DEF 14A 1 a2243056zdef14a.htm DEF 14A

Use these links to rapidly review the document
Table of Contents
TABLE OF CONTENTS

Table of Contents

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant ý
Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

    CF INDUSTRIES HOLDINGS, INC.

(Name of Registrant as Specified In Its Charter)
   

 

 



(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

 

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

1)

 

Title of each class of securities to which transaction applies:
        
 
    2)   Aggregate number of securities to which transaction applies:
        
 
    3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    4)   Proposed maximum aggregate value of transaction:
        
 
    5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

1)

 

Amount Previously Paid:
        
 
    2)   Form, Schedule or Registration Statement No.:
        
 
    3)   Filing Party:
        
 
    4)   Date Filed:
        
 

Table of Contents

LOGO

Proxy Statement


2021 Annual Meeting of
Shareholders


 


Table of Contents

        LOGO
        LOGO

March 23, 2021

To Our Shareholders:

On behalf of your board of directors, it is our privilege to invite you to attend the 2021 Annual Meeting of shareholders of CF Industries Holdings, Inc. The annual meeting will be held on Tuesday, May 4, 2021, in a virtual meeting format only, via the Internet. At the annual meeting, shareholders will vote on the matters set forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement and any other business matters properly brought before the annual meeting. Whether or not you are able to attend the annual meeting, we encourage you to read the enclosed materials and submit your proxy.

During the meeting, we will also review our corporate performance in 2020 and discuss our strategy and vision for the future. By any measure, the COVID-19 pandemic was an unprecedented test for our economy and society. The Board and Senior Management worked hand-in-hand during the year to manage these challenges, deliver strong results, meet our commitments to a broad range of stakeholders and position the Company for long-term growth and a sustainable future.

Strong Performance in an Uncertain Environment

Throughout the COVID-19 pandemic, a top priority for the Company has been to protect the health and well-being of our employees, others who come onto our sites to perform essential services and the people living in our local communities. For CF Industries' employees and contractor partners, this has meant adapting how we work. We instituted strict precautionary measures to prevent the spread of COVID-19 amongst people whose jobs required them to be onsite. All other employees were shifted to a work-from-home environment by utilizing digital infrastructure systems and controls already in place as part of the Company's disaster recovery protocols. To date, the Company has not had a single known instance of virus transmission within any of our facilities; nor have we experienced any pandemic-related disruption to our business.

We have also served our communities in a time of need. We provided donations of personal protective equipment to local healthcare workers and gave nearly $600,000 in contributions to area food banks. We are proud that these efforts have had a very positive impact in the communities where we live and work.

Our 2020 results highlight outstanding execution by our team, as we achieved records for safety, production and sales volumes. Most notably, we experienced only four recordable injuries and zero lost time injuries across the network for the entire year. This yielded a recordable incident rate of 0.14 incidents per 200,000 work hours, the lowest level ever recorded by the Company.

This outstanding operational performance drove strong financial results despite a challenging product pricing environment. Full year net earnings were $317 million and EBITDA(1) was $1.32 billion. We continued to generate strong free cash flow, with net cash from operating activities of $1.2 billion and free cash flow(2) of approximately $750 million.

   


(1)
EBITDA is defined as net earnings attributable to common stockholders plus interest expense – net, income taxes and depreciation and amortization. See Appendix A for a reconciliation of EBITDA to the most directly comparable GAAP measure.

(2)
Free cash flow is defined as net cash from operating activities less capital expenditures and distributions to noncontrolling interest. See Appendix A for a reconciliation of free cash flow to the most directly comparable GAAP measure.

Table of Contents

Clean Energy Economy Opportunity

As management and the Board evaluated opportunities to reduce the Company's carbon footprint, we identified a tremendous opportunity to help decarbonize the broader economy as well. As such, we have made a commitment to help accelerate the world's transition to clean energy. Our focus on clean energy is a natural evolution of our existing strategy and is entirely consistent with our current business model. As we aggressively decarbonize our production and distribution network, we will both provide clean energy in the form of nitrogen fertilizer to continue feeding the crops that feed the world; and, provide a clean energy source to support and accelerate adoption of a broader hydrogen economy by enabling others to move away from carbon-intensive energy sources. We have updated our Vision, Mission and Strategy statements to encompass this additional element of our focus and our business. We fully expect our commitment to clean energy to provide the Company with a long-term, sustainable growth platform.

We encourage you to read more about our commitment to the clean energy economy in our Annual Report and on our website at www.cfindustries.com.

Our Commitment to Environmental, Societal and Governance Priorities

Our business strategy is aligned with our commitment to have a positive impact across the many issues important to our broad group of stakeholders.

The Company made substantial progress in 2020 towards defining our approach to ESG-related matters. Most notably, the Company announced comprehensive ESG goals covering a broad range of critical environmental, societal and workforce imperatives. For example, these new goals include both a commitment to reduce our CO2 equivalent emission intensity by 25% by 2030; and, a commitment to achieve net-zero carbon emissions by the year 2050.

The principles underlying the Company's Core Values have been updated to more explicitly state our longstanding commitment to inclusion and diversity. The importance of this effort became even clearer as events in 2020 again exposed how far we have to go as a society to realize a future of equality and understanding. You can view our updated Core Values at www.cfindustries.com.

Our commitment to inclusion and diversity is analogous to our commitment to a safe workplace. That is, we make it a priority simply because it is the right thing to do and it makes CF Industries a better company. Just as we want everyone to go home in the same condition at the end of the day as when they arrived, we want everyone at the Company to feel welcomed and valued as a part of our team. As we do this, we will ensure that we always remain proud to be a part of CF Industries.

We are committed to taking a more active role supporting the communities in which we operate. To this end, we have aligned our philanthropic activities via both a paid-volunteer time off program and charitable contributions around four key pillars: local community advancement (including supporting first responders); STEM education and awareness; environmental sustainability; and access to healthy food.

Given the critical importance of these efforts for the Company, its shareholders and its other stakeholders, the Board have taken steps to align executive compensation directly to the Company's ESG objectives. The Directors have also established the new Board-level Environmental Sustainability and Community Committee announced last October. It is charged with oversight of the Company's progress toward net-zero carbon emissions; execution of the new Clean Energy strategy; and, the Company's active involvement with the communities in which it operates.

Our Board of Directors helps set the standard for our Company with our belief that its members should reflect a diversity of backgrounds, including experience and skills as well as personal characteristics such as race, gender and age. Over the past seven years, our Board has added six new independent directors. In addition to impeccable business credentials, these new directors include two women, an African American, and a director of Asian origin residing in the United Kingdom and carrying dual citizenship in the U.S. and U.K. At our 2021 annual meeting, our recommended nominees for director include another woman as well. As a result, following our 2021 annual meeting, we expect our eleven-member board of directors will include three women and two members who are racially or ethnically diverse.


Table of Contents

Our complete list of ESG goals can be found at www.cfindustries.com and in our 2020 Sustainability Report.

A Strong Future Ahead

As we entered 2021, global nitrogen market dynamics were the most favorable in almost a decade. Rising grain values and higher global energy prices drove strong demand and significant price appreciation for nitrogen products in the early part of the year. The combination of our continued focus on safety and execution, and our position at the low end of the global nitrogen cost curve sets us up well for the year ahead.

Longer-term, our commitment to decarbonize the world's largest ammonia production network positions CF Industries at the forefront of emerging markets for clean hydrogen and ammonia supply. Our unparalleled manufacturing and distribution network has been and is positioned to remain a significant competitive advantage.

Finally, we recognize William Davisson, who is retiring from the board of directors this year. For the last 22 years, Bill has provided outstanding leadership, insight and direction to CF Industries. He played a critical role in our Company's transition from a cooperative to a publicly traded company, having served as Chairman of the Board from 2002-2004 as the plans for an initial public offering began to take shape. We are grateful for Bill's commitment and dedication to CF Industries and our shareholders and we wish him all the best in his retirement.

Thank you for your continued trust in CF Industries. We look forward to discussing our performance and the opportunities ahead when we gather virtually for our annual meeting on May 4, 2021.

Sincerely,

GRAPHIC   GRAPHIC

                                                                                                  Stephen A. Furbacher

 

W. Anthony Will
Chairman of the Board   President and Chief Executive Officer

Table of Contents

        LOGO
        LOGO

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Date and Time:   Tuesday, May 4, 2021, at 10:00 a.m., Central time

Virtual Meeting:

 

To support the health and well-being of our shareholders and other meeting participants, the 2021 Annual Meeting of Shareholders will be conducted virtually at www.vitualshareholdermeeting.com/CF2021

Items of Business:

 

At the Annual Meeting, shareholders will be asked to:
    1.   Elect the eleven directors named in the accompanying Proxy Statement;
    2.   Consider and approve an advisory resolution regarding the compensation of our named executive officers;
    3.   Approve an amendment to our bylaws to provide for courts located in Delaware to be the exclusive forum for certain legal actions and for federal district courts of the United States of America to be the exclusive forum for certain other legal actions;
    4.   Ratify the selection of KPMG LLP as our independent registered public accounting firm for 2021;
    5.   Act upon one shareholder proposal regarding the right to act by written consent, if properly presented at the Annual Meeting; and
    6.   Consider any other business properly brought before the Annual Meeting.

Record Date:

 

You may vote at the Annual Meeting if you were a shareholder of record of our company as of the close of business on March 11, 2021.

Meeting Details:

 

Procedures for attending and participating in the virtual meeting and other information regarding the meeting can be found on page 107.

 

 

During the Annual Meeting, the list of our shareholders of record will be available for viewing by shareholders at www.virtualshareholdermeeting.com/CF2021. To view the list of shareholders, you will be required to enter the 16-digit control number on your Notice of Internet Availability of Proxy Materials or your proxy card.

Internet Availability of Proxy Materials

 

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of Shareholders to be held on Tuesday, May 4, 2021: Our Proxy Statement and 2020 Annual Report are available free of charge at www.proxyvote.com.

Your vote is important. Please vote your shares promptly so that your shares will be represented whether or not you attend the Annual Meeting. To vote your shares, you may use the Internet as described on your Notice of Internet Availability of Proxy Materials and proxy card, call the toll-free telephone number listed on your proxy card or complete, sign, date, and return your proxy card. Submitting your proxy now will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option.

By order of the board of directors,

GRAPHIC

Douglas C. Barnard
Senior Vice President, General Counsel, and Secretary
March 23, 2021


Table of Contents

Table of Contents

PROXY STATEMENT SUMMARY

  1

PROPOSAL 1: ELECTION OF DIRECTORS

 

12

Director Nominees

  12

Director Succession Planning and Nomination Process

  12

Criteria for Board Membership

  15

Board Recommendation

  17

Director Nominee Biographies

  18

CORPORATE GOVERNANCE

 

24

Corporate Governance Guidelines

  24

Director Independence

  24

Leadership of the Board

  24

Committees of the Board

  26

Attendance of Directors at Meetings

  27

Board Oversight of Strategy and Risk Management

  27

Our Approach to Human Capital Management

  29

Sustainability at CF Industries

  32

Corporate Responsibility

  33

Shareholder Engagement

  34

Communications with Directors

  35

Director Compensation

  35

COMMON STOCK OWNERSHIP

 

37

Common Stock Ownership of Certain Beneficial Owners

  37

Common Stock Ownership of Directors and Management

  39

POLICY REGARDING RELATED PERSON TRANSACTIONS

 

40

PROPOSAL 2: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS ("SAY ON PAY")

 

43

EXECUTIVE OFFICERS

 

44

COMPENSATION DISCUSSION AND ANALYSIS

 

46

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT

 

80

EXECUTIVE COMPENSATION

 

81

PROPOSAL 3: APPROVAL OF AN AMENDMENT TO THE COMPANY'S BYLAWS TO PROVIDE FOR COURTS LOCATED IN DELAWARE TO BE THE EXCLUSIVE FORUM FOR CERTAIN LEGAL ACTIONS AND FOR FEDERAL DISTRICT COURTS OF THE UNITED STATES OF AMERICA TO BE THE EXCLUSIVE FORUM FOR CERTAIN OTHER LEGAL ACTIONS

  96

Board Recommendation

  98

PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021

 

99

Board Recommendation

  99

Audit and Non-Audit Fees

  99

Pre-Approval of Audit and Non-Audit Services

  100

Auditor Independence

  100

AUDIT COMMITTEE REPORT

 

102

PROPOSAL 5: SHAREHOLDER PROPOSAL REGARDING THE RIGHT TO ACT BY WRITTEN CONSENT

 

103

The Board's Statement in Opposition

  104

ANNUAL MEETING INFORMATION

 

107

Questions and Answers about the Annual Meeting and Voting

  107

Important Additional Information

  111

Deadlines for Submission of Future Shareholder Proposals, Shareholder Nominated Director Candidates and Other Business of Shareholders

  112

OTHER MATTERS

 

113

APPENDIX A: NON-GAAP RECONCILIATION

  A-1

APPENDIX B: ARTICLE X, EXCLUSIVE FORUM BYLAW

 

B-1


Table of Contents

PROXY STATEMENT SUMMARY

This summary provides certain key information about CF Industries' business and strategy and highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. This Proxy Statement and a form of proxy were first sent or made available to shareholders on or about March 23, 2021.

2021 ANNUAL MEETING OF SHAREHOLDERS INFORMATION

Date and Time:   Tuesday, May 4, 2021, at 10:00 a.m. Central time
Location:   www.virtualshareholdermeeting.com/CF2021
Record Date:   March 11, 2021

VOTING MATTERS

Shareholders will be asked to vote on the following matters at the Annual Meeting:

Proposals
  Board
Recommendation
 
  Page
Reference
 
1.   Election of Directors
The Board believes the director nominees provide us with the combined depth and breadth of skills, experience and qualities required to contribute to an effective and well-functioning Board.
  Vote FOR each director nominee   12
2.   Advisory Vote on Compensation of Named Executive Officers ("Say on Pay")
CF Industries seeks a non-binding advisory vote from its shareholders to approve the compensation of the named executive officers as disclosed in this Proxy Statement. The Board values the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
  Vote FOR   43
3.   Approval of an Amendment to the Company's Bylaws to Provide for Courts Located in Delaware to be the Exclusive Forum for Certain Legal Actions and for Federal District Courts of the United States of America to be the Exclusive Forum for Certain Other Legal Actions
The Board believes that the company and its shareholders will benefit from having internal corporate claims litigated in Delaware and claims arising under the Securities Act of 1933 litigated in United States federal district courts.
  Vote FOR   96
4.   Ratification of Selection of Independent Registered Public Accounting Firm for 2021
The audit committee has selected KPMG LLP to serve as CF Industries' independent registered public accounting firm for 2021 and this appointment is being submitted to our shareholders for ratification. The audit committee and the Board believe that the continued retention of KPMG to serve as CF Industries' independent registered public accounting firm is in the best interests of the company and its shareholders.
  Vote FOR   99
5.   Shareholder Proposal Regarding the Right to Act by Written Consent, if Properly Presented at the Annual Meeting
The Board believes that the action requested by the proponent is unnecessary and not in the best interest of the company and its shareholders.
  Vote AGAINST   103

1


Table of Contents

OUR BUSINESS AND STRATEGY

At CF Industries, our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network — the world's largest — to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our nine manufacturing complexes in the United States, Canada, and the United Kingdom, an unparalleled storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world's transition to clean energy. Our best-in-class operational capability and disciplined capital and corporate stewardship — supported by a culture rooted in our core values that we live each and every day — drive business results that create long-term value for all our stakeholders. Our strategy is reviewed and endorsed annually by our Board and the Board plays an active role in overseeing the successful execution of our strategy.

For more information on our business, see "Item 1. — Business" and "Item 7. — Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2020 Annual Report.

GRAPHIC

Our Commitment to a Clean Energy Economy

In October 2020, we announced that we are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia. Since ammonia is one of the most efficient ways to transport and store hydrogen and is also a fuel in its own right, we believe that CF Industries, as the world's largest producer of ammonia with an unparalleled manufacturing and distribution network and deep technical expertise, is uniquely positioned to fulfill anticipated demand for hydrogen and ammonia from green and blue sources. Our approach will focus on green ammonia production, which refers to ammonia produced through a carbon-free process, and blue ammonia, which relates to ammonia produced by conventional processes but with CO2 removed through carbon capture and sequestration (CCS) and other certified carbon abatement projects. We have announced an initial green ammonia project at our flagship Donaldsonville Nitrogen Complex to produce approximately 20,000 tons per year of green ammonia. Additionally, we are developing CCS and other carbon abatement projects across our production facilities that will enable us to produce blue ammonia.

2


Table of Contents

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 longer time horizon than just one year. 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, 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, 2020.


Total Shareholder Return (TSR)

GRAPHIC

Each of the peer group companies is or was a publicly traded manufacturer of agricultural chemical fertilizers. The companies comprising the peer group are:

Agrium,  Inc.*

 

The Mosaic Company

 

LSB Industries,  Inc.

Incitec Pivot Limited

 

OCI N.V.**

 

Potash Corporation of Saskatchewan Inc.*

Nutrien Ltd.*

 

CVR Partners LP**

 

Yara International ASA

*
Agrium, Inc. (Agrium) and Potash Corporation of Saskatchewan Inc. (Potash Corp) are included in the peer group from December 31, 2010 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. was included in the peer group for the period from January 2, 2018 through December 31, 2020.

**
CVR Partners LP and OCI N.V. were excluded from the calculation of the 10-year total shareholder return because they each had less than 10 years of trading history.

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, 2020, 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 date used to establish the beginning stock price. 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.

3


Table of Contents

2020 PERFORMANCE HIGHLIGHTS

Operating Results

    Net Earnings
Attributable to
Common Stockholders
      Earnings Per
Diluted Share
      EBITDA(1)       Net Cash Provided by
Operating Activities
   
    $317 Million      
$1.47
     
$1.32 Billion
     
$1.23 Billion
   

Annual Incentive Plan Performance Metrics

    Adjusted EBITDA(2)       Behavioral Safety
Gate Threshold
      Gross Ammonia
Production
   
   
$1.34 Billion
     
Achieved 99%
     
10.4 Million Tons
   
    Target: $1.6 Billion       Threshold: ³ 95%(3)       Target: 10.0 Million Tons    

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. Going into 2020, industry fundamentals were expected to continue to be supportive, with global nitrogen prices somewhat lower than those realized during 2019 mostly offset by slightly lower natural gas feedstock prices, based on expectations reflected in forward market curves. In addition, the company expected to return to operating rates consistent with our historical performance for scheduled downtime for turnaround and maintenance activity rather than the exceptional capacity utilization rates seen in 2019. Actual financial results in 2020 did not meet the company's plan, as product prices declined more than anticipated and were not offset by lower than expected natural gas and SG&A costs — contributing to lower revenue and margins. During 2020, the decline in margins was partially offset by an increase in sales volume, as we exceeded our production goals in part due to our best-in-class operational capabilities that enable us to produce more product than other comparable manufacturers.

4


Table of Contents

Additionally, the company continued to deliver on its strategic priorities and create long-term shareholder value.

    Safety       As of December 31, 2020, the company's 12-month rolling average recordable incident rate was 0.14 incidents per 200,000 work hours — an industry leading result    
    Operational Excellence       Long-term asset utilization-and-production is approximately 13 percent higher than the average utilization rate of our North American competitors    
    Efficiency       SG&A costs as a percent of sales remain among the lowest in both the chemicals and fertilizer industries    
    Return to Shareholders       Returned $358 million to shareholders through $100 million in share repurchases and $258 million in dividend payments    
    Clean Energy Commitment       In October 2020, we announced that we are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia    
    Comprehensive ESG Goals       In line with our commitment to the clean energy economy, we have published comprehensive environmental, social and governance goals covering critical environmental, societal, and workforce imperatives    

    (1)         EBITDA is defined as net earnings attributable to common stockholders plus interest expense-net, income taxes and depreciation and amortization. See Appendix A for a reconciliation of EBITDA to the most directly comparable GAAP measure.

    (2)         See "Compensation Discussion and Analysis — 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.

    (3)         The Secondary Metric, Tons of Ammonia Produced, has a behavioral safety gate threshold. If at least 95% of the aggregated safety grades of all employees at manufacturing sites were a "B" 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 Secondary Metric.

5


Table of Contents

OUR DIRECTOR NOMINEES

Our corporate governance and nominating committee regularly reviews the overall composition of our 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.

 
   
   
   
  Other
Public
Boards

  Committee Memberships(1)
Nominee
   
  Director
Since

   
Primary Occupation
  Age
  Independent
  AC
  CC
  GC
  EC
Javed Ahmed
Former CEO of Tate & Lyle PLC
  61   2018   Yes   0       ·   ·    
Robert C. Arzbaecher
Former Chairman and CEO of Actuant Corp.
  61   2005   Yes   0   ·           C
Deborah L. DeHaas
Former Vice Chairman and Managing Partner Center for Board Effectiveness, Deloitte
  61   N/A   Yes   1                
John W. Eaves
Executive Chairman of Arch Resources, Inc.
  63   2017   Yes   1   ·           ·
Stephen A. Furbacher
Former President and COO of Dynegy Inc.
  73   2007   Yes   0   ·       ·    
Stephen J. Hagge
Former President and CEO of AptarGroup, Inc.
  69   2010   Yes   1   ·   C        
Anne P. Noonan
President and CEO of Summit Materials, Inc.
  57   2015   Yes   1       ·   C    
Michael J. Toelle
Owner, T&T Farms
  58   2017   Yes   0       ·       ·
Theresa E. Wagler
CFO of Steel Dynamics, Inc.
  50   2014   Yes   0   C           ·
Celso L. White
Former Global Chief Supply Chain Officer of Molson Coors Brewing Company
  59   2018   Yes   0       ·   ·    
W. Anthony Will
President and CEO of CF Industries
  55   2014   CEO   0                
(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

Director Nominee Skills and Experience Highlights

GRAPHIC

6


Table of Contents

CORPORATE GOVERNANCE HIGHLIGHTS

We are committed to implementing sound corporate governance practices that enhance the effectiveness of the Board and our management and that serve the interests of our shareholders. Highlights of our governance practices include:

        Governance Practice

  For More Information
           
   
Board Structure
and Governance


 

All of director nominees are independent, except for our CEO. All of our standing Board committees are 100 percent independent.

We have an independent Chairman of the Board and separate Chief Executive Officer.

Our directors are elected annually based on a majority voting standard for uncontested elections. We have a resignation policy if a director fails to receive a majority of votes cast.

Each of our directors attended 100% of the combined total meetings of the full Board and the committees on which he or she served during 2020.

Our non-management directors meet in executive session, without management present, during each regularly scheduled Board meeting.

Annual Board and committee self-assessments and peer evaluations monitor the performance and effectiveness of the Board and its committees and directors.

The Chairman of the Board and chair of the governance committee lead an active process to regularly assess Board composition and attributes and consider succession planning.

We consider diversity of background, including experience and skills as well as personal characteristics such as race, gender and age, in identifying nominees for director and incorporate recruitment protocols in our candidate searches that seek to identify candidates with these diversity characteristics.

The Board plays an active role in reviewing and approving our strategy, and in overseeing the successful execution of our strategy.

Diligent Board oversight of risk management is a cornerstone of the company's risk management program.

The Board has an integral role in oversight of sustainability and engages with senior management on a broad range of environmental, social, and governance topics, including climate change, human capital management and diversity and inclusion, and our related comprehensive ESG goals.

      P. 24-27

P. 24-25

P. 12



P. 27

P. 25

P. 25

P. 12-14

P. 15

P. 27-28

P. 27-29

P. 29-31; 32-33

   
   
   
Stock
Ownership


 

We have strong stock ownership guidelines for our executive officers and directors.

We prohibit hedging and pledging of our common stock by directors and executive officers.

We have a robust clawback policy covering incentive awards.

      P. 77

P. 78

P. 77-78

   
   
   
Corporate
Responsibility


 

Our ethics program includes a strong Code of Corporate Conduct for all of our directors, officers and employees.

We discuss Corporate Responsibility on our website and in our sustainability reports, including our values and "Do It Right" culture, our commitment to our stakeholders and communities, and our strong corporate commitment to respect the dignity and human rights of others.

We provide disclosure of charitable contributions and corporate political contributions and trade associate dues in semi-annual reports.

      P. 33

www.cfindustries.com/ sustainability-at-cf-industries

www.cfindustries.com/reports

   
   
   
Shareholder
Rights


 

Eligible shareholders can utilize the proxy access provisions of our bylaws to include their own nominees for director in our proxy materials along with Board-nominated candidates.

We do not have a shareholder rights plan or poison pill. Our Board has adopted a policy whereby any rights plan adopted without shareholder approval must be submitted to shareholders for ratification, or the plan must expire, within one year of such adoption.

Our shareholders have the right to call a special meeting of shareholders.

All supermajority voting provisions have been eliminated from our certificate of incorporation and our bylaws.

      P. 14-15; Bylaws






Bylaws

Charter and Bylaws

   
   

7


Table of Contents

SHAREHOLDER ENGAGEMENT

We believe that building positive relationships with our shareholders is critical to CF Industries' success. We conduct shareholder outreach campaigns in the spring and in the fall to engage with shareholders to understand their perspectives on a variety of topics, such as our financial performance, environmental, social, and governance initiatives, executive compensation, human capital management, environmental sustainability, community relations, and related matters.

We also communicate with shareholders through a number of routine forums, including

    Quarterly earnings releases;

    Securities and Exchange Commission ("SEC") filings;

    The Annual Report and Proxy Statement;

    The annual shareholders meeting;

    Investor meetings, conferences and web communications; and

    Our sustainability report.

We relay shareholder feedback and trends on corporate governance and sustainability developments to our Board and its committees. Our engagement activities have resulted in valuable feedback that has contributed to our decision-making with respect to these matters. See "Corporate Governance — Shareholder Engagement" for a further discussion of our shareholder engagement activities.

8


Table of Contents

COMPENSATION PROGRAM HIGHLIGHTS

Our executive compensation practices are overseen and administered by the compensation and management development committee, which is comprised exclusively of independent directors. The committee is responsible for designing an executive compensation program — including approving any changes to it — that effectively incentivizes our executives to create long-term value for our shareholders.

        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. 55    
   
   
Key Elements of
Compensation Program


  Salary   Paid in line with individual performance and contribution to company goals and aligned to competitive market data       P. 56; 60    
   
        Annual Cash Incentives*   The amount of the actual incentive earned is determined based on our level of achievement of two performance metrics:

75%: level of achievement of Adjusted EBITDA** (Primary Metric)

25%: level of achievement of ammonia production goals, subject to first achieving a gating level of behavioral safety practices goals (Secondary Metric)

      P. 56;

60-65

   
   
        Long-Term Equity Incentives   A specified cash value amount is split among two different equity award types:

60%: 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%: RSUs (3-year ratable vesting)

      P. 56;

65-70

   
   
   
Rigorous Benchmarking and
Incentive Target Setting


  Bench-marking   Our total direct compensation is targeted at the 50th percentile of our Industry Reference Group, which is comprised of 17 companies in related industries, and the overall general industry market data.       P. 58-59    
   
        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. 56-59;

60-65;

66-72

   
   
   
Leading Compensation
Governance Practices


  Our leading compensation governance practices include:

Strong pay-for-performance alignment

Robust clawback policy covering incentive awards

Stock ownership guidelines

Performance metrics that align executive interests with interests of shareholders

A majority of compensation for CEO and other executive officers is performance-based, at risk, and paid in equity

    

No employment agreements

No repriced stock options

Minimal perquisites

Executive officers are prohibited from hedging or pledging our stock

No new excise tax gross-ups after 2011 (CEO, CFO and SVP-HR have no such gross-up)

   
   
*
See "2021 Compensation Actions" below for a discussion of changes to our performance metrics and weightings for 2021.

**
For the definitions of Adjusted EBITDA and RONA, see "Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — Key Elements of NEO Compensation Program — Our Metrics Defined."

9


Table of Contents

2020 Target Total Compensation

The compensation and management development committee believes the majority of compensation should be composed of awards that are performance-based — with direct ties to the company and individual employee performance. The significant majority of the target compensation of each named executive officer ("NEO") is at-risk based on company performance.

The following graphs illustrate the mix of total target direct compensation for our chief executive officer and for our other named executive officers for 2020:

GRAPHIC

AIP: Annual Incentive Plan (annual bonus), cash settled

LTIP: Long-Term Incentive Plan, denominated in equity

Changes to AIP Performance Metrics and Weightings for 2021

The compensation and management development committee approved changes in the performance metrics and metrics for our annual incentive program for 2021. The annual incentive awards to our NEOs for 2021 will be determined based upon our level of achievement of the following performance metrics:

    80% of each executive's annual incentive payment opportunity is based upon our level of achievement of adjusted EBITDA for 2021 (the "Adjusted EBITDA Metric");

    10% of each executive's annual incentive payment opportunity is based upon our level of achievement of the development of a list of capital projects to reduce the company's Scope 1 greenhouse gas (GHG) emissions footprint versus a 2019 baseline (the "Environmental 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, increased in weighting from 75% (in 2018, 2019 and 2020) to 80% in 2021. The new Environmental Metric reflects our continued commitment to improving energy efficiency and reducing GHG emission intensity. The new Process Safety Metric, which maintains a behavioral safety practices goal that was also part of our previous annual incentive performance metrics as a gating standard ("safety gate"), reflects our focus on safely

10


Table of Contents

operating our facilities. The inclusion of the Environmental 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 the company's ESG goals into executive compensation.

For a further discussion, see "Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — 2021 Compensation Actions."

11


Table of Contents

PROPOSAL 1: ELECTION OF DIRECTORS

DIRECTOR NOMINEES

Our Board has nominated the eleven individuals named in this Proxy Statement for election at the 2021 Annual Meeting. Ten of the eleven director nominees are present directors of the company standing for re-election. William Davisson will retire from the Board effective as of the date of the 2021 Annual Meeting and will not stand for re-election. Each director elected at the 2021 Annual Meeting will serve until our next annual meeting 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 eleven director nominees are elected, our Board will consist of eleven directors, each of whom other than our CEO will be "independent" as defined in the NYSE listing standards.

Majority Vote Standard for Election of Directors

Our directors are elected by a majority of the votes cast in uncontested elections, which means the number of shares voted "for" a 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.

Director Resignation Policy

In accordance with procedures set forth in the company's corporate governance guidelines, any incumbent director (including the ten nominees standing for re-election at the Annual Meeting) who fails to receive a majority of votes cast in an uncontested election will be required to tender his or her resignation for consideration by the company's corporate governance and nominating committee. The corporate governance and nominating committee will consider the resignation and, within 45 days following the date of the applicable annual meeting, make a recommendation to the Board concerning the acceptance or rejection of the resignation. The Board will then take formal action on the corporate governance and nominating committee's recommendation no later than 90 days following the date of the annual meeting. Following the Board's decision on the committee's recommendation, we will publicly disclose the Board's decision, together with an explanation of the process by which the decision was made and, if applicable, the Board's reason or reasons for rejecting the tendered resignation.

DIRECTOR SUCCESSION PLANNING AND NOMINATION PROCESS

The Board is responsible for nominating candidates for election to the Board and for filling vacancies on the Board that may occur between annual meetings of shareholders. The corporate governance and nominating committee is responsible for identifying, screening, and recommending candidates to the Board for Board membership.

12


Table of Contents

Regular Assessment of our Board Composition and Succession Planning

The chairman of the board and chair of the corporate governance and nominating committee lead an active process to regularly review the overall composition of the Board and each Board committee and 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. Board composition and succession planning is a standing item on the calendar for corporate governance and nominating committee meetings each year. The review process incorporates the results of the annual Board and committee performance and skills self-assessment processes described under the heading "Corporate Governance — Annual Board and Committee Self-Evaluations and Director Peer Evaluations" in assessing and determining whether any gaps in experience, qualifications, attributes, and skills exist and the characteristics and critical skills required of prospective candidates for election to the Board.

In order to maintain a Board with an appropriate mix of experience and qualifications and to permit time for orientation, the succession planning process generally considers the development of the Board over a time horizon extending for the next five years. In the case of an anticipated change in the composition of the Board, whether as a result of a retirement consistent with our general aged-based retirement policy described below or otherwise, the Board generally prefers to recruit and add new directors such that there is time for the new directors to learn in detail our strategy, business, and governance sufficiently in advance of expected departures. The Board has also concluded that the appropriate number of directors is generally no fewer than eight nor more than twelve. The Board believes this range permits diversity of experience without hindering effective discussion or diminishing individual accountability. Therefore, the Board attempts to coordinate director additions and departures to maintain this size while allowing orientation time for new members as discussed above. Consistent with this process, the Board has added six new independent members over the past seven years and four independent directors have retired over the past four years (including Mr. Davisson, who will retire as of the date of the 2021 annual meeting). In addition, the Board has nominated Ms. DeHaas for election at the 2021 annual meeting. Given our general aged-based retirement policy described below, in addition to Mr. Davisson, at least one more of our current directors is expected to retire within the next two years. The gradual refreshment process over approximately eight years reflects the Board's intention to allow orientation time for new directors while maintaining the benefit of departing director's experience.

Identifying and Evaluating Candidates for Director

The corporate governance and nominating committee generally identifies potential nominees by engaging third party search firms that specialize in identifying director candidates. Current directors and executive officers may also notify the committee if they become aware of potential candidates, and the committee refers such persons to the third party search firm to first evaluate whether the candidate meets the criteria for Board membership discussed below. The committee will also consider candidates recommended by shareholders as described below.

Once a person has been identified by the corporate governance and nominating committee as a potential candidate, the committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the corporate governance and nominating committee determines that the candidate warrants further consideration, the committee chair or another member of the committee will contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the corporate governance and nominating committee will request information from the candidate, review the person's accomplishments and qualifications, including in light of

13


Table of Contents

any other candidates that the committee might be considering, and ask directors to conduct one or more interviews with the candidate. In certain instances, committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons who may have greater first-hand knowledge of the candidate's accomplishments. The committee's evaluation process will not vary based on whether or not a candidate is recommended by a shareholder, although, as stated below, the committee may take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held.

Recent Director Searches

As a result of our active succession planning and candidate evaluation processes, directors Ahmed, Eaves, Noonan, Toelle, Wagler and White were identified as candidates and added to the Board over the last seven years. Each of these independent directors brings important skills and experience to our company that have further strengthened and complemented our Board. In addition, the Board has nominated Ms. DeHaas for election at the 2021 annual meeting and, should she be elected, she will complement and strengthen our Board with her significant accounting and financial expertise and environmental sustainability and human capital management experience. Each of these seven individuals was recommended for consideration to the corporate governance and nominating committee by a third party search firm, and none of these seven individuals was known to our chairman of the board or chief executive officer prior to the candidate evaluation process.

Shareholder Recommendations of Director Candidates

The corporate governance and nominating committee will consider director candidates recommended by shareholders. In considering candidates submitted by shareholders, the committee will take into consideration the needs of the Board and the qualifications of the candidate. To have a candidate considered by the committee, a shareholder must submit the recommendation in writing and include the following information:

the name of the shareholder and evidence of the person's ownership of our stock, including the number of shares owned and the length of time of ownership; and

the name of the candidate, the candidate's resume or a listing of his or her qualifications to be a director of CF Industries, and the person's consent to be named as a director if selected by the committee and nominated by the Board.

The shareholder recommendation and information described above must be sent c/o the corporate secretary to our principal executive offices at the address on the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement and must be received by the corporate secretary not less than 120 days prior to the anniversary date of our most recent annual meeting of shareholders.

Proxy Access

Our bylaws allow eligible shareholders to include their own nominees for director in our proxy materials along with the Board-nominated candidates. Subject to applicable procedural and other requirements under our bylaws, the proxy access provisions of our bylaws permit any shareholder or group of up to 20 shareholders who have maintained continuous qualifying ownership of 3% or more of our outstanding common stock for at least the previous three years to nominate and include in our proxy materials director nominees constituting not more than 25% of the number of the directors in office at the time of the nomination. For further information in this regard, see the discussion under the heading "Annual Meeting Information — Deadlines for Submission of Future Shareholder Proposals, Shareholder

14


Table of Contents

Nominated Director Candidates and Other Business of Shareholders — Director Nominations for Inclusion in CF Industries' Proxy Materials (Proxy Access)."

CRITERIA FOR BOARD MEMBERSHIP

Director Qualifications and Attributes

The corporate governance and nominating committee takes into consideration a number of factors and criteria in reviewing candidates for potential nomination to the Board. The corporate governance and nominating committee believes that the minimum qualifications for serving as a director of CF Industries are that a nominee demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board's oversight of our business and affairs and have an impeccable record and reputation for honesty and ethical conduct in both his or her professional and personal activities.

In addition, the committee will examine a candidate's specific experiences and skills, relevant industry background and knowledge, time availability in light of other commitments, potential conflicts of interest, material relationships with CF Industries, and independence from management and the company.

Diversity

Our corporate governance guidelines and corporate governance and nominating committee charter reflect the intention of the Board that the board of directors represent a diversity of backgrounds. In accordance with the corporate governance and nominating committee charter and our corporate governance guidelines, the corporate governance and nominating committee considers diversity in identifying nominees for director, including personal characteristics such as race, gender and age, and the experiences and skills relevant to the Board's performance of its responsibilities in the oversight of the company. In furtherance of this objective, the corporate governance and nominating committee has determined that it will incorporate recruitment protocols that seek to identify candidates in any future director search who meet these diversity characteristics. As discussed above, six independent directors have joined our Board over the last seven years. These directors' experience and skills backgrounds include senior executive leadership (three sitting or retired chief executive officers, a sitting chief financial officer, and a global supply chain executive) and six directors with industry expertise. In terms of personal characteristics, these current directors include two women, an African American, and a director of Asian origin who lives in the United Kingdom and has dual citizenship in the US and UK. In addition, the Board has nominated Ms. DeHaas for election as a new director at the 2021 annual meeting. Ms. DeHaas's experience and skills background includes significant accounting and financial expertise and environmental sustainability and human capital management experience.

Retirement Age

As set forth in the company's corporate governance guidelines, it is the general policy of the company that no director having attained the age of 74 years shall be nominated for re-election or reappointment to the Board. However, the Board may determine to waive this policy in individual cases.

Director Tenure

To ensure that the Board maintains an appropriate balance of experience, continuity, and an openness to new ideas and a willingness to critically re-examine the status quo, the corporate governance and nominating committee considers the issue of continuing director tenure in connection with each director nomination recommendation.

15


Table of Contents

Three director nominees, comprising 27% of the nominees, have served 10 or more years on the Board and three director nominees, comprising 27% of the nominees, have served between 5 and 9 years on the Board. These directors bring a wealth of experience and knowledge concerning CF Industries.

The remaining five director nominees, comprising 46% of the nominees, have served less than 5 years on the Board and bring fresh perspective to Board deliberations.

Service on Other Public Company Boards

The company recognizes the substantial time commitments attendant to Board membership and expects that the members of our Board will be fully committed to devoting all such time as is necessary to fulfill their Board responsibilities, in terms of both preparation for and attendance and participation at meetings. Accordingly, directors should generally not serve on more than three other public company boards. A director who also serves as the chief executive officer or named executive officer of a public company generally should not serve on the board of more than one other public company.

In addition, in recognition of the enhanced time commitments associated with membership on a public company's audit committee, the Board has adopted a policy that no member of the audit committee may serve simultaneously on the audit committees of more than two other public companies unless the Board determines that such simultaneous service would not impair the ability of such director to effectively serve on the company's audit committee.

16


Table of Contents

Summary of Director Core Competencies

We consider the depth and diversity of experience on our Board a key strength. Our eleven director nominees offer a diverse set of qualifications and perspectives and possess a wealth of leadership and professional experience. The following table summarizes experiences and skills that we have identified as key to our current and future global strategy, business, and governance.

GRAPHIC

Snapshot of Director Nominees

Diversity   Tenure   Independence
GRAPHIC   GRAPHIC   GRAPHIC

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 eleven 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 eleven 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.

17


Table of Contents

DIRECTOR NOMINEE BIOGRAPHIES

The following is biographical information about each of our director nominees, and 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 our Board. All director nominee biographical information is as of March 23, 2021.

GRAPHIC

GRAPHIC

18


Table of Contents

GRAPHIC

GRAPHIC

19


Table of Contents

GRAPHIC

GRAPHIC

20


Table of Contents

GRAPHIC

GRAPHIC

21


Table of Contents

GRAPHIC

GRAPHIC

22


Table of Contents

GRAPHIC

23


Table of Contents

CORPORATE GOVERNANCE

CF Industries is committed to implementing sound corporate governance practices that enhance the effectiveness of the Board and our management and that serve the interests of our shareholders. Our corporate governance and nominating committee periodically reviews corporate governance developments and best practices along with our policies and business strategies. The committee advises the Board and management in an effort to strengthen existing governance practices and develop new policies that make CF Industries a better company. We are proud of the steps we have taken and the progress we have made to further strengthen our corporate governance practices and demonstrate our responsiveness to shareholder concerns.

CORPORATE GOVERNANCE GUIDELINES

The Board has adopted corporate governance guidelines to document its overall management governance philosophy. According to these guidelines, the business and affairs of CF Industries shall be managed by or under the direction of the Board. The Board's goal is to build long-term value for our shareholders and assure the vitality of the company for our customers and employees and the other individuals and organizations who depend on us. A copy of our corporate governance guidelines is available to shareholders at our corporate website, www.cfindustries.com, or by writing to our corporate secretary at the address of our principal executive offices on the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

DIRECTOR INDEPENDENCE

The experience and diversity of our directors has been, and continues to be, critical to our success. Our corporate governance guidelines require that the Board be composed of at least a majority of directors who qualify as independent directors under the listing standards of the New York Stock Exchange (the "NYSE"). Additionally, in accordance with NYSE listing standards, the members of our audit, compensation, and corporate governance and nominating committees must be independent. The Board has made an affirmative determination that all of our non-employee directors who served in 2020 or are currently serving as directors and all of our non-employee director nominees have no material relationship with CF Industries or any of its subsidiaries (other than, as applicable, being a director and shareholder of CF Industries) and, accordingly, meet the applicable requirements for "independence" set forth in the NYSE's listing standards. In determining that Ms. DeHaas meets the applicable requirements to be an independent director of the company under the NYSE's listing standards, the Board considered that the company and its subsidiaries have in the past retained, and may from time to time retain, Deloitte to provide services to the company and its subsidiaries and that Ms. DeHaas was a partner, and held leadership positions, in Deloitte prior to her retirement from Deloitte in September 2020.

LEADERSHIP OF THE BOARD

Separate Independent Board Chairman and Chief Executive Officer

The Board has determined that the most effective leadership structure is to maintain an independent Board chair role separate from the chief executive officer. In making this determination, the Board took into account a number of factors, including (1) that separating these positions allows our Board chairman to focus on the Board's role of providing advice to, and independent oversight of, management and (2) the time and effort our chief executive officer needs to devote to the management and operation of CF Industries and the development and implementation of our business strategies. Although our governance

24


Table of Contents

documents provide the Board with the flexibility to select the leadership structure in the way that it deems best for CF Industries at any given point in time, the Board intends to continue to maintain an independent Board chair separate from the chief executive officer. In addition, according to our corporate governance guidelines, if the chairman of the Board is not an independent director, our independent directors will designate one of their number to serve as a lead independent director. Otherwise, if the chairman of the Board is an independent director, he or she will serve as the lead independent director.

Stephen A. Furbacher has served as our lead independent director since 2010 and as Board chairman since May 2014. Mr. Furbacher was selected by the directors to serve as chairman because of his contributions to the leadership of the Board. Because Mr. Furbacher is an independent director, he continues to serve as our lead independent director. The lead independent director's duties include (i) coordinating the activities of the independent directors, (ii) coordinating the agenda for and moderating sessions of the independent directors, and (iii) facilitating communications between the other members of the Board. Unless otherwise provided in a short-term succession plan approved by the Board:

    in the event that our chief executive officer should unexpectedly become unable to perform his or her duties, the chairman of the Board (if the chairman is an independent director or else the lead independent director) shall allocate the duties of the chief executive officer among our other senior officers; and

    in the event that the chairman of the Board should unexpectedly become unable to perform his or her duties, the chief executive officer (if the chairman of the Board is an independent director or else the lead independent director) shall temporarily assume the duties of the chairman of the Board,

in each case, until the Board has the opportunity to consider the situation and take action.

Executive Sessions

At each regularly scheduled meeting, the Board conducts executive sessions, which are discussions that involve only the non-employee directors. Our corporate governance guidelines state that the lead independent director or, in such director's absence, another independent director designated by the lead independent director will preside at the executive sessions of the Board.

Annual Board and Committee Self-Evaluations and Director Peer Evaluations

Our corporate governance and nominating committee sponsors an annual self-assessment of the Board's performance and the performance of each committee of the Board as well as director peer evaluations. The assessment includes a review of any areas in which the Board believes the Board can make a better contribution to CF Industries. In addition, the chair of the corporate governance and nominating committee sponsors an annual self-assessment of director skills and experience. The assessment asks each director to rank the importance of various business experiences, qualifications, attributes, and skills to our current and future global strategy, business, and governance and to rate the director's own competency level in each of these skills. The results of the assessments are discussed with the full Board and each committee. The corporate governance and nominating committee considers the results of these self-evaluation processes as applicable in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board and making recommendations to the Board with respect to assignments of Board members to various committees.

25


Table of Contents

COMMITTEES OF THE BOARD

The Board has established four separate standing committees: the audit committee, the compensation and management development committee, the corporate governance and nominating committee and the environmental sustainability and community committee. The Board has adopted written charters for each of these committees and copies of these charters are available to shareholders at our corporate website, www.cfindustries.com, or by writing to our corporate secretary at the address of our principal executive offices on the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

Audit Committee. Our audit committee is a separately designated standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The committee currently consists of Theresa E. Wagler (chair), Robert C. Arzbaecher, William Davisson, John W. Eaves, Stephen A. Furbacher and Stephen J. Hagge. The Board has affirmatively determined that all of the directors on the committee are independent under the corporate governance standards of the NYSE applicable to audit committee members. The Board has also determined that Ms. Wagler and Messrs. Arzbaecher, Davisson, Eaves and Hagge are "audit committee financial experts," as defined by the SEC. The audit committee assists the Board in fulfilling its oversight responsibility for (1) the integrity of our financial statements and financial reporting process and our systems of internal accounting and financial controls, (2) the performance of our internal audit function, (3) the annual independent integrated audit of our consolidated financial statements and internal control over financial reporting, and (4) our compliance with legal and regulatory requirements, including our disclosure controls and procedures. The duties and responsibilities of the audit committee include the engagement of our independent registered public accounting firm and the evaluation of our accounting firm's qualifications, independence, and performance. The audit committee's report to shareholders appears elsewhere in this Proxy Statement.

Compensation and Management Development Committee. Our compensation and management development committee currently consists of Stephen J. Hagge (chair), Javed Ahmed, Anne P. Noonan, Michael J. Toelle, and Celso L. White. The Board has affirmatively determined that all of the directors on the committee are independent under the corporate governance standards of the NYSE applicable to compensation committee members. The Board has also determined that all of the members of the committee qualify as "non-employee directors," within the meaning of Rule 16b-3 promulgated under the Exchange Act, and "outside directors," within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). The compensation and management development committee oversees our compensation and employee wellbeing plans and practices, including our executive compensation plans, director compensation plans, and incentive-compensation and equity-based plans. In addition, the compensation and management development committee supports the full Board with succession plans for the CEO, while overseeing and reviewing management's development, retention and succession planning for other key executives and senior management as well as overseeing diversity, equity and inclusion initiatives within the company. The compensation and management development committee's report to shareholders appears elsewhere in this Proxy Statement. Additional information regarding the processes and procedures of the compensation and management development committee in recommending and determining compensation for our directors and executive officers is set forth below under the heading "Compensation Discussion and Analysis."

Corporate Governance and Nominating Committee. Our corporate governance and nominating committee currently consists of Anne P. Noonan (chair), Javed Ahmed, William Davisson, Stephen A. Furbacher, and Celso L. White. The Board has affirmatively determined

26


Table of Contents

that all of the directors on the committee are independent under the corporate governance standards of the NYSE. The corporate governance and nominating committee's responsibilities include identifying and recommending to the Board individuals qualified to serve as directors and on committees of the Board; advising the directors with respect to the Board's composition, procedures, and committees; developing and recommending to the Board a set of corporate governance principles; and overseeing the evaluation of the Board and the president and chief executive officer.

Environmental Sustainability and Community Committee. Our environmental sustainability and community committee currently consists of Robert C. Arzbaecher (chair), John W. Eaves, Michael J. Toelle and Theresa E. Wagler. The Board has affirmatively determined that all of the directors on the committee are independent under the corporate governance standards of the NYSE. The purpose of the environmental sustainability and community committee is to assist the Board in fulfilling its oversight responsibility with respect to the strategies, goals, objectives, policies and practices, and related risks that pertain to energy, emissions and climate change, food security, product stewardship, public advocacy, community engagement, and charitable contributions ("ESC Committee Matters"). The environmental sustainability and community committee's responsibilities include considering, reviewing and monitoring the company's general strategy and objectives relating to ESC Committee Matters; assessing the effectiveness of and advising the Board on the company's programs and initiatives related to ESC Committee Matters; reviewing and discussing current and emerging trends with respect to ESC Committee Matters; and discussing and reviewing with management the company's identification, assessment and management of risks associated with ESC Committee Matters. The environmental sustainability and community committee also reviews the goals established from time to time with respect to ESC Committee Matters, assesses the company's sustainability performance and progress towards its goals and strategic objectives, and oversees the company's external reporting on ESC Committee Matters, including the sustainability report.

ATTENDANCE OF DIRECTORS AT MEETINGS

Directors are expected to attend meetings of the Board and the committees on which they serve, as well as our annual meeting of shareholders. A director who is unable to attend a meeting (which it is understood will occur on occasion) is expected to notify the chairman of the Board or the chair of the appropriate committee in advance of such meeting.

During 2020, the Board held seven meetings, our audit committee held nine meetings, our compensation and management development committee held six meetings, our corporate governance and nominating committee held four meetings and our environmental sustainability and community committee, which was established in October 2020, held one meeting. Each of our directors attended 100% of the combined total meetings of the full Board and the committees on which he or she served during 2020. All eleven of our directors then in office attended the 2020 annual meeting, which was held virtually on May 20, 2020.

BOARD OVERSIGHT OF STRATEGY AND RISK MANAGEMENT

Shareholders elect the Board to oversee management and to serve shareholders' long-term interests. Management is responsible for delivering on our strategy, creating our culture, establishing accountability, and managing risk. The Board and its committees work closely with management to balance and align strategy, risk, sustainability, and other areas while considering feedback from shareholders. Essential to the Board's oversight role is a transparent and active dialogue between the Board and its committees and management. To support that dialogue, the Board and its committees have access to, receive presentations from, and conduct regular meetings with our executive officers, other internal business and function leaders and subject matter experts, as well as external experts and advisors.

27


Table of Contents

Board Oversight of Strategy

One of the Board's primary responsibilities is reviewing and approving the strategy established by management and overseeing the successful execution of our strategy. Throughout the year, the Board and its committees provide oversight and guidance to management regarding our strategy, operating plans, and overall performance. While elements of strategy are embedded in every regularly-scheduled meeting of the Board, the Board also dedicates at least one full day meeting each year to focus on our long-term business strategic planning. At all of these reviews, the Board engages with our executive officers and other business leaders regarding business objectives, the competitive landscape, economic trends, regulatory developments and sustainability matters. At meetings occurring throughout the year, the Board also assesses strategic initiatives, our budget and capital allocation plans, and performance for alignment to our strategy.

Board Oversight of Risk Management

Our management is responsible for establishing and maintaining systems to assess and manage the company's risk exposure, and the Board provides oversight in connection with those efforts. In fulfilling its risk oversight role, the Board focuses on the adequacy of our risk management process and the effectiveness of our overall risk management system. In addition, the Board routinely assesses policies and procedures in critical areas to ensure that the responsibilities and authority delegated to senior management are appropriate from an operational and risk management perspective. The Board also receives regular reports from senior management addressing financial and operational risk exposure, including monthly scorecards and quarterly dashboards that include financial metrics and safety and environmental statistics.

Our management has established an enterprise risk management ("ERM") program that includes an annual assessment process that is designed to identify risks that could affect us and the achievement of our objectives; to understand, assess, and prioritize those risks; and to facilitate the implementation of risk management strategies and processes across the company that are responsive to the company's risk profile, business strategies, and specific material risk exposures. The ERM program seeks to integrate consideration of risk and risk management into business decision-making throughout the company, including through the implementation of policies and procedures intended to ensure that necessary information with respect to material risks is transmitted to senior executives and, as appropriate, to the Board or relevant committees. Each year, the Board reviews and discusses with the key members of management responsible for management of risk the guidelines and policies governing the ERM process, the key risks identified in the ERM process, as well as the likelihood of occurrence and the potential impact assigned to those risks by management, and the risk mitigation strategies in each instance.

The standing committees assist the Board in its oversight role with respect to risks relating to the committee's respective areas of responsibility.

    The audit committee oversees the integrity of CF Industries' financial statements, the effectiveness of the internal control environment, the external auditors and the internal audit function. In addition, the audit committee receives regular reports on the efficacy of our information security and technology risks (including cybersecurity) and related policies and procedures from our chief information officer and other members of senior management who are tasked with monitoring cybersecurity risks.

    The compensation and management development committee reviews risks associated with the design and implementation of our compensation plans and arrangements (see "Compensation Discussion and Analysis — Compensation and Benefits Risk Analysis"

28


Table of Contents

      below). In addition, the compensation and management development committee supports the full Board with succession plans for the CEO, while overseeing and reviewing management's development, retention and succession planning for other key executives and senior management.

    The nominating and corporate governance committee reviews risks related to our governance structures and processes, including Board succession planning.

    In October 2020, the Board established the environmental sustainability and community committee to, among other things, assist the Board with the oversight of our strategy and processes to identify, assess, and address the risks and opportunities to our company associated with energy, emissions and climate change, food security, product stewardship, public advocacy, community engagement, and charitable contributions.

All Board members are invited to attend every committee meeting, and Board members who do not attend a committee meeting receive information about committee activities and deliberations.

OUR APPROACH TO HUMAN CAPITAL MANAGEMENT

Our long-term success depends on our people. We are dedicated to creating a workplace where employees are proud to work and grow and everyone feels empowered to do their best work. We do this by investing in extensive recruitment, training and professional development opportunities for our employees and fostering diversity and inclusion in CF Industries' culture. In addition, we have an effective succession management process to safeguard the long-term achievement of our strategy.

Culture, Inclusion and Diversity

Doing the right thing is the cornerstone of our culture and is a significant factor in our success. Our culture is rooted in our core values — We Do It Right, We Do It Well, We Execute as a Team and We Take a Long-Term View — which you can read more about on our website at www.cfindustries.com.

Our core values and their underlying principles reflect our commitment to a diverse and inclusive culture, treating one another with respect. During 2020, all of our employees engaged in training to learn to recognize and address the effects of unconscious bias by challenging assumptions; encouraging diversity of experience, opinion, and expression; and supporting a workplace culture that actively strives to be more inclusive. In order to continue to improve the inclusiveness and diversity of our company and culture, our recently announced comprehensive ESG goals include goals to increase the representation of females and persons of color in senior leadership roles and to implement a program designed to increase the hiring and promotion of minority and female candidates.

Workforce Health & 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 and processes that provide a clear, repeatable direction toward excellence.

29


Table of Contents

    Superior performance that aligns effective and efficient environmental, health, and safety activities with operations.

Our commitment to safety is unwavering, and we have demonstrated that our focus on this priority is yielding positive results. We believe that focusing on leading indicators — such as the behavioral safety practices 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.

Responding to Coronavirus

In response to the COVID-19 pandemic, we instituted safety precautions early in the year to protect the health and well-being of all of our employees, including the manufacturing workforce who operate our manufacturing complexes and distribution facilities. These safety measures included installing thermal temperature checks at each of our sites for all personnel, including contractors, who arrive at our sites, adjusting schedules to support social distancing, including changes to loading and shipping procedures, maintaining a close contact log for employees, self-quarantine logs, requiring face coverings on site, restricting visitor access, and implementing enhanced cleaning protocols and travel restrictions for employees. We also paid approximately $19 million of bonuses to our operational workforce under a special COVID-19 bonus program, which concluded in June. In addition, since mid-March 2020, the majority of our non-operational personnel at our sites who work in administrative and operational support functions have worked remotely in order to maintain social distancing following governmental guidelines. These administrative and operational support functions have operated effectively during this period, meeting our commitments to our customers and continuing to manage our business without interruption. We have not furloughed any employees or instituted any reductions in pay or benefits or other significant cost containment measures due to the pandemic.

Talent Development

A core aspect of our culture is our commitment to identifying and developing talent to help employees accelerate growth and achieve their career goals. We invest in extensive assessment, training and professional development opportunities for our employees through a robust set of formal and informal programs, including targeted job movements, key experiences, and training with an emphasis on creating a culture of inclusion. At CF, leadership is the quality that drives our values and sets us apart. To help foster leadership, the company has developed a set of leadership competencies that provide a common language for how to demonstrate leadership at every level of the organization. We view training and development programs as being a key part of succession planning, allowing us to grow a stronger company, today and in the future.

Board Oversight of Human Capital Management and Succession Planning

Our Board plays a critical role in the oversight of talent and culture at CF Industries. The Board and the compensation and management development committee engage with senior management and human resources executives across a broad range of human capital management topics including culture, succession planning and development, compensation, recruiting and retention, and diversity and inclusion.

Our Board plays an integral oversight role in talent development by recognizing the importance of succession planning for the CEO and other key executives at CF Industries. To assist the Board, the chief executive officer prepares and distributes to the Board an annual report on succession planning for all senior officers of the company with an assessment of senior managers and their potential to succeed the chief executive officer and other senior

30


Table of Contents

management positions. In addition, the chief executive officer prepares, on a continuing basis, a short-term succession plan which delineates a temporary delegation of authority to certain officers of the company, if all or a portion of the senior officers should unexpectedly become unable to perform their duties.

BEYOND THE BOARDROOM

On-Site Visits to Nitrogen Manufacturing Facilities

In 2020, due to the COVID-19 pandemic and related measures to contain the virus, such as travel bans and gathering restrictions, the majority of our Board and committee meetings were held virtually through video conferencing. In a typical year, most Board and committee meetings are held on-site at our headquarters or near other CF facilities. Over the last six years our Board has visited our nitrogen manufacturing facilities in Verdigris, Oklahoma; Yazoo City, Mississippi; Port Neal, Iowa; Donaldsonville, Louisiana; and Ince, United Kingdom. Locating the Board and committee meetings on-site or near our headquarters or manufacturing locations allows our directors to deepen their understanding of the company and interact with on-site employees.

Director Orientation

All new members of the Board participate in the company's new director orientation program led by members of senior management. The new director orientation program enables new members of the Board to quickly become active, knowledgeable and effective Board members. Orientation includes a visit to the company's corporate headquarters for a personal comprehensive briefing by senior management on our business, financial position, strategic plans, significant financial, accounting and risk management issues, compensation practices, corporate governance and key policies and our principal officers and internal and independent auditors as well as the roles and responsibilities of our directors. In addition, within a few months of joining our Board, new directors visit one of our nitrogen manufacturing facilities to see our operations in person and learn about our manufacturing processes.

Continuing Education

All directors are encouraged to participate in outside continuing education programs to increase their knowledge and understanding of the duties and responsibilities of directors and the company, regulatory developments and best practices. The Board materials for every corporate governance and nominating committee meeting include a schedule and summary of upcoming relevant continuing education programs, sponsored by leading universities or other organizations, with any associated expenses to be reimbursed by the company. Directors who have participated in such programs share their lessons and insights with other members of the Board. The company also provides continuing director education through individual speakers who make relevant presentations in connection with Board meetings, for our directors to stay current and knowledgeable about the company's industry, market and overall environment. The company's senior management also monitors pertinent developments in business, corporate governance and issues pertaining to the company and the industries in which it participates and regularly shares articles, reports and current events with directors. The corporate governance and nominating committee reviews the director education process to ensure the continuing education provided remains relevant and helpful.

Individual Discussions and Mentoring Management

Outside of regularly scheduled Board and Committee meetings, our directors have discussions with each other including with our CEO. Directors have access to management at any time and are encouraged to have small group or individual meetings, as necessary. Additionally,

31


Table of Contents

high-potential employees join members of the Board for dinners prior to on-site Board and committee meetings. These dinners are designed to give directors the opportunity to engage with employees directly and afford employees an opportunity to ask questions and get to know our directors.

SUSTAINABILITY AT CF INDUSTRIES

We believe we have an important role to play in solving some of the world's greatest challenges, such as providing clean energy to the world, feeding a growing global population and protecting the environment. We also believe that our ability to integrate sustainable business practices into our strategy and operations is integral to delivering long-term value. That's why sustainability is an inherent part of how we run our business and part of our commitment to the communities where we live and work.

Sustainability Focus

CF Industries is a leader in an industry whose mission is fundamental to human survival: putting food on the world's table. By providing plant nutrients to farmers, we feed the crops that feed the world and produce building blocks for a better life. We are proud of the role our company plays in fulfilling this increasingly challenging mission. As a company, we are also confronting issues such as energy efficiency, resource use, and economic growth. In October 2020, we announced that we are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia. Green hydrogen and ammonia have emerged as leading candidates to help the world achieve net-zero carbon emissions by 2050. Ammonia, which is composed of three-parts hydrogen and one-part nitrogen, is a highly efficient transport and storage mechanism for hydrogen as well as a fuel in its own right. We believe that CF Industries, as the world's largest producer of ammonia with an unparalleled manufacturing and distribution network and deep technical expertise, is uniquely positioned to fulfill anticipated demand for hydrogen and ammonia from green and blue sources. CF Industries is taking significant steps to support a global hydrogen and clean fuel economy through decarbonizing our ammonia network to enable the production of green ammonia, which refers to ammonia produced through a carbon-free process, and blue ammonia, which relates to ammonia produced by conventional processes but with CO2 removed through carbon capture and sequestration and other certified carbon abatement projects. We have announced an initial green ammonia project at our flagship Donaldsonville Nitrogen Complex to produce approximately 20,000 tons per year of green ammonia. Additionally, we are developing CCS and other carbon abatement projects across our production facilities that will enable us to produce blue ammonia.

Comprehensive Environmental, Social, and Governance (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 goals covering critical environmental, societal, and workforce imperatives. These goals include a 25% reduction in CO2 equivalent emissions intensity by 2030 and net-zero carbon emissions by 2050. Additionally, executive compensation is tied directly to ESG goals as discussed in Compensation Discussion and Analysis — Compensation Discussion and Analysis: In Detail — 2021 Compensation Actions." You can read more about our comprehensive ESG goals at our corporate website, www.cfindustries.com.

Sustainability Reports

We prepare annual sustainability reports, each of which is posted on our corporate website, www.cfindustries.com. Our sustainability reports have been presented annually to the corporate governance and nominating committee, and, going forward, these reports will be presented

32


Table of Contents

annually to our new environmental sustainability and community committee. In response to increased interest from the investment community and our commitment to transparency, our sustainability report includes a GRI Index in accordance with the Global Reporting Initiative (GRI) Standards, in which we report on a comprehensive basis and cover nearly all GRI indicators, and a SASB Index using the Sustainability Accounting Standards Board (SASB) framework for the chemicals industry. This year, in addition to continuing to enhance our sustainability reporting in line with GRI and SASB disclosure frameworks, we will also begin expanding our reporting to utilize the Task Force on Climate-related Financial Disclosures (TCFD) disclosure recommendations. Our sustainability reports are published in tandem with our annual report, to better align the timing of our sustainability reporting with our financial reporting and to further integrate our business and sustainability strategies.

CORPORATE RESPONSIBILITY

Corporate responsibility and sustainability are inherent to our values and our "Do It Right" culture and an intrinsic part of our commitment to the communities in which we live and work.

Code of Corporate Conduct

Our commitment to ethical behavior is captured in our code of corporate conduct, which was adopted by our Board. The code is applicable to all of our directors, officers, and employees, all of whom must acknowledge receiving and reading the code annually. We provide annual code of corporate conduct and anti-corruption training to all employees.

A copy of our code of corporate conduct is available at our corporate website, www.cfindustries.com, or by writing to our corporate secretary at the address of our principal executive offices on the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement. We intend to disclose on our corporate website any amendment to any provision of the code that relates to any element of the definition of "code of ethics" enumerated in Item 406(b) of Regulation S-K under the Exchange Act, and any waiver from any such provision granted to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.

Political Contributions Report

We prepare a semiannual Political Contributions Report listing CF Industries' political contributions. Each Political Contributions Report is posted on our corporate website, www.cfindustries.com, and presented to the corporate governance and nominating committee. Going forward, the Political Contribution Reports will be presented to our new environmental sustainability and community committee. Additionally, the Political Contributions Reports set forth the United States trade associations and other similar non-profit organizations to which the company annually pays dues of $20,000 or more and identify the portion of such dues that is used for advocacy and/or political activities by those associations. The most recent Political Contributions Report and our code of corporate conduct, containing our corporate policies related to political activities and contributions, lobbying and related matters, are currently available on our corporate website.

Charitable Contributions Report

We also prepare a semiannual Charitable Contributions Report listing CF Industries' charitable contributions that exceed $20,000. Each Charitable Contributions Report is posted on our corporate website, www.cfindustries.com. Most of our philanthropic and social outreach initiatives are locally based. This enables each of our facilities to address the unique needs and opportunities in their respective communities. During 2020, our locations and employees

33


Table of Contents

helped meet the significant needs created by the COVID-19 pandemic, including donating masks and other personal protective equipment to hospitals, nursing homes and other health care organizations. The company also donated $550,000 to organizations fighting hunger, with a particular focus on local food banks.

SHAREHOLDER ENGAGEMENT

We believe that building positive relationships with our shareholders is critical to CF Industries' success. We value the views of, and regularly communicate with, our shareholders on a variety of topics, such as our financial performance, environmental, social, and governance initiatives, executive compensation, human capital management, environmental sustainability, community relations, and related matters. Management shares the feedback received from shareholders with the Board. Our chairman, our committee chairs, and other members of the Board may also be available to participate in meetings with shareholders as appropriate. Requests for such a meeting are considered on a case-by-case basis. Our engagement activities have resulted in valuable feedback that has contributed to our decision-making with respect to these matters.

We conduct shareholder outreach campaigns in the spring and in the fall. Our engagements in the spring are primarily focused on ballot items up for a shareholder vote at our annual meeting. Our engagements in the fall generally focus on voting outcomes from our prior annual meeting — including direct shareholder feedback on how they voted on ballot items —as well as our environmental, social, and governance activities and initiatives. The fall engagement also presents an opportunity to discuss with shareholders developments in their methodologies and analyses and potential future areas of focus.

GRAPHIC

In both the spring of 2020 leading up to our 2020 annual meeting and during the fall of 2020 following our 2020 annual meeting, we contacted shareholders comprising approximately 75% of our outstanding shares to invite them to engage with us. Combined, we engaged with shareholders representing approximately 32% of our outstanding shares, discussing with these shareholders the ballot items and voting outcomes from our 2020 annual meeting as well as general governance, compensation, corporate responsibility and sustainability matters.

34


Table of Contents

COMMUNICATIONS WITH DIRECTORS

The Board has established a process to receive communications from shareholders and other interested parties. Shareholders and other interested parties may contact any member (or all members) of the Board, any Board committee, or any chair of any such committee by mail. To communicate with the Board, any individual director, or any group or committee of directors, correspondence should be addressed to the Board or any such individual director or group or committee of directors by either name or title. All such correspondence should be sent c/o the corporate secretary to our principal executive offices at the address on the Notice of Annual Meeting of Shareholders accompanying this Proxy Statement.

All communications received as set forth in the preceding paragraph will be opened by the office of our general counsel for the sole purpose of determining whether the contents represent a message to one or more of our directors and then forwarded promptly to each addressee. In the case of communications to the Board or any group or committee of directors, the office of the general counsel will distribute copies of the contents to each director who is a member of the Board or of the group or committee to which the envelope or correspondence is addressed.

DIRECTOR COMPENSATION

Non-employee directors receive compensation, including fees and reimbursements of expenses, for their service and dedication to our 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, 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 — Other Compensation Governance Practices and Considerations — Role of the Compensation Consultant.")

Annual Cash Retainer

Each non-employee director is entitled to an annual cash retainer of $100,000, payable quarterly. We do not pay meeting fees to our directors. The chairman of the Board and the chairs of the Board committees receive additional annual cash retainers in the following amounts, payable quarterly:

Chairman of the Board   $ 80,000  
Audit committee chair   $ 20,000  
Compensation and management development committee chair   $ 15,000  
Corporate governance and nominating committee chair   $ 15,000  
Environmental sustainability and community committee chair   $ 15,000  

35


Table of Contents

Annual Restricted Stock Grant

Each non-employee director will receive, upon joining the Board, a restricted stock grant with a fair market value of $130,000 (or, in the case of the chairman of the Board, $230,000), rounded to the nearest whole share. Thereafter, each continuing non-employee director will receive an annual restricted stock grant with a fair market value of $130,000 (or, in the case of the chairman of the Board, $230,000), rounded to the nearest whole share, on the date of each annual meeting of the shareholders. Assuming continuing service as a non-employee director, all shares of restricted stock will vest on the earlier of (x) the date of the first annual meeting of the shareholders following the date of grant or (y) the first anniversary of the date of grant.

2020 Total Director Compensation

The following table sets forth cash and non-cash compensation with respect to the year ended December 31, 2020, for our non-employee directors. Mr. Will receives no additional compensation for his service as a director.

 Name 
  Fees Earned
or Paid
in Cash(1)
($)
  Stock
Awards(2)
($)
  All Other
Compensation(3)
($)
  Total
($)

Javed Ahmed

    100,000     130,012     3,768     233,780

Robert C. Arzbaecher

    115,000     130,012     3,768     248,780

William Davisson(4)

    100,000     130,012     3,768     233,780

John W. Eaves

    100,000     130,012     3,768     233,780

Stephen A. Furbacher

    180,000     230,011     6,666     416,677

Stephen J. Hagge

    115,000     130,012     3,768     248,780

John D. Johnson(5)

    25,000         25,932     50,932

Anne P. Noonan

    103,750     130,012     3,768     237,530

Michael J. Toelle

    100,000     130,012     3,768     233,780

Theresa E. Wagler

    120,000     130,012     3,768     253,780

Celso L. White

    100,000     130,012     3,768     233,780

(1)
Amounts in this column represent the annual cash retainers that our non-employee directors earned during 2020.

(2)
Amounts in this column represent the grant date fair value computed in accordance with FASB ASC Topic 718 of the restricted stock awards that we granted to the non-employee directors during 2020 pursuant to our 2014 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, 2020. 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, 2020 were as follows: 4,726 shares for each of directors Ahmed, Arzbaecher, Davisson, Eaves, Hagge, Noonan, Toelle, Wagler and White and 8,361 shares for Chairman Furbacher.

(3)
Amounts in this column represent dividends on restricted stock. Amounts in this column for Mr. Johnson also includes a $25,000 donation to a charity designated by Mr. Johnson in connection with his retirement from the Board and in recognition of his many years of service.

(4)
Mr. Davisson will retire from the Board effective as of the date of the 2021 Annual Meeting and will not stand for re-election.

(5)
Mr. Johnson retired from the Board effective as of the 2020 Annual Meeting.

36


Table of Contents

COMMON STOCK OWNERSHIP

COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information, as of March 11, 2021, concerning the beneficial ownership of each person known to us to beneficially own more than 5% of our common stock. The information in the table and the related notes is based on statements filed by the respective beneficial owners with the SEC pursuant to Sections 13(d) and 13(g) under the Exchange Act.

 Name and Address of Beneficial Owner 
  Amount and Nature
of
Beneficial
Ownership(1)
  Percent of
Class(2)

BlackRock, Inc. 

    20,149,458(3)     9.4%

55 East 52nd Street
New York, New York 10055

           

T. Rowe Price Associates, Inc. 

   
22,346,722(4)
   
10.4%

100 E. Pratt Street
Baltimore, Maryland 21202

           

The Vanguard Group, Inc. 

   
24,077,562(5)
   
11.2%

100 Vanguard Blvd.
Malvern, Pennsylvania 19355

           

(1)
Unless otherwise indicated, beneficial ownership consists of sole power to vote or direct the vote and sole power to dispose or direct the disposition of the shares listed.
(2)
Unless otherwise indicated, percentages calculated based upon common stock outstanding as of March 11, 2021 and beneficial ownership of common stock as set forth in the statements on Schedule 13G filed by the respective beneficial owners with the SEC.
(3)
Based solely on a Schedule 13G (Amendment No. 13), dated January 28, 2021 and filed with the SEC on January 29, 2021, by BlackRock, Inc. ("BlackRock"). BlackRock reports beneficial ownership of shares by its direct and indirect subsidiaries, including BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited, and BlackRock Fund Managers Ltd. These BlackRock entities have sole power to vote or to direct the vote of 18,637,967 shares of common stock and sole power to dispose or to direct the disposition of 20,149,458 shares of common stock.
(4)
Based solely on a Schedule 13G (Amendment No. 5), dated February 16, 2021 and filed with the SEC on February 16, 2021, by T. Rowe Price Associates, Inc. ("T. Rowe Price"). T. Rowe Price has sole power to vote or to direct the vote of 11,220,055 shares of common stock and sole power to dispose or to direct the disposition of 22,346,722 shares of common stock.
(5)
Based solely on a Schedule 13G (Amendment No. 11), dated February 8, 2021 and filed with the SEC on February 10, 2021, by The Vanguard Group, Inc.

37


Table of Contents

    ("Vanguard"). Vanguard reports beneficial ownership of shares of itself and its subsidiaries, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia, Ltd., Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited. These Vanguard entities have shared power to vote or to direct the vote of 345,851 shares of common stock, sole power to dispose or to direct the disposition of 23,138,053 shares of common stock, and shared power to dispose or to direct the disposition of 939,509 shares of common stock.

38


Table of Contents

COMMON STOCK OWNERSHIP OF DIRECTORS AND MANAGEMENT

The following table sets forth information, as of March 11, 2021, concerning the beneficial ownership of our common stock by:

    each director or director nominee and each of our named executive officers; and

    all directors and executive officers as a group.
 
  Amount and Nature of
Beneficial Ownership(1)
   
 Name of Beneficial Owner   Shares of
Common Stock
Owned
Directly or
Indirectly(2)
  Shares of
Common Stock
that can be
Acquired within
60 Days(3)
  Total Shares of
Common Stock
  Percent
of
Class

Javed Ahmed

    10,932         10,932     *

Robert C. Arzbaecher(4)

    115,331         115,331     *

William Davisson

    36,191         36,191     *

Deborah L. DeHaas

                *

John W. Eaves

    15,103         15,103     *

Stephen A. Furbacher

    57,548         57,548     *

Stephen J. Hagge

    44,171         44,171     *

Anne P. Noonan

    24,819         24,819     *

Michael J. Toelle

    15,103         15,103     *

Theresa E. Wagler

    24,231         24,231     *

Celso L. White

    11,196         11,196     *

W. Anthony Will(5)

    443,600     1,126,095     1,569,695     *

Christopher D. Bohn

    72,038     192,295     264,333     *

Douglas C. Barnard(5)

    96,375     298,760     395,135     *

Bert A. Frost

    96,176     356,815     452,991     *

Susan L. Menzel

    19,927         19,927     *

All directors and executive officers as a group (19 persons)

    1,188,036     2,256,332     3,434,368     2%

*
Less than 1%
(1)
Unless otherwise indicated, beneficial ownership consists of sole power to vote or direct the vote and sole power to dispose or direct the disposition of the shares listed, either individually or jointly or in common with the individual's spouse, subject to community property laws where applicable.
(2)
The shares indicated include 4,726 shares for each of directors Ahmed, Arzbaecher, Davisson, Eaves, Hagge, Noonan, Toelle, Wagler and White and 8,361 shares for Chairman Furbacher, in each case granted under our 2014 Equity and Incentive Plan, that have not yet vested. These shares of restricted stock can be voted during the vesting period. The table does not include restricted stock units or performance vesting restricted stock units granted to our executive officers under our 2014 Equity and Incentive Plan, as these awards cannot be voted during the vesting period.
(3)
The shares indicated in this column represent shares underlying stock options granted under an equity and incentive plan that have already vested or that will vest within 60 days. The shares underlying these stock options cannot be voted.
(4)
The shares indicated include 18,565 shares held by the Arzbaecher Family Foundation and 175 shares held by one of Mr. Arzbaecher's children, for which Mr. Arzbaecher disclaims beneficial ownership.
(5)
Messrs. Will and Barnard each also hold, respectively, 29,504 and 13,369 additional "phantom" shares as a deemed investment under our Supplemental Benefit and Deferral Plan (a non-qualified benefits restoration and deferred compensation plan). These phantom shares cannot be voted.

39


Table of Contents

POLICY REGARDING RELATED PERSON TRANSACTIONS

We recognize that transactions with related persons can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of the company and its shareholders. Accordingly, as a general matter, it is our preference to avoid such transactions.

Nevertheless, we recognize that there are situations where related person transactions may be in, or not inconsistent with, the best interests of the company and its shareholders, including but not limited to situations where we may obtain products or services of a nature, quantity, or quality, or on other terms, that are not readily available from alternative sources, or when we provide products or services to related persons on an arm's length basis on terms comparable to those provided to unrelated third parties or to employees generally.

In order to deal with the potential conflicts inherent in such transactions, our audit committee has adopted a written policy regarding related person transactions. For the purposes of this policy, a "related person transaction" is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements, or relationships) in which the company was, is, or will be a participant and the amount involved exceeds $120,000, and in which any related person had, has, or will have a direct or indirect material interest, other than (a) transactions where the rates or charges involved in the transaction are determined by competitive bids, or the transaction involves the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; (b) transactions involving services as a bank depositary of funds, transfer agent, registrar, or trustee under a trust indenture, or similar services; (c) transactions in which the interest of the related person derives solely from his or her service as a director of another entity that is a party to the transaction; or (d) transactions in which the interest of the related person derives solely from his or her ownership of less than 10% of the equity interest in another entity (other than a general partnership interest) which is a party to the transaction.

In addition, under our policy regarding related person transactions, transactions involving the purchase of products or services (other than personal or professional services) from an entity for which a director of the company or an immediate family member of a director serves as an executive officer are not considered to involve a material interest on the part of such director (and therefore are not considered related person transactions) if (i) the director did not participate in the decision on the part of the company to enter into such transactions, (ii) the transactions are made in the ordinary course of business and on substantially the same terms as those prevailing at the time for transactions with other unrelated third parties, and (iii) the amount paid in all transactions with any such entity in a twelve-month period is less than the greater of $500,000 or 1% of such entity's consolidated gross revenues for the most recently completed fiscal year for which data is publicly available.

For purposes of the policy, a "related person" means:

any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of the company or a nominee to become a director of the company;

any person who is known to be the beneficial owner of more than 5% of any class of our voting securities;

any immediate family member of any of the foregoing persons; and

40


Table of Contents

any firm, corporation, or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

Under our policy regarding related person transactions, except as described below with respect to certain commercial transactions in the ordinary course of business, any proposed transaction with a related person may be consummated or amended only if approved through the following process:

The general counsel will assess whether the proposed transaction is a related person transaction for purposes of the policy.

If the general counsel determines that the proposed transaction is a related person transaction, the proposed transaction must be submitted to the audit committee for consideration at the next committee meeting or, in those instances in which the general counsel, in consultation with the chief executive officer or the chief financial officer, determines that it is not practicable or desirable for us to wait until the next committee meeting, to the chair of the audit committee (who has been delegated authority to act between committee meetings).

The audit committee, or where submitted to the chair of the committee, the chair, will consider all of the relevant facts and circumstances available to the committee or the chair, including (if applicable) but not limited to: (i) the benefits to the company; (ii) the impact on a director's independence in the event the related person is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder, or executive officer; (iii) the availability of other suppliers or customers for comparable products or services; (iv) the terms of the transaction; and (v) the terms available to unrelated third parties or to employees generally.

The audit committee (or the audit committee chair) will approve only those related person transactions that are in, or are not inconsistent with, the best interests of the company and its shareholders, as the committee (or the audit committee chair) determines in good faith.

The audit committee or the audit committee chair, as applicable, will convey the decision to the general counsel, who shall convey the decision to the appropriate persons within the company.

At the audit committee's first meeting of each fiscal year, the committee will review any previously approved related person transactions that remain ongoing and have a remaining term of more than six months or remaining amounts payable to or receivable from the company of more than $120,000. Based on all relevant facts and circumstances, taking into consideration the company's contractual obligations, the committee will determine if it is in the best interests of the company and its shareholders to continue, modify, or terminate the related person transaction.

In 2020, FMR and certain of its direct and indirect subsidiaries (collectively, "Fidelity") owned in the aggregate more than 5% of our outstanding common stock and, therefore, were considered related persons under our policy regarding related person transactions during 2020. We have agreements in place for Fidelity to provide administrative and trustee services for the company's 401(k) plan, deferred compensation plan, and health savings accounts (HSAs). During 2020, Fidelity earned approximately $253,000 from us and approximately $65,000 from plan participants for these services. At its first meeting in 2021, the audit committee reviewed and approved the transactions with, and ongoing administrative services from, Fidelity in accordance with our policy. As of the end of 2020, Fidelity has not reported

41


Table of Contents

owning more than 5% of our outstanding common stock. As a result, it will not be considered a related person under our policy regarding related person transactions so long as its ownership remains under 5%.

Our policy regarding related person transactions provides that no member of the audit committee will participate in any review, consideration, or approval of any related person transaction with respect to which such member or any of his or her immediate family members is the related person.

42


Table of Contents

PROPOSAL 2: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS ("SAY ON PAY")

Pursuant to Section 14A of the Exchange Act, our shareholders are entitled to an advisory (non-binding) vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement, including in the Compensation Discussion and Analysis (CD&A) beginning on page 46 and the Executive Compensation tables and accompanying narrative discussion beginning on page 81. This proposal is commonly referred to as a "Say on Pay" proposal.

The Board and the compensation and management development committee believe that the compensation of the named executive officers is appropriate for the company and in the best interests of our shareholders over the long term. As discussed in more detail in the CD&A beginning on page 46, our compensation programs are intended to:

      align the interests of our officers with those of our shareholders,
      permit the company to remain competitive in the market for highly qualified management personnel,
      provide appropriate incentives for attainment of both our short-term and long-term goals and
      retain strong performers.

Accordingly, we are asking you to vote FOR the adoption of the following resolution:

    "RESOLVED, that the shareholders of CF Industries Holdings, Inc. approve the compensation of the CF Industries Holdings, Inc.'s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion."

As an advisory vote, this proposal is not binding on the company. Although the vote is non-binding, the Board and the compensation and management development committee value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

We currently hold our advisory "Say on Pay" proposal every year. Therefore, the next advisory "Say on Pay" proposal will be held at our 2022 annual meeting. Shareholders will have an opportunity to cast an advisory vote on the frequency of "Say on Pay" proposals at least every six years. We currently expect that the next advisory vote on the frequency of the "Say on Pay" proposals will occur at the 2023 annual meeting of shareholders.

Board Recommendation

The Board unanimously recommends that you vote FOR the Say on Pay proposal.

43


Table of Contents

EXECUTIVE OFFICERS

Set forth below is certain biographical information for our executive officers other than Mr. Will (whose biographical information appears above under the heading "Director Nominee Biographies"). Each of our executive officers, other than Mr. Hopkins, also served in the comparable officer positions with Terra Nitrogen GP Inc. ("TNGP") as he or she has held with CF Industries from April 2010 until April 2018. TNGP was our indirect, wholly-owned subsidiary and the sole general partner of Terra Nitrogen Company, L.P., a publicly-traded producer of nitrogen fertilizer products. In April 2018, we purchased all of the publicly traded common units of Terra Nitrogen Company, L.P. In the biographical information set forth below, the ages of our executive officers are as of March 23, 2021.

Douglas C. Barnard (age 62) has served as our senior vice president, general counsel, and secretary since January 2012 and was previously our vice president, general counsel, and secretary from January 2004 to December 2011. Mr. Barnard served as a director of TNGP from June 2010 to April 2018 and as chairman of the board of TNGP from February 2016 to April 2018. Prior to joining CF Industries in January 2004, Mr. Barnard had been an executive vice president and general counsel of Bcom3 Group, Inc., an advertising and marketing communication services group. Earlier in his career Mr. Barnard was a partner in the law firm of Kirkland & Ellis LLP and, prior to that, was vice president, general counsel, and secretary of LifeStyle Furnishings International Ltd., a manufacturer and distributor of residential furniture and decorative fabrics. He holds a B.S. degree from the Massachusetts Institute of Technology ("M.I.T"), a J.D. degree from the University of Minnesota, and an M.B.A. degree from the University of Chicago. Mr. Barnard has also taught as a lecturer at the University of Chicago Law School, and serves as a member of the M.I.T Corporation Development Committee.

Christopher D. Bohn (age 53) has served as our senior vice president and chief financial officer since September 2019. He was previously 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. Mr. Bohn served as a director of TNGP from February 2016 to April 2018. 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. He holds a B.S. degree in finance from Indiana University and an M.M. degree (M.B.A.) from the Kellogg Graduate School of Management at Northwestern University.

Linda M. Dempsey (age 57) has served as our vice president, public affairs, since March 2020. Prior to joining CF Industries, Ms. Dempsey served as vice president, international economic affairs, for the National Association of Manufacturers from September 2012 to February 2020 where she represented the manufacturing sector on international trade, investment, intellectual property and regulatory policies, legislation and agreements. Prior to the National Association of Manufacturers, Ms. Dempsey served as vice president of the Emergency Committee for American Trade from December 2000 to August 2012. Ms. Dempsey holds a B.A. in political science from The Pennsylvania State University and a J.D. degree from Boalt Hall School of Law, University of California at Berkeley.

Bert A. Frost (age 56) has served as our senior vice president, sales, market development, and supply chain, since May 2016. He was previously our senior vice president, sales, distribution, and market development, from May 2014 to May 2016, our senior vice president, sales and

44


Table of Contents

market development, from January 2012 to May 2014, and our vice president, sales and market development, from January 2009 to December 2011. Before joining CF Industries in November 2008, Mr. Frost spent over 13 years with Archer Daniels Midland Company, where he served most recently as Managing Director — International Fertilizer/Inputs from June 2008 to November 2008 and Director — Fertilizer, Logistics and Ports Divisions, ADM — Brazil from April 2000 to June 2008. Earlier in his career, Mr. Frost held positions of increasing responsibility at Archer Daniels Midland and Koch Industries, Inc. He holds a B.S. degree from Kansas State University and he is a graduate of the Harvard Business School's Advanced Management Program.

Richard A. Hoker (age 56) has served as our vice president and corporate controller since November 2007. Mr. Hoker served as a director of TNGP from January 2014 to April 2018 and previously served as a director of TNGP from September 2010 to August 2011. Before joining CF Industries, Mr. Hoker spent over 11 years with Sara Lee Corporation, where he served most recently as vice president and controller from January 2007 to November 2007 and principal accounting officer from July 2007 to November 2007. Prior to being named controller, Mr. Hoker held other financial management positions of increasing responsibility at Sara Lee. Prior to joining Sara Lee, Mr. Hoker was a member of the financial advisory services consulting group at Coopers & Lybrand LLP in Chicago (now PricewaterhouseCoopers) and previously led teams in the firm's audit practice. Mr. Hoker holds a B.S. degree in accounting from DePaul University and an M.B.A. degree in finance and accounting from the University of Chicago. He is a certified public accountant.

David P. Hopkins (age 64) has served as our managing director, CF Fertilisers UK, since October 2015. He was previously our director, sales, from July 2010 to October 2015. Mr. Hopkins was director of sales for Terra Industries, which was acquired by CF Industries, from September 2006 to July 2010 and director of industrial sales at Terra Nitrogen, UK from January 1999 to September 2006. Mr. Hopkins has a degree in Agriculture from Reading University and a Diploma in Company Direction from the Institute of Directors in London. Mr. Hopkins has informed us he intends to retire from CF Industries on April 30, 2021.

Ashraf K. Malik (age 55) has served as our senior vice president, manufacturing and distribution, since September 2019. He was previously our Vice President, Site Operations, from January 2012 to September 2019. Prior to joining CF Industries, Mr. Malik served as director of manufacturing for GrowHow UK Ltd from 2007 to 2012. Earlier in his career, Mr. Malik held positions of increasing responsibility in engineering and plant operations management at Terra Industries Inc. and ICI Plc. Mr. Malik holds a BSc degree in engineering from City, University of London.

Susan L. Menzel (age 55) has served as our senior vice president, human resources, since October 2017. Prior to joining CF Industries, Ms. Menzel served as executive vice president, human resources, for CNO Financial Group, Inc., a holding company for a group of insurance companies operating throughout the United States, from May 2005 to October 2017. Prior to CNO Financial Group, she served as senior vice president, human resources for APAC Customer Services, Inc., and in roles of increasing responsibility for Sears, Roebuck & Company and Montgomery Ward, Inc. Ms. Menzel holds a bachelor's degree in business administration and economics from Augustana College.

45


Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis discussion provides you with a detailed description of our compensation program for our named executive officers (NEOs) for 2020. It also provides an overview of our compensation philosophy and our policies and programs, which are designed to achieve our compensation objectives.

NAMED EXECUTIVE OFFICERS

Our NEOs for 2020 were:

Name

Title
W. Anthony Will   President and Chief Executive Officer
Christopher D. Bohn   Senior Vice President and Chief Financial Officer
Douglas C. Barnard   Senior Vice President, General Counsel, and Secretary
Bert A. Frost   Senior Vice President, Sales, Market Development, and Supply Chain
Susan L. Menzel   Senior Vice President, Human Resources


TABLE OF CONTENTS

46


Table of Contents

OVERVIEW OF OUR BUSINESS AND STRATEGY

Business Overview and Corporate Strategy

At CF Industries, our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network — the world's largest — to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our nine manufacturing complexes in the United States, Canada, and the United Kingdom, an unparalleled storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world's transition to clean energy. Our best-in-class operational capability and disciplined capital and corporate stewardship — supported by a culture rooted in our core values that we live each and every day — drive business results that create long-term value for all our stakeholders. Our strategy is reviewed and endorsed annually by our Board and the Board plays an active role in overseeing the successful execution of our strategy.

For more information on our business, see "Item 1. — Business" and "Item 7. — Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2020 Annual Report.

GRAPHIC

Our Commitment to a Clean Energy Economy

In October 2020, we announced that we are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia. Since ammonia is one of the most efficient ways to transport and store hydrogen and is also a fuel in its own right, we believe that CF Industries, as the world's largest producer of ammonia with an unparalleled manufacturing and distribution network and deep technical expertise, is uniquely positioned to fulfill anticipated demand for hydrogen and ammonia from green and blue sources. Our approach will focus on green ammonia production, which refers to

47


Table of Contents

ammonia produced through a carbon-free process, and blue ammonia, which relates to ammonia produced by conventional processes but with CO2 removed through carbon capture and sequestration (CCS) and other certified carbon abatement projects. We have announced an initial green ammonia project at our flagship Donaldsonville Nitrogen Complex to produce approximately 20,000 tons per year of green ammonia. Additionally, we are developing CCS and other carbon abatement projects across our production facilities that will enable us to produce blue ammonia.

Our Approach to Human Capital Management

Our long-term success depends on our people. We are dedicated to creating a workplace where employees are proud to work and grow and everyone feels empowered to do their best work. We do this by investing in extensive recruitment, training and professional development opportunities for our employees and fostering diversity and inclusion in CF Industries' culture. In addition, we have an effective succession management process to safeguard the long-term achievement of our strategy.

Culture, Inclusion and Diversity

Doing the right thing is the cornerstone of our culture and is a significant factor in our success. Our culture is rooted in our core values — We Do It Right, We Do It Well, We Execute as a Team and We Take a Long-Term View — which you can read more about on our website at www.cfindustries.com.

Our core values and their underlying principles reflect our commitment to a diverse and inclusive culture, treating one another with respect. During 2020, all of our employees engaged in training to learn to recognize and address the effects of unconscious bias by challenging assumptions; encouraging diversity of experience, opinion, and expression; and supporting a workplace culture that actively strives to be more inclusive. In order to continue to improve the inclusiveness and diversity of our company and culture, our recently announced comprehensive ESG goals include goals to increase the representation of females and persons of color in senior leadership roles and to implement a program designed to increase the hiring and promotion of minority and female candidates.

Workforce Health & 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 and processes that provide a clear, repeatable direction toward excellence.

    Superior performance that aligns effective and efficient environmental, health, and safety activities with operations.

Our commitment to safety is unwavering, and we have demonstrated that our focus on this priority is yielding positive results. We believe that focusing on leading indicators — such as the behavioral safety practices 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.

48


Table of Contents

Responding to Coronavirus

In response to the COVID-19 pandemic, we instituted safety precautions early in the year to protect the health and well-being of all of our employees, including the manufacturing workforce who operate our manufacturing complexes and distribution facilities. These safety measures included installing thermal temperature checks at each of our sites for all personnel, including contractors, who arrive at our sites, adjusting schedules to support social distancing, including changes to loading and shipping procedures, maintaining a close contact log for employees, self-quarantine logs, requiring face coverings on site, restricting visitor access, and implementing enhanced cleaning protocols and travel restrictions for employees. We also paid approximately $19 million of bonuses to our operational workforce under a special COVID-19 bonus program, which concluded in June. In addition, since mid-March 2020, the majority of our non-operational personnel at our sites who work in administrative and operational support functions have worked remotely in order to maintain social distancing following governmental guidelines. These administrative and operational support functions have operated effectively during this period, meeting our commitments to our customers and continuing to manage our business without interruption. We have not furloughed any employees or instituted any reductions in pay or benefits or other significant cost containment measures due to the pandemic.

Talent Development

A core aspect of our culture is our commitment to identifying and developing talent to help employees accelerate growth and achieve their career goals. We invest in extensive assessment, training and professional development opportunities for our employees through a robust set of formal and informal programs, including targeted job movements, key experiences, and training with an emphasis on creating a culture of inclusion. At CF, leadership is the quality that drives our values and sets us apart. To help foster leadership, the company has developed a set of leadership competencies that provide a common language for how to demonstrate leadership at every level of the organization. We view training and development programs as being a key part of succession planning, allowing us to grow a stronger company, today and in the future.

2020 Performance Highlights

Operating Results

    Net Earnings
Attributable to
Common Stockholders
      Earnings Per
Diluted Share
      EBITDA(1)       Net Cash Provided by
Operating Activities
   
    $317 Million       $1.47       $1.32 Billion       $1.23 Billion    

Annual Incentive Plan Performance Metrics

    Adjusted EBITDA(2)       Behavioral Safety
Gate Threshold
      Gross Ammonia
Production
   
    $1.34 Billion       Achieved 99%       10.4 Million Tons    
    Target: $1.6 Billion       Threshold: ³ 95%(3)       Target: 10.0 Million Tons    

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 at the end of each calendar year. Management prepares the company's annual business plan and reviews it in detail with the Board. Management prepares the annual business plan through a rigorous process utilizing a combination of factors, including management's view of current industry conditions, recent historical performance, internal forecasts, as well as external public market indicators.

49


Table of Contents

Going into 2020, industry fundamentals were expected to continue to be supportive, with global nitrogen prices somewhat lower than those realized during 2019 mostly offset by slightly lower natural gas feedstock prices, based on expectations reflected in forward market curves. In addition, the company expected to return to operating rates consistent with our historical performance for scheduled downtime for turnaround and maintenance activity rather than the exceptional capacity utilization rates seen in 2019. Actual financial results in 2020 did not meet the company's plan, as product prices declined more than anticipated and were not offset by lower than expected natural gas and SG&A costs — contributing to lower revenue and margins. During 2020, the decline in margins was partially offset by an increase in sales volume, as we exceeded our production goals in part due to our best-in-class operational capabilities that enable us to produce more product than other comparable manufacturers.

Additionally, the company continued to deliver on its strategic priorities and create long-term shareholder value.

    Safety       As of December 31, 2020, the company's 12-month rolling average recordable incident rate was 0.14 incidents per 200,000 work hours — an industry leading result    
    Operational Excellence       Long-term asset utilization-and-production is approximately 13 percent higher than the average utilization rate of our North American competitors    
    Efficiency       SG&A costs as a percent of sales remain among the lowest in both the chemicals and fertilizer industries    
    Return to Shareholdersù       Returned $358 million to shareholders through $100 million in share repurchases and $258 million in dividend payments    
    Clean Energy Commitment       In October 2020, we announced that we are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia    
    Comprehensive ESG Goals       In line with our commitment to the clean energy economy, we have published comprehensive environmental, social and governance goals covering critical environmental, societal, and workforce imperatives    

(1)             EBITDA is defined as net earnings attributable to common stockholders plus interest expense-net, income taxes and depreciation and amortization. See Appendix A for a reconciliation of EBITDA 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.

(3)             The Secondary Metric, Tons of Ammonia Produced, has a behavioral safety gate threshold. If at least 95% of the aggregated safety grades of all employees at manufacturing sites were a "B" 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 Secondary Metric.

50


Table of Contents

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 longer time horizon than just one year. 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, 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, 2020.


Total Shareholder Return (TSR)

GRAPHIC

Each of the peer group companies is or was a publicly traded manufacturer of agricultural chemical fertilizers. The companies comprising the peer group are:

Agrium,  Inc.*

 

The Mosaic Company

 

LSB Industries,  Inc.

Incitec Pivot Limited

 

OCI N.V.**

 

Potash Corporation of Saskatchewan Inc.*

Nutrien Ltd.*

 

CVR Partners LP**

 

Yara International ASA

*
Agrium, Inc. (Agrium) and Potash Corporation of Saskatchewan Inc. (Potash Corp) are included in the peer group from December 31, 2010 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. was included in the peer group for the period from January 2, 2018 through December 31, 2020.

**
CVR Partners LP and OCI N.V. were excluded from the calculation of the 10-year total shareholder return because they each had less than 10-years of trading history.

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, 2020, 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 date used to establish the beginning stock price. 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.

51


Table of Contents

COMPENSATION PROGRAM OVERVIEW

Compensation Program Highlights

Our exeuctive compensation practices are overseen and administered by the compensation and management development committee, which is comprised exclusively of independent directors. The committee is responsible for designing an executive compensation program — including approving any changes to it — that effectively incentivizes our executives to create long-term value for our shareholders.

        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. 55    
   
   
Key Elements of
Compensation Program


  Salary   Paid in line with individual performance and contribution to company goals and aligned to competitive market data       P. 56; 60    
   
        Annual Cash Incentives*   The amount of the actual incentive earned is determined based on our level of achievement of two performance metrics:

75%: level of achievement of Adjusted EBITDA** (Primary Metric)

25%: level of achievement of ammonia production goals, subject to first achieving a gating level of behavioral safety practices goals (Secondary Metric)

      P. 56;

60-65

   
   
        Long-Term Equity Incentives   A specified cash value amount is split among two different equity award types:

60%: 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%: RSUs (3-year ratable vesting)

      P. 56;

65-70

   
   
   
Rigorous Benchmarking and
Incentive Target Setting


  Bench-marking   Our total direct compensation is targeted at the 50th percentile of our Industry Reference Group, which is comprised of 17 companies in related industries, and the overall general industry market data.       P. 58-59    
   
        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. 56-59;

60-65;

66-72

   
   
   
Leading Compensation
Governance Practices


  Our leading compensation governance practices include:

Strong pay-for-performance alignment

Robust clawback policy covering incentive awards

Stock ownership guidelines

Performance metrics that align executive interests with interests of shareholders

A majority of compensation for CEO and other executive officers is performance-based, at risk, and paid in equity

    

No employment agreements

No repriced stock options

Minimal perquisites

Executive officers are prohibited from hedging or pledging our stock

No new excise tax gross-ups after 2011 (CEO, CFO and SVP-HR have no such gross-up)

   
   
*
See "— Compensation Discussion and Analysis: In Detail — 2021 Compensation Actions" below for a discussion of changes to our performance metrics and weightings for 2021.

**
For the definitions of Adjusted EBITDA and RONA, see " — Compensation Discussion and Analysis: In Detail — Key Elements of NEO Compensation Program — Our Metrics Defined."

52


Table of Contents

2020 Target Total Compensation

The compensation and management development committee believes the majority of compensation should be composed of awards that are performance-based — with direct ties to the company and individual employee performance. The significant majority of each NEO's target compensation is at-risk based on company performance.

2020 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 2020:

GRAPHIC

AIP: Annual Incentive Plan (annual bonus), cash settled LTIP:

Long-Term Incentive Plan, denominated in equity

2020 CEO Target Total Compensation

The compensation and management development committee increased our CEO's base salary and target values of his annual incentive award and long-term incentive award for 2020. These new amounts are in line with our Industry Reference Group (described in greater detail below) and the overall general industry survey data. Prior to this increase, the CEO's base salary and target value of his annual incentive award had remained unchanged since the 2016 fiscal year. The CEO's target annual incentive level of 135% of base salary for 2020 was unchanged from the last four years, and the increase in the target value of his annual incentive award is a result of the increase in base salary only. The committee believes the minimal changes over several years underscores that our executive compensation program is appropriately aligned with performance and that salaries and the target value for incentive awards are appropriately benchmarked.

 

Pay Element

 
2020


2019


% Change

 

Salary

  $ 1,250,000   $ 1,150,000     9 %  

 

Target Annual Incentive

  $ 1,687,500   $ 1,552,500     9 %  

 

Target Long-Term Incentive

  $ 6,000,000   $ 5,900,009     2 %  

 

Total

  $ 8,937,500   $ 8,602,509     4 %  

53


Table of Contents

Shareholder Engagement

Our Board recognizes the importance of executive compensation decisions to our shareholders. The annual say-on-pay advisory vote provides our shareholders with the opportunity to:

    Evaluate our executive compensation philosophy, policies and practices;
    Evaluate the alignment of the compensation of our NEOs with our results; and
    Cast an advisory vote to approve the compensation of our NEOs.

At the 2020 annual meeting of shareholders, the say-on-pay advisory vote received majority support, with approximately 96% of the votes cast in favor of our executive compensation policies, practices and determinations. Our Board encourages an open and constructive dialogue with shareholders on compensation to ensure alignment on policies and practices.

We invite all shareholders to provide feedback to us on our compensation programs. As discussed in "Proposal 1: Election of Directors — Corporate Governance Shareholder Engagement," we extended engagement requests to shareholders representing 75% of outstanding shares during both our spring and fall outreach campaigns. Shareholders who provided feedback on our compensation programs generally reported that executive compensation at CF Industries was reasonable and well-aligned to performance. No consistent or prevalent concerns were raised from our engagements. During our fall campaign, we received positive feedback on our intention to align a portion of our annual incentive plan performance metrics with our recently published comprehensive ESG goals. Details of those changes are discussed below under the heading "— Compensation Discussion and Analysis: In Detail — 2021 Compensation Actions."

We will continue to regularly review (along with our outside compensation consultant) our executive compensation programs to ensure alignment with our compensation philosophy, and we are committed to continuing our dialogue with shareholders so that we can be proactive in responding to emerging industry trends and be responsive to shareholder concerns.

54


Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS: IN DETAIL

Compensation Philosophy

Our compensation and management development committee has adopted a compensation philosophy that 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 NEOs. 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.

Our executive compensation program is designed to reward executives for their contributions to our short-term and long-term results. Annual cash incentive compensation is based on the achievement of annual performance goals while the majority of executives' long-term incentive opportunity is based on performance against criteria that are correlated with both annual and long-term shareholder value.

Our goal is to provide direct compensation to our NEOs that is market competitive with other comparable companies. To obtain a general understanding of current compensation practices, the compensation and management development committee received in 2020 a market assessment from its independent outside compensation consultant, Exequity LLP ("Exequity"), that was derived from published survey compensation data, which Exequity adjusted for variations in revenue among the included companies. To further gauge the competitiveness of our total compensation offering, we also compare ourselves against our Industry Reference Group, which is a group of 17 similar companies in related industries. Additional information regarding this group of companies is set forth below under the heading "Use of Industry Reference Group."

Incentive opportunities are structured in a way that recognizes our cyclicality and emphasis on a team-based culture.

55


Table of Contents

Key Elements of NEO Compensation Program

Component   Key Characteristics and Rationale

Salary

 

We seek to pay salaries in line with individual performance and contribution to company goals.

 

In the aggregate, base salaries of our NEOs 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. Individual performance and potential, relative criticality of the individual position in relation to achievement of the company's goals, and business affordability are also considered in determining base salaries.

 

To maintain our desired market position, we conduct annual salary reviews.

Short-Term Incentives

 

Variable compensation component that provides executive officers and other employees with the opportunity to earn additional annual cash 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.

 

Short-term incentives are also targeted at the market median, and achievement of these awards depends on attaining corporate performance goals.

 

For 2018, 2019 and 2020, the short-term incentive earned was determined based on our level of achievement of the following primary and secondary performance metrics: 75% based on our level of achievement of Adjusted EBITDA and 25% based upon our level of achievement of specified ammonia production goals, subject to first achieving a gating level of behavioral safety practices goals ("safety gate").

Long-Term Incentives

 

Variable compensation component that focuses on enterprise value creation and employee retention. Long-term incentives are provided through annual stock-based awards.

 

Participation is extended to executive officers and other key employees. Eligibility guidelines with award ranges reflecting position responsibility levels and competitive market practices are updated annually. The guidelines allow for individual variation in long-term incentives based on performance level, potential contribution, and value to the business.

 

In general, long-term incentives for our executive officers are targeted at the market median with the opportunity to receive above market awards for excellent performance.

 

Long-term incentive awards granted to our NEOs in connection with setting target compensation for 2018, 2019 and 2020 were based on a specified cash value, which amount was split among two different award types — 60% PRSUs and 40% RSUs.

 

PRSUs awards are subject to three-year vesting criteria based on:

 

o

Average return on net assets (RONA) over three one-year periods

 

o

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 against a threshold, target, and maximum level of performance

56


Table of Contents

Compensation Metrics Tie to Business Strategy

The compensation and management development committee selects 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, as indicated below:

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    
    Behavioral Safety Practices   The "safety gate" underscores our commitment to CF's "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.    
    Ammonia
Production
  Focus on operational excellence in terms of operational execution and asset utilization will help create value and aligns with recent investments in our production capabilities    

 

Long-Term Incentives
     
    Metric   Alignment

 
    Return on
Net Assets (RONA)
  RONA is typically 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    

Our Metrics Defined

As described above, our annual incentive plan uses Adjusted EBITDA as its primary performance metric and our long-term incentive program uses average return on net assets, or RONA, for the PRSU three-year performance criteria.

    EBITDA is defined as net earnings attributable to common stockholders plus interest expense-net, income taxes and depreciation and amortization.
    Adjusted EBITDA is defined under the annual incentive plan as EBITDA as adjusted for certain items, including:(i) unrealized mark to market losses (gains) on hedges; (ii) unrealized and realized losses (gains) associated with foreign exchange on intercompany loan activity or foreign denominated intercompany payables and receivables; (iii) acquisition or disposition related transaction costs or fees; (iv) integration costs for acquisitions; (v) losses (gains) on the disposition of equity investments in joint ventures; (vi) restructuring, exit, impairments, system implementation costs or similar types of costs; (vii) non-capitalized expansion project costs; (viii) losses (gains) recognized due to the acquisition or disposal of a business or group of assets, that represents a major portion of the business; (ix) losses (gains)

57


Table of Contents

      associated with regulatory changes (e.g. regulatory tax code changes); and (x) losses (profits) associated with divestitures (acquisitions) completed during the year.

    Average Return on Net Assets (RONA) is determined by reference to the ratio (expressed as a percentage) of Adjusted EBITDA divided by average operational assets. The "average operational assets" denominator of this metric is determined under the long-term incentive program essentially as the simple average of the beginning and year-end values for total assets as adjusted for certain items, including: (i) cash and cash equivalents; (ii) restricted cash; (iii) short-term investments; (iv) investments in marketable equity securities; (v) prepaid income taxes; (vi) total current liabilities; (vii) long-term deferred income taxes; (viii) other noncurrent liabilities; (ix) assets associated with major capital projects (as approved by the compensation and management development committee); (x) net assets associated with acquisitions and divestitures completed during the year; (xi) asset or liability changes associated with regulatory changes (e.g. regulatory tax code changes); (xii) short-term debt or notes payable included in current liabilities; and (xiii) short-term lease liabilities.

The Compensation Process

Allocation of Compensation Elements

We provide a mixture of cash compensation and non-cash compensation to our NEOs. The cash portion consists primarily of base salaries and short-term incentive awards. The non-cash portion consists primarily of stock-based long-term incentive awards.

Our allocation among base salary, short-term incentives, and long-term incentives varies significantly by management level, reflecting individual responsibility levels and competitive market practices. In general, our more senior executive officers receive a greater percentage of their total expected compensation in the form of incentives (particularly long-term incentives) and a correspondingly lower percentage in the form of salary.

In addition to using benchmark survey data, we also consider internal factors that may cause us to adjust particular elements of an individual executive officer's compensation. These factors may include an individual's operating responsibilities, management level, tenure, potential, and performance in the position.

To assist in its evaluation, our compensation and management development committee reviews the details of an executive's historical and proposed compensation as described below, including a review of our NEOs' existing base salaries and target annual incentive levels in connection with the approval of their new base salaries and target annual incentive levels for the following year.

In addition, four times per year the compensation and management development committee reviews reports regarding our NEOs' holdings and transactions involving our stock, including our NEOs' holdings of stock and long-term stock-based incentive awards, stock option exercises, purchases, sales and gifts of stock, and surrenders of vested shares of restricted stock in order to satisfy withholding tax requirements, as applicable.

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

58


Table of Contents

potential of each NEO in setting actual compensation; therefore, total direct compensation can be above or below the 50th percentile for different NEOs.

Committee Process for Incentive Target-Setting

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. Management prepares the company's annual business plan and reviews it in detail with the Board. Management prepares the annual business plan through a rigorous process utilizing a combination of factors, including management's view of current industry conditions, recent historical performance, internal forecasts, as well as external public market indicators.

Our industry is inherently cyclical, and our financial results are significantly impacted by the pronounced effects of highly volatile commodity prices for our fertilizer products as well as for natural gas, which is our principal feedstock. As a result, the industry conditions in existence during any given fiscal year can be dramatically different from, and have no significant bearing on, the conditions that will exist in the following year. Accordingly, the target performance levels set by the compensation and management development committee for our annual incentive program for any given year may be higher or lower or unchanged from the levels set in the prior year.

In addition to cyclicality, the calendar timing of the compensation and management development committee's decision-making process around target-setting for our incentive compensation programs is particularly important to understanding its limited visibility into certain external factors that have the potential to significantly impact our financial and operating results, including natural gas prices, international trade policies, geopolitics, currency fluctuations, weather, etc.

Illustrative Timeline for Compensation and Management Development Committee Process
               
    May

    October

    December – February

 
   

Review of current compensation trends and issues

Independent Compensation Consultant provides an analysis of current and potential peers based on strategy, business structure, and industry

         

Evaluation of STI and LTI program outcomes against overall program design, stated goals, and alignment with strategy

Review of current/future compensation program objectives, design, and goals

Review of proxy peer analysis and overall general industry benchmark market data against our NEOs

STI and LTI metrics for upcoming year established

         

Completion of internal budget forecasting, incorporating supply-demand forecasts with external market prices such as natural gas futures strips

Setting STI and LTI performance goals and targets taking into account the previous year's financial performance, market trends and the company's annual business plan

   

59


Table of Contents

Review and Approval of 2020 Cash Compensation

In setting cash compensation levels for 2020, the compensation and management development committee reviewed the base salaries and target annual incentives for our NEOs that had been in effect for 2019.

In connection with its review, the compensation and management development committee reviewed several reports from its outside compensation consultant, Exequity, to obtain a general understanding of current compensation practices. In performing its market assessment, Exequity used published survey compensation data, and adjusted for variations in revenue among the included companies.

In addition, the compensation and management development committee reviewed information provided by the compensation consultant regarding the publicly reported cash compensation of NEOs of the group of companies in our Industry Reference Group, which is comprised of 17 companies in related industries. Additional information regarding this group of companies is set forth below under the heading "Use of Industry Reference Group."

The compensation and management development committee also considered cash compensation recommendations from our chief executive officer for 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.

Review of Base Salary Compensation

During its review of NEO's base salaries, 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 seek to pay salaries in line with individual performance and contribution to company goals.

    In the aggregate, base salaries 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.

    Individual performance, relative criticality of the individual position in relation to achievement of the company's goals, and business affordability are also considered in determining base salaries.

    We conduct annual salary reviews and make salary adjustments as necessary to maintain our desired market position.

    Additional information regarding these goals and objectives is set forth above under the headings "Compensation Philosophy" and "Components of Compensation."

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 strategic objectives. 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. Our primary metric for each of the last five years has been Adjusted EBITDA at a weighting of 50% to 75%. For 2018, the compensation and management development committee introduced a new secondary metric, a level of achievement of an ammonia production goal, subject to first achieving a gating level of behavioral safety practices goals.

60


Table of Contents

The committee believed a focus on operational excellence would drive the company to safely maximize operational execution and asset utilization. The changes to our secondary metric for 2018 also demonstrated our commitment to safety and the "Do It Right" culture. For 2019, the committee maintained the same secondary metric relating to the achievement of ammonia production goals, subject to first achieving a gating level of behavioral safety practices goals.

During its review of our short-term incentive program for 2020, 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 to reflect our evolving strategic priorities. Accordingly, the compensation and management development committee decided to maintain the secondary metric relating to our achievement of ammonia production goals, subject to first achieving a gating level of behavioral safety practices goals, which reflects our focus on safely operating our facilities and ammonia production. Notably, Adjusted EBITDA — the primary metric we use and that is used by our investors to evaluate our profitability — has been our primary metric for the last five years.

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 fertilizer 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 "Components of Compensation."

61


Table of Contents

Selection of Primary and Secondary Performance Metrics for 2020

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 2020 would be based upon our level of achievement of the following primary and secondary performance metrics:

    75% of each executive's annual incentive payment opportunity was based upon our level of achievement of Adjusted EBITDA for 2020 (the "Primary Metric"); and
    The remaining 25% was based upon our level of achievement of ammonia production, subject to first achieving a gating level of behavioral safety practices goals (the "Secondary Metric").

These primary and secondary performance metrics and their 75% and 25% weightings, respectively, were unchanged from our 2018 and 2019 annual incentive programs.

Selection of Performance Levels for Primary Performance Metric for 2020

The compensation and management development committee established the following performance levels and corresponding percentages of target opportunity earned with respect to the Primary Metric for 2020:

Performance Level

  Primary Metric

Adjusted EBITDA Achieved


 
Percentage of
Primary Metric
Target Award Earned


 
 

Below Threshold

  Less than $1.1 billion   0%    

Threshold

  $1.1 billion   50%    

Target

  $1.6 billion   100%    

Maximum

  $1.8 billion   200%    

Straight line interpolation is used to determine the achievement percentage for the Primary Metric between threshold and target and between target and maximum performance levels.

Selection of Performance Levels for Secondary Performance Metric for 2020

For the Secondary Metric, 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 grade (A through F) for each hourly group and individual manager is assigned. Under the Secondary Metric, the quarterly grades issued to all site employees were aggregated. If at least 95% of the grades were "B" 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 Secondary Metric.

The compensation and management development committee established the following ammonia production performance levels and corresponding percentages of target opportunity

62


Table of Contents

earned with respect to the Secondary Metric for 2020, subject to first achieving the safety performance gating requirement:

Performance Level

  Secondary Metric

Tons of Ammonia Produced


 
Percentage of
Secondary Metric
Target Award Earned


 
 

Below Threshold

  Less than 9.5 million tons   0%    

Threshold

  9.5 million tons   50%    

Target

  10.0 million tons   100%    

Maximum

  10.3 million tons   200%    

Straight line interpolation is used to determine the achievement percentage for the Secondary Metric between threshold and target and between target and maximum performance levels.

The compensation and management development committee retained discretion to adjust the performance levels to address circumstances that impact our ability to meet production expectations, such as market-based curtailments, severe weather events or other events of force majeure that result in production outages, and other adjustments approved by the compensation and management development committee.

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. Going into 2020, industry fundamentals were expected to continue to be supportive, with global nitrogen prices somewhat lower than those realized during 2019 mostly offset by slightly lower natural gas feedstock prices, based on expectations reflected in forward market curves. In addition, the company expected to return to operating rates consistent with our historical performance for scheduled downtime for turnaround and maintenance activity rather than the exceptional capacity utilization rates seen in 2019. As a result, the compensation and management development committee set the target performance level for the Primary Metric at the same level as the actual results achieved in 2019, and set the Secondary Metric at the same level as the target level set in 2019. Maximum performance for both metrics was 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.

63


Table of Contents

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 2014 through 2020 demonstrates our pay for performance linkage in the annual incentive program.


Adjusted EBITDA Targets, Actual Results, and Percentage Payouts(1)

GRAPHIC


(1)
Reflects payout percentage on the annual incentive program metric associated with Adjusted EBITDA. For 2016-2020, Adjusted EBITDA was the primary metric under the company's annual incentive program (with a weighting of 50% in 2016 and 75% in 2017, 2018, 2019 and 2020).

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 2020 that utilizing Adjusted EBITDA as the Primary Metric and ammonia production as the Secondary Metric would align the interests of our executive officers with the interests of our shareholders and reflect our team-based culture. The committee determined to condition payout on the Secondary Metric to first achieving the "safety gate" to underscore the company's commitment to our "Do It Right" culture and complement 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.
    Superior performance that aligns effective and efficient environmental, health, and safety activities with operations.

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 behavioral safety practices we have incorporated into our annual incentive plan to drive and measure activities that prevent and control safety incidents, results in our industry-leading

64


Table of Contents

safety record. During 2020, we set an important company record with our trailing 12 month recordable injury rate of 0.14 for the twelve months ended December 31, 2020 — the lowest year-end rate we have ever achieved as a company.

Approval of Base Salaries and Target Annual Incentive Awards for 2020

Based on its review of the general, company-specific, and competitive considerations described above, in December 2019, the compensation and management development committee approved base salaries and target annual incentive awards for our NEOs for calendar year 2020. In setting compensation levels for 2020, the compensation and management development committee considered a competitive market assessment performed by Exequity, the committee's outside compensation consultant, 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. The increase in base salary for Mr. Will, our chief executive officer, is the first such increase to his base salary since the 2016 fiscal year. The target annual incentive level did not increase from 2019 to 2020 for any of our 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 2020 and 2019:

 

 

  Base Salary

    Target Annual
Incentive Level


 
                   

 

Name

  2019

2020

Increase

    2019

2020

Increase

 

 

W. Anthony Will

  $1,150,000   $1,250,000   9%           135%   135%   0%    

 

Christopher D. Bohn

  $600,000   $625,000   4%           80%   80%   0%    

 

Douglas C. Barnard

  $540,000   $565,000   5%           80%   80%   0%    

 

Bert A. Frost

  $600,000   $625,000   4%           80%   80%   0%    

 

Susan L. Menzel(1)

  $525,000   $525,000   0%           75%   75%   0%    
(1)
Ms. Menzel's base salary was increased during 2019 from $500,000 to $525,000 following her assumption of additional responsibilities as the executive overseeing information technology. In addition, her target annual incentive level was increased from 70% to 75% in 2019 in connection with her increased responsibilities.

Approval of Annual Incentive Payments for 2020

Following the end of 2020, management prepared a report on our level of achievement of the Primary Metric (Adjusted EBITDA), the threshold gate of behavioral safety performance, and the Secondary Metric (Production of Ammonia Tons) under the short-term incentive plan. 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 105.6% of the executive's target opportunity with respect to the executive's annual incentive award for 2020. This result is based on our attainment of Adjusted EBITDA of $1.34 million, which resulted in a payout percentage for the Primary Metric of 74% and, after first achieving the gating level of behavioral safety practices goals, our production of 10.4 million ammonia tons equated to a payout percentage for the Secondary Metric of 200%.

Review and Approval of 2020 Long-Term Incentives

The compensation and management development committee reviewed our long-term incentive program during 2019 and granted long-term stock-based incentive awards to our NEOs in January 2020.

65


Table of Contents

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 fertilizer products upon our operating results.

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 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 2014 Equity and Incentive Plan allows the use of stock options, full-value shares, and cash-based awards. Eligibility is extended to executive officers and other key employees. Eligibility 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 2020

Based on its review of general, company-specific, and competitive considerations, the compensation and management development committee determined that, consistent with 2018 and 2019, the long-term incentive awards granted to our NEOs for 2020 would be composed of 60% PRSUs 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 2020:

    Return on net assets (RONA) measured over three one-year periods (with payouts determined based on the average of the three years); and

66


Table of Contents

    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 in 2018 and 2019 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 2020 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

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., 2020, 2021, and 2022) 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. 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 2020, our actual RONA performance of 14.4% resulted in an 85% 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.
    The combined impact of these performance criteria is that the final payout percentages range from 0% to 240% of target PRSUs.

67


Table of Contents

      The number of PRSUs earned at the end of the three-year performance period will be determined as follows for the 2018, 2019 and 2020 PRSU awards:

      GRAPHIC

(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.
TSR Performance Level
  TSR Modifier
Percentage
 

Threshold: Less than 15.5%

    80 %

Target: 22.5%

    100 %

Max: At or Above 29.5%

    120 %

68


Table of Contents

Approval of Target Awards for 2020

On January 2, 2020, the compensation and management development committee approved long-term incentive awards for our NEOs for 2020 as set forth in the table below.

        Target Performance RSUs

    Time Vesting RSUs

    Total
Target
Grant



 
                     
    Name   Number

Grant Value

    Number

Grant Value

    Value

 
    W. Anthony Will   77,769   $3,600,000           51,846   $2,400,000           $6,000,000    
    Christopher D. Bohn   16,850   $780,000           11,233   $520,000           $1,300,000    
    Douglas C. Barnard   14,258   $660,000           9,505   $440,000           $1,100,000    
    Bert A. Frost   18,146   $840,000           12,097   $560,000           $1,400,000    
    Susan L. Menzel   10,369   $480,000           6,913   $320,000           $800,000    

On the grant date, the compensation and management development committee approved dollar-denominated RSU and PRSU awards for each of our individual NEOs. 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's outside compensation consultant.

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.

After the close of business 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 represented 60% of the total value on the grant date and the number of RSUs represented 40%.

Target Values versus Accounting Values

Because of the accounting rules governing preparation of the Summary Compensation Table on page 81, the grant date value for RSUs and PRSUs awarded in 2020 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 2020 PRSUs, without regard for when the performance goals are established.

69


Table of Contents

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 2020 PRSUs, only the RONA performance goals for the 2020 fiscal year, the first of three one-year periods, were approved at the time the PRSUs were awarded in 2020. As a result, for the 2020 PRSUs, the Summary Compensation Table does not include the value of the PRSUs based on the annual RONA goals for fiscal 2021 or fiscal 2022. Such amounts will be included as equity compensation in the Summary Compensation Table for fiscal 2021 and fiscal 2022, respectively, when the RONA goals are established. With respect to the 2018 PRSUs and the 2019 PRSUs, the RONA performance goals for the 2020 fiscal year, the third of three one-year periods and the second of three one-year periods, respectively, were also approved in 2020. As a result, the Summary Compensation Table also includes the value of the portion of the 2018 PRSUs and the 2019 PRSUs that is based on the annual RONA goals for the 2020 fiscal year.

Vesting and Other Terms of RSUs and PRSUs

The target RSUs granted to our NEOs in 2020 will vest in three equal annual installments following the date of 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 2020 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, 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 and, with respect to PRSUs, based upon the level of attainment of applicable performance goals for completed years in the applicable three-year performance period and based upon target for commenced but uncompleted years in the performance period, 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 2020 is set forth below under the heading "Executive Compensation — Grants of Plan-based Awards."

Determination of 2018-2020 Performance Period PRSU Awards

The three-year performance period for PRSU awards granted in 2018 ended on December 31, 2020. The performance metrics for PRSUs granted in 2018 were (i) return on net assets

70


Table of Contents

(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%, 185% and 85%, respectively, resulting in a 3-year average payout performance of 157% attained for the three-year performance period. As shown in the "How We Determine the Number of PRSUs Earned" graphic above, our TSR performance for the three-year performance period was less than 15.5%, resulting in a TSR modifier percentage of 80%. As a result, in accordance with the terms of the awards, the committee approved a payout of 125% of the PRSUs from these grants.