Bert A. Frost

About Bert A. Frost

Bert A. Frost (age 60) is Executive Vice President, Sales, Market Development and Supply Chain at CF Industries; he has served in the EVP role since July 2023 and has been with CF since November 2008. He holds a B.S. from Kansas State University and is a graduate of Harvard Business School’s Advanced Management Program . CF’s 2024 results provide the performance context for incentive design and payouts: net earnings $1.22B, EPS $6.74, EBITDA $2.33B, adjusted EBITDA $2.28B, net cash from operations $2.27B, and free cash flow $1.45B . CF also highlights multi-period TSR outperformance versus peers and indices over 1-, 3-, 5-, 7- and 10-year horizons .

Past Roles

External Roles

No public company directorships or external board roles for Mr. Frost are disclosed in the proxy .

Fixed Compensation

• CF has no employment agreements and emphasizes minimal perquisites and strong governance practices (ownership guidelines, clawback, no hedging/pledging) .

Multi-year compensation (Summary Compensation Table):

2024 target pay elements (approved for the year):

Deferred compensation (plan balances and credits):

Performance Compensation

Annual Incentive Plan (AIP) structure and 2024 outcomes:

• Mr. Frost’s 2024 AIP payout (Non-Equity Incentive Plan Compensation): $749,700 .

Long-Term Incentives (LTIs):

• Design: 60% PRSUs (3-year performance: average RONA across three 1-year periods; TSR modifier ±20%), 40% time-vesting RSUs (3-year vest) .
• No stock options are granted to NEOs; none outstanding as of 12/31/2024 .

2024 target LTI awards (grant-date values and counts):

Realized performance from prior cycle:

• 2022 PRSU cycle (performance period ended 12/31/2024) paid at 137%: 3-year average RONA payout 115% with TSR modifier at 120% (TSR 41.1% vs threshold 29.5%) . Frost’s 2022 PRSU target 13,566; earned 18,639; value $1,510,132 at $81.02 per share (2/28/2025) .

Stock vested in 2024 (supply indicator):

• Shares vested: 58,784; value realized $4,753,445 .

Equity Ownership & Alignment

Beneficial ownership and outstanding equity:

Vesting schedules and restrictions:

• Annual RSUs vest in three equal annual installments following grant; Frost’s 6/17/2024 retention RSUs vest in full on Jan 3, 2027 and do not provide pro rata vesting on retirement .
• PRSUs vest after the 3-year performance period upon committee certification .

Ownership policy and trading restrictions:

• Ownership guidelines: NEOs must hold stock equal to 2x base salary within 5 years; as of 12/31/2024 all directors and officers were in compliance .
• Hedging and pledging are prohibited for directors and executive officers; robust Dodd-Frank compliant clawback policy updated Oct 2023 .

Insider selling pressure indicators:

• Significant cliff vest on Jan 3, 2027 (45,125 RSUs from the 2024 retention award), creating a potential liquidity event absent 10b5-1 or retention of shares for taxes .

Employment Terms

• Start date at CF: November 2008; EVP since July 2023 .
• No employment agreements (company-wide practice) .

Change-in-control (CIC), severance, and retirement:

• Cash severance upon qualifying termination in connection with a CIC: 2x (salary + target annual incentive) plus target AIP for year of termination; separate retirement savings plan enhancement and welfare benefits continuation .
• Equity acceleration: Upon CIC, restrictions on RSUs/PRSUs lapse and performance goals are deemed achieved at the greater of target or actual-to-date (single-trigger for equity); AIP for the CIC year pays at target or actual, whichever is higher .
• Estimated CIC economics (as of 12/31/2024 at $85.32 per share):
  • Severance amount $3,185,000; retirement savings plan enhancement $182,000; early vesting of RSUs/PRSUs $8,904,934; other CIC benefits $114,784; total $12,386,718 .
• Excise tax gross-up: Mr. Frost’s legacy 2008 CIC agreement includes an excise tax gross-up provision; no gross-up was estimated at the 12/31/2024 price scenario .
• Clawback: Applies to incentive-based compensation in event of required accounting restatement (3-year lookback) .
• Insider trading policy: Prohibits hedging/pledging and speculative transactions .

Compensation Structure Analysis

• Mix shift: 2024 stock awards up materially due to a $3.5M one-time retention RSU (45,125 units vesting 1/3/2027), increasing equity-based, time-vested exposure for Frost .
• Performance linkage: AIP anchored 60% to Adjusted EBITDA and 40% to strategic/safety milestones; PRSUs tied to RONA with a TSR modifier, aligning with cash generation and shareholder return over cycles .
• Governance: No options and no employment agreements; clawback, ownership guidelines, and hedging/pledging prohibitions in place .
• Benchmarking: Target total direct compensation set around the 50th percentile of an Industry Reference Group and general industry data; committee considers role criticality and performance .

Equity Ownership & Alignment Details

Investment Implications

• Near-term selling pressure risk in early 2027: Frost’s 45,125 retention RSUs cliff vest on Jan 3, 2027, representing a concentrated vest event that may create incremental stock supply absent pre-arranged trading plans or net share settlement for taxes .
• Alignment is robust: Heavy use of PRSUs tied to RONA and a TSR modifier, ownership guidelines, prohibition on hedging/pledging, and a Dodd-Frank compliant clawback support pay-for-performance and governance quality .
• CIC economics: Equity accelerates on a single trigger at CIC while cash severance is double-trigger; Frost’s legacy excise tax gross-up is a governance blemish, though zero gross-up was estimated at the current scenario .
• Performance sensitivity: AIP misses on EBITDA (actual $2.28B vs $2.75B target) were offset by strong achievement on clean energy, sustainability, and safety milestones; PRSU payouts from the 2022 grant at 137% indicate above-target operating returns and TSR during that cycle .
• Retention: The 2024 retention grant increases stickiness through 2027, but also backloads value and creates a focal vesting date relevant for executive retention and potential trading activity .