Table
2023 Nonqualified Deferred Compensation Table
2023 Nonqualified Deferred Compensation Table
| Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(4) ($) | | W. Anthony Will | 61,200 | 132,600 | (47,529) | — | 3,084,320 | | Christopher D. Bohn | 22,200 | 44,400 | 226,988 | — | 1,571,236 | | Douglas C. Barnard | 16,200 | 35,100 | 55,873 | — | 1,278,092 | | Bert A. Frost | 225,200 | 41,573 | 283,271 | — | 1,735,482 | | Susan L. Menzel | 16,454 | 30,165 | 33,441 | — | 225,928 |
2023 Nonqualified Deferred Compensation Table
(1) Under our Supplemental Benefit and Deferral Plan, each of the named executive officers may elect to defer (i) up to 6% of his or her base salary in excess of the annual compensation limit under Section 401(a)(17) of the Internal Revenue Code and (ii) up to 100% of his or her annual incentive payment. Amounts in this column represent the amounts we credited to the accounts of the named executive officers during 2023. There is typically an administrative delay between the time when a participant defers income under the plan and the time when we subsequently credit the participant’s account. As a result of this delay, the amounts that we credited to the named executive officers’ accounts during 2023 differ slightly from the amounts that the named executive officers deferred during 2023. All amounts included under “Executive Contributions” are also included in the “Salary” or “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table on page 86. (2) Amounts in this column represent the employer matching contributions and employer annual service credit amounts that we credited to the accounts of the named executive officers for their service during 2023, which were credited during 2023 or shortly thereafter. For 2023, for each named executive officer who elects to defer any of his or her base salary in excess of the annual compensation limit, we match (through further such credits to his or her deemed account) the portion (up to 6%) of his or her excess base salary that he or she elects to defer. This column also includes the named executive officer’s annual service credit for 2023, to the extent the annual service credit was not allocated to the named executive officer’s 401(k) plan. Both the employer matching credits and the employer annual service credits are also reported for 2023 in the “All Other Compensation” column of the Summary Compensation Table on page 86. Under our Supplemental Benefit and Deferral Plan, each of the named executive officers makes notional investments of his or her account balance from time to time in shares of (i) our common stock or (ii) the public mutual funds we offer to our employees as investment alternatives under our 401(k) plan. In order to make these notional investments, the named executive officer notifies the third-party plan administrator of his or her selections. The plan administrator then tracks the published total return on the actual securities underlying the named executive officer’s notional investments, and we credit or debit the named executive officer’s deemed account balance accordingly. Since all such credits and debits are determined by a third-party plan administrator and set to equal the published total return on notional capital market investments selected in advance by the named executive officers, none of the amounts shown in this column are reported as above-market or preferential earnings on nonqualified deferred compensation in the Summary Compensation Table. In general, deferred amounts are paid out in a lump sum upon the termination of the named executive officer’s employment. The aggregate balance consists of executive contributions, company matching credits, and credits (or debits) reflecting returns on the notional investments. The following amounts of the reported aggregate balance were compensation for 2021 or 2022 and are included in the “Salary” or “Non-Equity Incentive Plan Compensation” columns (in the case of executive contributions) or the “All Other Compensation” column (in the case of company matching credits) of the Summary Compensation Table on page 86 for those years for the named executive:
2023 Nonqualified Deferred Compensation Table
| Name | Executive Contributions in 2021 ($) | Registrant Contributions in 2021 ($) | Executive Contributions in 2022 ($) | Registrant Contributions in 2022 ($) | | W. Anthony Will | 57,600 | 57,600 | 59,700 | 59,700 | | Christopher D. Bohn | 129,648 | 20,100 | 221,300 | 21,300 | | Douglas C. Barnard | 17,102 | 17,102 | 16,800 | 16,800 | | Bert A. Frost | 102,261 | 20,100 | 170,100 | 20,100 | | Susan L. Menzel | 14,100 | 14,100 | 14,700 | 14,700 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control We have change in control agreements in effect with each of the named executive officers. Under the terms of the change in control agreements, the named executive officer is entitled to receive certain payments and benefits from us upon a qualifying termination, specifically if we terminate his or her employment without cause (other than by reason of his or her death or disability) or if he or she resigns because of good reason, in either case within the period of 24 months following (or in certain cases prior to) a change in control (as such terms are defined in the agreements). Under the change in control agreements, a named executive officer will be deemed to have good reason if we: • fail to pay his or her specified annual salary or reduce such salary, or provide certain benefits; • assign duties inconsistent with such officer’s current position or substantially and adversely alter his or her responsibilities; • fail to continue any compensation plan that constitutes a material portion of his or her compensation; or • change his or her primary employment location by more than 35 miles. Following a qualifying termination, the change in control agreements for each named executive officer provide for (i) a lump sum payment to the named executive officer equal to two times (or, in the case of Mr. Will, three times) the sum of the officer’s base salary and target annual incentive payment; (ii) welfare benefit continuation for a period of two years (or, in the case of Mr. Will, three years) and outplacement services for a period of up to two years; and (iii) a pro-rata annual incentive payment for the year of termination, assuming target levels of performance or, if higher, actual year-to-date performance. The named executive officer will also receive a cash payment equal to the employer matching and annual service contributions that we would have made on his or her behalf for a period of two years (or, in the case of Mr. Will, three years) under our defined contribution 401(k) plan and the related amounts that we would have credited to his or her account balance under our Supplemental Benefit and Deferral Plan. If the named executive officer is not fully vested in his or her benefits under these plans, the officer will also receive a cash payment equal to his or her unvested benefits. The change in control agreements for Messrs. Barnard and Frost, which were entered into in 2007 and 2008, respectively, further provide that, if any of the payments to the named executive officer become subject to the “golden parachute” excise tax imposed by Section 4999 of the Internal Revenue Code, the named executive officer will be entitled to receive an additional gross-up payment such that, after payment by him of all taxes, including any excise tax imposed upon the gross-up payment, he will receive the net after-tax benefit that he would have received had the excise tax not been imposed. The change of control agreements for Messrs. Will and Bohn and Ms. Menzel do not provide for a gross-up payment. The change in control agreements for each of these three named executive officers provide that payments that would be subject to the excise tax will be reduced to the greatest amount that he or she may receive without becoming subject to the excise tax, unless he or she would be better off on an after-tax basis (including following application of the excise tax) receiving the full amount of such payments, in which case no such reduction will be applied. In December 2014, the Board adopted a policy whereby the company will not in the future enter into any new agreements with its named executive officers that include Internal Revenue Code Section 280G excise tax “gross-up” provisions with respect to payments contingent on a change in control of the company. Each of the named executive officers will be required to sign a release of claims at the time of the qualifying termination as a condition to receiving any such payments or benefits from us under his or her change in control agreement. The named executive officer will not be obligated to seek other employment in mitigation of the payments and benefits to be provided, and no such other employment will reduce our obligation to make such payments and to provide such benefits to him or her under the agreements. In addition, under our 2022 Equity and Incentive Plan and our prior plan (the 2014 Equity and Incentive Plan), which governs awards granted prior to May 2022, upon a change in control the restrictions, limitations, and conditions applicable to outstanding RSUs, PRSUs, stock options, and other plan-based awards will lapse, any performance goals will be deemed fully achieved at the greater of target and actual performance to-date, and the awards will become fully vested (and in the case of stock options, exercisable); provided, that under our 2022 Equity and Incentive Plan, our compensation and management development committee may, in its discretion, provide such holders the consideration provided to similarly situated shareholders in such change in control. In addition, under our annual incentive plan, in the event of a change in control, the performance goals applicable in the performance year in which the change in control occurs will be deemed fully achieved at the target or actual performance level, whichever is higher. Assuming a change in control had occurred on December 31, 2023, with a transaction price equal to the closing price for our stock ($79.50 per share) on the NYSE as of December 29, 2023 (the last trading day of 2023), each of the named executive officers would have been entitled to receive the following estimated severance benefits upon a qualifying termination of his or her employment on such date:
Potential Payments Upon Termination or Change in Control
| Name | Severance Amount(1) ($) | Retirement Savings Plan Enhance- ment(2) ($) | Early Vesting of RSUs and PRSUs(3) ($) | Other Change in Control Benefits(4) ($) | Estimated Excise Tax Gross Up(5) ($) | Total ($) | | W. Anthony Will | 12,150,000 | 526,500 | 22,291,641 | 102,304 | N/A | 35,070,445 | | Christopher D. Bohn | 3,080,000 | 168,000 | 5,561,820 | 81,049 | N/A | 8,890,869 | | Douglas C. Barnard(6) | 2,640,000 | 156,000 | 4,255,158 | 65,350 | — | 7,116,508 | | Bert A. Frost | 2,948,000 | 174,200 | 5,477,868 | 79,401 | — | 8,679,469 | | Susan L. Menzel | 2,772,000 | 138,600 | 3,839,055 | 65,614 | N/A | 6,815,269 |
Potential Payments Upon Termination or Change in Control
This amount represents a cash payment to the named executive officer equal to (i) two times (or, in the case of Mr. Will, three times) the sum of his or her base salary and target annual incentive payment plus (ii) an annual incentive payment for the year of termination, assuming target level of performance. This amount represents a cash payment to the named executive officer equal to the employer matching and annual service contributions that we would have made on his or her behalf for a period of two years (or, in the case of Mr. Will, three years), assuming each named executive officer contributed the maximum allowable amount under our 401(k) plan and the related amounts we would have credited to his or her account balance under our Supplemental Benefit and Deferral Plan. The year ended December 31, 2023 is the first year for which the annual service credit was applied to the 401(k) plan and the Supplemental Benefit and Deferral Plan. (3) This amount represents the value attributable to the accelerated vesting of outstanding awards of RSUs and PRSUs held by the named executive officer, which is deemed to equal the market value on December 29, 2023 (the last trading day of 2023) of the RSUs and PRSUs that would otherwise have been unvested as of such date. Payout value of PRSUs granted during 2021, 2022, and 2023 assumes target performance level. Each named executive officer would also receive accelerated vesting of such awards in the event of their death or disability, in the same amounts as set forth above. For a discussion of the vesting and other terms of the RSU and PRSU awards, see “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Review and Approval of 2023 Long-Term Incentives — Vesting and Other Terms of RSUs and PRSUs.” (4) This amount represents the present value of the continuation of certain welfare benefits for the named executive officer for a period of two years (or, in the case of Mr. Will, three years) and the value of outplacement services for the named executive officer for a period of up to two years. (5) The change in control agreements for Messrs. Barnard and Frost, which were entered into in 2007 and 2008, respectively, provide (or provided in the case of Mr. Barnard) that, if any of the payments to the named executive officer become subject to the “golden parachute” excise tax imposed by Section 4999 of the Internal Revenue Code, the named executive officer will be entitled to receive an additional gross-up payment such that, after payment by him of all taxes, including any excise tax imposed upon the gross-up payment, he will receive the net after-tax benefit he would have received had the excise tax not been imposed. As reflected in the table, the named executive officers would not have received any gross-up payment in connection with a change of control assuming a transaction price equal to the closing price for our stock as of December 29, 2023 (the last trading day of 2023). The change of control agreements for Messrs. Will and Bohn and Ms. Menzel do not provide for a gross-up payment. Mr. Barnard met the conditions for “special retirement” contained in certain of his equity award agreements as of December 31, 2023. As a result, a pro-rated number of RSUs and PRSUs would vest assuming a termination due to retirement had occurred on December 31, 2023. If Mr. Barnard had retired on such date, he would have been entitled to receive an estimated $3,047,871, representing the value attributable to the pro-rata vesting of outstanding awards of RSUs and PRSUs held by Mr. Barnard, which is valued per share based on the market value on December 29, 2023 (the last trading day of 2023). The payout value of PRSUs granted during 2021, 2022, and 2023 assumes target performance level. For a discussion of the retirement vesting terms of the RSU and PRSU awards, see “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Change in Control, Severance, and Retirement Benefits.” Mr. Barnard retired from the company on January 12, 2024. For further discussion of the amounts paid to Mr. Barnard pursuant to his termination due to special retirement, see “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Change in Control, Severance, and Retirement Benefits — Mr. Barnard’s Retirement.”
CEO Pay Ratio
CEO Pay Ratio In 2015, pursuant to a mandate of the Dodd-Frank Act, the SEC adopted a rule requiring annual disclosure of the ratio of our median employee’s annual total compensation to the annual total compensation of our principal executive officer. The company’s principal executive officer is Mr. Will. Mr. Will had 2023 annual total compensation of $12,899,559, as reflected in the Summary Compensation Table included under the heading “Executive Compensation.” We calculated the 2023 annual total compensation for our median employee using the same methodology we use for our named executive officers as required to be set forth in the Summary Compensation Table included in this Proxy Statement. Our median employee’s 2023 annual total compensation was $140,469. As a result, we estimate that Mr. Will’s 2023 annual total compensation was approximately 92 times that of our median employee. Due to the variability of Mr. Will’s performance-based compensation, the CEO pay ratio can differ significantly from year to year. We identified our median employee in 2023 by examining the 2023 total cash compensation (base salary and cash bonus) for all individuals, excluding our chief executive officer, who were employed by us on November 1, 2023. We included all employees, whether employed on a full-time, temporary or part-time basis. We did not make any assumptions, adjustments (including cost-of-living adjustments) or use any estimates with respect to determining total cash compensation, except that we annualized the compensation for our full-time and part-time permanent employees who were not employed by us for all of 2023. As permitted under the SEC pay ratio rules, we had used the same median employee for pay ratio purposes in 2020, 2021 and 2022. The SEC requires us to identify our median employee at least once every three years, which was the primary reason we identified a new median employee in 2023.
Pay Versus Performance
Pay Versus Performance
Pay Versus Performance
| | | | Average Summary Compensation Table Total for Non-PEO Named Executive Officers(1) ($) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(1)(2)(4) ($) | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(1)(2)(3) ($) | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return(5) ($) | Net Income(6) ($, in millions) | Adjusted EBITDA(7) ($, in millions) | | 2023 | 12,899,559 | 9,465,171 | 3,335,968 | 2,605,155 | 183.54 | 143.73 | 1,825 | 2,748 | | 2022 | 14,279,027 | 33,759,455 | 3,547,447 | 7,453,688 | 192.66 | 171.23 | 3,937 | 5,884 | | 2021 | 11,685,670 | 31,665,167 | 3,034,079 | 6,990,851 | 157.58 | 160.92 | 1,260 | 2,743 | | 2020 | 9,705,007 | 2,779,177 | 2,393,762 | 1,125,081 | 84.22 | 103.42 | 432 | 1,341 |
Pay Versus Performance
(1) Our principal executive officer (PEO) for each of the fiscal years 2023, 2022, 2021 and 2020 is Mr. Will. Our other named executive officers for each of the fiscal years 2023, 2022, 2021 and 2020 are Mr. Bohn, Mr. Barnard, Mr. Frost and Ms. Menzel. The amounts shown as compensation actually paid have been calculated in accordance with SEC rules and do not reflect compensation actually realized or received by the company’s named executive officers. As described in footnote 3 of the summary compensation table, our assumptions with respect to the FASB ASC Topic 718 valuation of our equity awards granted in 2023 are described in the footnotes to our audited financial statements as of and for the year ended December 31, 2023. In accordance with SEC rules, the aggregate grant date fair value of the PRSUs is calculated based on the probable outcome of the performance conditions as of the grant date, which, for the PRSUs reflected in the summary compensation table for each of the fiscal years 2020, 2021, 2022 and 2023, was target level performance. In accordance with SEC rules, the change in fair value of the PRSUs as of the end of each of the fiscal years 2020, 2021, 2022 and 2023 is based upon the probable outcome of the performance conditions as of the last day of the applicable fiscal year. The amounts included in the columns in footnotes 3 and 4 below identified as “Year-End Fair Value of Equity Awards Granted During Applicable Year,” “Change in Fair Value as of Year-End of Any Prior Year Awards that Remain Unvested as of Year-End,” and “Change in Fair Value as of the Vesting Date of Any Prior Year Awards that Vested During Applicable Year,” are based on the probable outcome, as of the last day of the applicable fiscal year, of the PRSU performance conditions, reflecting the actual outcome of the performance conditions of the applicable PRSU awards to date as of the last day of such fiscal year. For more information regarding how we determine the number of PRSUs earned, see “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Review and Approval of 2023 Long-Term Incentives — How We Determine the Number of PRSUs Earned.” The following table discloses the amounts deducted from and added to the total compensation of our principal executive officer in determining our principal executive officer’s compensation actually paid (determined as described in footnote 2 above) for each fiscal year shown in the pay for performance table:
Pay Versus Performance
| Year | Summary Compen- sation Table Total ($) | Minus: Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($) | Plus: Pension Service Costs Attributable to the Applicable Year ($) | Minus: Grant Date Fair Value of Equity Awards Granted During Applicable Year ($) | Plus: Year-End Fair Value of Equity Awards Granted During Applicable Year ($) | Plus: Change in Fair Value as of Year- End of Any Prior Year Awards that Remain Unvested as of Year- End ($) | Plus: Change in Fair Value as of the Vesting Date of Any Prior Year Awards that Vested During Applicable Year ($) | Compen- sation Actually Paid ($) | | 2023 | 12,899,559 | 39,712 | — | 8,754,185 | 10,529,242 | (5,235,905) | 66,172 | 9,465,171 | | 2022 | 14,279,027 | 40,080 | 81,498 | 9,198,580 | 18,434,354 | 5,027,737 | 5,175,500 | 33,759,455 | | 2021 | 11,685,670 | 72,771 | 73,194 | 6,767,986 | 18,506,213 | 7,552,436 | 688,411 | 31,665,167 | | 2020 | 9,705,007 | 124,968 | 70,767 | 6,260,802 | 5,198,095 | (3,581,626) | (2,227,296) | 2,779,177 |
Pay Versus Performance
(4) The following table discloses the amounts deducted from and added to the average total compensation of our named executive officers, other than our principal executive officer, in determining those named executive officers’ average compensation actually paid (determined as described in footnote 2 above) for each fiscal year shown in the pay for performance table:
Pay Versus Performance
| Year | Summary Compen- sation Table Total ($) | Minus: Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($) | Plus: Pension Service Costs Attributable to the Applicable Year ($) | Minus: Grant Date Fair Value of Equity Awards Granted During Applicable Year ($) | Plus: Year-End Fair Value of Equity Awards Granted During Applicable Year ($) | Plus: Change in Fair Value as of Year- End of Any Prior Year Awards that Remain Unvested as of Year-End ($) | Plus: Change in Fair Value as of the Vesting Date of Any Prior Year Awards that Vested During Applicable Year ($) | Compen- sation Actually Paid ($) | | 2023 | 3,335,968 | 15,847 | — | 1,926,657 | 2,313,447 | (1,112,534) | 10,779 | 2,605,155 | | 2022 | 3,547,447 | 22,240 | 31,035 | 1,867,438 | 3,769,427 | 1,019,332 | 976,124 | 7,453,688 | | 2021 | 3,034,079 | 34,549 | 32,057 | 1,403,170 | 3,805,073 | 1,430,716 | 126,645 | 6,990,851 | | 2020 | 2,393,762 | 51,596 | 31,215 | 1,185,711 | 982,623 | (662,964) | (382,248) | 1,125,081 |
Pay Versus Performance
(5) Each of the peer group companies is a publicly traded manufacturer of agricultural chemical fertilizers. The companies comprising the peer group are CVR Partners LP, Incitec Pivot Limited, LSB Industries, Inc., Nutrien Ltd., OCI N.V., The Mosaic Company and Yara International ASA. For Yara International ASA, Incitec Pivot Limited and OCI N.V., we used their respective home exchange stock prices, converted into U.S. dollars, to calculate their total shareholder return. We have a strategic venture with CHS Inc. (CHS) under which CHS owns an equity interest in CF Industries Nitrogen, LLC (CFN), an indirect subsidiary of CF Industries Holdings, Inc., which represents approximately 11% of the membership interests of CFN. Net income represents our net earnings, which includes net earnings attributable to CHS’s noncontrolling interest in the company. Our net earnings attributable to common stockholders for the years ended December 31, 2023, 2022, 2021 and 2020 was $1,512 million, $3,346 million, $917 million and $317 million, respectively. For more information regarding our strategic venture with CHS, see Note 1 — Noncontrolling Interest in Notes to Consolidated Financial Statements in Item 8 of our 2023 Annual Report. See “Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Key Elements of NEO Compensation Program — Our Metrics Defined” on page 59 for the definition of Adjusted EBITDA and a description of how Adjusted EBITDA is calculated from net earnings attributable to common stockholders in our audited financial statements.