Faiza J. Saeed, Esq. Thomas E. Dunn, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Telephone: (212) 474-1000 |
David C. Karp, Esq. Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 |
o | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Number of Shares | Value of Shares | |||||||||||||||||||
Underlying | Underlying | Number of | Value of | Aggregate | ||||||||||||||||
Performance | Performance | Restricted | Restricted | Equity Award | ||||||||||||||||
Executive Officers | Share Awards | Share Awards | Shares | Shares | Consideration | |||||||||||||||
Michael L. Bennett |
298,100 | $ | 14,129,940 | 58,000 | $ | 2,749,200 | $ | 16,879,140 | ||||||||||||
Daniel D. Greenwell |
54,549 | $ | 2,585,623 | 21,200 | $ | 1,004,880 | $ | 3,590,503 | ||||||||||||
John W. Huey |
43,793 | $ | 2,075,788 | 17,800 | $ | 843,720 | $ | 2,919,508 | ||||||||||||
Joseph D. Giesler |
36,503 | $ | 1,730,242 | 15,100 | $ | 715,740 | $ | 2,445,982 | ||||||||||||
Richard S. Sanders Jr. |
36,946 | $ | 1,751,240 | 14,900 | $ | 706,260 | $ | 2,457,500 | ||||||||||||
Joe A. Ewing |
36,461 | $ | 1,728,251 | 14,500 | $ | 687,300 | $ | 2,415,551 | ||||||||||||
Douglas M. Stone |
43,351 | $ | 2,054,837 | 16,400 | $ | 777,360 | $ | 2,832,197 | ||||||||||||
Earl B. Smith |
32,553 | $ | 1,543,012 | 8,400 | $ | 398,160 | $ | 1,941,172 | ||||||||||||
Geoffrey J. Obeney |
30,941 | $ | 1,466,603 | 7,900 | $ | 374,460 | $ | 1,841,063 | ||||||||||||
Edward J. Dillon |
23,669 | $ | 1,121,911 | 10,000 | $ | 474,000 | $ | 1,595,911 |
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Continuation of | Additional Age | |||||||||||||||||||||||
Medical and | and Service | |||||||||||||||||||||||
Cash | Dental | Credit under | Outplacement | 280G Tax | ||||||||||||||||||||
Executive Officer | Severance | Benefits(1) | SERP(2) | Services(3) | Gross-up(4) | Total | ||||||||||||||||||
Michael L. Bennett |
$ | 3,500,000 | $ | 23,753 | $ | 498,435 | $ | 84,000 | $ | $ | 4,106,188 | |||||||||||||
Daniel D. Greenwell |
$ | 1,330,000 | $ | 29,674 | $ | $ | 45,600 | $ | 1,405,778 | $ | 2,811,052 | |||||||||||||
John W. Huey |
$ | 911,550 | $ | 18,346 | $ | $ | 36,462 | $ | 1,155,908 | $ | 2,122,266 | |||||||||||||
Joseph D. Giesler |
$ | 790,400 | $ | 18,346 | $ | 101,580 | $ | 29,640 | $ | $ | 939,966 | |||||||||||||
Richard S. Sanders Jr. |
$ | 806,400 | $ | 23,753 | $ | 84,357 | $ | 30,240 | $ | $ | 944,750 | |||||||||||||
Joe A. Ewing |
$ | 816,000 | $ | 29,674 | $ | $ | 30,600 | $ | $ | 876,274 | ||||||||||||||
Douglas M. Stone |
$ | 1,050,000 | $ | 29,674 | $ | $ | 36,000 | $ | 1,230,464 | $ | 2,346,138 | |||||||||||||
Earl B. Smith |
$ | 686,400 | $ | 23,752 | $ | $ | 27,456 | $ | 878,811 | $ | 1,616,419 | |||||||||||||
Geoffrey J. Obeney |
$ | 652,050 | $ | 23,753 | $ | $ | 26,082 | $ | 893,662 | $ | 1,595,547 | |||||||||||||
Edward J. Dillon |
$ | 649,200 | $ | 29,674 | $ | $ | 25,968 | $ | 892,015 | $ | 1,596,857 |
(1) | Terra determined the value of medical and dental benefits based on assumptions used for financial reporting purposes under ASC 715, Compensation Retirement Benefits. | |
(2) | Terra determined these amounts by adding two years of credited service to the April 2, 2010 total pension benefit (i.e., sum of tax qualified pension and SERP) for the executive officer and then determined the present value of that accrued benefit deferred to the date the executive officer reaches the age of 63, which is the earliest age at which unreduced pension benefits would be available to the executive officer with an extra two years of age. | |
(3) | Terra determined the value of post-termination outplacement services based on a value equal to approximately 12% of the executive officers annual base salary as of March 17, 2010. | |
(4) | Terra determined the amount of the excise tax payment by multiplying by 20% the excess parachute payments that would arise as a result of Section 280G of the Code in connection with the consummation of the Offer. Terra utilized the following key assumptions to determine the executive officers tax gross-up payments: |
| based on Terras performance as of March 17, 2010, Performance Share Awards granted for the 2008-2010 performance cycle and the 2009-2011 performance cycle are currently expected to vest at 200% of target. Therefore, the amount of excise tax with respect to such Performance Share Awards was calculated assuming that all performance goals with respect to such Performance Share Awards had already been met at the 200% level. The result is that the amount of the excise tax attributable to both such Performance Share Awards and the restricted shares is based solely on the value of accelerated vesting and the lapse of the obligation to perform future services. While we anticipate that Terras performance for the first quarter of the current year will cause Performance Share Awards for the 2010-2012 performance cycle to vest at 200% of target, such performance is not yet certain. As such, the amount of the excise tax with respect to the Performance Share Awards granted for such cycle was calculated based on the full value for such awards; | ||
| a statutory federal income tax rate of 35% and a Medicare tax rate of 1.45%; | ||
| each executive officers Section 280G base amount was determined based on average W-2 compensation for the period from 2005 through 2009 (or the period of the executive officers employment with Terra, if shorter); and | ||
| the interest rate assumption was 120% of the applicable federal rate as of March 2010. |
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Executive Officer | Prorated Bonus | |||
Michael L. Bennett |
$ | 529,315 | ||
Daniel D. Greenwell |
$ | 143,671 | ||
John W. Huey |
$ | 76,587 | ||
Joseph D. Giesler |
$ | 74,709 | ||
Richard S. Sanders Jr. |
$ | 76,221 | ||
Joe A. Ewing |
$ | 77,129 | ||
Douglas M. Stone |
$ | 113,425 | ||
Earl B. Smith |
$ | 57,670 | ||
Geoffrey J. Obeney |
$ | 54,784 | ||
Edward J. Dillon |
$ | 54,545 |
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TERRA INDUSTRIES INC. |
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By: | /s/ John W. Huey | |||
Name: | John W. Huey | |||
Title: | Vice President, General Counsel and Corporate Secretary | |||
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