As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 3/09/06  Potash Corp of Saskatchewan Inc   10-K       12/31/05   12:6237                                   Bowne of Calgary/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML    328K 
 2: EX-10.DD    Medium Term Incentive Plan Effective January 2006   HTML    108K 
 3: EX-11       Statement Re Computation of Per Share Earnings      HTML      9K 
 4: EX-12       Computation of Ratio of Earnings to Fixed Charges   HTML     15K 
 5: EX-13       2005 Annual Report                                  HTML  1,208K 
 6: EX-21       Subsidiaries of the Registrant                      HTML     15K 
 7: EX-23       Consent of Deloitte & Touche Llp                    HTML      9K 
 8: EX-31.A     Certification Pursuant to Section 302 of the        HTML     10K 
                          Sarbanes-Oxley Act of 2002                             
 9: EX-31.B     Certification Pursuant to Section 302 of the        HTML     10K 
                          Sarbanes-Oxley Act of 2002                             
10: EX-32       Certification Pursuant to Section 906 of the        HTML      8K 
                          Sarbanes-Oxley Act of 2002                             
11: EX-99       2006 Notice of Meeting, Proxy Circular and Form of  HTML    551K 
                          Proxy                                                  
12: 10-K        PDF Courtesy Copy - Annual Report                    PDF 13,641K 

We are pleased to invite you to join our Board of Directors and senior management team at our 2006 Annual and Special Meeting of Shareholders. The meeting will be held on:

The items of business to be considered and voted upon at this meeting are set out in the Notice of Annual and Special Meeting and the accompanying Management Proxy Circular. In addition, this meeting provides you, the shareholder, with an opportunity to meet, listen to and ask questions of the people who are responsible for the performance of the Corporation.

Your vote and participation are very important. If you are unable to attend the meeting in person, you can vote by telephone, via the Internet or by completing and returning the enclosed proxy. Please refer to the “Questions and Answers on Voting and Proxies” section of the accompanying Management Proxy Circular for further information.

We will also webcast the meeting at www.potashcorp.com. We encourage you to visit our website at any time before the meeting as it provides useful information about our company.

We look forward to seeing you on May 4, 2006.

for the following purposes:

2.   Who is soliciting my proxy?

3.   On what am I voting?

4.   Who is entitled to vote?

5.   By when must I vote?

Please note that Items 6 to 10 below are only applicable to Registered Shareholders. Non-Registered Shareholders should refer to Item 11 for further information on voting.

6.   How do I vote if I am a Registered Shareholder?

14. How can I contact the transfer agent?

Except as otherwise stated, the information contained herein is given as of February 27, 2006. Unless otherwise specified, all dollar amounts are expressed in United States dollars.

The articles of the Corporation provide that the Board of Directors of the Corporation (the “Board”) shall consist of a minimum of 6 directors and a maximum of 20, with the actual number to be determined from time to time by the Board. The Board has determined that, at the present time, there will be 12 directors.

Proxies solicited hereby will be voted for the following proposed nominees (or for substitute nominees in the event of contingencies not known at present) who will, subject to the bylaws of the Corporation and applicable corporate law, hold office until the next annual meeting of shareholders or until their successors are elected or appointed in accordance with the bylaws or applicable corporate law. In an uncontested election, any nominee for director who fails to receive votes in favor of his or her election representing at least a majority of the votes cast (added together with the votes withheld) shall tender his or her resignation for consideration by the Corporate Governance and Nominating Committee. Except in extenuating circumstances, it is expected that the Committee will recommend to the Board that the resignation be accepted and effective within a period of 90 days and that the action taken be publicly disclosed. To the extent possible, the Committee and Board members who act on the resignation shall be directors who have themselves received a majority of votes cast.

The following table states the names and ages of all the persons to be nominated for election as directors, all other positions and offices with the Corporation now held by them, their present principal occupation or employment, their business experience over the last five years, the period during which present directors of the Corporation have served as directors and their independence status. The table also discloses the number of Shares and Deferred Share Units beneficially owned by each of them as of February 27, 2006, including Shares over which any such individual has or shares voting or investment power, and the value thereof. Finally, the table discloses the number of Shares deemed to be beneficially owned (as defined).

Mr. Blesi, 68, of Glenview, Illinois, U.S.A., is a retired Chairman and Chief Executive Officer of the Phosphate Chemicals Export Association, Inc. (“PhosChem”), principal exporter of U.S. phosphate chemicals. Before joining PhosChem, he was Vice President, International with International Minerals and Chemical Corporation. He is a director of the Evans Scholars Foundation and The Western Golf Association.

Mr. Doyle, 55, of Winnetka, Illinois, U.S.A., is President and Chief Executive Officer of the Corporation. He became President of PCS Sales in 1987, after a career with International Minerals and Chemical Corporation. He is Chairman of The Fertilizer Institute and Potash & Phosphate Institute and Vice Chairman of Canpotex Limited. Mr. Doyle is on the College Board of Advisors at Georgetown University.

Mr. Doyle is a member of the Executive Committee.

Mr. Estey, 55, of Glenview, Illinois, U.S.A., is President and Chief Executive Officer of S&C Electric Company. He is a member of the Board of Governors of the National Electrical Manufacturers Association, a director of the Executives’ Club of Chicago and a member of the Dean’s Advisory Board at the Kellogg School of Management at Northwestern University.

Mr. Estey is Chair of the Compensation Committee and a member of the Safety, Health and Environment Committee.

Mr. Fetzer, 68, of Glencoe, Illinois, U.S.A., is a Retired Partner with the investment banking firm Goldman Sachs. He sits on the boards of Serologicals Corporation, Sphere Communications, Northern Star Broadcasting, University of Wisconsin Foundation and Rush-Presbyterian St. Luke’s Medical Center. He is also on the Kellogg Alumni Advisory Board.

Mr. Fetzer is a member of the Corporate Governance and Nominating Committee and the Compensation Committee.

Mr. Howe, 61, of Calgary, Alberta, Canada, is owner and Chief Executive Officer of DSTC Ltd., a technology investment company, and a director of Advanced Data Systems Ltd. and the Saskatchewan Wheat Pool Inc. A director of Potash Corporation of Saskatchewan, the Crown corporation, from 1982 to 1989, he joined the Corporation’s Board in 1991 and was elected Chair in 2003.

Mr. Howe is Board Chair, Chair of the Executive Committee and a member of the Corporate Governance and Nominating Committee.

Ms. Laberge, 49, of Vancouver, British Columbia, Canada, is a Corporate Director and the former President and Chief Executive Officer of Fincentric Corporation, a global provider of software solutions to financial institutions. She was previously Senior Vice President and Chief Financial Officer of MacMillan Bloedel Limited and is a director of the Royal Bank of Canada, Catalyst Paper, the United Way of the Lower Mainland and St. Paul’s Hospital Foundation.

Ms. Laberge is a member of the Audit Committee and the Safety, Health and Environment Committee.

Mr. McCaig, 54, of Houston, Texas, U.S.A., is Chairman and Chief Executive Officer of Trimac Holdings, a bulk trucking and third-party logistics company. Prior to that, he practiced law, specializing in corporate financing and securities. He is a director of Orbus Pharma Inc., The Standard Life Assurance Company of Canada and Stoneham Administration Inc.⁽⁶⁾

Mr. McCaig is a member of the Audit Committee and the Compensation Committee.

Ms. Mogford, 61, of Newcastle, Ontario, Canada, is a Corporate Director and a former Ontario Deputy Minister of Finance and Deputy Minister of Natural Resources. She is a director of Falconbridge Ltd., MDS Inc. and Sears Canada Inc., and a member of the Altamira Advisory Council. She is a Fellow of the Institute of Corporate Directors (ICD) and an accredited director under the ICD/Rotman School of Business Directors’ Education Program.

Ms. Mogford is the Chair of the Corporate Governance and Nominating Committee and a member of the Audit Committee.

Mr. Schoenhals, 64, of Calgary, Alberta, Canada, is President and Chief Executive Officer of Enform, a petroleum industry safety and training service. He is a former Member of the Legislative Assembly and Cabinet Minister in Saskatchewan and was Chairman of Potash Corporation of Saskatchewan, the Crown corporation, from 1987 to 1989.

Mr. Schoenhals is the Chair of the Safety, Health & Environment Committee and a member of the Compensation Committee.

Mr. Stromberg, 64, of Saskatoon, Saskatchewan, Canada, was formerly associated with the Saskatchewan law firm Robertson Stromberg Pedersen. He is a director of NorSask Forest Products Inc. and Hitachi Canadian Industries Ltd. and holds the rank of Honorary Lieutenant-Colonel of the North Saskatchewan Regiment.

Mr. Stromberg is a member of the Executive Committee, the Safety, Health & Environment Committee and the Corporate Governance and Nominating Committee.

Mr. Vicq, 66, of Saskatoon, Saskatchewan, Canada, is Professor Emeritus of Accounting, University of Saskatchewan. He is a past Associate Dean of Commerce at the university and was responsible for the Centre for International Business Studies. He formerly held the A.W. Johnson Distinguished Chair in Public Policy in the Saskatchewan Department of Finance.

Mr. Vicq is the Chair of the Audit Committee and a member of the Executive Committee.

Ms. Viyella de Paliza, 51, of the Dominican Republic, is President of Inter-Quimica, S.A., a chemicals importer and distributor, Monte Rio Power Corp. and Indescorp, S.A. She is President of the Dominican Business Council, a member of the board of the Inter-American Dialogue and Past President of the Dominican Stock Exchange, Dominican Manufacturers Association and the National Agribusiness Board.

Ms. Viyella de Paliza is a member of the Executive Committee and the Safety, Health and Environment Committee.

All of the above directors have had the principal occupation described above for the previous five years other than Ms. Laberge, who was Chief Financial Officer of Fincentric Corporation from October 2000 to November 2003 and Chief Executive Officer from December 2003 to June 2005.

The Board has determined that all of the directors of the Corporation with the exception of Mr. Doyle and Ms. Paliza are independent within the meaning of the “PotashCorp Governance Principles”, National Instrument 58-101 “Disclosure of Corporate Governance Practices” (“NI 58-101”), applicable rules of the SEC and the New York Stock Exchange (“NYSE”) corporate governance rules.

For a director to be considered independent, the Board must determine that the director does not have any material relationship with the Corporation, either directly or indirectly (e.g. as a partner, shareholder or officer of an organization that has a relationship with the Corporation). Directors of the

Mr. Doyle is the Chief Executive Officer of the Corporation and is therefore not independent. Mr. Doyle is also Vice Chairman of Canpotex Limited. The Corporation had sales of approximately $577.1 million to Canpotex Limited in 2005.

Ms. Paliza’s father and brother are executive officers of Fertilizantes Santo Domingo, C. por A (“Fersan”), a fertilizer bulk blender and distributor of agrichemicals based in the Dominican Republic, which is a customer of the Corporation. Although representing less than 1% of the Corporation’s consolidated sales in 2005, sales to Fersan exceeded 2% of Fersan’s 2005 consolidated gross revenues. As such, Ms. Paliza does not meet the Corporation’s categorical independence standards which incorporate in relevant part the NYSE corporate governance rules. Ms. Paliza has no direct or indirect interest in the Corporation’s sales to and purchases by Fersan and all such transactions are completed on normal trade terms. Even though she does not meet the aforementioned independence standards, Ms. Paliza provides a valuable contribution to the Board through her industry knowledge and experience and international business perspective.

In determining the independence of its other directors, the Board evaluated business and other relationships that each director had with the Company. In doing so, it determined as immaterial (i) any relationship falling below the thresholds in 3(a) and not otherwise required to be disclosed pursuant to Items 404(a) or (b) of Regulation S-K under the Securities

Although disclosure is required pursuant to the regulations of the SEC under the Exchange Act, the Board also determined the following relationships relating to Mr. Stromberg to not impair his independence.

Mr. Stromberg was associated with the Saskatchewan law firm Robertson Stromberg Pedersen until June 30, 2005. The Corporation retained Robertson Stromberg Pederson in 2005. Total billings for 2005 did not exceed $150,000 and Mr. Stromberg derived no material benefit therefrom. A son of Mr. Stromberg, David Stromberg, is a director and a major indirect shareholder of Micro Oil Inc. (“Micro Oil”), a privately held process oil blender and supplier based in Saskatoon, Saskatchewan. David Stromberg is also the president of Micro Oil. Another son of Mr. Stromberg, Jeffrey Stromberg, is a shareholder of Micro Oil. In 2005 and 2004, purchases in an aggregate amount of approximately Cdn$1,126,147.78 and Cdn$352,000, respectively, were made by the Corporation from Micro Oil. The 2005 purchases totaled $929,625, based on a 2005 average exchange rate of 1.2114, and the 2004 purchases totaled $270,499 based on 2004 average exchange rate of 1.3013. Micro Oil and the Corporation have also entered into a confidentiality agreement relating to the development of oil processes used by the Corporation.

Purchases from Micro Oil are made in the ordinary course of business. Mr. Stromberg has no current relationship with the Robertson Stromberg Pedersen firm and has no interest in the business of his adult sons. Through his prominence in the Saskatchewan business community and his professional qualifications and experience, Mr. Stromberg has been and continues to be a valued member of the Board. His presence on the Board plays no role in the Corporation’s decisions to transact business with Micro Oil or the Robertson Stromberg Pedersen firm. The Corporation has and will continue to make such decisions on the basis of the best interests of the Corporation.

None of the directors of the Corporation serve together on the boards of directors of other companies.

Directors of the Corporation who are not also officers or employees, that is all directors other than Mr. Doyle, (the “outside directors”) are compensated through the cash payment of an annual retainer plus other fees and the grant of Deferred Share Units. In 2003, the Board decided to discontinue granting stock options to directors.

Except as set forth below, each outside director receives from the Corporation a retainer at an annual rate of $50,000, a per diem fee of $1,500 for meetings he or she attends (until July 1, 2005 the annual rate of the retainer was $40,000 and the per diem fee was $1,000) and a travel fee of $500 per day where travel is required on a day or days on which a meeting does not occur. Outside directors receive an additional $10,000 per year if they serve as a chair of a Board Committee ($15,000 in the case of the Audit Committee Chair). As of July 1, 2004, all Audit Committee members receive an additional $5,000 per year, with the exception of the Audit Committee Chair. Each outside director who is a member of a Board Committee receives a per diem fee of $1,500 for meetings he or she attends, provided such meetings are not held the same day as a Board meeting. Outside directors are also reimbursed for expenses incurred in discharging their responsibilities. Effective July 1, 2005, Mr. Howe, as Board Chair, receives an annual retainer of $140,000 (until July 1, 2005, his annual retainer was $110,000), but does not receive per diem or travel fees. Director compensation is established on the advice of independent consultants, with a view to establishing compensation at the median of the applicable Comparator Group (see “Report of the Compensation Committee and Compensation Discussion and Analysis – Compensation Principles”).

Effective November 20, 2001, the Corporation adopted a Deferred Share Unit Plan for Non-Employee Directors (the “Plan”), which entitles non-employee directors to receive discretionary grants of deferred share units (“Deferred Share Units”), each of which has an initial value equal to the market value of a Share at the time of its grant. The Plan also allows the director to defer, in the form of Deferred Share Units, up to 100% of the annual retainer fees and any other fees payable to such director in respect of serving as a director (“Fees”), which would otherwise be payable in cash. The Plan is intended to enhance the Corporation’s ability to attract and retain highly qualified individuals to serve as directors and promote a greater alignment of interests between such directors and the shareholders of the Corporation.

The number of Deferred Share Units credited to the director’s account with respect to Fees that the director elects to allocate to the Plan is determined as of the last trading day of each calendar quarter and is equal to the quotient obtained by dividing (a) the aggregate amount of Fees allocated to the Plan for the relevant calendar quarter by (b) the market value of a Share on such last trading day (determined on the basis of the closing price on the Toronto Stock Exchange (“TSX”) for participants resident in Canada and on the basis of the closing price on the NYSE for all other participants). Deferred Share Units earn dividends in the form of additional Deferred Share Units at the same rate as dividends are paid on Shares.

Each Deferred Share Unit is credited to the account of an individual director and fully vests upon an award, but is distributed only when the director has ceased to be a member

At such time, the director will receive a cash payment equal to the market value of a number of Shares purchased on the open market equal to the number of Deferred Share Units recorded in the director’s account (reduced by the amount of applicable withholding taxes). While the Compensation Committee, with Board approval, has the discretion to distribute Shares in lieu of cash, the Committee and Board have determined that all distributions pursuant to the Plan will be made in cash.

On July 1, 2004, the Board determined that the value of annual discretionary Deferred Share Unit grants be established at $55,000 for outside directors, with the exception of the Board Chair, Mr. Howe, whose annual value of Deferred Share Unit grants is set at $140,000. On November 16, 2005, each non-employee director received a discretionary grant of 676 Deferred Share Units, with the exception of the Board Chair, Mr. Howe, who was granted 1,721 Deferred Share Units.

The Board believes that the economic interests of directors should be aligned with those of shareholders. To achieve this, all directors are expected to hold Shares and Deferred Share Units in the Corporation. By the time a director has served on the Board for ten months, he or she must own a minimum of 2,000 Shares. By the time a director has served on the Board for three years, he or she must own Shares and/or Deferred Share Units with a value at least five times the annual retainer paid to directors. The Board may make exceptions to this standard where, as a result of the unique financial circumstances of a director, compliance would result in an unacceptable hardship. As at February 27, 2006, all of the Corporation’s directors were in compliance with the minimum shareholding requirements described above.

Directors also participate in the Corporation’s Group Life insurance coverage (Cdn$50,000), Accidental Death and Dismemberment coverage (Cdn$100,000), Business Travel Accidental coverage (Cdn$250,000) and Supplemental Business Travel Medical coverage ($250,000 per calendar year).

The following table sets forth compensation earned by the individuals who served as directors of the Corporation during fiscal 2005.

The following tables provide a summary of Board and Committee meetings held during fiscal 2005 and attendance thereat.

Pursuant to the “PotashCorp Governance Principles”, the Board meets in executive session, with only independent directors present, before and after each regularly scheduled meeting of the Board. The presiding officer at the executive session is Dallas J. Howe, the Board Chair, or, in his absence, a director selected by majority vote of those present. Sessions are of no fixed duration and participant directors are encouraged to raise and discuss any issues of concern.

For the years ended December 31, 2005 and December 31, 2004, Deloitte & Touche LLP received the following fees:

Deloitte & Touche LLP billed the Corporation $2,281,000 and $2,301,000 for 2005 and 2004, respectively, for the following audit services (i) audit of the annual consolidated financial statements of the Corporation for the fiscal years ended December 31, 2005 and 2004; (ii) review of the interim financial statements of the Corporation included in quarterly reports on Form 10-Q for the periods ended March 31, June 30 and September 30, 2005 and 2004; (iii) audits of individual statutory financial statements; and (iv) the provision of consent letters. The amounts billed for 2005 and 2004 were significantly impacted by the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

Deloitte & Touche LLP billed the Corporation $201,000 and $165,000 for 2005 and 2004, respectively, for the following services (i) accounting consultations regarding financial accounting and reporting standards; and (ii) employee benefit plan audits.

Deloitte & Touche LLP billed the Corporation $32,000 and $79,000 for 2005 and 2004, respectively, for the following services (i) tax compliance; (ii) tax planning; and (iii) tax advice, including minimizing tax exposure or liability.

Deloitte & Touche LLP billed the Corporation $3,000 and $121,000 for 2005 and 2004, respectively, for provision of risk and knowledge datasets and implementation of a risk control tracking system.

The Audit Committee monitors and reviews the independence of its auditors on an on-going basis. In addition, the Committee has adopted processes for the pre-approval of engagements for services of its external auditors.

The Audit Committee’s policy requires pre-approval of all audit and non-audit services provided by the external auditor. The policy identifies three categories of external auditor services and the pre-approval procedures applicable to each category, as follows:

All fees paid to the independent auditors for 2005 were approved in accordance with the pre-approval policy.

On February 27, 2006, the Board adopted a new performance option plan (the “2006 Performance Option Plan”), subject to the approval of the 2006 Performance Option Plan by the Corporation’s shareholders at the Meeting. If approved, the 2006 Performance Option Plan will be deemed effective as of January 1, 2006 and will permit the grant of options to purchase up to 1,400,000 Shares to individual officers and employees of the Corporation and its subsidiaries. Non-employee directors and other non-employee contractors and third party vendors will not be eligible to participate in the 2006 Performance Option Plan.

Options to purchase Shares may be granted under the terms of the 2006 Performance Option Plan only during 2006 and no options will be granted prior to the Meeting. Unless sooner terminated as provided therein, the 2006 Performance Option Plan will terminate on January 1, 2007, although the terms of the plan will continue to govern options granted thereunder prior to termination.

The 2006 Performance Option Plan will be administered by the Compensation Committee or any other Board Committee designated by the Board. A copy of the 2006 Performance Option Plan is attached hereto as Appendix C. This description of the 2006 Performance Option Plan is qualified, in its entirety, by the terms of the attached plan document.

If approved, the 2006 Performance Option Plan will result in up to 1.35% (as at February 27, 2006) of the outstanding share capital of the Corporation being available for issue pursuant to the exercise of options granted under the 2006 Performance Option Plan. The aggregate number of Shares in respect of which stock options may be granted to any one person pursuant to the 2006 Performance Option Plan and which remain outstanding may not at any time exceed 300,000 Shares, representing 0.29% (as at February 27, 2006) of the outstanding share capital of the Corporation.

Under the terms of the 2006 Performance Option Plan, options will have a term of ten years and will vest at the end of the three-year performance cycle ending December 31, 2008, subject to the Corporation’s achievement of the performance criteria described in the 2006 Performance Option Plan. The performance metrics and vesting scale have been designed in accordance with the Corporation’s compensation philosophy. See “Report of the Compensation Committee and Compensation Discussion and Analysis”. In general, options will vest as determined by a schedule that references the Corporation’s performance during the performance cycle as measured by reference to cash flow return on investment and weighted average cost of capital. Any options that do not become vested will terminate at the end of the performance cycle.

The number of options granted to each individual optionee will be targeted to deliver total compensation in the 75^th percentile of the Comparator Group for corporate performance, based on cash flow return on investment and weighted average cost of capital, above the 75^th percentile of the Dow Jones U.S. Basic Materials Index (“DJUSBMI”). Similarly, for corporate performance in the 50^th percentile of the DJUSBMI, the number of options granted will be targeted to deliver total compensation in the 50^th percentile of the Comparator Group.

It is anticipated that there will be approximately 220 participants in the 2006 Performance Option Plan. Following shareholder approval of the 2006 Performance Option Plan at the Meeting, a determination will be made as to the number of options to be granted to executive officers and other participants, which options will be granted in accordance with the criteria described below.

The option price for any option granted under the 2006 Performance Option Plan to any optionee shall be fixed by the Board when the option is granted and, for optionees resident in the United States and any other optionees designated by the Board, the option price shall not be less than the fair market value of a Share at such time, which shall be deemed to be the closing price per Share on the NYSE on the last trading day immediately preceding the day the stock option is granted. For all other optionees, the option price shall be deemed to be the closing price per Share on the TSX on the last trading day immediately preceding the day the stock option is granted. In either case, if the Shares did not trade on such exchange on such day, the option price shall be the closing price per Share on such exchange on the last day on which the Shares traded on such exchange prior to the day the stock option is granted.

The 2006 Performance Option Plan requires all options to be subject to provisions to the effect that:

Nothing contained in paragraphs (a), (b) or (c) above shall extend the period during which a stock option may be exercised beyond its ten-year term or any earlier date on which it is otherwise terminated in accordance with the provisions of the 2006 Performance Option Plan.

If a stock option is assigned pursuant to paragraph (d)(ii) above, the references in paragraphs (a), (b) and (c) above to the termination of employment or death of an optionee shall not relate to the assignee of a stock option but shall relate to the original optionee. In the event of such assignment, legal personal representatives of the original optionee shall not be entitled to exercise the assigned stock option, but the assignee of the stock option or the legal personal representatives of the assignee may exercise the stock option during the applicable specified period.

The Board may amend or discontinue the 2006 Performance Option Plan at any time but no such amendment may increase the aggregate maximum number of Shares that may be subject to stock options granted under the 2006 Performance Option Plan, change the manner of determining the minimum option price, extend the option term under any option beyond ten years or, without the consent of the holder of the option, alter or impair any option previously granted to an optionee under the 2006 Performance Option Plan; and, provided further, that, without the prior approval of the Corporation’s shareholders, stock options issued under the 2006 Performance Option Plan shall not be repriced, replaced or regranted through cancellation, or by lowering the option price of a previously granted stock option. In the event of certain transactions affecting the capitalization of the Corporation, including a merger, the Board may make such adjustments in the number or option price of outstanding options or the number of Shares available for grant and other authorized limits under the 2006 Performance Option Plan it deems appropriate to reflect such transaction. In the event of change of control (as defined in the 2006 Performance Option Plan), all unvested options then outstanding will become fully vested.

A participant in the 2006 Performance Option Plan who is employed and resident in Canada will be deemed to receive a benefit from employment in the year he or she exercises options under the 2006 Performance Option Plan. One-half of the difference between the exercise price and the market price of the Shares at the time of exercise, multiplied by the number of Shares over which options are exercised, will be included in the participant’s taxable income in the year of exercise. If the participant so elects, and subject to certain limitations, taxation of the said benefit may be deferred from the year of exercise until the earliest of the year the participant disposes of the Shares, dies or ceases to be resident in Canada for tax purposes. The participant will have a cost base in the optioned Shares equal to their market value on the date of exercise for purposes of computing any capital gain or capital loss on any subsequent disposition of the Shares. The Corporation may not take any tax deduction in respect of the benefits deemed to be received by participants under the 2006 Performance Option Plan in Canada.

All of the options granted under the 2006 Performance Option Plan will be treated as non-qualified stock options for U.S. federal income tax purposes. A participant in the 2006 Performance Option Plan who is employed and resident in the U.S. will not be deemed to receive any income at the time an option is granted, nor will the Corporation’s applicable subsidiary be entitled to a deduction at that time. However, when any part of an option is exercised, the participant will be deemed to have received ordinary income in an amount equal to the difference between the exercise price of the option and the fair market value of the Shares received on the exercise of the option. The Corporation’s applicable subsidiary will be entitled to a tax deduction in an amount equal to the amount of ordinary income realized by such participants. Upon any subsequent sale of the Shares acquired upon the exercise of an option, any gain (the excess of the amount received over the fair market value of the Shares on the date ordinary income was recognized) or loss (the excess of the fair market value of the Shares on the date ordinary income was recognized over the amount received) will be a long-term capital gain or loss if the sale occurs more than one year after such date of recognition and otherwise will be a short-term capital gain or loss.

Grants under the 2006 Performance Option Plan shall be made after shareholder approval is obtained and during the 2006 fiscal year.

In order for the 2006 Performance Option Plan to become effective, the resolution to approve the 2006 Performance Option Plan must be passed by a majority of the votes cast by the shareholders who vote in respect of the resolution.

UNLESS A PROXY SPECIFIES THAT THE SHARES IT REPRESENTS SHOULD BE VOTED AGAINST THE RESOLUTION TO APPROVE THE 2006 PERFORMANCE OPTION PLAN, THE PROXYHOLDERS NAMED IN THE ACCOMPANYING FORM OF PROXY INTEND TO VOTE FOR THE RESOLUTION.

The Corporation has three other stock option plans. On May 5, 2005, the Corporation’s shareholders approved the 2005 Performance Option Plan under which the Corporation was permitted, after February 28, 2005 and before January 1, 2006, to grant options for the issuance of up to 1,200,000 Shares pursuant to the exercise of the options. As at January 1, 2006, options to acquire 1,186,000 Shares had been granted and were outstanding under the 2005 Performance Option Plan. Grants under the 2005 Performance Option Plan were made during fiscal year 2005 only. The material terms of the 2005 Performance Option Plan are described in the “Report of the Compensation Committee and Compensation Discussion and Analysis – Long-Term Incentives (Stock Options)”. Additional information regarding the 2005 Performance Option Plan, including the full text of the plan, can be found in the Corporation’s Management Proxy Circular for the fiscal year ended 2004. No amendments with respect to the 2005 Performance Option Plan have been adopted in the last fiscal year.

The Corporation also has an existing Stock Option Plan – Officers and Employees with 148,176 options remaining available for grant as at February 27, 2006 (148,176 at December 31, 2005) and a Stock Option Plan – Directors with 28,600 options remaining available for grant as at February 27, 2006 (28,600 at December 31, 2005). The material terms of the Stock Option Plan – Officers and Employees and the Stock Option Plan – Directors are described in the “Report of the Compensation Committee and Compensation Discussion and Analysis – Long-Term Incentives (Stock Options)”. No amendments with respect to the Stock Option Plan – Officers and Employees and the Stock Option Plan – Directors have been adopted in the last fiscal year.

The following table provides information about securities that may be issued under the Corporation’s existing equity compensation plans, as of December 31, 2005 and February 27, 2006:

As a Canadian reporting issuer with securities listed on the TSX and the NYSE, the Corporation has in place corporate governance practices that are not only consistent with the requirements of both of those stock exchanges but in many cases go beyond those requirements. The Corporation is also in compliance with applicable rules adopted by the Canadian Securities Administrators through the Canadian securities regulatory authorities and the SEC.

The Corporation has a standing Audit Committee. The Board has determined that each of the following directors, who served as members of the Audit Committee during the year ended December 31, 2005, is independent according to the Board’s independence standards as set out in the “PotashCorp Governance Principles” (which is available on the Corporation’s website), NI 58-101, applicable rules of the SEC and the corporate governance rules of the NYSE. See also “Nominees for Election to the Board of Directors – Director Independence and Other Relationships”.

      Jack G. Vicq (Chair)

The Board has determined that Mr. Vicq and Ms. Laberge qualify as “audit committee financial experts” under the rules of the SEC and thereby have the requisite accounting and/or related financial management expertise required under the rules of the NYSE. In addition, the Board, in its business judgment, has determined that each member of the Audit Committee is financially literate.

The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities for (i) the integrity of the Corporation’s financial statements, (ii) the Corporation’s compliance with legal and regulatory requirements, (iii) the qualification and independence of the Corporation’s independent auditors, and (iv) the performance of the Corporation’s independent auditors. In accordance with the Audit Committee Charter adopted by the Board, the Audit Committee has responsibility for the oversight of the Corporation’s financial reporting and audit processes and related internal controls on behalf of the Board. During the fiscal year ended December 31, 2005, the Committee met 9 times.

In overseeing the audit process, the Audit Committee obtained from the independent auditors their letter dated February 14, 2006, as required by the Independent Standards Board Standard No. 1, describing all relationships between the auditors and the Corporation that might bear on the auditors’ independence and the auditors’ judgment that they are, in fact, independent and discussed with the auditors the disclosures therein. The Audit Committee also reviewed the organizational structure, procedure and practices that support the objectivity of the internal audit department and reviewed and approved the Internal Audit Department Charter. The Audit Committee reviewed with both the independent and the internal auditors their audit plans, audit scope and identification of audit risks. The Audit Committee discussed, with and without management present, the results of the independent auditors’ communications required by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees”. The Committee also discussed the results of the internal audit examinations.

In meetings with financial management, internal audit and the independent auditors, the Audit Committee reviewed and discussed quarterly interim financial information prior to the earnings release for the applicable quarter. The Audit Committee also reviewed and approved the quarterly MD&As.

The Audit Committee reviewed and discussed the MD&A and the audited financial statements of the Corporation as of and for the fiscal year ended December 31, 2005, with management and the independent auditors, including the quality, not just the acceptability, of the Corporation’s financial reporting practices and the completeness and clarity of the related financial disclosures. Management is responsible for the preparation of the Corporation’s financial statements and the independent auditors are responsible for auditing those financial statements.

The Audit Committee reviewed the processes involved in evaluating the Corporation’s internal control environment and the Audit Committee also oversaw and monitored the 2005 compliance process related to the certification and attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

Based on the above-mentioned review and discussions with management and the independent auditors, the Audit Committee recommended to the Board that the audited consolidated financial statements and MD&A be included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for filing with the SEC. The Audit Committee also recommended the reappointment, subject to shareholder approval, of the independent auditors.

The Audit Committee reviews the Corporation’s Disclosure Controls and Procedures on an annual basis. In addition, in November 2005, it reviewed and updated its Committee Charter, a copy of which is attached as Appendix E hereto. The Committee has established procedures for:

Submitted on behalf of the Audit Committee: Jack G. Vicq, Frederick J. Blesi, Alice D. Laberge, Jeffrey J. McCaig and Mary Mogford.

Composition of the Compensation Committee

The Corporation has a standing Compensation Committee, referred to as the “Committee” hereinafter in this report. The Board has determined that each of the following directors who served as members of the Committee during the year ended December 31, 2005, is independent according to the Board’s independence standards as set out in the “PotashCorp Governance Principles” (which is available on the Corporation’s website), NI 58-101, applicable rules of the SEC and the corporate governance rules of the NYSE. See also “Nominees for Election to the Board of Directors – Director Independence and Other Relationships”.

      John W. Estey (Chair)

The Committee is, at present, composed of four independent directors. The Committee held 6 meetings in the last fiscal year.

The Committee is charged with formulating and making recommendations to the Board in respect of compensation issues relating to directors and senior officers of the Corporation. The Committee also makes recommendations regarding the Corporation’s stock option plans and administers the Short- and Medium-Term Incentive plans, each in accordance with its terms which are described later in this report. Prior to January 1, 2006, the Corporation administered a Long-Term Incentive Plan, the terms of which are substantially the same as the current Medium-Term Incentive Plan. The name of the plan was changed principally to distinguish it from our option plans which, given their ten-year life, are more appropriately considered long-term incentives.

The Committee reviews and makes recommendations regarding the general merit increase budget for salaried and non-bargaining hourly employees and has general oversight of employee benefit programs. In addition, the Committee, in consultation with the Chief Executive Officer, considers and reports to the Board regarding employee or executive succession matters.

The Committee engaged Hewitt Associates, executive compensation consultants, during 2005 for research, survey information and design expertise in reviewing certain executive and director compensation programs. This work has included director pay analysis, performance stock option plan design and executive compensation analysis. Also in 2005, the Committee engaged Watson Wyatt executive compensation consultants to provide input and a second opinion on the competitiveness of program design and award values. Hewitt Associates has historically performed other human resources consulting services for the Corporation, including actuarial consulting, employee benefits design, finance consulting and recordkeeping services. The Committee has adopted the corporate governance best practice of retaining independent executive compensation consulting services and conducted a process during the summer of 2005 to select an independent consulting firm to replace Hewitt Associates as executive compensation consultant to the Committee. The Committee evaluated four consulting firms and selected Watson Wyatt as the replacement consultant, based in part on the positive experience in delivering the review services earlier in the year, on their expertise in both Canadian and U.S. compensation regulation and practices and on their depth of available compensation consulting services. Watson Wyatt does not perform any other consulting services for the Corporation. The Committee will continue to use Hewitt Associates’ proprietary Total Compensation Measurement data services to provide specific competitive data for selected executive and director positions for some period of transition, but this information has been and will continue to be supplemented with other compensation survey data available through Watson Wyatt consulting.

The Corporation does not have any non-qualified deferred compensation arrangements in place for management.

Under the terms of the plan, generally no payments are made if the cash flow return is less than 50% of the target set by the Board for that year. For senior executives, which include the Named Executive Officers, incentive awards can range from 15% to 200% of salary, depending upon position level, actual cash flow return as compared to target return above the minimum threshold requirement, and subject to adjustment (± 20%) based on the executive’s performance and such other factors as the Committee deems appropriate, provided the total of the adjusted awards proximates the total of the awards at mid-point.

Effective for the 2006 plan year, the Corporation’s Short-Term Incentive Plan has been extended to most salaried staff employees. The purpose is to tie compensation more directly to corporate performance and support initiatives to have motivated and productive employees that support corporate goals. Furthermore, an extensive study of cash compensation was conducted and indicated that competitive practice also supports extending performance-based pay at these levels of the Corporation.

A participant is awarded a number of units under the Medium-Term Incentive Plan, generally based on the participant’s salary at the beginning of the performance period (multiplied by three), target award percentage and the Share price at the beginning of the performance period. The target award percentages range from 20% to 70%, depending upon the executive’s position with and potential for contribution to the success of the Corporation.

Under the Medium-Term Incentive Plan, vesting of one-half of the units is based on increases in the TSR over the three-year performance period ending December 31, 2008. Vesting of the remaining one-half of the units is based on the extent to which the TSR matches or exceeds the TSR of the common shares of a group of peer companies over the performance period. The peer group of companies consists of those companies that are included in the DJUSBMI.

Participants generally are required to continue in a qualifying position with the Corporation throughout the performance period as one of the conditions to vesting. However, if a participant’s employment terminates earlier due to the participant’s retirement, disability or death or the Corporation terminates a participant’s employment without just cause, the participant will be entitled to a cash payment in settlement of a pro rata number of units, with vesting determined based on the achievement of performance objectives as of the date of termination. A participant who resigns or whose employment is terminated for just cause forfeits all rights to any units granted under the plan.

Vested units are settled in cash based on the average Share price in the last 30 trading days at the end of the performance period. However, the Share price used to determine the cash payout in settlement of a vested unit may not exceed 300% of the market value of a Share as at the commencement of a performance cycle. Depending on the extent to which the performance objectives are achieved, an amount ranging from 0% to 150% of the units granted under the Medium-Term Incentive Plan may become vested. Achievement of all target performance objectives entitles an eligible executive to a payout of 100% of the units awarded under the plan. The target performance objective for the one-half of the units based on total TSR is a TSR of 30% over the performance period. The target performance objective for the remaining units is to outperform the peer group index by 5% over the performance period. A maximum of 150% of units may become vested if performance exceeds target. For a corporate TSR of 50% or more, one-half of the units will vest at 150%. For TSR performance that exceeds the peer group by 10% or more, one-half of the units will vest at 150%. No units will vest if none of the minimum performance objectives are achieved. The minimum performance requirement for the units based on total TSR is a positive TSR. The minimum performance requirement for the remaining units is for the TSR to have matched the peer group index.

As at February 27, 2006, options for a total of 3,660,469 Shares had been granted and were outstanding under the Officers and Employees Plan, representing approximately 3.53% of the total number of Shares outstanding. Options were granted at 100% of market value at the date of the grant, become exercisable over two years (or earlier in the event of a “change of control”, as defined in the Officers and Employees Plan) and expire after ten years. 148,176 options are still available for grant under the Officers and Employees Plan.

If the employment of an optionee terminates by reason of his or her death or if a retired optionee dies, his or her legal personal representatives will be entitled to exercise any unexercised options, including options that may vest after the date of death, at any time until the end of the twelfth calendar month following the calendar month in which the optionee dies, failing which the options terminate. Unless the Board at the time of the grant of an option provides otherwise, if the employment of an optionee terminates by reason of retirement in accordance with the applicable retirement policy, the optionee is entitled to exercise any options, including options that vest after the date of retirement, until the expiry date of such options or the date on which such options are otherwise terminated in accordance with the

Options granted under the Officers and Employees Plan are not assignable, except where the optionee’s employment terminates by reason of his or her death or if a retired optionee dies, provided that an option may be assigned to the spouse, children and grandchildren of the original optionee and to a trust, partnership or limited liability company, the entire beneficial interest of which is held by one or more of the foregoing if the Board so elects. If a “change of control” of the Corporation occurs (as defined in the Officers and Employees Plan), each outstanding option granted under the Officers and Employees Plan may be exercised, even if such option is not otherwise exercisable by its terms.

The Board may amend or discontinue the Officers and Employees Plan at any time but, except in certain limited circumstances, no such amendment may increase the aggregate maximum number of Shares that may be subject to option under the Officers and Employees Plan, change the manner of determining the minimum option price, extend the option period under any option beyond ten years or, without the consent of the holder of the option, alter or impair any option previously granted to an optionee under the Officers and Employees Plan.

As at February 27, 2006, options for a total of 179,600 Shares had been granted and were outstanding under the Directors Plan, representing approximately 0.17% of the total number of Shares outstanding. Options were granted at 100% of the market value at the date of the grant, became exercisable over two years and expire after ten years. 28,600 options are still available for grant under the Directors Plan. The terms of the Directors Plan are substantially as described for the Officers and Employees Plan. As noted above, the Company has not granted options under the Directors Plan since 2002.

The substantially identical 2005 and 2006 Performance Option Plans have one key difference from the Officers and Employees Plan, which is the performance-based vesting feature. This feature was developed to support the Committee’s principles, as defined above, that the opportunity to earn pay above the median should be delivered through long-term compensation that requires achieving performance goals aligned with shareholder interests.

Under the 2005 and 2006 Performance Option Plans, option vesting is determined by achieving corporate performance goals that historically have correlated with the Corporation’s TSR and, in turn, relative to the DJUSBMI TSR. Performance will be measured over a three-year vesting period.

The performance-based vesting schedule determines the percentage of options vested at the end of the three-year vesting period and ties the level of Corporation performance to the level of total compensation delivered.

Using 10-year historical data, the Committee worked with Hewitt Associates and Watson Wyatt to analyze the correlation between the Corporation’s cash flow return on investment (“CFROI”) minus its weighted average cost of capital (“WACC”), the Corporation’s TSR and the Corporation’s performance relative to the DJUSBMI performance. Having established the link between the Corporation’s CFROI-WACC and TSR performance levels relative to the DJUSBMI performance, a schedule was developed based upon the Corporation’s CFROI-WACC levels to vest appropriate amounts of Shares at different performance levels.

In order to deliver a level of total compensation that is synchronized with the level of corporate performance achieved, data on compensation provided by the Comparator Group and Additional Surveys was analyzed to determine the 25^th, 50^th, and 75^th percentile compensation levels for the Corporation’s management positions. These compensation study results and the vesting schedule are then linked to determine option grant levels that will deliver the appropriate compensation for the performance delivered.

For 2006, the Corporation is requesting shareholder approval of an amount of 1,400,000 options to be available for grant under the provisions of the 2006 Performance Option Plan. It is expected that this amount will be sufficient for one annual grant to be made after the Meeting and before January 1, 2007.

The Guidelines are:

Reference is also made to the compensation of Chief Executive Officers of the Comparator Group and Additional Surveys. The comparison of the Corporation’s Chief Executive Officer compensation to the Comparator Group incorporates many factors including the relative sales and market capitalization of the companies, their profitability and shareholder return history, the duties of the Chief Executive Officer and any other extenuating or special circumstances. In general, the Chief Executive Officer’s cash compensation is set at the 50^th percentile of the applicable range.

In January 2006, the Committee and the Board reviewed Mr. Doyle’s performance relative to his 2005 performance goals for the purpose of determining his 2006 base pay level and 2005 short-term incentive bonus award. At that time, a salary of $1,000,000 and short-term incentive bonus award of $1,056,000 for 2005 performance were recommended by the Committee and approved by the Board. The goals and related achievements upon which the decision was based were:

Mr. Doyle’s compensation for 2005 as set forth in the Summary Compensation Table and salary for 2006 were determined in accordance with the foregoing and approved by the Committee together with all other independent members of the Board.

Submitted on behalf of the Committee: John W. Estey, Wade Fetzer III, Jeffrey J. McCaig and Paul J. Schoenhals.

Disclosure Regarding Nominating Committee Processes

Shareholders may propose individuals to be nominated for election as directors (a “Proposal”) in accordance with the provisions of Section 137 of the Canada Business Corporations Act  (the “Act”). Shareholders wishing to make a Proposal should refer to the relevant sections of the Act for a description of the procedures to be followed. For additional information regarding shareholder proposals, see “2007 Shareholder Proposals”. Shareholders who do not meet the threshold criteria for making, or otherwise choose not to make, a Proposal may at any time suggest nominees for

A CG&N Committee-recommended nominee for a position on the Board must, at a minimum, meet the qualification standards for directors established by Section 105 of the Act. In addition, such nominee must possess and exhibit the highest degree of integrity, professionalism, values and independent judgment. The CG&N Committee also believes that the Board should be comprised of directors who possess experience and expertise in one or more of the following areas:

On an ongoing basis the CG&N Committee asks incumbent directors and senior management to suggest individuals who should be considered as proposed nominees to the Board. The CG&N Committee identifies the mix of expertise and qualities required for the Board. The Chair of the CG&N Committee, in consultation with the CG&N Committee, the Board Chair and the Chief Executive Officer maintains a list of potential candidates suggested by incumbent directors, senior management or shareholders and biographical information for each such potential candidate. When it becomes apparent that a vacancy on the Board will arise, either from mandatory or elective retirement or otherwise, the CG&N Committee reviews its list of potential candidates against the skill sets of incumbent Board members and the range of experience and expertise necessary for the Board. Potential candidates who have, in the opinion of the CG&N Committee, the desired expertise are identified. Those who have the requisite qualifications and meet the Corporation’s standards are ranked by the CG&N Committee in order of preference and contacted to determine their interest in serving on the Board. If this process does not result in the identification of suitable nominees, the CG&N Committee may engage the services of a search firm to assist in the identification of director candidates. The CG&N Committee evaluates all potential candidates in the manner described, no matter what the source of the recommendation.

Prior to joining the Board, new directors are informed of the degree of energy and commitment the Corporation expects of its directors.

In an uncontested election, any nominee for director who fails to receive votes in favor of his or her election representing at least a majority of the votes cast (added together with the votes withheld) shall tender his or her resignation for consideration by the CG&N Committee. Except in extenuating circumstances, it is expected that the CG&N Committee will recommend to the Board that the resignation be accepted and effective within a period of 90 days and that the action taken be publicly disclosed. To the extent possible, the CG&N Committee and Board members who act on the resignation shall be directors who have themselves received a majority of votes cast.

The orientation program is tailored to the needs of each new director, and consists of a combination of written materials, one-on-one meetings with senior management, site visits and other briefings and training as appropriate.

The Board also recognizes the importance of ongoing director education and the need for each director to take personal responsibility for this process. To facilitate ongoing education, the Corporation will:

The Board holds one meeting each year at one of the Corporation’s operating facilities. Site visits by the Board and meetings with senior management of the facility are incorporated into the itinerary.

Communications by e-mail should be sent to directors@potashcorp.com.

Matters relating to the Corporation’s accounting, internal accounting controls or auditing matters will be referred to the Audit Committee. Other matters will be referred to the Board Chair.

To further facilitate communications between the Corporation’s shareholders and the Board, the Corporation has adopted a policy that all directors standing for re-election and all new director nominees are expected to attend the Meeting. In 2005, all such directors and nominees attended the annual meeting.

Submitted on behalf of the CG&N Committee: Mary Mogford, Frederick J. Blesi, Wade Fetzer III, Dallas J. Howe and E. Robert Stromberg.

Listed below are the names and other information concerning persons known to the Corporation (from records and reports filed with the SEC on Schedule 13D or 13G) who owned, as of February 27, 2006 more than 5% of the Corporation’s Shares:

Summary Compensation Table

The following table sets forth, for the periods indicated, all compensation earned by the individuals who served as the Chief Executive Officer and the Chief Financial Officer of the Corporation, and by each of the Corporation’s other three most highly compensated executive officers as of the end of calendar year 2005, for services rendered to the Corporation and its subsidiaries (the “Named Executive Officers”).

The following table provides details on the options granted to the Named Executive Officers during the fiscal year ended December 31, 2005.