finding a healthy balance with employees

People work to live, not the other way around. We realize our employees have full lives that involve interests outside the workplace. While at work, we aim to balance our demands on employees with fair and equitable treatment, and competitive compensation. Above all, we balance our desire for productivity with an overriding respect for health and safety.

our commitment to employees

We are committed to attracting, retaining and developing quality people in our industry. We are committed to providing our employees with meaningful work, competitive total compensation and opportunities for professional development. We do all of this within an environment that is fair, safe, healthy, open and free from harassment and workplace violence.

All safety incidents, large or small, are tracked in an effort to identify root causes and determine preventive measures.

Our compliance hotline allows employees to confidentially report concerns.

opportunities and challenges

• In a tight labor market, we need to offer a work environment and compensation package that attracts, retains, motivates, and inspires employees to be high performers and to produce results.
• Many of our operations involve physical activity and heavy machinery, putting employees in situations with the potential for injury. In a dynamic, fast-paced work environment, it is important to pay close attention to safety at all times.
• Employee diversity is less than it should be across the agricultural and industrial sectors. Our challenge is to achieve an employee diversity profile that is representative of the local population.

actions

Attraction and Retention
To support our growth strategies, we have taken a proactive, strategic approach to manage our workforce requirements. This will provide us with the right people, with the right skills, at the right time and in the right roles.

As part of this strategy, two working committees are developing plans to address the Alberta workforce shortage.

A key to attraction and retention is providing a competitive total compensation program, including market-driven base and incentive pay, as well as pension plans, health and dental coverage, disability and life insurance benefits, and vacation. Throughout 2004 and 2005, we conducted extensive reviews of these programs. As a result of these efforts, we have enhanced our compensation programs to address market competitiveness and better link pay to performance.

A new profit sharing plan for Wholesale and Corporate employees was implemented in 2004. Distributions are based on a percentage of base pay, to a maximum of 10 percent. Distributions for 2004 and 2005 were at or near the maximum. An annual incentive plan is provided for mid and seniorlevel employees.

The U.S. benefits programs were reviewed against those of our peers and changes were made throughout 2005. Our Canadian defined contribution pension program was reviewed in 2005, with enhanced Company contributions being rolled out in 2006. We have also provided managers with education, tools and budget flexibility to ensure ownership of the salary process is at the heart of our compensation philosophy.

We have built flexibility into hours of work. In situations where there is a business need, we support alternative work arrangements including job sharing, flex hours and part-time work.

We also survey our employees to determine their level of satisfaction working at Agrium, and provide results and related tools to managers so they can address common concerns.

Health and Safety
When an injury happens on a professional sports team, management often calls up a replacement player. We don’t believe in replacements at Agrium. We believe in injury prevention. Nonetheless, injuries do happen. When they do, Agrium follows an employee-driven rehabilitation program to ensure theemployee returns to meaningful work as quickly as possible. Our rehabilitation program includes modified work assignments, where an employee gradually works back to his or her previous role, increasing physical activity along the way.

To help prevent injuries, we require employees to report all incidents and near misses. Once we understand the root cause of unsafe conditions, we take corrective action to reduce the risk of injury.

To ensure that continual vigilance is placed on safety, we conducted more than 200 formal, internal environment, health and safety (EH&S) assessments of our operations in 2005.

Diversity
It is our firm conviction that a culture that values the unique perspectives, skills, styles and abilities of its employees contributes to their ability to succeed individually and adds to our collective success. Workplace diversity invariably leads to openness, learning and innovation.

We recognize that we have a shortage of women in our workforce in general as well as in leadership roles. Within our Corporate and Wholesale businesses, women constitute 16 percent of the workforce and nine percent of senior leaders in 2005. Though these statistics would not be unusual in heavy industry, our senior leadership team is committed to increasing the number of women in our organization.

We support our diversity beliefs through the following policies and code: Diversity Policy; Harassment and Workplace Violence Policy; and Code of Business Conduct and Ethics (Code).

Policies do not amount to much if you do not promote them or provide a channel for corrective actions. To ensure employee awareness of our Harassment Policy, we provide harassment training during employee orientation, as well as ongoing training. In addition, employees are asked to acknowledge annually that they have reviewed the Code. Employees who believe they, or someone else within the Company, have been treated in a discriminatory manner or harassed, are encouraged to report the incident to their supervisor and/or Human Resources. Violations of the Code may be reported through a confidential hotline. Matters under investigation are handled confidentially. Employees found to have violated any of these policies are subject to appropriate disciplinary action up to and including termination.

Freedom of Association

Agrium’s relationship with unions is critical to the reliable operation of our facilities. In accordance with our policy, employees at Agrium are free to organize into trade unions. Approximately 500 of our employees are unionized. We have operated for nine years without a labor disruption to operations. In 2005, we successfully negotiated a bargaining contract extension for our Fort Saskatchewan, Alberta operation.

performance

Employees

Employee numbers increased to 4,719 with our acquisitions in 2005, however, we did experience reductions at our Kennewick, Washington and Homestead, Nebraska operations. Following our acquisitions of Royster-Clark and Nu-gro in early 2006, employee numbers will increase by approximately 2,000.

Safety

Since 2003, employee recordable injury rates have decreased 30 percent. Our contractor injury rates have increased since 2003. Regretfully, we experienced an employee fatality in 2004 and one during the first half of 2006. We investigate all fatalities thoroughly and share our learnings with our employees and contractors through specific communications and training.

Employee Learning and Development

We support our employees through educational courses, conferences, professional memberships and educational rebates. Prior to 2005, industry and business memberships were included in our statistics. This has been excluded in 2005 resulting in a more accurate representation of our investment in employee learning and development.

Employee Survey

We conduct our Voice of the Employee survey of Agrium employees every one to two years. We conducted the survey in 2003 and 2004; another survey is scheduled for the Fall of 2006. Results for two questions that were identified as focus areas are provided in the graph:

• Incentive programs motivate me to give “that little bit extra”.
• Information the senior leadership team communicates is reliable and trustworthy.