CF Industries Holdings Inc

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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 7, 2024.

2024 ANNUAL MEETING OF SHAREHOLDERS INFORMATION

Date and Time:

Thursday, April 18, 2024, at 11:00 a.m. Central time

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Location:

www.virtualshareholdermeeting.com/CF2024

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Record Date:

February 23, 2024

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VOTING MATTERS

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

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 low-carbon hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our nitrogen manufacturing complexes in the United States, Canada, and the United Kingdom, an extensive 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 the 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 2023 Annual Report.

Our Strategy

Our strategy is to leverage our unique capabilities to accelerate the world’s transition to clean energy. We believe this strategy builds upon the company’s leadership in ammonia production to capture emerging opportunities available to ammonia produced with a lower carbon intensity than that of ammonia produced through traditional processes. These opportunities include traditional applications in agriculture to help reduce the carbon footprint of food production and the life cycle carbon intensity of ethanol production, enabling its use for sustainable aviation fuel, among other purposes. They also include new applications, such as power generation and marine shipping, that would use the hydrogen component of the ammonia molecule for clean energy given that ammonia does not contain or emit carbon when combusted. We execute our strategy across four dimensions: decarbonizing our existing network to accelerate the availability of low-carbon ammonia; evaluating new low-carbon ammonia capacity growth; forging partnerships to accelerate our timeline and bridge gaps in areas where we do not have expertise; and collaborating to build understanding of ammonia’s clean energy capability, safety track record and regulatory environment.

Decarbonization projects in our existing network include our green ammonia project at our Donaldsonville, Louisiana complex. Green ammonia refers to ammonia produced with hydrogen sourced through an electrolysis process that produces no carbon emissions. In April 2021, we signed an engineering and procurement contract with thyssenkrupp to supply a 20 MW alkaline water electrolysis plant to produce green hydrogen at our Donaldsonville complex. We will integrate the green hydrogen generated by the electrolysis plant into existing ammonia synthesis loops to enable the production of approximately 20,000 tons per year of green ammonia. The green hydrogen production facility is mechanically complete, and commissioning activities began in early 2024. We believe that the Donaldsonville green ammonia project will be the largest of its kind in North America at the time of its startup.

Decarbonization projects in our existing network also include the production of low-carbon ammonia. Low-carbon ammonia is ammonia produced by conventional processes but with approximately 60-98% of the process and flue gas CO 2 generated by ammonia production removed through carbon capture and sequestration (CCS). We are executing a project also at our Donaldsonville complex that will enable us to produce a significant volume of low-carbon ammonia. At an estimated cost of $200 million, we are constructing a CO 2 dehydration and compression facility to enable CCS at the facility. Engineering activities for the construction of the dehydration and compression unit continue to advance, all major equipment for the facility has been procured, fabrication of the CO 2 compressors is proceeding, and construction activities at the Donaldsonville site are underway. Once the dehydration and compression unit is in service and sequestration is initiated, we expect that the Donaldsonville complex will have the capacity to dehydrate and compress up to 2 million tons per year of process CO 2, thereby converting a portion of our existing ammonia production to low-carbon ammonia. In October 2022, we announced that we had entered into a definitive CO 2 offtake agreement with ExxonMobil to transport and permanently sequester the CO 2 from Donaldsonville. Start-up for the project is planned for 2025. Under current regulations, the project would be expected to qualify for tax credits under Section 45Q of the Internal Revenue Code, which provides a credit per tonne of CO 2 sequestered.

Alongside these projects, we are also evaluating the construction of greenfield low-carbon ammonia capacity in Louisiana. In the fourth quarter of 2023, we and Mitsui & Co., Ltd. (Mitsui) completed a front-end engineering and design (FEED) study on a greenfield steam methane reforming (SMR) ammonia facility with CCS technologies. We and Mitsui are progressing two additional FEED studies focused on technologies with the potential to further reduce the carbon intensity of the proposed low-carbon ammonia facility, including a FEED study evaluating autothermal reforming (ATR) ammonia production technology and a FEED study assessing the cost and viability of adding flue gas capture to an SMR ammonia facility. We expect to complete both FEED studies in the second half of 2024. We and Mitsui are targeting the second half of 2024 for the final investment decision on the proposed greenfield low-carbon ammonia facility.

Should the companies agree to move forward, the ammonia facility would be constructed at our new Blue Point Complex.

In addition to ongoing discussions with existing customers who have interest in forthcoming availability of low-carbon ammonia for traditional applications, we are engaged in advanced discussions regarding the supply of low-carbon ammonia for new applications. In the first quarter of 2023, we signed a memorandum of understanding (MOU) with JERA Co., Inc. (JERA), Japan’s largest energy generator, regarding the long-term supply of up to 500,000 tonnes per year of clean ammonia beginning in 2027. The execution of the MOU was the result of a supplier comparison and evaluation process for the procurement of clean ammonia that JERA initiated in February 2022 for the world’s first commercial scale ammonia co-firing operations that JERA is developing. The MOU establishes a framework for JERA and us to assess how we would best supply JERA with clean ammonia, which will be required to be produced with at least 60% lower carbon emissions than conventionally produced ammonia, under a long-term offtake agreement. We and JERA are evaluating a range of potential supply options, including JERA making an equity investment with us to develop a clean ammonia facility in Louisiana and a supplementary long-term offtake agreement.

We believe that execution of our strategy and development of the market for green and low-carbon ammonia will provide significant growth opportunities and generate sustainable long-term value for all of our stakeholders.

Agreement to Purchase Ammonia Production Facility

On December 1, 2023, we completed the acquisition from Dyno Nobel Louisiana Ammonia, LLC, a U.S. subsidiary of Australian-based Incitec Pivot Limited (“IPL”), of an ammonia production complex located in Waggaman, Louisiana. The facility has a nameplate capacity of 880,000 tons of ammonia annually and is located on the Mississippi river approximately 60 miles from our Donaldsonville complex. In connection with the acquisition, we entered into a long-term ammonia offtake agreement under which we will supply ammonia to IPL’s Dyno Nobel, Inc. subsidiary. Additionally, we anticipate implementing carbon capture and sequestration technologies at the site on an accelerated timeline, increasing its network’s low-carbon ammonia production capability while earning Internal Revenue Code Section 45Q tax credits for sequestered carbon dioxide.

Shareholder Returns

The global nitrogen industry is inherently cyclical, and our financial results can be significantly impacted by the pronounced effects of highly volatile commodity prices for our products as well as for natural gas, which is our principal feedstock. Additionally, we execute our strategy and evaluate our performance over a full cycle for our industry, which typically occurs over multiple years. As a result, we believe it is important to view total shareholder return over a longer time horizon than just one year. The following table shows the cumulative total shareholder return (“TSR”), assuming the reinvestment of dividends, for our common stock and a peer group index for the 1-, 3-, 5-, 7-, and 10-year periods ended December 31, 2023.

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

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Agrium, Inc. (“Agrium”) and Potash Corporation of Saskatchewan Inc. (“Potash Corp”) are included in the peer group from December 31, 2013 through December 31, 2017. On January 2, 2018, Agrium and Potash Corp completed a merger of equals transaction to form Nutrien, Ltd. The cumulative investment in each of Agrium and Potash Corp, assuming dividend reinvestments up to December 31, 2017, was converted into shares of Nutrien, Ltd. on January 2, 2018 using the exchange ratio in the merger of equals transaction consummated on that date. Nutrien, Ltd. is included in the peer group for the period from January 2, 2018 through December 31, 2023.

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For purposes of calculating the TSR of CF Industries and the peer group index for the 1-, 3-, 5-, 7-, and 10‑year periods ending December 31, 2023, the beginning stock price for each peer group company was established by its respective closing price on the last trading day immediately preceding January 1 of the first fiscal year of the applicable measurement period. The returns of the peer group companies were weighted according to their respective market capitalizations as of the beginning of each period for which a return is indicated. For Yara International ASA, Incitec Pivot Limited and OCI N.V., we used their respective home exchange stock prices, converted into U.S. dollars, for TSR calculation purposes.

2023 PERFORMANCE HIGHLIGHTS

Operating Results

CF Industries’ 2023 financial results were driven by our strong operational performance, underpinned by favorable global nitrogen industry dynamics.

In addition to strong financial results, the company continued to deliver on its strategic priorities and create long-term shareholder value.

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(1)

EBITDA is defined as net earnings attributable to common stockholders plus interest expense-net, income taxes and depreciation and amortization. Adjusted EBITDA as reported is EBITDA adjusted for selected items as shown in Appendix A. See Appendix A for a reconciliation of EBITDA and adjusted EBITDA as reported to the most directly comparable GAAP measure.

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OUR DIRECTOR NOMINEES

Our corporate governance and nominating committee regularly reviews the overall composition of the Board and its committees to assess whether each reflects the appropriate mix of experience, qualifications, attributes, and skills that are relevant to CF Industries’ current and future global strategy, business, and governance.

Based on specific areas of focus or expertise that are particularly relevant to a director nominee’s service on the Board. It should not be inferred that other director nominees do not also possess meaningful experience or skills in these areas.

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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:

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

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quarterly earnings releases;

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Securities and Exchange Commission (“SEC”) filings;

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the annual report and proxy statement;

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the annual shareholders meeting;

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investor meetings, conferences and web communications; and

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annual sustainability reporting, including our ESG Report and our Sustainability Report.

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We relay shareholder feedback and trends on corporate governance and sustainability developments to the 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.

COMPENSATION PROGRAM HIGHLIGHTS

Our executive compensation practices are overseen and administered by the compensation and management development committee, which is composed 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.

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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.” Adjusted EBITDA as defined under our annual incentive plan may differ from the company’s adjusted EBITDA as reported due to further adjustments permitted under the terms of the annual incentive plan and approved by the compensation and management development committee.

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2023 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 2023:

AIP:

Annual Incentive Plan (annual bonus), cash settled

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LTIP:

Long-Term Incentive Plan, denominated in equity

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Annual Incentive Plan Performance Metrics

When setting performance levels for the short-term incentive program, which we also call the annual incentive plan, the compensation and management development committee considers the previous year’s financial performance, market trends and the company’s annual business plan. In 2022, market conditions led to very high prices for nitrogen products, leading to expanded margins and very strong financial performance. Going into 2023, the company expected global nitrogen market conditions to lead to lower product prices and a corresponding contraction of margins and financial performance compared to 2022. Despite that downward pressure on prices and margins, it was projected that nitrogen industry fundamentals would remain positive compared to conditions over years prior to 2022. High crop prices and the need to replenish global grain stocks were expected to support strong global fertilizer demand, while global nitrogen supply was expected to remain constrained with production in Europe and Asia affected by high energy prices. While energy spreads between North America producers and marginal production in Europe had compressed from the highs seen during 2022 as a result of Russia’s invasion of Ukraine, they remained above historical levels and forward energy curves continued to suggest the wider differentials would persist for an extended period. The company also expected decreased production from its network, based on increased turnaround and maintenance activity planned for 2023 compared to 2022. As a result, the compensation and management development committee set the target performance level for the Financial Metric at $4.0 billion of Adjusted EBITDA, which reflected the lower product pricing and production expected for 2023 compared to 2022 but still consistent with strong industry fundamentals.

Actual financial results in 2023 reflect continued strong execution by the CF Industries team, a constructive global nitrogen supply and demand balance and energy spreads favoring North American production. The company’s 2023 financial performance did not meet the company’s expectations as a result of lower selling prices driven by lower energy spreads between North American producers and marginal production in Europe and Asia which increased global supply availability due to higher global inventories entering 2023 and higher operating rates in high-cost regions. Lower pricing was partially offset by higher sales volumes as positive farm economics increased demand. Our natural gas costs were lower than planned due to greater domestic supply availability as warmer-than-normal temperatures decreased the demand for natural gas and supply remained strong due to few weather-related production disruptions and maintenance and outages at liquefied natural gas facilities that limited total gas exports. The company’s facilities ran extremely well in 2023 and we exceeded our production expectations.

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(1)

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. Adjusted EBITDA as defined under our annual incentive plan may differ from the company’s adjusted EBITDA as reported due to further adjustments permitted under the terms of the annual incentive plan and approved by the compensation and management development committee. For 2023, the difference between Adjusted EBITDA as reported of $2.76 billion and Adjusted EBITDA as defined under our annual incentive plan of $2.75 billion was due to $12 million of EBITDA associated with the Waggaman acquisition that was excluded from the calculation of Adjusted EBITDA under our annual incentive plan calculation.

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(2)

The completion of specified clean energy milestones relating to the production of green and low-carbon ammonia, the demand for hydrogen and ammonia from low-carbon sources, our long-term decarbonization plan and the implementation of projects that reduce carbon emissions across our global network in furtherance of the company’s greenhouse gas (GHG) emission goals.

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(3)

The completion of specified sustainability goals related to key initiatives that continue to advance efforts to streamline, automate and integrate process technology and reporting capabilities for our long-term growth and sustainability.

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(4)

The Process Safety Metric has a behavioral safety gate threshold. If at least 95% of all individual safety scores of all employees at manufacturing sites were “80 points” or better for the year, the safety performance gating requirement would be achieved. If the safety performance gating requirement was not achieved, there would be no payout under the Process Safety Metric.

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(5)

The completion of scheduled safety critical equipment inspections on schedule and timely management of changes (MOCs).

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FORWARD-LOOKING STATEMENTS AND WEBSITE REFERENCES

All statements in this Proxy Statement by CF Industries Holdings, Inc. (together with its subsidiaries, the “company”), other than those relating to historical facts, are forward-looking statements. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond the company’s control, which could cause actual results to differ materially from such statements. These statements may include, but are not limited to, statements about strategic plans and management’s expectations with respect to the production of green and low-carbon ammonia, the development of carbon capture and sequestration projects, the transition to and growth of a hydrogen economy, greenhouse gas reduction targets, projected capital expenditures, statements about future financial and operating results, and other items described in this Proxy Statement.

Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others, the cyclical nature of the company’s business and the impact of global supply and demand on the company’s selling prices; the global commodity nature of the company’s nitrogen products, the conditions in the international market for nitrogen products, and the intense global competition from other producers; conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for our fertilizer products; the volatility of natural gas prices in North America and the United Kingdom; weather conditions and the impact of adverse weather events; the seasonality of the fertilizer business; the impact of changing market conditions on the company’s forward sales programs; difficulties in securing the supply and delivery of raw materials or utilities, increases in their costs or delays or interruptions in their delivery; reliance on third party providers of transportation services and equipment; the company’s reliance on a limited number of key facilities; risks associated with cybersecurity; acts of terrorism and regulations to combat terrorism; risks associated with international operations; the significant risks and hazards involved in producing and handling the company’s products against which the company may not be fully insured; the company’s ability to manage its indebtedness and any additional indebtedness that may be incurred; the company’s ability to maintain compliance with covenants under its revolving credit agreement and the agreements governing its indebtedness; downgrades of the company’s credit ratings; risks associated with changes in tax laws and disagreements with taxing authorities; risks involving derivatives and the effectiveness of the company’s risk management and hedging activities; potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements; regulatory restrictions and requirements related to greenhouse gas emissions; the development and growth of the market for green and low-carbon ammonia and the risks and uncertainties relating to the development and implementation of the company’s green and low-carbon (blue) ammonia projects; and risks associated with expansions of the company’s business, including unanticipated adverse consequences and the significant resources that could be required.

More detailed information about factors that may affect the company’s performance and could cause actual results to differ materially from those in any forward-looking statements may be found in CF Industries Holdings, Inc.’s filings with the Securities and Exchange Commission, including CF Industries Holdings, Inc.’s most recent annual and quarterly reports on Form 10-K and Form 10-Q, which are available in the Investor Relations section of the company’s website. It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events, plans or goals anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on our business, results of operations, cash flows, financial condition and future prospects. Forward-looking statements are given only as of the date of this Proxy Statement and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Website references have been provided for convenience only. The content on any referenced websites is not incorporated by reference into this Proxy Statement and does not constitute a part of this Proxy Statement.