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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

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

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

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

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

INTREPID POTASH, INC.

(Name of Registrant as Specified In Its Charter)

 

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

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

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

 

 

(1)

 

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

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LOGO

Intrepid Potash, Inc.
707 17th Street, Suite 4200
Denver, Colorado 80202

April 9, 2012

Dear Stockholder:

        We cordially invite you to attend the 2012 annual meeting of stockholders of Intrepid Potash, Inc. The meeting will be held on Tuesday, May 29, 2012, at 10:00 a.m. local time, at the Denver Marriott City Center, 1701 California Street, Denver, Colorado 80202.

        You will find important information about the matters to be voted on at the meeting in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. We are sending most of our stockholders a one-page notice regarding the Internet availability of these materials and our 2011 Annual Report instead of sending them a full set of printed materials. This notice tells you how to access and review on the Internet all of the important information contained in the proxy materials. This notice also tells you how to vote on the Internet or by phone and how to request to receive a printed copy of our proxy materials.

        Your vote is important. Whether or not you plan to attend the meeting, we hope that you will vote as soon as possible. You may vote on the Internet or by telephone as described in the attached proxy materials. You also may vote by mail if you timely requested to receive printed copies of these proxy materials in the mail.

    Very truly yours,

 

 


GRAPHIC
    Robert P. Jornayvaz III
Executive Chairman of the Board

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LOGO

Intrepid Potash, Inc.
707 17th Street, Suite 4200
Denver, Colorado 80202

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Date   Tuesday, May 29, 2012

Time

 

10:00 a.m. Denver local time

Place

 

Denver Marriott City Center, 1701 California Street, Denver, Colorado 80202

Items of Business

 

(1)

 

To elect two Class I directors nominated by our Board of Directors to serve three-year terms expiring at our 2015 annual meeting of stockholders

 

 

(2)

 

To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2012

 

 

(3)

 

To approve, on an advisory basis, our executive compensation

 

 

(4)

 

To approve the Intrepid Potash, Inc. Short-Term Incentive Plan, as amended and restated

 

 

(5)

 

To approve the Intrepid Potash, Inc. Equity Incentive Plan, as amended and restated

 

 

(6)

 

To transact any other business that properly comes before the meeting and any adjournment or postponement of the meeting

 

 

The accompanying proxy statement provides more details about each of these proposals.

Record Date

 

Only holders of record of our common stock on April 2, 2012, are entitled to receive notice of, and to vote at, the meeting and any postponement or adjournment of the meeting.

Voting

 

Your vote is very important. Whether or not you plan to attend the meeting, we encourage you to read the accompanying proxy materials and submit your vote as soon as possible. You can find specific information about how to cast your vote in the Question and Answer section of the accompanying proxy statement.


IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON MAY 29, 2012
This notice, the proxy statement, and the 2011 annual report are available on our website at
investors.intrepidpotash.com.

    By Order of the Board of Directors
of Intrepid Potash, Inc.

 

 



GRAPHICS

 

 

Martin D. Litt
Secretary

Denver, Colorado
April 9, 2012


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TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

    1  

PROPOSAL 1—ELECTION OF CLASS I DIRECTORS

    5  

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2012

    10  

PROPOSAL 3—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

    11  

PROPOSAL 4—APPROVAL OF THE INTREPID POTASH, INC. SHORT-TERM INCENTIVE PLAN, AS AMENDED AND RESTATED

    13  

PROPOSAL 5—APPROVAL OF THE INTREPID POTASH, INC. EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED

    16  

EQUITY COMPENSATION PLAN INFORMATION

    25  

CORPORATE GOVERNANCE

    25  

Director Independence

    25  

Board Leadership Structure

    26  

Independent Lead Director

    26  

Risk Management

    26  

Communication with Directors

    27  

Stock Ownership Guidelines

    28  

Committees and Meetings

    28  

Audit Committee

    28  

Nominating and Corporate Governance Committee

    29  

Compensation Committee

    29  

Director Designation and Voting Agreement

    29  

Governance-Related Materials

    30  

COMPENSATION COMMITTEE REPORT

    31  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    31  

EXECUTIVE COMPENSATION

    31  

Compensation Discussion and Analysis

    31  

Summary Compensation Table

    49  

Grants of Plan-Based Awards in 2011

    51  

Outstanding Equity Awards at the End of 2011

    53  

Option Exercises and Stock Vested in 2011

    54  

Pension Benefits

    54  

Non-Qualified Deferred Compensation

    54  

Employment Agreement with Mr. Jornayvaz

    54  

Termination and Change-in-Control Payments

    55  

DIRECTOR COMPENSATION

    59  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    62  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

    65  

LIMITATION OF LIABILITY AND INDEMNIFICATION

    68  

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    69  

REPORT OF THE AUDIT COMMITTEE

    69  

HOUSEHOLDING

    70  

STOCKHOLDER PROPOSALS

    70  

ANNUAL REPORT ON FORM 10-K AND OTHER SEC FILINGS

    70  

OTHER MATTERS

    71  

APPENDIX A—INTREPID POTASH, INC. SHORT-TERM INCENTIVE PLAN

       

APPENDIX B—INTREPID POTASH, INC. EQUITY INCENTIVE PLAN

       

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LOGO

Intrepid Potash, Inc.
707 17th Street, Suite 4200
Denver, Colorado 80202
(303) 296-3006



PROXY STATEMENT



QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

Why did I receive these proxy materials?

        We are providing these proxy materials to you in connection with the solicitation by the Board of Directors of Intrepid Potash, Inc., a Delaware corporation, of proxies to be voted at our 2012 annual meeting of stockholders. The meeting will be held on Tuesday, May 29, 2012, at 10:00 a.m. local time, at the Denver Marriott City Center, 1701 California Street, Denver, Colorado 80202.

        Unless the context otherwise requires, when we use the term "Intrepid," "us," "we," or "our," we are referring to Intrepid Potash, Inc. and its consolidated subsidiaries.


What matters will be voted on at the meeting?

        We will ask stockholders to vote on the following matters at the annual meeting:


Why did I receive a one-page notice about the Internet availability of these materials instead of printed materials?

        Under rules of the Securities and Exchange Commission, or the SEC, we have elected to furnish proxy materials to our stockholders on the Internet. Beginning on or about April 12, 2012, we will mail to most of our stockholders a one-page Notice of Internet Availability of Proxy Materials. If you receive this notice, you will not receive printed copies of the proxy materials unless you specifically request them. The notice provides instructions on how to access and review the proxy materials on the Internet, how to request to receive a printed set of the proxy materials by mail, and how to vote your shares.

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        The notice also provides instructions on how to elect to receive all future proxy materials electronically by e-mail or in printed form by mail. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail or printed form by mail will remain in effect until you terminate it.


What is the difference between a stockholder of record and a beneficial holder?

        Most of our stockholders hold their shares through a stockbroker, bank, or other nominee rather than directly in their own name. There are some important distinctions between shares held of record and those owned beneficially.

Stockholder of Record

        If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., or Computershare, you are the stockholder of record for those shares and are receiving proxy materials directly from us. As the stockholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the meeting.

Beneficial Holder

        If your shares are held in a stock brokerage account, by a bank or other nominee (commonly referred to as being held in "street name"), you are the beneficial holder of those shares. Your broker, bank, or nominee is the stockholder of record and therefore has forwarded proxy materials to you as beneficial holder. As the beneficial holder, you have the right to direct your broker, bank, or other nominee how to vote your shares and are also invited to attend the meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you obtain a signed proxy from your broker, bank, or nominee giving you the right to vote the shares.


Who can vote?

        Only stockholders of record at the close of business on the record date of April 2, 2012, are entitled to receive notice of, and to vote at, the annual meeting. As of April 2, 2012, there were 75,514,611 shares of common stock issued and outstanding. Each share is entitled to one vote on each item voted on at the annual meeting.

        A list of stockholders entitled to vote at the meeting will be available for inspection by any stockholder at the annual meeting and during normal business hours for the ten days prior to the annual meeting at our corporate headquarters located at 707 17th Street, Suite 4200, Denver, Colorado 80202.


How do I vote?

Stockholder of Record

        If you are a stockholder of record, you can vote over the telephone or on the Internet by following the instructions you received from us in the mail or by e-mail. If you requested to receive a full set of proxy materials in the mail, you also can vote by mail using the proxy card included with the materials. Finally, you can vote in person at the meeting.

Beneficial Holder

        If you are a beneficial holder, you can vote over the telephone or on the Internet by following the instructions you received from your bank, broker, or nominee in the mail or by e-mail. If you requested to receive a full set of proxy materials in the mail, you also can vote by mail using the voting

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instruction card included with the materials. If you have not received this information from your broker, bank, or other nominee, please contact them as soon as possible. You can vote in person at the meeting only if you obtain a signed proxy from your broker, bank, or nominee giving you this right.

        If you do not give your bank, broker, or nominee instructions as to how to vote, under the rules of the New York Stock Exchange, or NYSE, your bank, broker, or nominee may not vote your shares without your instructions on the election of directors or other non-routine items of business. Please be sure to return your voting instructions to your bank, broker, or nominee so your vote is counted.

Multiple Holdings

        If you hold shares BOTH as a stockholder of record and as a beneficial holder, YOU MUST VOTE SEPARATELY for each set of shares.


Can I change or revoke my vote?

        If you are a stockholder of record, you may change your vote at any time prior to the vote at the annual meeting by

        If you are a beneficial holder, you may change your vote by submitting new voting instructions to your bank, broker or nominee following the instructions they provided.

        Your attendance at the meeting will not automatically revoke your proxy.


What is the quorum requirement for the meeting?

        A quorum of stockholders is necessary for any action to be taken at the meeting (other than adjournment or postponement of the meeting). Our bylaws provide that a quorum exists if stockholders holding a majority of the outstanding shares of our common stock are present at the meeting in person or by proxy. If you submit a properly completed proxy, even if you abstain from voting, your shares will be counted for purposes of determining the presence of a quorum. Broker non-votes (described below) also will be counted for purposes of determining the presence of a quorum provided that the bank, broker, or nominee uses its discretionary authority to vote on at least one routine matter.


How will my shares be voted at the meeting?

        Your shares will be voted in accordance with your properly submitted instructions.

Stockholders of Record

        If you are a stockholder of record and you submit a proxy but do not include voting instructions on a particular matter, your shares will be voted FOR each of the five proposals described in this proxy statement (Proposals 1-5) in accordance with the recommendations of our Board. If any other matters are properly presented for a vote at the meeting or any adjournment or postponement of the meeting, your shares will be voted in the discretion of the named proxies.

Beneficial Holders and Broker Non-Votes

        If you are a beneficial holder and you do not provide voting instructions to your bank, broker, or nominee, that organization will determine if it has the discretionary authority to vote your shares on

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the particular matter. Under NYSE rules, these organizations have the discretion to vote your shares on routine matters, such as the ratification of the appointment of KPMG as our independent registered public accounting firm for 2012 (Proposal 2). However, they do not have the discretion to vote your shares on non-routine matters, such as the election of directors, the advisory vote to approve executive compensation, and the approval of the incentive plans (Proposals 1 and 3-5). The unvoted shares are called "broker non-votes." Shares that constitute broker non-votes are considered present for purposes of determining a quorum but are not considered entitled to vote or votes cast on the particular matter.


What are the voting requirements for each matter?

Proposal
  Vote Required   Broker
Discretionary
Voting Allowed

(1)

 

Election of each Class I director

  Majority of votes cast   No

(2)

 

Ratification of appointment of KPMG

  Majority of votes cast   Yes

(3)

 

Advisory vote to approve executive compensation

  Majority of votes cast   No

(4)

 

Approval of our Short-Term Incentive Plan, as amended and restated

  Majority of votes cast   No

(5)

 

Approval of our Equity Incentive Plan, as amended and restated

  Majority of votes cast   No

        For a proposal to receive a majority of the votes cast, the number of shares voted "for" that proposal must exceed the number of votes cast "against" that proposal. Abstentions and broker non-votes will not count as votes cast on any of the proposals.

        With respect to the election of Class I directors, each director nominee has tendered a contingent, irrevocable resignation to the Board that will become effective only if he fails to receive the required majority vote and the Board accepts the resignation. In the event a director does not receive a majority of the votes cast, the Nominating and Corporate Governance Committee of the Board (sometimes referred to as the Governance Committee) will make a recommendation to the Board as to whether to accept or reject the resignation or whether some other action should be taken. The Board will act (taking into account the recommendation of the Governance Committee) and publicly disclose its decision and the rationale behind it within 90 days after the date of the certification of the election results.

        Although the advisory vote on executive compensation is non-binding, as provided by law, our Board and its Compensation Committee will review the results of the vote and will consider the results in making future decisions on executive compensation.


Who will count the votes?

        A representative or designee of Computershare will tabulate the votes and act as inspector of election.


Who will pay the costs of soliciting votes for the meeting?

        We will pay all costs of soliciting proxies. We have retained Alliance Advisors LLC to assist in the solicitation of proxies. We expect to pay Alliance Advisors LLC $3,000, plus reimbursement of reasonable expenses. The solicitation may be made personally or by mail, telephone, e-mail, or other electronic means of communication. In addition, our officers, directors, and employees, without additional compensation, may also solicit proxies using any of these methods. We will send proxy materials or additional soliciting materials to banks, brokers, other institutions, nominees, and fiduciaries that will forward these materials to the beneficial holders of our shares. On request, we will reimburse these organizations for their reasonable expenses in forwarding these materials.

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PROPOSAL 1—ELECTION OF CLASS I DIRECTORS

        Our Board consists of six directors who are divided into three classes, designated as Class I, Class II, and Class III. In accordance with our bylaws and certificate of incorporation, the number of directors constituting the entire Board is fixed exclusively by the Board from time to time. The directors are divided as evenly as possible into the three classes. If the number of directors is not evenly divisible by three, the remaining positions are allocated first to Class III and then to Class II. The classes of directors serve for staggered three-year terms, with their current terms ending at the annual stockholders meeting in the following years: Class I directors—2012; Class II directors—2013; and Class III directors—2014.

        The Class I directors elected at the 2012 annual stockholders meeting will serve until the 2015 annual stockholders meeting. Our nominees for these Class I directorships are Terry Considine and Chris A. Elliott. Each nominee has consented to serve as a director if elected. However, if either or both nominees are unable to serve, or for good cause will not serve, the persons named in the proxy intend to vote in their discretion for one or more substitutes who will be designated by the Board. Both nominees are currently serving on our Board, and Mr. Considine was elected by stockholders at our 2009 annual meeting. Our Board appointed Mr. Elliott to the Board in August 2010. As such, Mr. Elliott has not previously stood for election at an annual meeting. In 2010, we paid a fee to a third-party search firm to assist us with the identification of Mr. Elliott as a director.

        To be elected, each nominee must receive a majority of the votes cast. Specifically, the number of shares voted "for" the nominee must exceed the number of votes cast "against" that nominee. Each nominee has tendered to the Board a contingent, irrevocable resignation that will become effective only if the nominee fails to receive the required majority vote and the Board decides to accept the resignation. In the event a nominee does not receive a majority of the votes cast, the Governance Committee will make a recommendation to the Board whether to accept or reject the resignation or whether some other action should be taken. The Board will act (taking into account the recommendation of the Governance Committee) and publicly disclose its decision and the rationale behind its decision within 90 days after the date of the certification of the election results.

        Our Corporate Governance Guidelines provide that the Governance Committee is responsible for identifying and recommending directors for nomination by the Board for election as members of the Board. The Governance Committee performed its evaluation and nominating committee functions in early 2012. The Governance Committee seeks independent directors who represent a mix of backgrounds and experiences that it believes will enhance the quality of the Board's deliberations and decisions. When searching for new candidates, the Governance Committee considers the evolving needs of the Board and searches for candidates to fill any current or anticipated future gaps. The Governance Committee selects each nominee based on the nominee's skills, achievements, and experience. The Governance Committee does not have a formal policy with respect to diversity; however, the Board and the Governance Committee believe that it is essential that the members of the Board represent diverse and experienced viewpoints. The Governance Committee also believes that each nominee should have the highest level of personal and professional ethics, integrity, and values together with expertise that is useful to Intrepid and complementary to the background and expertise of other members of the Board. Additionally, nominees are expected to have a willingness and ability to devote the time necessary to carry out the duties and responsibilities of membership on the Board and a desire to ensure that our operations and financial reporting are effected in a transparent manner and in compliance with applicable laws, rules, and regulations.

        The Governance Committee evaluates each potential nominee individually and in the context of the Board as a whole. The objective is to recommend a group that will contribute to our long-term success and effectively represent stockholder interests. With respect to the nomination of continuing directors for re-election, the individual's contributions to the Board are also considered.

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        When seeking candidates for a new director, the Governance Committee solicits suggestions from incumbent directors, management, stockholders, and others. The Governance Committee has authority under its charter to retain a search firm for this purpose. If the Governance Committee believes a candidate would be a valuable addition to the Board, it recommends his or her candidacy to the full Board.

        The Governance Committee will consider suggestions by stockholders of possible future nominees. The Governance Committee does not intend to alter its criteria for evaluating potential director candidates, including the criteria described above, in the case of director candidates recommended by stockholders. Stockholders may nominate persons for election to the Board only in accordance with our bylaws. You can find more information about the requirements for submitting stockholder proposals, including proposals relating to director nominees, below under the heading "Stockholder Proposals."

        Below is biographical and other information about our Class I director nominees and continuing directors. We also provide for each director the specific experience, qualifications, and skills that helped lead our Board to conclude that he should serve as a director.

 
  Biographical Information   Specific Experiences,
Qualifications and Skills
Considered by Our Board

Class I Nominees
(Term Expires at 2012 Annual Meeting)

 

 

Terry Considine
Age 65
Director since April 2008

 

Mr. Considine has served as Chief Executive Officer and Chairman of Apartment Investment Management Company, a publicly held, multi-family apartment real estate investment trust, since 1994. Mr. Considine also served as Chief Executive Officer and Chairman of American Land Lease, Inc., another publicly held real estate investment trust from July 1996 through February 2009.

 

Management and director experience with complex public companies

Business experience in the real estate industry

Chris A. Elliott
Age 46
Director since August 2010

 

Mr. Elliott has 24 years of work experience in the agriculture industry. Mr. Elliott has served as President and Chief Executive Officer of Agricultural Company of America Partners, LP since July 2007, a company that owns and manages agriculture real estate and operates farms producing a variety of crops over a diverse geographic spectrum. In addition, since 2007, Mr. Elliott has been the President and co-owner of Accuform Technologies,  LLC, an agriculture product development company. Mr. Elliott previously served as President and Chief Executive Officer of Nutra-Park Inc., an agriculture plant growth regulator company, from 2002 to 2006.

 

Extensive experience in the agricultural industry

In-depth knowledge of agricultural commodities

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  Biographical Information   Specific Experiences,
Qualifications and Skills
Considered by Our Board

Class II Directors
(Term Expires at 2013 Annual Meeting)

 

 

J. Landis Martin
Age 66
Director since December 2007

 

Mr. Martin is the founder of the private equity firm Platte River Ventures and has been its Managing Director since 2005. Mr. Martin retired as Chairman and Chief Executive Officer of Titanium Metals Corporation, an integrated producer of titanium metals, where he served from 1989 until 2005. Mr. Martin served as President and Chief Executive Officer of NL Industries, Inc., a manufacturer of titanium dioxide chemicals, from 1987 to 2003 and was Chairman and Chief Executive Officer of Baroid Corporation from 1990 to 1994. Mr. Martin is Chairman of the Board of Directors of Crown Castle International Corp. and is also a director of Halliburton Company and Apartment Investment Management Company.

 

Management and director experience with complex public companies

Business experience with complex companies in the manufacturing sector and energy industry

Barth E. Whitham
Age 55
Director since April 2008

 

Mr. Whitham has served as President and Chief Executive Officer of Enduring Resources, LLC, a company focused on the acquisition and exploitation of upstream energy assets in domestic onshore basins, since 2005, and also serves on its board of directors. From January 1991 to 2005, Mr. Whitham served as President and Chief Operating Officer of Westport Resources Corp., a publicly traded oil and gas exploration and production company, and also served on its board of directors. Mr. Whitham also serves as a director of Ensign Energy Services Inc., an oilfield services company publicly traded on the Toronto Stock Exchange.

 

Management and director experience with operations and management of complex public companies

Business experience in the energy industry

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  Biographical Information   Specific Experiences,
Qualifications and Skills
Considered by Our Board

Class III Directors
(Term Expires at 2014 Annual Meeting)

 

 

Robert P. Jornayvaz III
Age 53
Director since December 2007

 

Mr. Jornayvaz has served as our Executive Chairman of the Board since May 2010. Mr. Jornayvaz served as our Chairman of the Board and Chief Executive Officer from November 2007 until May 2010 and served, directly or indirectly, as a manager of Intrepid Mining LLC from January 2000 until its dissolution in 2008, at the time of our initial public offering, or IPO. As a manager of Intrepid Mining LLC, Mr. Jornayvaz, along with Mr. Harvey, was responsible for the business operations of Intrepid Mining LLC. Mr. Jornayvaz is the sole owner of Intrepid Production Corporation, which owns approximately 15 percent of our common stock as of April 2, 2012. He is also the sole owner of IPC Management LLC, one of two managers of the former Intrepid Mining LLC. Intrepid Production Corporation also owns 50 percent of Intrepid Oil & Gas, LLC, with an entity owned by Mr. Harvey as the other 50 percent owner. Mr. Jornayvaz has 13 years of experience in the potash industry and 30 years of experience in the oil and gas industry.

 

Management experience with us and Intrepid Mining LLC

Experience in extractive and commodities businesses

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  Biographical Information   Specific Experiences,
Qualifications and Skills
Considered by Our Board

Hugh E. Harvey, Jr.
Age 59
Director since November 2007

 

Mr. Harvey has served as our Executive Vice Chairman of the Board since May 2010 and as a member of our Board since our formation in November 2007. Mr. Harvey served as our Chief Technology Officer from May 2009 until May 2010, our Chief Operating Officer from February 2009 to October 2009 and our Executive Vice President of Technology from November 2007 until May 2009. Mr. Harvey served, directly or indirectly, as a manager of Intrepid Mining LLC from January 2000 until its dissolution in 2008, at the time of our IPO. As a manager of Intrepid Mining LLC, Mr. Harvey, along with Mr. Jornayvaz, was responsible for the business operations of Intrepid Mining LLC. Mr. Harvey is sole owner of Harvey Operating and Production Company, which owns approximately 13 percent of our common stock as of April 2, 2012. He is also the sole owner of HOPCO Management LLC, one of two managers of the former Intrepid Mining LLC. Harvey Operating and Production Company also owns 50 percent of Intrepid Oil & Gas, LLC, with an entity owned by Mr. Jornayvaz as the other 50 percent owner. Mr. Harvey has 13 years of experience in the potash mining industry, over 27 years of experience in the oil and gas industry and a unique combination of mining, mineral processing, drilling, field operations, and economic evaluation experience.

 

Management experience with us and Intrepid Mining LLC

Engineering and operational experience in extractive industries


Recommendation of the Board of Directors

        THE BOARD RECOMMENDS A VOTE "FOR" EACH NOMINEE. Proxies will be voted in favor of each nominee unless you specify otherwise in your proxy.

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PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2012

        The Audit Committee of our Board has selected KPMG to serve as our independent registered public accounting firm for the year ended December 31, 2012, and our Board is asking stockholders to ratify this selection. Stockholder approval or ratification is not required to appoint KPMG; however, our Board believes that submitting the appointment of KPMG to stockholders for ratification is good corporate governance. If stockholders do not ratify this appointment, the Audit Committee will reconsider whether to retain KPMG. If the selection of KPMG is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that a change would be in the best interest of us and our stockholders.

        KPMG has served as our independent registered public accounting firm since 2007. To our knowledge, neither KPMG nor any of its members has any direct or material indirect financial interest in Intrepid or any connection with Intrepid in any capacity other than as independent public accountants. A representative of KPMG is expected to be present at the meeting and will have an opportunity to make a statement if he or she desires to do so and to respond to appropriate questions.

        We paid the following fees to KPMG for the audit of our consolidated financial statements and for other services provided in the years ended December 31, 2011, and 2010. All services and fees including tax service fees were pre-approved by the Audit Committee.

 
  2011   2010  

Audit Fees

  $ 700,464   $ 724,710  

Audit-Related Fees

        20,470  

Tax Fees

    125,878     131,622  

All Other Fees

         
           

Total Fees

  $ 826,342   $ 876,802  
           

        Audit fees included fees associated with the annual audit of our consolidated financial statements and internal control over financial reporting, the review of our periodic reports, accounting consultations, and services related to, or required by, statute or regulation, such as consents, and other audit services related to SEC and other regulatory filings. Audit-related fees included fees associated with the review of SEC comment letters and related response letters. Tax fees related to assistance with compliance-related and technical research. The Audit Committee has concluded that the provision of these non-audit services is compatible with maintaining the independence of KPMG.


Audit Committee Pre-Approval Policy and Procedures

        Under its charter, the Audit Committee is responsible for approving the fees and any other significant compensation paid to our independent accountants and pre-approving any non-audit services to be performed by our independent accountants. The pre-approval requirement may be waived only if the non-audit services meet a de minimis exception allowed by law. In carrying out this responsibility, the Audit Committee follows the following general procedures:

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Recommendation of the Board of Directors

        THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 2. Proxies will be voted in favor of the proposal unless you specify otherwise in your proxy.


PROPOSAL 3—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

        We are asking stockholders to approve, on an advisory basis, the compensation of our executives as disclosed in this proxy statement in accordance with the Securities Exchange Act of 1934, as amended, or the Exchange Act, and SEC rules. We encourage you to read the Compensation Discussion and Analysis, or CD&A, section of this proxy statement and the summary compensation and other tables that follow the CD&A. These sections provide detailed information about our compensation objectives, the design and operation of our executive compensation policies, and procedures and the 2011 compensation of our executives. Following our 2011 annual meeting, at which our stockholders supported an annual frequency for the advisory vote, our Board determined to hold the advisory vote on executive compensation annually. Accordingly, the next advisory vote on executive compensation will occur at our 2013 annual meeting.

        We believe that our executive compensation program is strongly aligned with the long-term interests of our stockholders and is instrumental in helping us achieve solid financial performance. Specifically, our executive compensation program is designed to meet the following goals:

        Below are key features of our 2011 executive compensation program.

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        We are asking stockholders to approve the following non-binding resolution:

        This proposal, commonly called a "say-on-pay" proposal, gives our stockholders the opportunity to express their views on the compensation of our executives. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our executives and the principles, policies, and practices described in this proxy statement. As an advisory vote, this proposal is not binding on us, our Board, or the Compensation Committee. Our Board and Compensation Committee will consider the outcome of the vote when making future executive compensation decisions.


Recommendation of the Board of Directors

        THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 3. Proxies will be voted in favor of the proposal unless you specify otherwise in your proxy.

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PROPOSAL 4—APPROVAL OF THE INTREPID POTASH, INC. SHORT-TERM INCENTIVE PLAN, AS AMENDED AND RESTATED

        We are asking stockholders to approve the Intrepid Potash, Inc. Short-Term Incentive Plan, as amended and restated, which we refer to as the Incentive Plan. We are seeking stockholder approval of the Incentive Plan to permit awards paid to certain executive officers to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, or Section 162(m).


Background

        Prior to our IPO, our Board and stockholders approved the original Intrepid Potash, Inc. Short Term Incentive Plan, effective April 20, 2008, which we refer to as the Original Incentive Plan. In March 2012, the Compensation Committee and our Board unanimously approved the Incentive Plan, subject to stockholder approval. Our Board then directed that we submit the Incentive Plan to a vote of our stockholders at the annual meeting.


Purpose of the Incentive Plan; Section 162(m)

        The Incentive Plan is designed to provide annual incentives to our executive officers and other key employees to achieve pre-established, objective performance goals. The Incentive Plan is an important element of our executive compensation program. It provides incentives for the achievement of near-term financial and operational corporate goals and individual objectives.

        The Incentive Plan is also designed to preserve the deductibility of payments that constitute qualifying performance-based compensation for purposes of Section 162(m), as well as to provide for compensation not intended to constitute performance-based compensation under Section 162(m). Section 162(m) limits a corporation's federal tax deduction for compensation paid to "covered employees" (the chief executive officer and the other officers employed at yearend the compensation of which is disclosed in the proxy statement, other than the chief financial officer). Section 162(m) generally provides that amounts paid to a covered employee in excess of $1 million are not deductible for federal income tax purposes.

        The deduction limit of Section 162(m) does not apply to qualifying performance-based compensation. Compensation can qualify as performance-based only if the material terms of the performance goals are disclosed to and approved by a company's stockholders before the compensation is paid and other requirements are satisfied. The material terms include the following: (a) the employees eligible to receive compensation; (b) a description of the business criteria on which the performance goals are based; and (c) either the maximum amount of compensation that could be paid to an employee if the performance goals are achieved or the formula used to calculate the amount. Periodic stockholder approval of the material terms of performance goals is necessary to preserve a company's federal income tax deduction for performance-based compensation paid to certain executive officers under Section 162(m).

        Plans adopted prior to an IPO, such as the Original Incentive Plan, generally have the benefit of a reliance period under Section 162(m), during which compensation paid is not subject to the deduction limit. Following the reliance period, the material terms of the plan must be approved by stockholders no later than the first stockholder meeting that occurs after three calendar years have elapsed since the year in which the IPO occurred.

        We are asking stockholders to approve the Incentive Plan at the annual meeting so that we may continue to take a federal income tax deduction for qualifying performance-based compensation payable to certain of our executive officers.

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Summary of the Incentive Plan

        The following is a summary of the material terms of the Incentive Plan, and does not describe all of the Incentive Plan terms. Please read the complete text of the Incentive Plan included as Appendix A to this proxy statement.

Purpose

        The purpose of the Incentive Plan is to provide an opportunity for eligible participants to earn competitive annual incentive compensation based on the achievement of pre-established, objective performance goals or targets. The Incentive Plan is intended to permit the payment of amounts that constitute qualified performance-based compensation for purposes of Section 162(m), as well as payments not intended to constitute performance-based compensation under Section 162(m).

Administration

        The Incentive Plan is administered and interpreted by the committee. The committee means the Compensation Committee or other committee of the Board appointed by the Board to administer the plan. The committee or the Board may designate one or more subcommittees consisting solely of two or more "outside directors" within the meaning of Section 162(m) with the power and authority delegated by the committee or the Board to administer the plan. All determinations and interpretations by the committee are final and binding on all persons.

Eligibility and Participation

        Awards under the Incentive Plan may be granted to executive officers or other key employee of Intrepid or any subsidiary whom the committee designates as a participant under the Incentive Plan for a plan year. As of April 2, 2012, eight executive officers and other key employees were eligible participants under the Incentive Plan. Within 90 days of the beginning of each plan year (our fiscal year, which currently runs from January 1 through December 31), the committee designates the participants for the plan year.

Target Awards and Performance Goals

        Within 90 days of the beginning of each plan year, the committee establishes (a) each participant's target award, if any, (b) the specific performance goals to receive an earned award, and (c) the formula or other methodology used to determine the amount of any earned award. The target awards, performance goals and formula or methodology for determining awards need not be the same for all participants.

        A performance goal under the Incentive Plan may be based on one or more of the following measures:

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        The performance goals may be based on pro forma numbers and may include or exclude the effect of payment of awards under the Incentive Plan and any other incentive or bonus plan of Intrepid. Subject to Section 162(m) requirements, the level of attainment of the performance goal may be adjusted to exclude (a) certain extraordinary or non-recurring items as described in the applicable accounting rules, (b) the effects of any changes in accounting principles affecting the reported results of Intrepid or a business unit, or (iii) any other adjustment consistent with the requirements of Section 162(m) that is pre-specified for the plan year by the committee.

Earned Awards and Payment of Awards

        After the end of each plan year, the committee reviews and certifies the level of attainment of the performance goals for the year and calculates the potential earned award amount for each participant based on the pre-specified formula or other methodology. The incentive award to be paid to any covered employee will not exceed the maximum award amount described below. The committee has discretion to reduce or eliminate the amount of any potential earned award for any reason (including individual performance).

        All earned awards are paid as soon as reasonably practicable after the end of the plan year and the committee's certification of the level of attainment of the performance goals and determination of the earned award for each participant, but in no event later than March 15 of the year following the plan year for the award unless otherwise deferred. Earned awards are ordinarily paid in cash, but the committee has discretion to pay all or any portion of an earned award in stock pursuant to the terms of our equity plan. A participant must be employed on the date of payment in order to be eligible to receive an earned award except as otherwise determined by the committee.

Maximum Award

        The maximum amount of compensation payable as a performance award under the Incentive Plan to a participant who is determined to be a covered employee for purposes of Section 162(m) for any calendar year is $5 million.

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Amendment and Termination

        The Incentive Plan may be amended or terminated at any time for any reason by our Board. No amendment will be effective without stockholder approval if stockholder approval is necessary for purposes of Section 162(m).

Recoupment of Awards

        Awards granted or amounts payable under the Incentive Plan shall be subject to the terms of any compensation recoupment policy then applicable, if any, to the extent the policy applies to such award or amount and any provision of applicable law relating to cancellation, rescission, payback or recoupment of compensation.

Tax Withholding

        All earned awards will be subject to applicable tax withholdings.

Unfunded; Unsecured General Creditor

        Amounts payable under the Incentive Plan will be paid from our general assets. The rights of any participant or beneficiary will be only those of an unsecured general creditor.


New Plan Benefits

        The amounts of awards payable under the Incentive Plan, if any, are not determinable. The potential amount payable to any participant depends on the performance goals established for the participant, the determination as to whether the performance goals were met, the participant's individual performance and the discretion of the committee. Following the reliance period described above, no amounts will be paid to any participant under the Original Incentive Plan or under the Incentive Plan if stockholder approval of the Incentive Plan is not obtained. In that event, the Compensation Committee likely would consider other forms of incentive compensation as necessary or appropriate to attract or retain key employees.


Recommendation of the Board of Directors

        THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 4. Proxies will be voted in favor of the proposal unless you specify otherwise in your proxy.


PROPOSAL 5—APPROVAL OF THE INTREPID POTASH, INC. EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED

        We are asking stockholders to approve the Intrepid Potash, Inc. Equity Incentive Plan, as amended and restated, which we refer to as the Equity Plan. We are seeking stockholder approval of the plan in order to permit certain awards that may be granted in the future under the plan to qualify as performance-based compensation for purposes of Section 162(m), and to make other changes described below. We are not asking stockholders to approve additional shares for awards under the plan at this time.


Background

        Prior to our IPO, our Board and stockholders approved the original Intrepid Potash, Inc. 2008 Equity Incentive Plan, effective April 20, 2008, which we refer to as the Original Equity Plan. In March 2012, the Compensation Committee and our Board, unanimously approved the Equity Plan, subject to stockholder approval. Our Board then directed that we submit the Equity Plan to a vote of our stockholders at the annual meeting.

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Purpose of the Equity Plan; Section 162(m)

        The Equity Plan is an equity incentive plan that is designed to provide long-term equity incentives to attract, retain, and motivate eligible employees, directors, and consultants and to align their interests with those of our stockholders. The Equity Plan is designed with the flexibility to award stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards in the form of performance shares, performance units, or cash-based awards, and other stock-based awards to eligible individuals. Following our IPO, long-term equity incentives have been an important part of our incentive compensation program. A significant portion of total annual compensation of our executive officers is paid in the form of long-term equity awards to more closely align the interests of management with the long-term interests of our stockholders.

        As discussed in more detail above under the heading "Proposal 4—Approval of the Intrepid Potash, Inc. Short-Term Incentive Plan, as Amended and Restated," Section 162(m) generally provides that amounts paid to a covered employee in excess of $1 million are not deductible for federal income tax purposes. This deduction limit does not apply to qualifying performance-based compensation if the material terms of the performance goals are disclosed to and approved by stockholders and other requirements are met. Following our IPO, we have had the benefit of a reliance period under Section 162(m), during which compensation paid from equity awards have not been subject to the deduction limit. In connection with the end of the reliance period, we are now asking stockholders to approve the Equity Plan so that we may continue to take a federal income tax deduction for certain qualifying performance-based compensation payable with respect to awards granted to certain executive officers. If our stockholders do not approve the Equity Plan at the annual meeting, we may continue to grant awards under the Original Equity Plan. However, future grants made under the Original Equity Plan may not qualify as performance-based compensation under Section 162(m).


Summary of Proposed Changes from the Original Equity Plan

        The amendments to the Original Equity Plan include the following changes:


Summary of the Equity Plan

        The following is a summary of the material terms of the Equity Plan, and does not describe all of the plan terms. Please read the complete text of the Equity Plan included as Appendix B to this proxy statement.

Purpose and Awards

        The plan is intended to enhance the ability of Intrepid and its affiliates to attract and retain highly qualified officers, directors, key employees, and other individuals to contribute to our growth and success, to provide incentives to individuals to contribute to our long-term growth and profitability, and to further align the interests of these individuals with the interests of stockholders. The plan permits the grant of restricted stock, restricted stock units, performance awards, incentive stock options, non-qualified stock options, stock appreciation rights, cash-based awards, and other stock-based awards.

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Administration

        The Compensation Committee or another committee of the Board generally administers the plan. The committee or the Board may delegate to one or more subcommittees (for example, a subcommittee consisting solely of outside directors or one or more members of the board who are also officers) the power and authority to grant awards to specified groups of eligible individuals. The committee selects participants and determines the amount, type, and other terms and conditions of the awards. The committee has full authority to administer the plan, including the authority to interpret and construe any provision in the plan and the terms of any award agreement and to adopt such rules and regulations for administering the plan that it may deem necessary or appropriate. Pursuant to this authority, on or after the date of grant of an award, the committee may (a) accelerate the date on which an award becomes vested, exercisable or transferable; (b) extend the term of any award, including, without limitation, extending the period following termination of a participant's service during which the award may remain outstanding; (c) waive any conditions with regard to vesting, exercisability or transferability of an award; and (d) make changes to recognize differences in local law, tax policy, or custom for individuals employed outside the United States.

Stock Subject to the Plan, Adjustments, and Share Counting

        We are not asking stockholders to approve any additional shares for awards under the plan relative to the Original Equity Plan. As a result, a total of 4,119,409 shares of our common stock, $0.001 par value per share, may be delivered pursuant to awards granted under the plan after December 31, 2011. This number equals the 5,000,000 shares previously authorized for issuance under the Original Equity Plan minus the aggregate number of shares delivered, or reserved for delivery, as of December 31, 2011. The number of shares that may be delivered under the plan is subject to adjustment in the event of any stock dividend or split, reorganization, recapitalization, merger, share exchange, or any other similar corporate event. Outstanding awards under the plan are also subject to similar adjustment for these types of events.

        To the extent that an award outstanding on December 31, 2011, or an award granted after that date, expires or is canceled, forfeited, settled in cash, or otherwise terminated without delivery to the participant of the full number of shares to which the award related, the shares retained or returned to us will again be available for grant. Shares withheld in payment of the exercise price or taxes relating to an award and shares tendered in payment of any exercise price or taxes relating to an award will be again available for awards under the plan. Shares that we issue under the plan may be authorized but unissued shares or previously issued shares that we have reacquired and held as treasury shares. Fair market value is generally defined under the plan as the closing sale price of a share of our common stock on the NYSE. The closing price of a share of our common stock on April 2, 2012, was $24.60.

Individual Award Limits

        Subject to adjustment for certain changes in capitalization, the maximum number of shares that may be granted to any participant in a calendar year is (a) 500,000 shares with respect to options and stock appreciation rights; (b) in connection with a participant's commencement of service with us, an additional 500,000 shares with respect to options and stock appreciation rights, which shall not count against the limit described in (a) above; and (c) 500,000 shares with respect to awards of restricted stock, restricted stock units, and performance shares that are intended to qualify as performance-based awards under section 162(m). Subject to adjustment for certain changes in capitalization, the maximum number of shares for awards paid to a participant for an annual performance period pursuant to an award of performance units that are intended to qualify as performance-based awards under Section 162(m) is 500,000, and, for any other performance period, such amount multiplied by a fraction, the numerator of which is the number of months in the performance period and the denominator of which is 12. Subject to adjustment for certain changes in capitalization, the maximum

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amount that may be paid to any participant for cash-based awards that are intended to qualify as performance-based awards under Section 162(m) for an annual performance period is $10 million and, for any other performance period, such amount multiplied by a fraction, the numerator of which is the number of months in the performance period and the denominator of which is 12.

Eligibility and Participation

        All employees, officers, or directors of Intrepid or an affiliate are eligible to participate in the plan when selected by the committee for an award. Certain consultants and advisers who provide services to us or an affiliate are also eligible to participate when selected by the committee for an award. As of April 2, 2012, approximately 80 of our employees, officers, directors, consultants, and advisors were eligible participants under the Incentive Plan.

Significant Features of Awards

        The following is a description of the significant terms that apply to each type of award that may be issued under the plan:

        The committee may grant an award of shares of restricted stock, which is an award of actual shares subject to a risk of forfeiture and restrictions on transfer. The committee may also grant an award of restricted stock units, which is a bookkeeping entry representing the equivalent of shares of stock. The committee may also grant a performance award in the form of performance shares, performance units, or a cash-based award which vest or payout based on the attainment of performance goals and any other terms and conditions determined by the committee. The terms and conditions of any award of restricted stock, restricted stock units, performance shares, performance units, or a cash-based award will be determined by the committee. Except as set forth in the award agreement, upon termination of a participant's services, any unvested shares of restricted stock or restricted stock units will be forfeited. Each award agreement will set forth the extent to which the participant will retain performance shares, performance units or cash-based awards upon termination of service.

        The committee may grant one or more awards designed to qualify as "performance-based" compensation under Section 162(m) based on the grant, vesting, or payout of such awards being contingent on the achievement of certain pre-established performance goals. The committee will establish objective performance goals within 90 days of the beginning of the performance period and the formula or other methodology used to determine the number or value of shares, units, or payout of any earned award. The target awards, performance goals, and formula or methodology for determining awards need not be the same for all participants.

        A performance goal under the plan may be based on one or more of the following measures:

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        The performance goals may be based on pro forma numbers and may include or exclude the effect of payment of awards under the plan and any other incentive or bonus plan of Intrepid. Subject to Section 162(m) requirements, the level of attainment of the performance goal may be adjusted to exclude (a) certain extraordinary or non-recurring items as described in the applicable accounting rules, (b) the effects of any changes in accounting principles affecting the reported results of Intrepid or a business unit, or (c) any other adjustment consistent with the requirements of Section 162(m) that is pre-specified for the plan year by the committee.

        After the applicable performance period has been completed, the committee will certify the level of achievement of the performance goals and determine the number or value of any earned award.

        Each option entitles the holder to purchase a specified number of shares at a specified exercise price. Each option agreement will specify whether the option is an "incentive stock option," or "ISO" (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or the Code), or a nonqualified stock option. Each stock appreciation right entitles the holder to receive, upon exercise, the excess of the fair market value of a share at the time of exercise over the grant price of the stock appreciation right multiplied by the specified number of shares to which the stock appreciation right is being exercised. Except for substitute awards, the exercise or grant price of each option and stock appreciation right will be at least 100 percent of the fair market value of a share on the date the award is granted. The term of any option or stock appreciation right may not exceed 10 years and the option or stock appreciation right will vest over a period determined by the committee. The award agreement may provide that the period of time over which an option other than an ISO and stock appreciation right may be exercised will be automatically extended if on the scheduled expiration date, the exercise of the option or stock appreciation right would violate applicable securities laws or our insider trading policy. Each option or stock appreciation right

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agreement will specify the consequences to the award with respect to a termination of service with us and our affiliates.

        The committee may grant other types of stock-based awards in which participants may (a) acquire shares of stock or (b) receive an award, whether payable in cash or stock, the value of which is determined in whole or in part, based on the value of our common stock, subject to the terms and conditions of the plan.

Dividends and Dividend Equivalents

        The committee will determine and set forth in the award agreement whether the participant will be entitled to receive (currently or on a deferred basis) dividends or dividend equivalents with respect to shares of stock covered by the award; provided, however, in no event may dividends or dividend equivalents be paid on awards that vest or pay based on the attainment of performance goals until and to the extent the award is earned, although amounts can be accumulated. The committee may provide that any dividends paid on shares subject to an award will be reinvested in additional shares of stock, which may or may not be subject to the same vesting conditions and restrictions applicable to the award.

Change of Control

        The committee may, in its sole discretion, provide at the time of the award or otherwise for specific treatment of an outstanding award at any time prior to, coincident with, or after the time of a change of control. Unless otherwise provided by the committee: (a) the acquiror may, without the consent of the participant, either assume our rights and obligations under outstanding awards or substitute the award with a substantially equivalent award for the acquiror's stock, provided, however, if the award is continued, assumed, or substituted and within 24 months after the change of control the participant's service is terminated without cause or the participant resigns for good reason, the following will apply: (i) all options and stock appreciation rights will become immediately exercisable and (ii) any restrictions imposed on restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards will lapse and the award will be paid in cash or stock, except that awards subject to performance-based conditions will be paid at the target level for the full calendar year of the termination or resignation and any prior periods; and (b) if the awards are not continued, assumed, or substituted, the committee may: (i) provide for full vesting; (ii) provide for expiration; (iii) with respect to options and stock appreciation rights, provide for cancellation and a cash payment; or (iv) make any other provision for outstanding awards as the committee deems appropriate.

        For purposes of the plan, a "change of control" occurs upon the occurrence of any one of the following events:

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Tax Withholding

        The plan provides that participants may elect to satisfy certain federal, state, and local income tax and employment tax withholding requirements by remitting to us cash or, subject to certain conditions, shares, or by instructing us to withhold shares payable to the participant.

Recoupment of Awards

        Awards granted or amounts payable under the plan will be subject to the terms of any Intrepid compensation recoupment policy then applicable, if any, to the extent the policy applies to such award or amount and any provision of applicable law relating to cancellation, rescission, payback, or recoupment of compensation.

Repricing

        Except for adjustments to reflect the effects of certain corporate transactions, the plan requires stockholder approval of any amendment or modification to outstanding options or stock appreciation rights that reduces the exercise or grant price; provides for a cancellation and replacement grant with a lower exercise or grant price; provides for a cancellation for cash or another award if the exercise or grant price is higher than the then-current fair market value; or provides for any other change that would be treated as a repricing under the exchange upon which our shares are traded.

Amendment and Termination

        Generally, our Board may amend, modify, or terminate the plan at any time; provided, however, that no amendment or modification may become effective without approval of stockholders if stockholder approval is required to satisfy any applicable statutory or regulatory requirements or if we determine that stockholder approval is otherwise necessary or desirable. We will not make any grants under the plan after May 28, 2022, but awards outstanding at that time will continue in accordance with their terms.


Federal Income Tax Consequences

        The following is intended only as a brief summary of the current material U.S. federal income tax consequences of awards granted under the plan. The tax consequences to a participant will depend upon the type of award issued to the participant. In general, if a participant recognizes ordinary income in connection with the grant, vesting, or exercise of an award, we will be entitled to a corresponding deduction equal to the amount of the income recognized by the participant. This summary does not address the effects of other federal taxes (including possible excise taxes) or taxes imposed under state, local, or foreign tax laws.

Restricted Stock, Restricted Stock Units, Performance Awards, and Other Stock-Based Awards

        If an award is subject to a restriction on transferability and a substantial risk of forfeiture (for example, restricted stock), the participant generally must recognize ordinary income equal to the fair market value of the transferred amounts at the earlier of the removal of the restrictions on transferability or when the risk of forfeiture lapses. However, the participant may elect under Section 83(b) of the Code within 30 days of the date of grant to recognize ordinary income or shares of restricted stock as of the date of grant equal to the excess of the fair market value of the shares on the date of grant, over the amount paid, if any. If an award has no restriction on transferability or is not subject to a substantial risk of forfeiture, the participant generally must recognize ordinary income equal to the cash or the fair market value of shares received. If a participant receives an award which includes a performance and/or vesting requirement or other restriction that must be satisfied prior to payment or receipt of shares, the participant will generally not recognize income for federal income tax

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purposes at the time of grant of such award and we are not entitled to a deduction at that time. At the time the performance and/or vesting requirements or other restrictions are satisfied, the participant will recognize ordinary income in the amount equal to the fair market value of any shares delivered or the amount of any cash paid. If a participant sells or disposes of shares delivered to the participant pursuant to an award, the participant will recognize short-term or long-term capital gain or loss measured by the difference between the sale price and the participant's tax basis in the shares.

Options and Stock Appreciation Rights

        In general, a participant does not have taxable income upon the grant of an option or a stock appreciation right. The participant will recognize ordinary income upon exercise of a nonqualified stock option equal to the excess of the fair market value of shares acquired on exercise over the aggregate option price for the shares. Upon exercising a stock appreciation right, the participant will recognize ordinary income equal to the cash or fair market value of the shares received over the aggregate base price for the shares. A participant will not recognize ordinary income upon exercise of an ISO, except that the alternative minimum tax may apply. If a participant disposes of shares acquired upon exercise of an ISO before the end of the applicable holding periods, the participant will recognize ordinary income. Otherwise, a sale of shares acquired by exercise of an option or a stock appreciation right generally will result in short-term or long-term capital gain or loss measured by the difference between the sale price and the participant's tax basis in the shares. We normally can claim a tax deduction equal to the amount recognized as ordinary income by a participant in connection with an option or stock appreciation right, but no tax deduction relating to a participant's capital gains. We will not be entitled to any tax deduction with respect to an ISO if the participant holds the shares for the applicable ISO holding periods before selling or transferring the shares.

Section 409A

        Section 409A of the Code imposes election, payment, and funding requirements on "nonqualified deferred compensation" plans. If a nonqualified deferred compensation arrangement subject to Section 409A of the Code fails to meet, or is not operated in accordance with, the requirements of Section 409A, then compensation deferred under the arrangement may become immediately taxable and subject to a 20 percent additional tax. Certain awards that may be issued under the plan may constitute a "deferral of compensation" subject to the requirements of Section 409A of the Code.

Section 162(m)

        Compensation that qualifies as "performance-based" compensation is excluded from the $1 million deduction limitation of Section 162(m). Under the plan, options, and stock appreciation rights granted with an exercise price at least equal to 100 percent of the fair market value of the underlying shares on the date of grant and certain other awards paid to covered employees that are conditioned upon achievement of performance goals are intended to qualify as "performance-based" compensation. A number of requirements must be met in order for compensation paid or earned with respect to an award granted under the plan to qualify as performance-based compensation for purposes of Section 162(m).


New Plan Benefits

        The amount of awards payable under the plan are not determinable. No awards have been granted that are conditioned upon stockholder approval of the plan. You can find more information regarding our equity-based awards granted to our executives during 2011 below under the heading "Executive Compensation—Grants of Plan-Based Awards in 2011."

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Stock Options Granted Under the Plan

        The following table sets forth, as of December 31, 2011, the aggregate number of stock options that we have granted under the Original Equity Plan since its adoption in 2008 to our individual executive officers, our executive officers as a group, our directors who are not executive officers as a group, and all employees as a group. In accordance with SEC rules, we have not included in the table information about any other types of awards granted under the plan or information about stock options that have been forfeited or exercised and are therefore no longer outstanding. You can find information about currently outstanding stock options held by our executives and directors below under the headings "Executive Compensation—Outstanding Equity Awards at the End of 2011" and "Director Compensation—Director Compensation Table."

Name or Group
  Number of
Securities
Underlying
Stock Options
Granted
 

Robert P. Jornayvaz III

    60,173  

David W. Honeyfield

    47,168  

Martin D. Litt

    24,972  

John G. Mansanti

    11,495  

Kelvin G. Feist

    3,751  
       

Executive officers, as a group

    147,559  
       

Directors who are not named above, as a group (includes director nominees)

    60,173  
       

All employees, as a group (includes executive officers and employee directors)

    396,898  
       

        We have not granted any stock options under the plan to any of our non-employee directors, including our director nominees, Terry Considine and Chris A. Elliott. We also have not issued any stock options under the plan to associates of any of our executive officers, directors, or director nominees or to any other person who has received or is expected to receive five percent of options available under the plan.


Share Usage Analysis

        The following table provides information about our use of shares authorized under the Original Equity Plan for the last three years (including options and shares of restricted stock that were granted and subsequently forfeited, withheld, or otherwise returned to us):

Year
  Number of
Options
Granted
  Number of Shares
of Restricted Stock
and Unrestricted
Common Stock Granted
 

2011

    102,196     71,201  

2010

    120,473     83,705  

2009

    174,229     91,277  


Recommendation of the Board of Directors

        THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 5. Proxies will be voted in favor of the proposal unless you specify otherwise in your proxy.

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EQUITY COMPENSATION PLAN INFORMATION

        Set forth below is information as of December 31, 2011, regarding our equity compensation plan:

 
  (a)
  (b)
  (c)
 
Plan Category
  Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights
  Weighted-average
exercise price of
outstanding
options,
warrants, and
rights
  Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
 

Equity compensation plans approved by security holders

    351,582 (1) $ 26.26     4,119,409 (2)

Equity compensation plans not approved by security holders

             
               

Total

    351,582   $ 26.26     4,119,409  
               

(1)
Represents shares issuable upon the exercise of outstanding nonqualified stock options issued under our 2008 Equity Incentive Plan.

(2)
Represents shares available for future issuance under our 2008 Equity Incentive Plan.


CORPORATE GOVERNANCE

Director Independence

        Our Board is comprised of a majority of independent directors. Our Board has determined that each of Terry Considine, Chris A. Elliott, J. Landis Martin, and Barth E. Whitham is an independent director under the rules of the SEC and NYSE and does not have any material relationship with us other than his position as a director and stockholder. In making these determinations, our Board considered past employment, remuneration, and all other relationships with Intrepid, as well as the specific independence tests set forth in the NYSE's director independence rules. Our Board also considered the relationships described below among directors and in each case concluded that the relationship did not compromise the director's independence.

        Mr. Martin—Each of Messrs. Jornayvaz and Harvey has an investment in an investment fund controlled by Mr. Martin. Our Board considered among other things that each of these investments constitutes less than 1 percent of the total amount of the fund.

        Messrs. Considine and Whitham—Each of Messrs. Considine, Jornayvaz, and Whitham has made investments in companies that were created to acquire and own residential apartment properties and that are managed and controlled by Mr. Considine's son. Our Board considered among other things the size and characteristics of the respective investments made by each of Messrs. Considine, Jornayvaz, and Whitham.

        Mr. Whitham—Enduring Resources, LLC and BH Holdings LLC have entered into an Aircraft Dry Lease Agreement and Crew Services Agreement relating to an aircraft owned by BH Holdings. Mr. Whitham is the Chief Executive Officer and President of Enduring Resources, and BH Holdings is owned by entities controlled by Messrs. Jornayvaz and Harvey. Our Board considered among other things the monetary value of the proposed transactions and nature of the agreement. Enduring Resources did not use the aircraft owned by BH Holdings during 2011.

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Board Leadership Structure

        We currently do not have a position entitled chief executive officer. We have one individual serving as our principal executive officer and chairman of our Board. Specifically, our Board has appointed Mr. Jornayvaz to serve as our Executive Chairman of the Board and our principal executive officer for SEC and NYSE reporting purposes. Our Board believes that Mr. Jornayvaz is best situated to serve as Executive Chairman of the Board because he is the director most familiar with our business and industry and is most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. We believe that independent directors and management have different perspectives and roles in strategy development. Our independent directors bring experience, oversight, and expertise from outside the company and from different industries, while Mr. Jornayvaz brings company- and industry-specific experience and expertise. At this time, our Board believes that the combined role of Executive Chairman of the Board and principal executive officer promotes strategy development and execution and facilitates information flow between management and our Board, each of which is essential to effective corporate governance. One of the key responsibilities of our Board is to develop strategic direction and to hold management accountable for the execution of strategy once it is developed. Our Board believes the combined role of Executive Chairman of the Board and principal executive officer, supported by an independent lead director having the duties described below, is in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management.


Independent Lead Director

        Our Board has selected Mr. Martin to serve as its independent lead director. Our lead director has the following responsibilities:


Risk Management

        We are exposed to a number of risks, and at least annually we undertake a risk management review to identify and evaluate risks throughout our company and to develop plans to manage them effectively. We have established an Enterprise Risk Management program to assist in this process. Our Executive Vice President of Human Resources and Risk Management, James N. Whyte, is directly responsible for our risk management functions, and in this capacity he periodically updates the Board

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regarding ongoing assessment and mitigation of our risks. In fulfilling his responsibilities, Mr. Whyte works closely with members of senior management, general managers, and others within Intrepid to identify and design programs or procedures to mitigate potential risks where possible. We also have established a compliance program, including our Code of Business Conduct and Ethics and ancillary statements and policies, and have appointed a Chief Compliance Officer to manage the compliance program. In this capacity, our Chief Compliance Officer reports directly to the Audit Committee.

        Our Board has an active role, as a whole and at its committee level, in overseeing management of our risks. Our Board regularly reviews information about our liquidity, capital expenditures, cost of goods sold, inventory, product pricing, and sales, as well as the associated risks in the potash market. The Compensation Committee is responsible for overseeing the management of risks relating to our compensation plans and arrangements. The Audit Committee oversees the management of accounting, financial reporting, and financial risks and the management of our compliance program. The Governance Committee manages risks associated with director independence and potential conflicts of interest. Our Board oversees management of risks associated with operations, environmental, health, and safety. While each committee is responsible for evaluating certain risks and overseeing the management of those risks, the entire Board is regularly informed about those risks through committee reports.

        As noted above, the Compensation Committee is responsible for overseeing the management of risks relating to our compensation plans and arrangements. In this regard, the Compensation Committee has reviewed our compensation programs for employees and has concluded that these programs do not create risks that are reasonably likely to have a material adverse effect on us. The Compensation Committee believes that the design of our annual cash and long-term equity incentive programs provides an effective and appropriate mix of incentives to help ensure that our performance is focused on long-term stockholder value creation and does not encourage the taking of short-term risks at the expense of long-term results. In general, bonus opportunities for our employees are capped, and we have the discretion to reduce bonus payments, or pay no bonus, based on individual performance or any other factors we may determine to be appropriate in the circumstances. As with the compensation of our executives, a significant portion of employee compensation is delivered in the form of incentive compensation or equity awards that help further align the interests of employees with those of stockholders.


Communication with Directors

        Stockholders and other interested parties who wish to communicate with our Board, including our independent or non-management directors as a group, our lead director or any other individual director, may do so by submitting a written communication to our lead director at the following address:

  Lead Director
c/o Intrepid Potash, Inc.
707 17th Street, Suite 4200
Denver, Colorado 80202
   

        Communications can be made anonymously and confidentially using this method. A copy of communications will be forwarded to our legal counsel and retained for a reasonable period of time. Our lead director may discuss these communications with our legal counsel, independent advisors, non-management directors, or management and may take other action or no action as he or she determines in good faith, using reasonable judgment and discretion.

        The Audit Committee oversees our procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or audit matters. We have established a toll-free telephone number for employees to use to report, on a confidential and anonymous basis, any concerns regarding questionable accounting, internal accounting controls, or auditing matters.

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Stock Ownership Guidelines

        We believe that stock ownership by our directors and senior management better aligns their interests with those of our other stockholders. As such, our Board has established stock ownership guidelines that encourage these individuals to own significant amounts of our common stock. Specifically, each covered individual is expected to own Intrepid common stock with a minimum average value equal to a specified multiple of his or her then-current annual base salary or annual cash retainer. If the individual has not achieved this ownership level within a specified time period, the individual is expected to retain 50 percent of all common stock he or she receives from equity incentive awards (on an after-tax basis) until the ownership level has been achieved.

        The table below summarizes our stock ownership guidelines:

Individual
  Multiple of
Annual Base Salary
or Cash Retainer
  Phase-In Period

Chief Executive Officer or Principal Executive Officer

    6   5 years after date of hire
(or February 2016 if later)

Senior Vice Presidents and above

    2   5 years after date of hire
(or March 2014 if later)

Board members

    5   5 years after date of first appointment or election
(or February 2016 if later)


Committees and Meetings

        Our Board met six times in 2011. In 2011, each director attended in person or by phone 75 percent or more of the aggregate of the total number of meetings of the Board held while he was a director and of each committee on which he served during the period in which he served as a member of that committee. Each director is expected to attend our annual meetings. All of our directors other than Mr. Whitham attended our 2011 annual meeting.

        Our Board has an Audit Committee, a Nominating and Corporate Governance Committee, and a Compensation Committee. Each of these committees is comprised solely of independent directors. The charters for these committees are available on our website at www.intrepidpotash.com. The following table sets forth the chairperson and members of each committee and the number of meetings held in 2011.

Name of Director
  Audit
Committee
  Nominating
and Corporate
Governance
Committee
  Compensation
Committee

Terry Considine

  X   Chair   X

Chris A. Elliott

  X   X   X

J. Landis Martin

  Chair   X   X

Barth E. Whitham

  X   X   Chair

Number of Meetings in 2011

 

7

 

4

 

6


Audit Committee

        The Audit Committee assists the Board in fulfilling its responsibilities to us and our stockholders relating to the accounting and financial reporting processes and the audit of our financial statements. The Audit Committee oversees management's processes and activities related to maintaining the

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reliability and integrity of our accounting policies, financial reporting practices and financial statements; the assessment of the independent auditor's qualifications and independence; the performance of our internal audit function; and compliance with laws and regulations and the requirements of any stock exchange or quotation system on which our securities may be listed. The Audit Committee is solely responsible for the engagement and discharge of independent auditors and reviews the quarterly and annual financial results. The committee reviews the audit plan and the results of the audit with the independent auditors and reviews the independence of the auditors, the range of audit fees, the scope and adequacy of our system of internal accounting controls, and our risk management policies. The Audit Committee also has oversight responsibility for our internal audit function. The head of our internal audit department reports directly to the Audit Committee.

        Audit Committee members are prohibited from serving on more than two other audit committees of public companies.

        Our Board has determined that each member of the Audit Committee is financially literate in accordance with the rules of the NYSE and is independent under the NYSE's director independence standards applicable to audit committee members, including the heightened independence requirements under the SEC's rules. In addition, the Board has determined that each of Messrs. Martin, Considine, and Whitham qualifies as an "audit committee financial expert" as defined by SEC rules.


Nominating and Corporate Governance Committee

        The Governance Committee reviews the overall composition of our Board, identifies individuals qualified to become members of our Board, and recommends to our Board the director nominees for the next annual meeting. The Governance Committee also oversees the evaluation of our Board and management succession plans, reviews from time to time our policies and practices on corporate governance including our Corporate Governance Guidelines, and recommends to our Board any changes it may deem necessary. Additionally, the Governance Committee is responsible for the periodic review and recommendation to the Board of the compensation structure for the non-employee directors for Board and committee service.


Compensation Committee

        The Compensation Committee assists the Board in discharging its responsibilities relating to compensation of our executives; administers our equity incentive plans (other than any plan applicable only to non-employee directors); and has overall responsibility for evaluating and approving (or recommending for approval to the Board) all compensation plans, policies, and programs that affect our executives. You can find more information about the Compensation Committee's role in setting executive compensation below under the heading "Executive Compensation—Compensation Discussion and Analysis." The Compensation Committee may form and delegate responsibility to subcommittees as it deems necessary or appropriate; provided that any subcommittee must meet all applicable independence requirements. In addition, the Compensation Committee may not delegate to persons other than independent directors any functions that are required, under applicable NYSE rules or federal securities laws, to be performed by independent directors. In this regard, the Compensation Committee has formed a Section 162(m) Subcommittee comprised solely of "non-employee directors" for purposes of Rule 16b-3 under the Exchange Act and "outside directors" under Section 162(m). The 162(m) Subcommittee is responsible for, among other things, approving equity awards and performance-based compensation for our executives.


Director Designation and Voting Agreement

        In April 2008, Intrepid, Harvey Operating and Production Company (or HOPCO), Intrepid Production Corporation (or IPC), and Potash Acquisition, LLC (or PAL) entered into a Director

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Designation and Voting Agreement. The largest beneficial owner of PAL was Platte River Ventures I, L.P. One of our directors, J. Landis Martin, was the managing member of the entity that acted as general partner of Platte River Ventures I, L.P. In November 2008, PAL distributed its shares of our common stock to its members. As a result, PAL's rights under the Director Designation and Voting Agreement terminated automatically. PAL was later dissolved. In December 2011, HOPCO, IPC, the manager of the dissolved PAL, and Mr. Martin entered into an Acknowledgement and Relinquishment under which (a) PAL and Mr. Martin acknowledged that PAL no longer has any rights under the Director Designation and Voting Agreement and (b) HOPCO and IPC released PAL from any obligations under the Director Designation and Voting Agreement.

        Under the Director Designation and Voting Agreement, each of HOPCO and IPC has agreed to designate one candidate for nomination and election to our Board and to vote their shares in favor of the other's candidate. We have agreed to use our best efforts to assure that the designees are included in the slate of nominees to the Board and recommended for election. We have also agreed not take any action to change the size of the Board to exceed seven members, without the prior consent of IPC and HOPCO, subject to any limitations imposed by the rules of the NYSE. IPC and HOPCO, together with shares beneficially owned by Messrs. Jornayvaz and Harvey, in the aggregate own approximately 28 percent of our outstanding common stock as of April 2, 2012. The directors currently serving on our Board under the Director Designation and Voting Agreement are Mr. Harvey (nominated by HOPCO) and Mr. Jornayvaz (nominated by IPC), both of whom are Class III directors whose terms expire in 2014. The rights and obligations under the Director Designation and Voting Agreement are not transferable upon sale or other transfer of common stock by IPC or HOPCO except to any affiliate of IPC or HOPCO. The agreement will terminate with respect to either stockholder party and its affiliates when their collective beneficial ownership falls below 5 percent of our outstanding common stock.

        Under the Director Designation and Voting Agreement, each of HOPCO and IPC has also agreed, except in the case of a transfer to each other, their affiliates or a public tender offer, to not knowingly sell shares of its common stock to any person if the result of that sale would be that the purchaser of such shares would own, directly or indirectly, 5 percent or more of our outstanding common stock.

        Other than the Director Designation and Voting Agreement, there are no arrangements or understandings between any director and any other person pursuant to which that director was or is to be elected.


Governance-Related Materials

        You can find copies of our governance-related materials, including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the written charters of the Audit Committee, Governance Committee, and Compensation Committee, in the investor relations section of our website at www.intrepidpotash.com. Copies of these materials also are available in print to any stockholder who requests them by sending a written request to the following address:

    Corporate Secretary
Intrepid Potash, Inc.
707 17th Street, Suite 4200
Denver, Colorado 80202
   

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COMPENSATION COMMITTEE REPORT

        The following report of the Compensation Committee is not "soliciting material," will not be deemed "filed" with the SEC, and will not be incorporated by reference into any of our filings under the Securities Act of 1933, as amended (referred to as the Securities Act), or the Exchange Act, except to the extent we specifically incorporate it by reference therein.

        The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

    THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF INTREPID POTASH, INC.

 

 

Barth E. Whitham, Chairman
Terry Considine
Chris A. Elliott
J. Landis Martin


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        During 2011, Messrs. Whitham, Considine, Elliott, and Martin served on our Compensation Committee. None of our executive officers currently serves, or served during 2011, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee. No member of our Compensation Committee has ever been an executive officer or employee of Intrepid.


EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        This section describes our executive compensation program as it relates to the following individuals:

        When we refer to our "executives" throughout this proxy statement, we mean the five individuals named above.

Executive Summary

        We believe that a strong executive team is critical to our long-term success. As such, one of the key goals of our executive compensation program is to attract, motivate, and retain a talented team of executives who will provide leadership for our success in dynamic and competitive markets. We seek to accomplish this goal in a way that rewards performance and is aligned with our stockholders' long-term

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interests. We believe our executive compensation program, as described below, is appropriate in design and is in the best interests of our stockholders.

        As described in our Annual Report on Form 10-K for the year ended December 31, 2011, we delivered strong financial results in 2011. Below are some highlights of our 2011 performance.

   


*
Adjusted EBITDA (or adjusted earnings before interest, taxes, depreciation, and amortization) is a financial measure not calculated in accordance with U.S. Generally Accepted Accounting Principles. It is calculated as net income adjusted to add back interest expense, income tax expense, depreciation, depletion, and amortization, and accretion related to our asset retirement obligation. In some cases, we adjust EBITDA for unusual or non-recurring items.

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        Our executive compensation program is designed to reward performance and to align our executives' interests with the long-term interests of our stockholders generally. We emphasize pay for performance in several ways:

        Below are key features of our 2011 executive compensation program.

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        Each of these items is described in more detail later in this section.

Impact of 2011 Say-on-Pay Advisory Vote

        Under recently adopted SEC rules, we held our first "say-on-pay" advisory vote on executive compensation at our 2011 annual meeting in May 2011. At the meeting, stockholders expressed substantial support for the compensation of our executives, with approximately 98 percent of the votes cast for advisory approval of our executive compensation. When the Compensation Committee conducts its annual review of executive compensation during the first part of each year, it considers a variety of factors as discussed in this CD&A, including for 2012 and beyond the results of the previous year's advisory vote to approve executive compensation. While the Compensation Committee has reviewed the results of the 2011 advisory vote, it did not make any changes to our executive program or policies as a result of the vote in light of the very strong stockholder support.

Philosophy and Overview of Compensation

        The goals of our executive compensation program are described below:

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        The primary elements of our 2011 executive compensation program are described below:

Element   Purpose   Intrepid Potash Practice
Base Salary   To provide a fixed amount of pay for an executive's primary duties and responsibilities   Base salaries are reviewed annually and are set based on market competitiveness, individual performance, and internal pay equity.

Annual Cash Incentive

 

To incentivize the achievement of near-term financial and operational corporate goals and individual objectives

 

Target annual cash bonuses are reviewed annually and set based on market competitiveness, individual performance, and internal pay equity. Payout amounts vary relative to company and individual performance. We use the same performance measures and goals to determine the bonuses paid to executives as we use for employees generally.

Long-Term Equity Incentive

 

To support our goals of retaining our critical talent and aligning management interests with those of stockholders

 

For 2011, equity awards were split equally between time-vested restricted stock and time-vested stock options. For both types of awards, the upside potential is tied to the market value of our common stock. In addition, stock options are entirely at risk based on this value.

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        We also provide the following compensation elements to our executives:

Element   Purpose   Intrepid Potash Practice
Employee Benefits   To provide basic health, life and disability insurance, and 401(k) benefits   These benefits are generally consistent with the benefits provided to our other employees and with benefits provided by other companies of our size.

Perquisites

 

To provide benefits that are designed to keep our executives in good health and to increase their time and travel efficiencies

 

Executives are eligible for a gym membership allowance and paid parking, which are benefits that are generally consistent with the benefits provided to all of our Denver-based employees. Executives are also eligible for an executive physical allowance, supplemental disability benefits, and, subject to approval from the Executive Chairman of the Board or Executive Vice Chairman of the Board, personal use of our leased corporate aircraft under certain circumstances.

Change-in-Control Benefits

 

To preserve executive productivity and encourage retention in an actual or potential change in control

 

These benefits are carefully tailored to our company and are generally competitive with benefits offered by similarly situated companies.

Role of the Compensation Committee and Management, and Use of Consultants

        For determining 2011 executive compensation, the Compensation Committee retained Pay Governance LLC, or Pay Governance, as its independent compensation consultant. As discussed in more detail below, Pay Governance helped the Compensation Committee collect and analyze executive compensation survey and proxy data, provided information about general compensation trends, and provided advice on a variety of executive compensation matters. Pay Governance did not provide any other consulting services to us or our management in 2011.

        While survey and proxy data can be useful guides for comparative purposes, the Compensation Committee believes that a successful compensation program also requires that the Compensation Committee apply its own judgment and subjective determination to reconcile the program's objectives with the realities of rewarding and retaining our valued executives and to measure the individual performance of our executives. In addition, the Compensation Committee asks Messrs. Jornayvaz and Honeyfield to make recommendations about the compensation to be paid to the executives who report to them. While the Compensation Committee is solely responsible for the appointment of the independent compensation consultant and for approving executive compensation, management supports the work of the Compensation Committee and the independent compensation consultant. In addition, at the request of the Compensation Committee, Messrs. Jornayvaz, Honeyfield, and other members of our executive management team meet periodically with the Compensation Committee regarding the

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design of our compensation programs and other compensation matters. The Compensation Committee meets periodically in executive session without management present.

Role of Peer Groups and Benchmarking

        For purposes of setting 2011 executive compensation, the Compensation Committee considered executive compensation survey and proxy data prepared by Pay Governance. Messrs. Jornayvaz and Honeyfield also considered this data in making recommendations to the Compensation Committee regarding the compensation for the executives who report to them. The Compensation Committee decided that it would use general industry survey data as the primary benchmark and would review proxy data for a select group of peer companies only to validate the findings of the general industry survey data and to provide additional context on compensation levels for executives working for companies in the fertilizer, natural resources and specialty chemical industries that are similar to us in terms of revenue. The Compensation Committee also used the proxy data to evaluate overall program structure and incentive program design.

        The survey and proxy data was used principally to gauge the reasonableness and competitiveness of our executive compensation packages, with the general view that, to continue to attract and retain the executive talent that we believe is critical to our success, the base salary and targeted total direct cash compensation for each executive should be between the 50th and 75th percentiles of the general industry survey data for selected position descriptions. Because position matches were not a direct comparison for several of our executives, we also considered proxy data of peer companies for selected positions to establish a range of total compensation within which adjustments were approved. In some cases, we have paid executives below or above the median of the market data in recognition of unique circumstances relating to us or the executive, such as the location of our corporate headquarters in Denver, an executive's previous experience in the potash or related industries, or an executive's position, duties, or performance.

        Pay Governance used the following process to prepare the survey data that it provided to the Compensation Committee. First, data was gathered from a 2010 general industry executive compensation survey performed by Towers Watson that included approximately 800 companies from all industries and covered compensation paid in 2009. At the Compensation Committee's direction, Pay Governance sorted this data in three ways in an attempt to mitigate year-over-year volatility in revenues and pay levels and to consistently assess the different data ranges. The data were appropriately sized to a $370 million annual revenue scope, which was representative of our budgeted revenue level for 2011, and sorted to include only companies with revenues between $150 million and $700 million and only companies with revenues between $200 million and $500 million as these ranges were considered a reasonable set of ranges of revenue that we might likely achieve given the volatility in commodity prices and production results associated with our business. Pay Governance then provided, for each executive position, the annual market base salary, target cash compensation and total direct compensation at the 25th, 50th, and 75th percentiles of the sized and sorted data. The Compensation Committee reviewed this data only on an aggregate basis and did not receive a list of the individual component companies or consider the individual practices of those companies.

        Pay Governance used the following process to prepare the proxy data that it provided to the Compensation Committee. It gathered proxy-reported compensation data relating to compensation paid during 2009 by a group of peer companies recommended by management and selected by the Compensation Committee. For each executive position, Pay Governance provided the proxy data for each peer company and in summary for the group as a whole. The data included annual market base salary, target and actual annual bonus awards, actual annual equity awards and target and actual total direct compensation levels at the 25th, 50th, and 75th percentiles of the data.

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        Below are the peer groups we used for evaluating 2011 and 2010 executive compensation. Companies shown in boldface type were in both peer groups. For 2010, our peer group generally focused on companies in our industry or similar industries. Acknowledging that it was difficult to find companies that matched our industry and revenues, for 2011, we selected a peer group that included companies that (a) had revenues ranging from $109 million to $963 million and market capitalizations ranging from $227 million to $3.0 billion and (b) were in our industry or other extraction industries or were based in Colorado.

2011 Peer Group
 
2010 Peer Group

AMCOL International Corporation

 

Agrium Inc.
American Vanguard Corporation   AMCOL International Corporation
Berry Petroleum Company   AMVAC Chemical Corporation
Bill Barrett Corporation   Bill Barrett Corporation
Brush Engineered Metals Inc.   Brush Engineered Materials Inc.
Clayton Williams Energy, Inc.   CF Industries Holdings, Inc.
Compass Minerals International Inc.   Clayton Williams Energy, Inc.
Crocs, Inc.   Compass Minerals International Inc.
Delta Petroleum Corporation   Lundin Mining Corporation
DigitalGlobe, Inc.   The Mosaic Company
Forest Oil Corporation   Potash Corporation of Saskatchewan Inc.
Golden State Resources Limited   Rosetta Resources Inc.
Lundin Mining Corporation   The Scotts Miracle-Gro Company
National CineMedia, Inc.   SM Energy Company
Petroleum Development Corporation   Terra Industries Inc.
Rosetta Resources Inc.   Thompson Creek Metals Company Inc.
RTI International Metals, Inc.   Venoco, Inc.
SM Energy Company    
Thompson Creek Metals Company Inc.    
Titanium Metals Corporation    
Venoco, Inc.    

2011 Compensation Decisions

        Mr. Jornayvaz's current employment agreement sets his salary at $100,000, subject to annual review by the Compensation Committee. When we entered into this agreement with Mr. Jornayvaz in May 2010, he requested that we reduce his salary to $100,000 in connection with the reallocation of day-to-day responsibilities to other executives, including Mr. Honeyfield. For 2011, the Compensation Committee decided not to make any changes to this salary.

        In February 2011, the Compensation Committee conducted its annual review of executive salaries. The Compensation Committee made the following changes to the salaries for Messrs. Honeyfield and Mansanti (and approved Mr. Litt's salary as unchanged):

Name
  2010 Salary   Change   2011 Salary
(Effective
2/2/11)
 

David W. Honeyfield

  $ 355,000     13 % $ 400,000  

Martin D. Litt

  $ 300,000     0 % $ 300,000  

John G. Mansanti

  $ 255,000     4 % $ 265,000  

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        In making these changes, the Compensation Committee reviewed survey and proxy data and generally targeted salaries at amounts that resulted in targeted total direct compensation between the 50th and 75th percentiles of the general industry survey data. Mr. Honeyfield's salary was set at the higher end of this range based on qualitative factors including a conclusion that it was difficult to find comparative survey and proxy data that took into account the combined position of President and Chief Financial Officer and a positive assessment of Mr. Honeyfield's management of his increased responsibilities in connection with the continued transition of Messrs. Jornayvaz and Harvey into their current roles.

        When we hired Mr. Feist in January 2011 as our Vice President of Marketing and Sales, the Compensation Committee set his salary at $210,000. Mr. Feist's compensation package was negotiated between management and Mr. Feist, and we believe it was an important factor in allowing us to attract Mr. Feist to Intrepid. In November 2011, we promoted Mr. Feist to Senior Vice President of Marketing and Sales upon his successful assumption of responsibilities from R.L. Moore, who retired as our Senior Vice President of Sales and Marketing. Based upon management's recommendation, the Compensation Committee approved an increase in Mr. Feist's salary to $232,000 to compensate him for the increased responsibilities associated with his promotion.

        Background.    We have adopted the Intrepid Potash, Inc. Short-Term Incentive Plan, which allows for the payment of annual bonuses based on the attainment of pre-established annual performance goals. The plan was approved by our stockholders prior to our IPO. As described above under the heading "Proposal 4—Approval of the Intrepid Potash, Inc. Short-Term Incentive Plan, as Amended and Restated," at the annual meeting we will be asking stockholders to approve an amendment and restatement of this plan to enable awards granted under the plan to qualify as "performance-based compensation" within the meaning of Section 162(m). You can find more information about Section 162(m) below under the heading "Accounting Impact and Tax Deductibility of Compensation."

        The Compensation Committee administers the plan. Within the first 90 days of each year, the Compensation Committee selects the executive officers and other key employees who are eligible to participate in the plan, establishes their target bonus amounts, and sets the performance goals for the year in accordance with the plan. The target bonus amounts and performance goals are communicated to plan participants. Shortly after the end of each year, the Compensation Committee determines the bonus payments to be made for the year, if any, based on actual performance as compared to the pre-established goals. Bonuses are paid in cash or stock as soon as administratively feasible following the Compensation Committee's determination, but no later than March 15 of the following year. Our Board can amend or terminate the plan at any time, subject to any restrictions under Section 162(m).

        In determining annual bonuses for our non-executive employees, we use the same performance measures and goals as we use for executives and other key employees under our Short-Term Incentive Plan.

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        2011 Bonus Calculation.    Executive bonuses for 2011 under our Short-Term Incentive Plan were calculated as follows:

Name
  2011 Salary   ×
  Target Bonus
Amount / Target
Bonus as a
Percentage of
Base Salary
  ×
  Corporate
Performance
Percentage
  =
  2011 Cash
Bonus under
Short-Term
Incentive Plan
 

Robert P. Jornayvaz III

    (1)         $500,000           131.9 %       $ 400,000 (2)

David W. Honeyfield

  $ 396,193         50% / 75%(3)           131.9 %       $ 382,929  

Martin D. Litt

  $ 300,000         40%           131.9 %       $ 158,280  

John G. Mansanti

  $ 264,154         50%           131.9 %       $ 174,209  

Kelvin G. Feist

  $ 196,677         40%           131.9 %       $ 103,767  

(1)
Under his employment agreement, Mr. Jornayvaz is entitled to a target bonus of $500,000. This amount is not tied to his annual base salary of $100,000.

(2)
Before the Compensation Committee approved the 2011 cash bonuses for executives, Mr. Jornayvaz asked that the Compensation Committee reduce his 2011 bonus to $400,000 from $659,500 (which is the amount that he otherwise would have earned based on the pre-determined bonus calculations under the Short-Term Incentive Plan).

(3)
Mr. Honeyfield's target bonus percentage was 50 percent of his base salary for the period from January 1 to February 1, 2011, and 75 percent of his base salary for the period from February 2 to December 31, 2011.

        Target Bonus Percentages.    Mr. Jornayvaz's current employment agreement provides that his target annual bonus is generally intended to be $500,000. This amount was negotiated between the Compensation Committee and Mr. Jornayvaz when the agreement was entered into in May 2010.

        In February 2011, the Compensation Committee established the target annual bonuses for Messrs. Honeyfield, Litt, and Mansanti under our Short-Term Incentive Plan as follows:

 
  Target Annual Bonus as a Percentage of Salary  
Name
  2010   2011
(effective 2/2/11)
 

David W. Honeyfield

    50 %   75 %

Martin D. Litt

    40 %   40 %

John G. Mansanti

    50 %   50 %

        In establishing these percentages, as described above under the heading "Base Salary," the Compensation Committee reviewed survey and proxy data and generally targeted total direct compensation between the 50th and 75th percentiles of the general industry survey data. The Compensation Committee also considered management's recommendations and the additional qualitative factors described above for Mr. Honeyfield.

        When we hired Mr. Feist in January 2011, the Compensation Committee set his target annual bonus at 40 percent of his annual base salary.

        Corporate Performance Percentage.    The actual bonus paid to each of our executives under our Short-Term Incentive Plan could have ranged from 0 to 200 percent of the executive's target annual bonus based on the achievement of the pre-established performance goals.

        In February 2011, taking into account management's recommendations, the Compensation Committee approved the 2011 performance measures, goals, and weightings under the plan. In

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general, for each measure, the Compensation Committee set threshold, target, and maximum levels of performance that corresponded to payouts within the range of 0 to 200 percent.

        In January 2012, the Compensation Committee reviewed actual performance in 2011 as compared to the pre-established goals and, based on management's recommendations, approved a payout of 131.9 percent for 2011 under the Short-Term Incentive Plan calculated as follows:

Measure
  Weight   Resulting Payout
on the Measure
Based on Actual
Performance
  Contribution to
Total Corporate
Performance
Percentage
 

Safety

    18 %   144 %   25.9 %

Capital Investment

    18 %   75 %   13.5 %

Cash Cost of Goods Sold per Ton of Potash

    18 %   114 %   20.6 %

Production Tons of Potash and Langbeinite

    18 %   119 %   21.5 %

Adjusted EBITDA

    18 %   200 %   36.0 %

SOX 404 Compliance

    5 %   114 %   5.7 %

Right-Size Staffing

    5 %   174 %   8.7 %
                   

Total Corporate Performance Percentage

                131.9 %
                   

        We include below more information about our reasons for selecting each of these measures and the calculations used to determine the resulting payout on each measure. Overall, management recommended, and the Compensation Committee approved, these measures, goals, and weightings because we believe they appropriately focus our executives and employees on the important elements of our business.

Weight
    18 %      

Performance Against Goal
                       
Payout Range
 
Goal: improve our
medical reportable
incident rate
  Actual
Performance
  Resulting
Payout on
this Metric
   
   
 
200%   30% improvement                        
100%   10% improvement   19% improvement     144 %            
  75%   No change                        
    0%   20% worsening or a fatality                        
                    x 144 %      
                           
Contribution to Total Corporate Performance Percentage           25.9 %

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Weight
    18 %      

Performance Against Goals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Payout
Range
 
Objective Goal: new AFEs
initiated after 1/1/2010 and
closed in 2011 were within
5% more or 15% less of
the original AFE amount
and were completed
within one month
of the estimated
completion date
  Actual
Performance on
Objective Goal
  Actual
Performance on
Subjective Goal
  Resulting
Payout on
this Metric
   
   
 
200%   90% of AFEs in specified ranges                              
100%   70% of AFEs in specified ranges     35 % Largely Positive     75 %            
    0%   Less than 50% of AFEs in specified ranges                     x 75 %      
                                 
Contribution to Total Corporate Performance Percentage           13.5 %

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Weight

    18 %      

Performance Against Goal

             
Payout
Range
  Goal   Actual Performance  
Resulting
Payout on
this Metric
   
   
 

200%

  $ 166                          

100%

  $ 184   $ 181     114 %            

  20%

  $ 206                          

                      x 114 %      
                               

Contribution to Total Corporate Performance Percentage

          20.6 %

Weight

    18 %      

Performance Against Goal

             
Payout
Range
  Goal   Actual Performance  
Resulting
Payout on
this Metric
   
   
 

200%

    1,015,275                          

100%

    940,069     954,692     119 %            

  20%

    846,062                          

                      x 119 %      
                               

Contribution to Total Corporate Performance Percentage

          21.5 %

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Weight

    18 %      

Performance Against Goal

             
Payout
Range
  Goal   Actual Performance  
Resulting
Payout on
this Metric
   
   
 

200%

  $ 173 million                          

100%

  $ 144 million   $ 192 million     200 %            

  20%

  $ 119 million                          

                      x 200 %      
                               

Contribution to Total Corporate Performance Percentage

          36.0 %

Weight

    5 %      

Performance Against Goal

             
Payout
Range
  Goal   Actual Performance  
Resulting
Payout on
this Metric
   
   
 

200%

  Fewer than 10 deficiencies (none                        

  significant)   Nine deficiencies                    

100%

  No significant deficiencies   (none significant)     114 %            

    0%

  Material weakness               x 114 %      
                           

Contribution to Total Corporate Performance Percentage

          5.7 %

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Weight

    5 %      

Performance Against Goal for Hourly Positions (70%)

             
Payout
Range
 
Goal: fill hourly
positions within 90 days
of general manager
approval
  Actual Performance   Resulting
Payout on
this Metric
   
   
 

200%

    97 %                        

100%

    85 %   96 %   189 %            

    0%

    60 %                        

 

Performance Against Goal for Salaried Positions (30%)
   
   
 
Payout
Range
 
Goal: fill salaried
positions within 90 days
of general manager
approval
  Actual Performance   Resulting
Payout on
this Metric
   
   
 

200%

    97 %                        

100%

    85 %   90 %   140 %            

    0%

    60 %               x 174 %      
                               

Contribution to Total Corporate Performance Percentage

          8.7 %

        In February 2012, the Compensation Committee approved the following discretionary cash bonuses for our executives:

Name
  2011
Discretionary
Cash Bonus
 

David W. Honeyfield

  $ 75,000  

Martin D. Litt

  $ 40,000  

John G. Mansanti

  $ 50,000  

Kelvin G. Feist

  $ 20,000  

        In approving the amount of Mr. Honeyfield's discretionary bonus, the Compensation Committee considered the recommendation of Mr. Jornayvaz and Mr. Honeyfield's leadership and performance in 2011, including his leadership in managing the continued transition of Messrs. Jornayvaz and Harvey into their current roles. In approving the discretionary bonuses for Messrs. Litt, Mansanti, and Feist, the Compensation Committee considered the recommendations of Messrs. Honeyfield and Jornayvaz and the executives' leadership and performance in 2011. Specifically, the Compensation Committee took note of Mr. Litt's efforts relating to government affairs and our steady progress towards obtaining the issuance of a Record of Decision from the Bureau of Land Management for our HB Solar Solution Mine project; Mr. Mansanti's leadership in mine management and capital projects; and Mr. Feist's successful integration into the sales and marketing organization.

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        When we hired Mr. Feist in January 2011, the Compensation Committee approved the payment to him of a starting bonus of $85,000, as well as an additional bonus of $8,835, payable in March 2011. As noted above, Mr. Feist's compensation package was negotiated between management and Mr. Feist, and we believe it was an important factor in allowing us to attract Mr. Feist to Intrepid. The additional bonus (together with the additional equity grants discussed below) was intended to compensate Mr. Feist for equity awards from his previous employer that he forfeited when he joined Intrepid.

        Our long-term incentive compensation program is a broad-based, long-term retention and incentive program that is intended to attract, retain, and motivate quality employees, officers, and directors and to align their interests with those of our stockholders. Specifically, the program is designed to meet the following goals:

We believe this program is critical to our efforts to create and maintain a competitive advantage in our industry.

        Award Amounts.    Mr. Jornayvaz's current employment agreement provides that his annual equity award is generally intended to have a grant date fair value of $750,000. This amount was negotiated between the Compensation Committee and Mr. Jornayvaz when the agreement was entered into in May 2010. Mr. Jornayvaz requested that the Compensation Committee reduce his 2011 equity award to a grant date fair value of $500,000, which was approved by the Compensation Committee.

        Over the past few years, the Compensation Committee has been discussing long-term incentive award values and volatility in the market for these types of awards. For 2011, the Committee increased the target annual equity awards previously established for Messrs. Honeyfield, Litt, and Mansanti in order to provide an equity opportunity that was more consistent with the market median based on general industry survey data and to reflect the increased responsibilities that executives had undertaken with the continued transition of Messrs. Jornayvaz and Harvey into their current roles, as described in more detail above under the heading "Base Salary."

 
  Value of Target
Annual Equity
Award as a
Percentage of
Annual Base
Salary
 
Name
  2010   2011  

David W. Honeyfield

    90 %   175 %

Martin D. Litt

    47 %   70 %

John G. Mansanti

    55 %   70 %

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        When we hired Mr. Feist in January 2011, the Compensation Committee set the value of his annual equity award at 70 percent of his annual base salary to be generally consistent with the target awards for other executives at his level.

        Form of Awards and Vesting Terms.    In 2011, as in prior years and in accordance with the market ranges provided by Pay Governance, the Compensation Committee split the value of each executive's annual equity award equally between time-vested stock options and time-vested restricted stock. For 2011, we believed this practice provided additional balance and diversity to our executive compensation packages. Both restricted stock and stock options increase in value as the value of our stock increases. However, stock options provide a benefit to the executive only if the value of our stock increases from the date of grant, while restricted stock has inherent value even if the value of our stock remains stable.

        In determining the number of options to grant, we divided the option portion of the award by the grant date fair value of each stock option (calculated using a Black-Scholes valuation technique and assumptions as described below in the table under the heading "Grants of Plan-Based Awards in 2011"). In determining the number of shares of restricted stock to grant, we divided the restricted stock portion of the award by the grant date fair value of each share of restricted stock (calculated using the closing market price of our common stock on the grant date).

        The awards vest in three equal annual installments beginning one year after the date of grant, subject to the grantee's continued employment with us. At the recommendation of Pay Governance, this vesting model was selected to encourage employee retention and to incentivize employees to act in our longer-term interests.

        When we hired Mr. Feist in January 2011, the Compensation Committee agreed to grant him shares of restricted stock to compensate him for equity awards from his previous employer that he forfeited when he joined Intrepid. Mr. Feist received 4,345 shares of restricted stock on February 1, 2011 and 1,157 shares of restricted stock on February 23, 2011. Of the 4,345 shares, 2,315 shares vested on December 31, 2011, 1,802 shares will vest on December 31, 2012, and 228 shares will vest on December 31, 2013, subject to Mr. Feist's continued employment with us on each vesting date. The 1,157 shares vested on December 31, 2011. These vesting terms were set in part by reference to the vesting terms of the equity awards that Mr. Feist forfeited.

        Our employees, including our executives, are eligible for various employee benefits, including medical and dental insurance, group life, accidental death, and disability insurance, health and dependent care flexible spending accounts, a 401(k) plan, and paid time off. We also generally match 100 percent of an employee's 401(k) deferrals up to a specified percentage of compensation or as limited by law. These benefits are generally consistent with the benefits provided by other companies of our size and help us remain competitive in attracting and retaining our executive talent.

        We have adopted an aircraft use policy under which Messrs. Jornayvaz and Harvey, and other executives approved by Messrs. Jornayvaz and Harvey, are allowed personal use of our plane or planes that we lease or charter. We believe these benefits provide increased travel efficiencies, allowing more productive use of our executives' time, which, in turn, allows greater focus on Intrepid-related activities. For 2011, Mr. Jornayvaz did not have personal use of aircraft that resulted in incremental cost to us.

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        Our executives are eligible for a gym membership allowance of up to $150 per month and paid parking. These benefits are generally consistent with the benefits we provide to all Denver-based employees. Executives are also eligible for allowances for regular physical examinations and supplemental long-term disability benefits. We believe that these benefits help us retain and reward our superior executive talent. We also believe that it is in our best interests for our executives and other employees to be in good health.

        We have entered into change-in-control severance agreements with our executives and other key employees. These agreements are intended to meet the following objectives:

        We carefully tailored these agreements to provide a mix of benefits that we believe support the objectives described above. Specifically, the agreements provide that unvested equity awards will vest immediately upon a change in control, but that no cash severance or other benefits will be paid unless there also is a qualifying employment termination event within 24 months after the change in control. You can find more information about these agreements below under the heading "Termination and Change in Control Payments."

Equity Award Practices

        Our current practice is to grant equity awards to executives only on a grant date that occurs in the first quarter of each year following the release of the prior year's earnings or in connection with certain management events, such as the hiring or promotion of an executive, a need to retain an executive, or the achievement by an executive of extraordinary personal performance objectives. Each equity award granted to our executives since the beginning of 2011 has a grant date that was on or after the date on which the Section 162(m) Subcommittee of the Compensation Committee approved the award. This Subcommittee may or may not possess material nonpublic information when it approves awards. However, this Subcommittee acts only at certain times of the year or in connection with certain management events and does not try to achieve more advantageous grant dates in connection with the timing of the release of material nonpublic information.

Accounting Impact and Tax Deductibility of Compensation

        The Compensation Committee reviews projections of the estimated accounting and tax impacts of all material elements of our executive compensation program.

        Section 162(m) generally provides that a publicly held corporation may not deduct in any one taxable year compensation in excess of $1 million to its chief executive officer and three other most highly compensated named executive officers employed at the end of the year other than its chief financial officer, unless certain specific and detailed criteria are satisfied. Awards granted under our 2008 Equity Incentive Plan and Short-Term Incentive Plan are designed to comply with a transition rule under Section 162(m) such that compensation paid pursuant to awards granted under the plans during the applicable transition period should be deductible by us. At the 2012 annual stockholders meeting,

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we are asking stockholders to approve amended and restated plans to enable awards granted under the plans to qualify as "performance-based compensation" for purposes of Section 162(m) provided additional requirements are satisfied. You can find more information about these proposals above under the headings "Proposal 4—Approval of the Intrepid Potash, Inc. Short-Term Incentive Plan, as Amended and Restated" and "Proposal 5—Approval of the Intrepid Potash, Inc. Equity Incentive Plan, as Amended and Restated." We intend to monitor our executive pay programs with respect to the requirements for deductibility under Section 162(m). However, we may pay compensation in excess of the Section 162(m) limitation if we conclude that doing so would be in the best interests of us and our stockholders.

        While we will consider the applicable accounting and tax treatment, these factors alone are not dispositive, and we will also consider the cash and non-cash impact of the programs and whether a program is consistent with our overall compensation philosophy and objectives.


Summary Compensation Table

        The following table sets forth the total compensation earned for services rendered during 2011, 2010, and 2009 by our principal executive officer, principal financial officer, and three other most highly compensated executive officers for 2011.

Name and Principal Position
  Year   Salary   Bonus(1)   Stock
Awards(2)
  Option
Awards(2)
  Non-Equity
Incentive Plan
Compensation(3)
  All Other
Compensation(4)
  Total  

Robert P. Jornayvaz III

    2011   $ 100,000       $ 249,973   $ 249,988   $ 400,000   $ 5,648   $ 1,005,609  

Executive Chairman of

    2010   $ 249,038   $ 226,417   $ 62,478   $ 62,494   $ 191,684   $ 10,753   $ 802,864  

the Board

    2009   $ 487,500       $ 365,622   $ 365,624   $ 110,000   $ 138,698   $ 1,467,444  

David W. Honeyfield

   
2011
 
$

396,193
 
$

75,000
 
$

339,983
 
$

339,984
 
$

382,929
 
$

18,709
 
$

1,552,798
 

President and Chief

    2010   $ 339,616       $ 212,496   $ 212,492   $ 165,180   $ 12,586   $ 942,370  

Financial Officer

    2009   $ 315,000   $ 58,000   $ 125,008   $ 125,003   $ 110,880   $ 13,319   $ 747,210  

Martin D. Litt(5)

   
2011
 
$

300,000
 
$

40,000
 
$

105,000
 
$

104,983
 
$

158,280
 
$

17,308
 
$

725,571
 

Executive Vice President,

    2010   $ 300,000       $ 159,977   $ 159,987   $ 116,640   $ 19,527   $ 756,131  

General Counsel, and Secretary

                                                 

John G. Mansanti(6)

   
2011
 
$

264,154
 
$

50,000
 
$

92,723
 
$

92,739
 
$

174,209
 
$

9,820
 
$

683,645
 

Senior Vice President of

    2010   $ 255,000       $ 94,978   $ 94,992   $ 123,930   $ 81,152   $ 650,052  

Operations

    2009   $ 52,471   $ 220,000   $ 374,984           $ 1,590   $ 649,045  

Kelvin G. Feist(7)

   
2011
 
$

196,677
 
$

113,835
 
$

276,630
 
$

73,482
 
$

103,767
 
$

4,337
 
$

768,728
 

Senior Vice President of Marketing and Sales

                                                 

(1)
In accordance with SEC rules, these amounts represent discretionary cash bonuses paid outside of our Short-Term Incentive Plan. You can find more information about the 2011 amounts above under the heading "Compensation Discussion and Analysis." As described in note 3 below, annual cash bonuses paid under our Short-Term Incentive Plan are reported under the table heading "Non-Equity Incentive Plan Compensation."

(2)
These amounts represent the grant date fair value of awards of restricted stock and nonqualified stock options. We calculated these amounts in accordance with the financial statement reporting rules using the same assumptions used for financial statement reporting purposes. You can find information about these assumptions below under the heading "Grants of Plan-Based Awards in 2011" and in Note 9 to our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2011.

(3)
In accordance with SEC rules, these amounts represent annual cash bonuses paid under our Short-Term Incentive Plan. You can find more information about the 2011 amounts above under the heading "Compensation Discussion and Analysis." As described in note 1 above, discretionary cash bonuses paid outside of this plan are reported under the table heading "Bonus."

(4)
You can find a breakdown of the 2011 amounts below under the heading "All Other Compensation Table."

(5)
Mr. Litt was not a named executive officer (as that term is defined under SEC rules) for 2009, and therefore in accordance with SEC rules his 2009 compensation information is not included in the table.

(6)
Mr. Mansanti joined Intrepid in October 2009.

(7)
Mr. Feist joined Intrepid in January 2011.

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All Other Compensation Table

        The following table describes each component of the "All Other Compensation" column for 2011 in the Summary Compensation Table above.

Name
  Perquisites and
Other Personal
Benefits(1)
  Group Life
Insurance
Premiums(2)
  Supplemental
Long-Term
Disability
Premiums(3)
  Company
Contributions
to 401(k)
Plan(4)
  Total  

Robert P. Jornayvaz III

  $ 1,000   $ 848       $ 3,800   $ 5,648  

David W. Honeyfield

  $ 3,863   $ 1,399   $ 1,197   $ 12,250   $ 18,709  

Martin D. Litt

  $ 2,692   $ 1,399   $ 967   $ 12,250   $ 17,308  

John G. Mansanti

  $ 1,704   $ 1,399   $ 1,154   $ 5,563   $ 9,820  

Kelvin G. Feist

  $ 2,767   $ 1,192   $ 378       $ 4,337  

(1)
For Messrs. Jornayvaz and Mansanti, the amounts represent payments for office parking. For Messrs. Honeyfield, Litt, and Feist, the amounts represent payments for office parking and reimbursements for gym membership fees. Although Mr. Jornayvaz is allowed personal use of our plane or planes that we lease or charter, we did not incur incremental costs in 2011 as a result of this use.

(2)
Amounts represent payments for group life insurance premiums for coverage in excess of $50,000.

(3)
Amounts represent payments or reimbursements for supplemental long-term disability insurance premiums.

(4)
Amounts represent matching contributions made by us under our 401(k) plan.

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Grants of Plan-Based Awards in 2011

        The following table provides information about non-equity incentive awards, restricted stock, and stock options granted to our executives in 2011.

 
   
   
  Estimated Possible Payouts
Under
Non-Equity Incentive Plan
Awards ($)(1)
  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(2)
  All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(3)
  Exercise
or Base
Price of
Option
Awards
($/Sh)
   
 
 
   
   
  Grant Date
Fair Value
of Stock
and Option
Awards ($)(4)
 
 
  Grant
Date
  Section 162(m)
Subcommittee
Approval Date
 
Name
  Threshold   Target   Maximum  

Robert P. Jornayvaz III

                                                       

Short-Term Incentive Plan

              $ 500,000   $ 1,000,000                  

Restricted Stock

    2/23/2011     2/23/2011                 7,004           $ 249,973  

Nonqualified Stock Option

    2/23/2011     2/23/2011                     12,761   $ 35.69   $ 249,988  

David W. Honeyfield

                                                       

Short-Term Incentive Plan

              $ 290,318   $ 580,636                  

Restricted Stock

    2/23/2011     2/23/2011                 9,526           $ 339,983  

Nonqualified Stock Option

    2/23/2011     2/23/2011                     17,355   $ 35.69   $ 339,984  

Martin D. Litt

                                                       

Short-Term Incentive Plan

              $ 120,000   $ 240,000                  

Restricted Stock

    2/23/2011     2/23/2011                 2,942           $ 105,000  

Nonqualified Stock Option

    2/23/2011     2/23/2011                     5,359   $ 35.69   $ 104,983  

John G. Mansanti

                                                       

Short-Term Incentive Plan

              $ 132,077   $ 264,154                  

Restricted Stock

    2/23/2011     2/23/2011                 2,598           $ 92,723  

Nonqualified Stock Option

    2/23/2011     2/23/2011                     4,734   $ 35.69   $ 92,739  

Kelvin G. Feist

                                                       

Short-Term Incentive Plan

              $ 78,671   $ 157,342                  

Restricted Stock

    2/1/2011     1/24/2011                 4,345           $ 161,851  

Restricted Stock

    2/23/2011     2/23/2011                 1,157           $ 41,293  

Restricted Stock

    2/23/2011     2/23/2011                 2,059           $ 73,486  

Nonqualified Stock Option

    2/23/2011     2/23/2011                     3,751   $ 35.69   $ 73,482  

(1)
Represents the estimated possible payouts that could have occurred for 2011 performance under our Short-Term Incentive Plan. Payout could have been zero if specified performance goals were not met. The actual payout that each executive received under this plan is reported in the "Summary Compensation Table" above in the column entitled "Non-Equity Incentive Plan Compensation."

(2)
Represents time-vested shares of restricted stock granted under our Equity Incentive Plan.

(3)
Represents time-vested nonqualified stock options granted under our Equity Incentive Plan.

(4)
Represents the grant date fair value as calculated for financial statement reporting purposes. You can find more information about the assumptions used to calculate these amounts above in the "Summary Compensation Table."

Equity Awards

        The 4,345 shares of restricted stock granted to Mr. Feist on February 1, 2011, vest as follows: 2,315 shares vested on December 31, 2011; 1,802 shares will vest on December 31, 2012; and 228 shares will vest on December 31, 2013. The 1,157 shares of restricted stock granted to Mr. Feist on February 23, 2011, vested in full on December 31, 2011. All other grants of restricted stock and stock options to executives in 2011 vest in three equal annual installments beginning on February 25, 2012. For all equity awards, vesting is subject to the executive's continued employment with us on the applicable vesting date.

        Under the change-in-control severance agreements that we have entered into with our executives, the awards also vest in full upon a qualifying change in control of Intrepid. You can find more information about these agreements below under the heading "Termination and Change-in-Control Payments." The awards also vest on a limited basis in the case of death or disability. The Compensation Committee may provide for the accelerated vesting of any restricted stock or options in its discretion, at any time. Prior to vesting, restricted stock or options may not be sold, assigned, or transferred in any way, other than by will or the laws of descent and distribution.

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        Except as described above, upon an executive's termination of service for any reason, any unvested shares of restricted shares and stock options held by the executive will be immediately forfeited.

        Holders of restricted stock generally have all of the same voting and other rights as holders of our common stock. However, if we make any dividend or other distribution to our stockholders, then any cash, securities or other property that the holder of restricted stock otherwise would receive will be subject to the same vesting schedule as is applicable to the restricted stock and will be forfeited if the underlying restricted stock is forfeited.

        All stock options have an exercise price equal to the fair market value of our common stock on the grant date and have a ten-year term.

        We estimated the grant date fair value of the restricted stock using the closing market price of our common stock on the grant date.

        We estimated the grant date fair value of the stock options using the Black-Scholes option valuation model. Option valuation models require the input of highly subjective assumptions, including the expected volatility of the price of the underlying stock. We used the following assumptions to compute the weighted average fair market value of options granted during 2011:

Risk-free interest rates

    2.6 %

Dividend yield

     

Estimated volatility

    56 %

Expected option life

    6 years  

        Our computation of the estimated volatility is based on the historic volatility of our and selected peer companies' common stock over the expected option life. The peer companies selected have had volatility that was highly correlated to our common stock from the date of our IPO to the dates of grant. This peer information has been utilized because we have insufficient trading history to calculate a meaningful long-term volatility factor. The computation of expected option life was determined based on a reasonable expectation of the average life prior to being exercised or forfeited, giving consideration to the overall vesting period and contractual terms of the awards. The risk-free interest rates for periods that matched the option award's expected life were based on the U.S. Treasury constant maturity yield at the time of grant over the expected option life.

        You can find information about the ranges of these assumptions as they relate to awards made in 2010 and 2009 in Note 9 to our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2011.

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Outstanding Equity Awards at the End of 2011

        The following table provides information regarding outstanding stock options and restricted stock held by each of our executives as of December 31, 2011.

 
  OPTION AWARDS   STOCK AWARDS  
 
   
   
   
   
   
   
   
  Market
Value
of Shares
of Stock
that
Have Not
Vested(2)
 
 
   
  Number of Securities
Underlying Unexercised
Options
   
   
   
  Number of
Shares of
Stock that
Have Not
Vested
 
 
   
   
   
  Restricted
Stock
Grant
Date
 
 
  Option
Grant
Date
  Option
Exercise
Price(1)
  Option
Expiration
Date
 
Name
  Exercisable   Unexercisable  

Robert P. Jornayvaz III

    2/23/2011         12,761 (3) $ 35.69     2/23/2021                    

    2/4/2010     1,482     2,966 (4) $ 25.47     2/4/2020                    

    2/25/2009     28,642     14,322 (5) $ 20.80     2/25/2019                    

                                  2/23/2011     7,004 (3) $ 158,501  

                                  2/4/2010     1,636 (4) $ 37,023  

                                  2/25/2009     5,860 (5) $ 132,612  

David W. Honeyfield

    2/23/2011         17,355 (3) $ 35.69     2/23/2021                    

    2/4/2010     5,041     10,083 (4) $ 25.47     2/4/2020                    

    2/25/2009     9,792     4,897 (5) $ 20.80     2/25/2019                    

                                  2/23/2011     9,526 (3) $ 215,573  

                                  2/4/2010     5,562 (4) $ 125,868  

                                  2/25/2009     2,004 (5) $ 45,351  

                                  4/25/2008     1,476 (6) $ 33,402  

Martin D. Litt

    2/23/2011         5,359 (3) $ 35.69     2/23/2021                    

    2/4/2010     3,795     7,592 (4) $ 25.47     2/4/2020                    

    2/25/2009     2,742     2,742 (5) $ 20.80     2/25/2019                    

                                  2/23/2011     2,942 (3) $ 66,577  

                                  2/4/2010     4,188 (4) $ 94,774  

                                  2/25/2009     1,122 (5) $ 25,391  

                                  4/25/2008     626 (6) $ 14,166  

John G. Mansanti

   
2/23/2011
   
   
4,734

(3)

$

35.69
   
2/23/2021
                   

    2/4/2010     2,253     4,508 (4) $ 25.47     2/4/2020                    

                                  2/23/2011     2,598 (3) $ 58,793  

                                  2/4/2010     2,486 (4) $ 56,258  

Kelvin G. Feist

   
2/23/2011
   
   
3,751

(3)

$

35.69
   
2/23/2021
                   

                                  2/23/2011     2,059 (3) $ 46,595  

                                  2/1/2011     2,030 (7) $ 45,939  

(1)
Represents the per share amount that the executive would pay upon the exercise of the option.

(2)
Market value is based on the closing market price of our common stock on December 30, 2011 ($22.63), which was the last trading day of 2011.

(3)
Unvested options or shares of restricted stock, as applicable, are scheduled to vest in three equal annual installments on February 25, 2012, February 25, 2013, and February 25, 2014.

(4)
Unvested options or shares of restricted stock, as applicable, are scheduled to vest in two equal annual installments on February 4, 2012, and February 4, 2013.

(5)
Unvested options or shares of restricted stock, as applicable, vested on February 25, 2012.

(6)
Unvested options or shares of restricted stock, as applicable, are scheduled to vest on April 25, 2012.

(7)
Unvested shares of restricted stock are scheduled to vest as follows: 1,802 shares of December 31, 2012, and 228 shares of December 31, 2013.

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Option Exercises and Stock Vested in 2011

        The following table provides information, for each of our executives, about stock options that were exercised and restricted stock that vested in 2011.

 
  OPTION AWARDS   STOCK AWARDS  
Name
  Number of
Shares
Acquired on
Exercise
  Value Realized
on Exercise
  Number of
Shares
Acquired
on Vesting(1)
  Value Realized
on Vesting(2)
 

Robert P. Jornayvaz III

            6,676   $ 255,206  

David W. Honeyfield

            8,135   $ 302,550  

Martin D. Litt

            3,842   $ 141,911  

John G. Mansanti

            5,608   $ 181,512  

Kelvin G. Feist

            3,472   $ 78,571  

(1)
Unless the executive delivered cash to us to cover the payment of taxes due upon the vesting, we withheld some of the acquired shares to cover these taxes, as described below.

Name
  Number of
Shares Withheld from Acquired
Shares to Cover Taxes
 

Robert P. Jornayvaz III

     

David W. Honeyfield

    2,621  

Martin D. Litt

    1,283  

John G. Mansanti

    1,796  

Kelvin G. Feist

    1,080  
(2)
Value was calculated by multiplying the number of shares that vested by the closing market price of our common stock on the vesting date.


Pension Benefits

        None of our executives participates in, or has any accrued benefits under, qualified or non-qualified defined benefit plans sponsored by us. We currently do not anticipate providing these benefits to executives.


Non-Qualified Deferred Compensation

        None of our executives participates in, or has any account balances in, non-qualified defined contribution plans or other deferred compensation plans maintained by us. While we do not currently anticipate providing these benefits to executives, we may in the future determine that doing so would be in our best interests and may institute these types of plans or programs at that time.


Employment Agreement with Mr. Jornayvaz

        On May 19, 2010, we entered into our most recent employment agreement with Mr. Jornayvaz. On February 23, 2011, we entered into an amendment to this agreement, which provides that the term of the agreement is a fixed 35-month period measured from May 19, 2010.

        Under the agreement, Mr. Jornayvaz is entitled to an annual base salary of $100,000, subject to annual review by the Compensation Committee. The agreement also provides that the general intent is for Mr. Jornayvaz to receive a target annual bonus of $500,000 and an annual equity award with a target grate date fair value of $750,000. Mr. Jornayvaz is entitled to personal use of our aircraft, to the extent that it does not interfere with our use of the aircraft for business purposes, and the right to use

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our aircraft under a time-sharing arrangement pursuant to which he reimburses us the cost of the use up to the limits allowed by Federal Aviation Administration regulations. Mr. Jornayvaz also is entitled to all other benefits offered generally to our senior management.

        If Mr. Jornayvaz's employment is terminated for any reason, he would be entitled to the following benefits:

        He would not be entitled to severance, except as provided under his change-in-control severance agreement, which is described below under the heading "Termination and Change-in-Control Payments."

        Mr. Jornayvaz has agreed that during the term of his employment and for a period of 24 months after termination, he will not solicit our employees or compete with us in the potash business and any other business in which we are engaged during the term or at his termination date.


Termination and Change-in-Control Payments

        This section describes and quantifies potential payments that may be made to each of our executives at, following, or in connection with the termination of his employment or as a result of a change in control of Intrepid.

Employment Agreement

        We have entered into an employment agreement with Mr. Jornayvaz that provides for certain benefits upon a termination of his employment. You can find more information about this agreement above under the heading "Employment Agreement with Mr. Jornayvaz."

Change-in-Control Severance Agreements

        We have entered into change-in-control severance agreements with all of our executives. These agreements do not include any excise tax gross-up provisions.

        Under these agreements, executives are entitled to the benefits described below.

        Upon a change in control, each executive would receive full vesting on all of his outstanding equity awards.

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        If the executive's employment is terminated by us without "Cause" or by him for "Good Reason" within 24 months of a change in control, the executive would be entitled to the following additional termination benefits:

        No benefits would be paid upon termination of employment following a change in control for any other reason, including a termination for "Cause," or as a result of death or disability.

        In order to receive the benefits described above, the executive is bound by certain non-solicitation provisions that prohibit the executive from hiring our employees or soliciting our business relations for a period of one year following the date of termination.

        A "change in control" occurs if any one of the following events occur:

        "Cause" means any (a) conviction of (or pleading nolo contendere to) a felony, (b) engaging in theft, fraud, embezzlement or willful misappropriation of our property; (c) violation of any of our policies or practices regarding discrimination or harassment that would be grounds for termination of one of our employees in general; and (d) willful failure to perform substantially the executive's material duties that is not cured within 30 days.

        "Good Reason" means (a) a reduction in the executive's base salary or annual bonus opportunity; (b) a material diminution in the executive's responsibility or authority; (c) a change of more than 30 miles in the location at which the executive primarily performs his services; or (d) any material failure by us to comply with any material term of the executive's change-in-control severance agreement. The executive is required to notify us of any of these events or conditions within 90 days.

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Post-Employment or Change-in-Control Payments

        Our executives are entitled to the following termination and change-in-control payments under their employment and/or change-in-control severance agreements, which are described above. All calculations assume that the termination of employment occurred on December 30, 2011, which was the last business day of 2011.

Type of Compensation
  Qualifying
Termination
Unrelated to a
Change in Control
  Change in Control
without Termination
  Change in Control
and Qualifying
Termination
 

Cash Severance

          $ 728,101  

Prorated Bonus for Year of Termination

          $ 500,000  

Accelerated Vesting of Restricted Stock(1)

      $ 328,135   $ 328,135  

Accelerated Vesting of Unvested Stock Options(2)

      $ 26,209   $ 26,209  

Other Benefits—Health & Welfare(3)

          $ 45,723  

Other Benefits—Outplacement Services

          $ 5,000  
               

Total Post-Employment or Change-in-Control Compensation

      $ 354,344   $ 1,633,168  
               

Type of Compensation
  Qualifying
Termination
Unrelated to a
Change in Control
  Change in Control
without Termination
  Change in Control
and Qualifying
Termination
 

Cash Severance

          $ 1,134,060  

Prorated Bonus for Year of Termination

          $ 290,318  

Accelerated Vesting of Restricted Stock(1)

      $ 420,194   $ 420,194  

Accelerated Vesting of Unvested Stock Options(2)

      $ 8,962   $ 8,962  

Other Benefits—Health & Welfare(3)

          $ 45,723  

Other Benefits—Outplacement Services

          $ 5,000  
               

Total Post-Employment or Change-in-Control Compensation

      $ 429,156   $ 1,904,257  
               

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Type of Compensation
  Qualifying
Termination
Unrelated to a
Change in Control
  Change in Control
without Termination
  Change in Control
and Qualifying
Termination
 

Cash Severance

          $ 851,120  

Prorated Bonus for Year of Termination

          $ 120,000  

Accelerated Vesting of Restricted Stock(1)

      $ 200,909   $ 200,909  

Accelerated Vesting of Unvested Stock Options(2)

      $ 5,018   $ 5,018  

Other Benefits—Health & Welfare(3)

          $ 45,723  

Other Benefits—Outplacement Services

          $ 5,000  
               

Total Post-Employment or Change-in-Control Compensation

      $ 205,927   $ 1,227,770  
               

Type of Compensation
  Qualifying
Termination
Unrelated to a
Change in Control
  Change in Control
without Termination
  Change in Control
and Qualifying
Termination
 

Cash Severance

          $ 873,930  

Prorated Bonus for Year of Termination

          $ 132,077  

Accelerated Vesting of Restricted Stock(1)

      $ 115,051   $ 115,051  

Accelerated Vesting of Unvested Stock Options(2)

             

Other Benefits—Health & Welfare(3)

          $ 45,723  

Other Benefits—Outplacement Services

          $ 5,000  
               

Total Post-Employment or Change-in-Control Compensation

      $ 115,051   $ 1,171,781  
               

Type of Compensation
  Qualifying
Termination
Unrelated to a
Change in Control
  Change in Control
without Termination
  Change in Control
and Qualifying
Termination
 

Cash Severance

          $ 556,800  

Prorated Bonus for Year of Termination

          $ 92,800  

Accelerated Vesting of Restricted Stock(1)

      $ 171,105   $ 171,105  

Accelerated Vesting of Unvested Stock Options(2)

             

Other Benefits—Health & Welfare(3)

          $ 45,723  

Other Benefits—Outplacement Services

          $ 5,000  
               

Total Post-Employment or Change-in-Control Compensation

      $ 171,105   $ 871,428  
               

(1)
Calculated by multiplying the number of shares of restricted stock held on December 30, 2011, by the closing market price of our common stock on that date ($22.63).

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(2)
With respect to each option, calculated by multiplying the number of unvested stock options held on December 30, 2011, by the difference between the closing market price of our common stock on that date ($22.63) and the option's exercise price. If the closing market price was less than the exercise price of a particular option, the option was considered "out of the money" on December 30, 2011, and we did not attribute any value to an accelerated vesting of the option.

(3)
Health and welfare benefits continue until the earlier of two years from the date of termination or when the executive obtains coverage under another employer's medical plan. Values are based on the actual per-employee cost to us of providing these benefits.

        Our salaried employees, including executives, are eligible for group life, accidental death, and disability insurance benefits upon a termination of employment due to death or disability. Employees, including executives, would also receive accelerated vesting of unvested stock options and restricted stock for the portion of each award that would have vested at the next applicable vesting date after the termination of employment due to death of disability. In addition to these standard benefits, executives other than Mr. Jornayvaz are eligible for supplemental disability and long-term care insurance benefits upon a termination of employment due to disability. In general, the executive could receive up to approximately $15,000 to $23,000 per month in supplemental disability and long-term care insurance benefits for the duration of the disability.


DIRECTOR COMPENSATION

Director Compensation Table

        The table below sets forth the compensation paid to or earned by our non-employee directors. All compensation for these directors was paid in accordance with our non-employee director compensation policy, which is described below. The compensation paid to or earned by Mr. Jornayvaz for his role as our Executive Chairman of the Board is reported in the Summary Compensation Table above. The compensation paid to or earned by Mr. Harvey for his role as our Executive Vice Chairman of the Board is reported in the table below. Neither of Messrs. Jornayvaz or Harvey receives any additional compensation for his service on the Board.

Name
  Fees Earned or
Paid in Cash
  Stock
Awards(1)
  Option
Awards(1)
  Non-Equity
Incentive Plan
Compensation
  All Other
Compensation
  Total  

Employee Director (Other than Mr. Jornayvaz)

                                     

Hugh E. Harvey, Jr.(2)

      $ 249,973   $ 249,988   $ 400,000   $ 122,871   $ 1,022,832  

Non-Employee Directors

                                     

Terry Considine

  $ 60,000   $ 74,981               $ 134,981  

Chris A. Elliott

  $ 55,000   $ 74,981               $ 129,981  

J. Landis Martin

  $ 70,000   $ 74,981               $ 144,981  

Barth E. Whitham

  $ 65,000   $ 74,981               $ 139,981  

(1)
Amounts represent the grant date fair value of equity awards granted in 2011. We calculated these amounts in accordance with financial statement reporting rules, using the same assumptions as we used for financial statement reporting purposes. For awards of common stock and restricted stock, the grant date fair value equals the number of shares granted multiplied by the closing market price of our common stock on the grant date. For awards of stock options, we estimated the grant date fair value using the Black-Scholes option valuation model. You can find information about

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(2)
You can find additional details about Mr. Harvey's compensation below under the heading "Hugh E. Harvey, Jr.'s Employee Compensation."


Non-Employee Director Compensation Policy

        The Governance Committee periodically conducts reviews of director compensation and makes recommendations for approval by the Board. Recommendations typically are based on a review of the median compensation for non-employee directors of companies of comparable size to us as set forth in general industry data. The Governance Committee also typically engages a compensation consultant to assist with these reviews. For 2011, non-employee director compensation consisted of the following:

Annual cash retainer

  $ 55,000  

Annual grant of common stock issued at the first Board meeting after the annual stockholders meeting

  $ 75,000  

Additional annual cash retainer to each committee chairperson:

       

Audit Committee

  $ 15,000  

Compensation Committee

  $ 10,000  

Governance Committee

  $ 5,000  

        All cash retainers are paid in quarterly installments. The annual stock grant is made at the first Board meeting after the annual stockholders meeting.


Hugh E. Harvey, Jr.'s Employee Compensation

Stock Awards and Option Awards

        Mr. Harvey's current employment agreement provides that his annual equity award is generally intended to have a grant date fair value of $750,000. Similar to Mr. Jornayvaz, Mr. Harvey requested that the Compensation Committee reduce his 2011 equity award to a grant date fair value of $500,000, which was approved by the Compensation Committee. For 2011, the value of this award was split equally between time-vested restricted stock and time-vested stock options. These awards generally have the same terms as the awards granted to our executives, which are described above under the heading "Compensation Discussion and Analysis."

Non-Equity Incentive Plan Compensation

        Mr. Harvey's current employment agreement provides that his target annual bonus is generally intended to be $500,000. Based on 2011 performance, his 2011 bonus under the Short-Term Incentive Plan would have been $659,500. However, before the Compensation Committee approved 2011 cash bonuses, Mr. Harvey asked that the Compensation Committee reduce his 2011 bonus to $400,000. You can find more information about the operation of our Short-Term Incentive Plan in 2011 above under the heading "Compensation Discussion and Analysis."

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All Other Compensation

        The following table provides details about other compensation paid to or earned by Mr. Harvey for 2011 in connection with his employment with us.

Name
  Salary for
Employee
Position as our
Executive Vice
Chairman(1)
  Perquisites
and Other
Personal
Benefits(2)
  Group Life
Insurance
Premiums(3)
  Company
Contributions to
401(k) Plan(4)
  Total  

Hugh E. Harvey, Jr. 

  $ 100,000   $ 17,023   $ 848   $ 5,000   $ 122,871  

(1)
Mr. Harvey's current employment agreement sets his salary at $100,000, subject to annual review by the Compensation Committee.

(2)
Amount represents a payment of $3,215 for an executive health physical, payments of $3,460 for office parking, and the aggregate incremental cost to us of $10,348 for his personal use of our leased aircraft. The aggregate incremental cost to us for personal use of aircraft was determined by multiplying (a) the total variable costs incurred by us in operating the aircraft by (b) a fraction, the numerator of which was the total number of allocated occupied seat miles flown by Mr. Harvey or his guests in 2011, including seat miles relating to any applicable deadhead or other positioning flights, and the denominator of which was the total number of aircraft occupied seat miles flown in 2011. Variable costs include fuel costs, travel expenses of the flight crew, landing fees, airport taxes and similar assessments, in-flight food and beverage costs, landing and ground handling fees, and hourly-based maintenance costs. The aggregate incremental cost to us does not include fixed costs that would be incurred regardless of personal use of the aircraft. Fixed costs include, for example, aircraft purchase costs, insurance premiums, calendar-based maintenance costs, and flight crew salaries.

(3)
Amount represents group life insurance premiums for coverage in excess of $50,000.

(4)
Amount represents matching contributions made by us under our 401(k) plan.

Employment and Change-in-Control Severance Agreements

        On May 18, 2010, we entered into our most recent employment agreement with Mr. Harvey in connection with his employment as our Executive Vice Chairman of the Board. The original term of the agreement is for 18 months, subject to earlier termination as provided in the agreement, and the term will automatically be extended by 12 months on the last day of the initial 18-month term and on each anniversary of that date thereafter, unless one party provides written notice of non-renewal to the other party at least 90 days prior to the effective date of an automatic extension. The other terms of this agreement are substantially similar to the terms of our employment agreement with Mr. Jornayvaz, which is described above under the heading "Employment Agreement with Mr. Jornayvaz." We also have entered into a change-in-control severance agreement with Mr. Harvey, pursuant to which he is entitled to severance benefits in connection with the change in control of Intrepid. The terms of this agreement are substantially similar to the terms of our change-in-control severance agreement for our executives, which is described above under the heading "Termination and Change-in-Control Payments."

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth information regarding the beneficial ownership of our common stock as of April 2, 2012, by

        The table is based on information that we received from the nominees, other directors, and executive officers and information disclosed in filings made with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Shares of common stock subject to options that are exercisable as of April 2, 2012, or will be exercisable within 60 days of that date, are considered outstanding and beneficially owned by the person holding the options for the purpose of computing the total and percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

        Unless otherwise noted, each of the stockholders listed below has sole voting and investment power (or shares those powers) with respect to the shares beneficially owned. Unless otherwise noted,

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the business address of each stockholder is c/o Intrepid Potash, Inc., 707 17th Street, Suite 4200, Denver, Colorado 80202.

Name of Beneficial Owner
  Shares
Beneficially
Owned
Excluding
Options
  Shares
Acquirable
Within
60 Days
Through the
Exercise of
Stock
Options(1)
  Total Shares
Beneficially
Owned
  Percent of
Shares
Outstanding
Beneficially
Owned(2)
 

Stockholders Owning More Than 5%

                         

Robert P. Jornayvaz III

    11,141,922     50,182     11,192,104 (3)   14.8 %

Executive Chairman of the Board

                         

Hugh E. Harvey, Jr. 

    10,048,429     50,182     10,098,611 (4)   13.4 %

Executive Vice Chairman of the Board

                         

Morgan Stanley

    7,531,576         7,531,576 (5)   10.0 %

Neuberger Berman

    4,671,281         4,671,281 (6)   6.2 %

Directors and Executives

                         

Terry Considine

    57,770         57,770 (7)   <1 %

Director

                         

Chris A. Elliott

    4,895         4,895     <1 %

Director

                         

J. Landis Martin

    80,006         80,006 (8)   <1 %

Director

                         

Barth E. Whitham

    16,870         16,870     <1 %

Director

                         

David W. Honeyfield

    53,071     30,556     83,627 (9)   <1 %

President and Chief Financial Officer

                         

Martin D. Litt

    21,095     14,861     35,956 (10)   <1 %

Executive Vice President, General Counsel, and Secretary

                         

John G. Mansanti

    22,308     6,085     28,393 (11)   <1 %

Senior Vice President of Operations

                         

Kelvin G. Feist

    11,068     1,250     12,318 (12)   <1 %

Senior Vice President of Marketing and Sales

                         

All executive officers and directors as a group (12 persons including those named above)

    21,502,993     170,761     21,673,754     28.6 %

(1)
Represents shares the stockholder has the right to acquire as of April 2, 2012, or within 60 days of that date, through the exercise of stock options.

(2)
The percentage ownership for each stockholder on April 2, 2012, was calculated by dividing (a) the total number of shares beneficially owned by the stockholder by (b) the number of shares of our common stock outstanding on April 2, 2012 (75,514,611), plus any shares the stockholder has the right to acquire as of April 2, 2012, or within 60 days of that date, through the exercise of stock options.

(3)
Includes (a) 11,096,000 shares held by Intrepid Production Corporation that are or may be deemed to be beneficially owned by Robert P. Jornayvaz III as a result of his position as the sole stockholder, sole director and President of Intrepid Production Corporation, (b) 19,611 shares held

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(4)
Includes (a) 10,007,763 shares held by Harvey Operating and Production Company that are or may be deemed to be beneficially owned by Hugh E. Harvey, Jr. as a result of his position as the sole stockholder, sole director and President of Harvey Operating and Production Company, (b) 14,475 shares held directly by Mr. Harvey, and (c) 26,191 shares of restricted stock.

(5)
This information is based on an Amendment No. 3 to Schedule 13G filed with the SEC by Morgan Stanley and Morgan Stanley Investment Management Inc. on February 8, 2012, with respect to their holdings as of December 31, 2011. Each of Morgan Stanley and Morgan Stanley Investment Management Inc. reported sole voting power with respect to 7,374,071 of the shares and sole dispositive power with respect to 7,531,576 of the shares. The shares reported by Morgan Stanley as a parent holding company are owned, or may be deemed to be beneficially owned, by Morgan Stanley Investment Management Inc., an investment adviser and a wholly owned subsidiary of Morgan Stanley. The report does not disclose, and we are unable to determine, who has the ultimate voting or investment control over the shares of our common stock held by Morgan Stanley and Morgan Stanley Investment Management Inc. The principal business office of Morgan Stanley is 1585 Broadway, New York, New York 10036, and the principal business office of Morgan Stanley Investment Management Inc. is 522 Fifth Avenue, New York, New York 10036.

(6)
This information is based on a Schedule 13G filed with the SEC by Neuberger Berman Group LLC (or NB Group) and Neuberger Berman LLC (or NB), Neuberger Berman Management LLC (or NB Management), and Neuberger Berman Equity Funds (or NB Equity Funds) on February 15, 2012, with respect to their holdings as of December 31, 2011. The holdings of Neuberger Berman Trust Co N.A., Neuberger Berman Trust Co of Delaware N.A., NB Alternative Fund Management LLC, NB Alternatives Advisers LLC, and Neuberger Berman Fixed Income LLC, affiliates of NB, are also aggregated in the reported holdings. Each of NB and Neuberger Berman Management serves as a sub-adviser and investment manager, respectively, of NB Group's various registered mutual funds that hold the reported shares for their clients in the ordinary course of business. No one client has an interest of more than 5% of Intrepid. As investment advisers, certain affiliated persons that are controlled by NB Group have investment and voting powers with respect to the reported shares. Each of NB Group and NB reported shared voting power over 4,140,265 shares, shared dispositive power over 4,671,281 shares, and sole voting or dispositive power over none of the reported shares. NB Management reported shared voting power over 4,057,299 shares, shared dispositive power over 4,057,299 shares, and sole voting or dispositive power over none of the reported shares. NB Equity Funds reported shared voting and dispositive power over 3,530,399 shares and sole voting or dispositive power over none of the reported shares. Each of NB Group, NB, and NB Management has disclaimed beneficial ownership of the reported shares. The principal business office of NB Group and NB is 605 Third Avenue, New York, New York 10158.

(7)
Represents (a) 9,370 shares held directly by Mr. Considine, (b) 4,840 and 38,720 shares indirectly owned through CIC Retirement Plan and Carbondale Corporation Retirement Plan, respectively, each of which is a qualified retirement plan, which shares were acquired as the result of a pro rata distribution of stock by Potash Acquisition, LLC on November 11, 2008, and (c) 4,840 shares held by the Considine Family Foundation. Mr. Considine has shared voting and dispositive power over the shares held by the Carbondale Corporation Retirement Plan and the Considine Family Foundation. Mr. Considine disclaims beneficial ownership of the shares held by the Considine Family Foundation.

(8)
Represents shares held by Platte River Ventures, LLC, of which Mr. Martin and his wife are the sole members.

(9)
Includes 23,140 unrestricted shares and 29,931 shares of restricted stock.

(10)
Includes 7,718 unrestricted shares and 13,377 shares of restricted stock.

(11)
Includes (a) 11,190 unrestricted shares and (b) 11,118 shares of restricted stock.

(12)
Includes 2,835 unrestricted shares and 8,233 shares of restricted stock.

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Policy on Transactions with Related Persons

        We have adopted a written policy and procedures for the Audit Committee's review of any transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or series of similar transactions, arrangements or relationships in which (a) we are a participant, (b) the aggregate amount involved will or may be expected to exceed $120,000, and (c) a related person has or will have a direct or indirect material interest. For purposes of this policy, a "related person" means (a) any of our directors, executive officers, or nominees for director, (b) any stockholder that beneficially owns more than 5 percent of the outstanding shares of our common stock, (c) any immediate family member of the foregoing, and (d) any firm, corporation, or other entity in which any of the foregoing persons is employed or is a partner or other principal or has a substantial ownership interest (more than 10 percent) or control of the entity. The Audit Committee approves or ratifies only those transactions that it determines in good faith are in, or are not inconsistent with, the best interests of us and our stockholders.

        In addition, our Code of Business Conduct and Ethics provides that no director, officer, or employee may pursue for his or her own account a business or investment opportunity if he or she has obtained knowledge of such opportunity through his or her affiliation with us.


Related Person Transactions

        Set forth below is a description of related transactions between us and our officers, directors, and greater than 5 percent stockholders during 2011 and 2012.

Director Designation and Voting Agreement

        You can find more information about this agreement above under the heading "Corporate Governance."

Registration Rights Agreement

        On April 25, 2008, Intrepid, HOPCO, IPC, and PAL executed a Registration Rights Agreement. In November 2008, PAL distributed its shares of our common stock to its members, and as a result its rights under this agreement terminated automatically. PAL was later dissolved. In December 2011, HOPCO, IPC, the manager of the dissolved PAL, and Mr. Martin entered into an Acknowledgement and Relinquishment under which PAL and Mr. Martin acknowledged that PAL no longer has any rights under the Registration Rights Agreement and HOPCO and IPC released PAL from any obligations under the Registration Rights Agreement.

        Under the Registration Rights Agreement, each of HOPCO and IPC has the right, in certain circumstances, to require us to register for sale some or all of the shares of common stock held by it. Subject to the terms and conditions of the Registration Rights Agreement, each of HOPCO and IPC will have the right to make three "demands" for registration, one of which may require a shelf registration statement. In addition, in connection with future registered offerings by us, whether pursuant to a "demand" registration or otherwise, HOPCO and IPC will have the ability to exercise certain "piggyback registration rights" and have some or all of their shares included in the registration statement. We will bear all costs of registration pursuant to the registration rights provided in the Registration Rights Agreement.

Airplane Use Policy

        Under our aircraft use policy, Messrs. Jornayvaz and Harvey, and other approved executives, are allowed personal use of our plane. Additionally, Messrs. Jornayvaz and Harvey may use the plane

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under dry-lease agreements and reimburse us the lesser of the actual cost or the maximum amount chargeable under Federal Aviation Regulation 91-501(d).

        In May 2008, we entered into a dry-lease agreement with BH Holdings LLC, or BH, which is owned by entities controlled by Messrs. Jornayvaz and Harvey, that allows us to use an aircraft owned by BH for Intrepid business purposes. In December 2011, we entered into a new dry-lease agreement with BH that replaced the May 2008 agreement and allows us to use an aircraft owned by BH for Intrepid business purposes. Additionally, in January 2009, we entered into a dry-lease agreement with Intrepid Production Holdings LLC, or IPH, which is indirectly owned by Mr. Jornayvaz, that allows us to use an aircraft owned by IPH for Intrepid business purposes. All of these arrangements and the underlying dry-lease rates were approved by our Audit Committee.

        In 2011, we incurred dry-lease charges of $589,234 under our dry-lease agreements with BH and $279,531 under our dry-lease agreement with IPH. As of December 31, 2011, our accounts payable balances due to BH and IPH were $57,577, and $36,295, respectively.

Sublease of Office Space from Intrepid

        In 2008, we entered into an agreement with IPC and the LARRK Foundation to sublease portions of our headquarters office space to these entities. The LARRK Foundation is a charitable foundation of which Mr. Jornayvaz is a trustee. The subleases to IPC and the LARRK Foundation are on the same general terms and conditions as the master lease under which we lease our office space. IPC and the LARRK Foundation have paid their respective shares of the security deposit due under the master lease and paid directly for the build-out of their respective subleased space. The terms of the subleases are from February 1, 2009, to April 30, 2019, for a total of 123 months. As of December 31, 2011, we had related party accounts payable balances due to IPC and the LARRK Foundation of $15,683 and $2,758, respectively, due to prepayments and refundable deposits related to these arrangements. The rent due from IPC and the LARRK Foundation is billed on a monthly basis and recognized as a receivable due within 30 days.

        The future minimum lease payments to be made to us by IPC and the LARRK Foundation for the next five years and thereafter are presented below:

 
  IPC   LARRK
Foundation
 

2012

  $ 73,270   $ 9,836  

2013

  $ 75,474   $ 10,132  

2014

  $ 77,738   $ 10,436  

2015

  $ 80,063   $ 10,748  

2016

  $ 82,471   $ 11,072  

Thereafter

  $ 201,866   $ 27,100  
           

Years 2011 - 2019

  $ 590,882   $ 79,324  
           

Transition Services Agreement

        On April 25, 2008, we and our wholly owned subsidiary, Intrepid Potash—Moab, LLC (or Intrepid Moab), entered into a Transition Services Agreement with Intrepid Oil & Gas, LLC (or IOG). On March 25, 2011, the term of this agreement was extended to April 24, 2013. Under this agreement, IOG may request specified employees of Intrepid or its subsidiaries (other than Messrs. Jornayvaz and Harvey) to provide a limited amount of geology, land title and engineering services in connection with IOG's oil and gas ventures with payment by IOG to Intrepid for these services at cost plus 10 percent.

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        IOG is obligated to reimburse us for an amount equal to the sum of the following amounts:

        The aggregate time spent by any employee of Intrepid or its subsidiaries on projects under the agreement is limited to 15 percent. This limit may be exceeded only with the prior approval of our Board.

        In addition, the parties to the Transition Services Agreement (a) acknowledge that IOG owns the rights that permit IOG to drill an oil and gas well at an agreed location near our Moab mine; and (b) consent to and authorize the drilling of the well by IOG at its own expense, provided that such drilling does not interfere with our operations. If and to the extent any costs are incurred by us in connection with IOG's drilling of the well, those costs will be reimbursable. If IOG determines in its sole discretion that the well is noncommercial for oil and gas production, and we agree that the well should be converted for use in its potash production, we will buy the well from IOG for a specified amount not to exceed $750,000 or IOG's actual out-of-pocket cost for the drilling and related costs and expenses incurred by IOG to drill the well to the base of the potash zones. IOG has agreed to indemnify Intrepid Moab for any damage to the Moab mine that is caused by the drilling of the well.

        During 2011, we billed IOG $9,183 for services under the Transition Services Agreement. As of December 31, 2011, our accounts receivable balance due from IOG was $245. We bill IOG on a monthly basis for our services and recognize this amount as a receivable from IOG with collection due within 30 days.

Surface Use Easement Agreements

        In connection with oil and gas rights owned by IOG that exist below the surface of land owned by our wholly owned subsidiary, Intrepid Moab, Intrepid Moab entered into two Surface Use Easement and Water Purchase Agreements with IOG, dated July 14, 2009, and November 16, 2009 (the "July Agreement" and the "November Agreement," respectively). The Audit Committee approved both agreements. In the July Agreement, Intrepid Moab granted IOG an easement across a portion of Intrepid Moab's land to access a drilling site for one of its wells. The term of the easement is for three years commencing on July 2, 2009, and so long thereafter as oil or gas is produced in paying quantities from the well or from any unit or communitized area that includes the well. As consideration for this easement, IOG paid $9,500 and agreed to pay Intrepid Moab $7,500 (plus an administrative fee) on July 2 of each year during the term of the easement. Among other things, Intrepid Moab agreed to sell IOG water or salt brine to the extent that Intrepid Moab has excess water or salt brine available that it may legally sell. In 2011, IOG paid us $8,250 under the July Agreement.

        In the November Agreement, Intrepid Moab granted IOG an easement across a portion of Intrepid Moab's land to access a drilling site for another of its wells. The term of the easement is for three years commencing on November 16, 2009, and so long thereafter as oil or gas is produced in paying quantities from the well or from any unit or communitized area that includes the well. As consideration for this easement, IOG paid approximately $11,000 and agreed to pay $7,500 (plus an administrative fee) on November 16 of each year during the term of the easement. Among other things, Intrepid Moab agreed to sell IOG water or salt brine to the extent that Intrepid Moab has

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excess water or salt brine available that it may legally sell. In 2011, IOG paid us $8,250 under the November Agreement.

        In addition, the parties to the November Agreement (a) acknowledge that IOG owns the rights that permit IOG to drill an oil and gas well at an agreed location near Intrepid's Moab mine; and (b) consent to and authorize the drilling of the well by IOG at its own expense, provided that such drilling does not interfere with the operations of Intrepid or its affiliates. If and to the extent any costs are incurred by Intrepid or its affiliates in connection with IOG's drilling of the well, such costs will be reimbursable under the Transition Services Agreement. If IOG determines in its sole discretion that the well is noncommercial for oil and gas production, and Intrepid Moab agrees that the well should be converted for use in its potash production, Intrepid Moab will buy the well from IOG for a specified amount not to exceed $750,000 or IOG's actual out-of-pocket cost for the drilling and related costs and expenses incurred by IOG to drill the well to the base of the potash zones. IOG has agreed to indemnify Intrepid Moab and its affiliates for any damage to the Moab mine that is caused by the drilling of the well.


LIMITATION OF LIABILITY AND INDEMNIFICATION

        As permitted by the Delaware General Corporation Law, or DGCL, our certificate of incorporation contains provisions that limit or eliminate the personal liability of our directors and officers for monetary damages for a breach of their fiduciary duty of care as a director or officer. The duty of care generally requires that, when acting on behalf of the corporation, directors and officers exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director or officer will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability for

        These limitations of liability do not generally affect the availability of equitable remedies such as injunctive relief or rescission.

        As permitted by the DGCL, our certificate of incorporation and bylaws provide that we will indemnify our current and former directors and officers and anyone who is or was serving at our request as the director, officer, employee or agent of another entity, and may indemnify our current or former employees and other agents, to the fullest extent permitted by the DGCL, subject to limited exceptions. In addition, we may purchase and maintain insurance on behalf of our current or former directors, officers, employees or agents against any liability asserted against them and incurred by them in any such capacity, or arising out of their status as such. We have obtained liability insurance for our directors and officers.

        Our certificate of incorporation requires us to advance expenses to our directors and officers in connection with a legal proceeding, subject to receiving an undertaking from such director or officer to repay advanced amounts if it is determined he or she is not entitled to indemnification. Our bylaws provide that we may advance expenses to our employees and other agents, upon such terms and conditions, if any, as we deem appropriate.

        We have entered into separate indemnification agreements with each of our directors and officers, which may be broader than the specific indemnification provisions contained in the DGCL. These

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indemnification agreements require us, among other things, to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers. These indemnification agreements also require us to advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could be indemnified and to obtain directors' and officers' insurance, if available on reasonable terms.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Under Section 16(a) of the Exchange Act, our directors and executive officers, and certain persons who own more than 10 percent of our common stock, must report their initial ownership of our common stock and any changes in that ownership in reports filed with the SEC. These individuals and entities are required to furnish us with copies of all of these reports. Based solely on a review of reports furnished to us, and written representations from our directors and executive officers that they were not required to file any other reports during 2011, we believe that all of our directors, executive officers, and 10 percent owners timely filed all reports required to be filed for 2011 under Section 16(a) of the Exchange Act.


REPORT OF THE AUDIT COMMITTEE

        The following report of the Audit Committee is not "soliciting material," will not be deemed "filed" with the SEC, and will not be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference therein.

        The Audit Committee is appointed by the Board to assist the Board in fulfilling its oversight responsibilities with respect to (a) the integrity of Intrepid's financial statements and financial reporting process and systems of internal controls regarding finance, accounting, and compliance with legal and regulatory requirements, (b) the qualifications, independence, and performance of Intrepid's independent accountants, (c) the performance of Intrepid's internal audit function, and (d) other matters as set forth in the charter of the Audit Committee approved by the Board.

        Management is responsible for Intrepid's financial statements and the financial reporting process, including the systems of internal controls and disclosure controls and procedures. The independent accountants are responsible for performing an independent audit of Intrepid's financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes.

        In connection with these responsibilities, the Audit Committee reviewed and discussed with management and the independent accountants the audited consolidated financial statements of Intrepid for the fiscal year ended December 31, 2011. The Audit Committee also discussed with the independent accountants the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. In addition, the Audit Committee received the written disclosures and the letter from the independent accountants required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants' communications with the Audit Committee concerning independence and has discussed with the independent accountants the independent accountants' independence.

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        Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements of Intrepid be included in Intrepid's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, that was filed with the SEC.

  THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS OF INTREPID POTASH, INC.

 

J. Landis Martin, Chairman

  Terry Considine

  Chris A. Elliott

  Barth E. Whitham


HOUSEHOLDING

        We have adopted a practice called "householding." This practice allows us to deliver only one copy of certain of our stockholder communications (including proxy-related materials, annual reports and information statements) to stockholders who have the same address and last name and who do not participate in e-mail delivery of these materials, unless one or more of these stockholders notifies us that he or she would like to receive an individual copy. If you share an address with another stockholder and receive only one set of proxy-related materials and would like to request a separate copy for this year's annual stockholders meeting or for any future meetings or stockholder communications, please send your written request to Intrepid Potash, Inc., 707 17th Street, Suite 4200, Denver, Colorado 80202, Attention: Secretary, or call us at (303) 296-3006. Upon request, we will promptly deliver a separate copy to you. Similarly, you may also contact us through either of these methods if you receive multiple copies of proxy-related materials and other stockholder communications and would prefer to receive a single copy in the future.


STOCKHOLDER PROPOSALS

        A stockholder who would like to have a proposal considered for inclusion in our 2013 proxy statement must submit the proposal so that it is received by us no later than December 13, 2012. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals should be addressed to the Secretary, Intrepid Potash, Inc., 707 17th Street, Suite 4200, Denver, Colorado 80202.

        For stockholder proposals submitted outside of the SEC proposal rules, our bylaws require that advance written notice in proper form of stockholder proposals for matters to be brought before an annual stockholders meeting be received by our Secretary not less than 90 days or more than 120 days before the first anniversary date of the immediately preceding annual stockholders meeting. Accordingly, notice of stockholder proposals for the 2013 annual meeting must be received by us between January 29, 2013, and February 28, 2013.


ANNUAL REPORT ON FORM 10-K AND OTHER SEC FILINGS

        If you request, we will provide you with a copy of our Annual Report on Form 10-K for the year ended December 31, 2011. You should send your written requests to Secretary, Intrepid Potash, Inc., 707 17th Street, Suite 4200, Denver, Colorado 80202. The exhibits to the annual report are available upon payment of charges that approximate our cost of reproduction.

        You can also obtain copies of the annual report and exhibits, as well as other filings that we make with the SEC, on our website at investors.intrepidpotash.com or on the SEC's website at www.sec.gov.

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OTHER MATTERS

        Management does not know of any other matters to be brought before the 2012 annual meeting. If any other matters not mentioned in this proxy statement are properly brought before the meeting, the individuals named in the enclosed proxy intend to use their discretionary voting authority under the proxy to vote the proxy in accordance with their best judgment on those matters.

  By Order of the Board of Directors

 


GRAPHIC

Martin D. Litt
Secretary

April 9, 2012

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Appendix A

        INTREPID POTASH, INC.

SHORT-TERM INCENTIVE PLAN

(As Amended and Restated Effective May 29, 2012)


Table of Contents

1.     PLAN OVERVIEW

        This Intrepid Potash, Inc. Short-Term Incentive Plan is an annual incentive plan designed to motivate and reward eligible executive officers to achieve favorable business results for the Company by providing Participants with the opportunity to earn competitive annual incentive compensation based on the achievement of pre-established, objective performance goals. The Plan is intended to permit the payment of amounts that constitute qualified performance-based compensation within the meaning of Code Section 162(m), as well as payments not intended to constitute performance-based compensation under Code Section 162(m).

2.     DEFINITIONS

        The following words as used in this Plan shall have the meanings ascribed to them below:

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3.     ADMINISTRATION

        The Committee will administer and interpret this Plan. The Committee shall have the authority, subject to the terms of the Plan, to determine the Participants in the Plan for each Plan Year, the Target Awards for all Participants for each Plan Year, the objective formula or other methodology that will be used to calculate incentive awards for each Plan Year, the Performance Goals that must be satisfied in order for awards to become payable for a Plan Year (which Performance Goals need not be the same for all Participants), whether the Performance Goals have been achieved, to calculate the amount, if any, of each Participant's incentive award for the Plan Year, to reduce an award otherwise payable to a Participant for a Plan Year, to determine whether awards shall be payable in cash or in Stock, and to set any other terms and conditions associated with the payment of incentive awards under the Plan as it deems necessary or desirable in accordance with the terms of the Plan and to the extent the award is intended to qualify as a performance-based award for purposes of Code Section 162(m), the requirements of Code Section 162(m).

        The Committee shall also have the authority to establish rules and procedures, not inconsistent with the provisions of the Plan, as it deems necessary or desirable for the proper administration of the Plan, and shall make such determinations and interpretations under and in connection with the Plan as it deems necessary or desirable. The Plan, and all rules, procedures, determinations, and interpretations of the Committee, shall be binding, final and conclusive upon the Company, its stockholders, and all Participants, and upon their legal representatives, heirs, beneficiaries, successors and assigns and upon all other person claiming under or through any of them.

4.     PARTICIPATION

        Within 90 days of the beginning of each Plan Year (or such other period permitted under Code Section 162(m)), the Committee shall designate in writing those executive officers and other key employees of the Company and its subsidiaries who shall participate in the Plan for the Plan Year. Participation in the Plan for one Plan Year does not guarantee participation in the Plan for future Plan Years, and the Committee may add or remove Participants in the Plan from one Plan Year to the next in its sole and absolute discretion.

5.     TARGET AWARDS AND PERFORMANCE GOALS

        Within 90 days of the beginning of each Plan Year (or such other period permitted under Code Section 162(m)), the Committee shall establish, in writing, (a) each Participant's Target Award, if any, for the Plan Year, (b) the Performance Goals that must be achieved in order for each Participant to receive an Earned Award, and (c) the formula or other methodology to be used in determining each Participant's Earned Award, if any, for the Plan Year, which formula or methodology shall require that the applicable Performance Goals must be achieved in order for a Participant to receive an Earned Award. Target Awards, Performance Goals, and the formula or methodology for determining Earned Awards need not be the same for all Participants.

        As determined by the Committee, the performance goals may provide for a targeted level or levels of performance for a Plan Year based on one or more of the following measures: (i) absolute or relative total shareholder return; (ii) return on assets, return on equity, or return on capital employed; (iii) earnings per share, corporate or business-unit net income, net income before extraordinary or non-recurring items, earnings before interest and taxes, or earnings before interest, taxes, depreciation and amortization; (iv) cash flow from operations; (v) gross or net revenues or gross or net margins; (vi) levels of operating expense or other expense items reported on the income statement;

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(vii) measures of customer satisfaction and customer service; (viii) safety; (ix) annual or multi-year production or average production growth; (x) annual or multi-year sales or average sales growth; (xi) annual or multi-year production or sales volume; (xii) annual or multi-year absolute or per-unit operating and maintenance costs; (xiii) satisfactory completion of a project or organizational initiative with specific criteria set in advance by the Committee; (xiv) debt ratios or other measures of credit quality or liquidity; (xv) strategic asset sales or acquisitions in compliance with specific criteria set in advance by the Committee; (xvi) annual or multi-year "net-back" sales or the introduction of new products in accordance with specific goals set in advance by the Committee; (xvii) compliance with Section 404 or other provisions of the Sarbanes-Oxley Act of 2002 or with other laws, regulations or policies; and (xviii) staffing and retention.

        The measures may, at the discretion of the Committee, be based on pro forma numbers and may, as the Committee specifies, either include or exclude the effect of payment of the incentives payable under this Plan and any other incentive or bonus plans of the Company. The performance goals may differ from Participant to Participant. The Committee may, subject to the requirements of Code Section 162(m) for awards intended to be performance-based, provide that the attainment of the performance goal shall be measured by appropriately adjusting the evaluation of the attainment of the performance goal to exclude (A) any extraordinary or non-recurring items as described in the applicable accounting rules, (B) the effect of any changes in accounting principles affecting the reported results of the Company or a business unit, or (C) any other adjustment consistent with the requirements of Code Section 162(m) that is pre-specified for the Plan Year by the Committee.

        Each Participant shall be promptly notified of his or her participation in the Plan for a Plan Year, the Target Award for such Participant for the Plan Year, the Performance Goals applicable to the Participant for the Plan Year, and the formula or other methodology to be used in determining the Participant's Earned Award for the Plan Year.

6.     COMPUTATION OF EARNED AWARDS AND CERTIFICATION OF PERFORMANCE GOALS

        Following the conclusion of each Plan Year, the Committee shall certify the levels of attainment of the Performance Goals for the prior Plan Year and calculate the potential Earned Award amount for each Participant in accordance with the formula or other methodology adopted by the Committee in accordance with Section 5 at the beginning of such Plan Year. The incentive award amounts to be paid to any Code Section 162(m) covered employee with respect to any Plan Year shall not exceed the Maximum Award amount. The Committee may, in its sole and absolute discretion and for any reason (including individual performance), reduce or eliminate the amount of the potential Earned Award otherwise payable. In no event shall a Participant receive an Earned Award under this Plan if the Performance Goals applicable to such Participant for the Plan Year are not satisfied.

7.     PAYMENT OF AWARDS

        All Earned Awards shall be payable as soon as reasonably practicable after the end of the Plan Year and the Committee's certification of Performance Goals and computation of Earned Awards, but in no event later than March 15th of the subsequent Plan Year unless otherwise deferred. All or any portion of an Earned Award shall be payable in cash or in Stock, as determined by the Committee in its sole discretion. Any portion of an Earned Award payable in Stock shall be paid pursuant to the terms of an equity plan maintained by the Company to the extent permitted by the terms of such plan.

        Participants must be employed or on a Company-approved leave of absence on the date of payment in order to receive payment of their Earned Awards, except as otherwise determined by the Committee.

        Participation in the Plan does not guarantee the Participant the payment of an award. All awards under the Plan are discretionary and subject to approval of the Committee.

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8.     MAXIMUM AWARD

        The Maximum Award payable to any Participant who is determined to be a covered employee for purposes of Code Section 162(m) with respect to any Plan Year shall be $5,000,000.

9.     GENERAL PROVISIONS

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Appendix B

        INTREPID POTASH, INC.

EQUITY INCENTIVE PLAN

(As Amended and Restated Effective May 29, 2012)

(Originally Adopted on April 20, 2008, as the Intrepid Potash, Inc. 2008 Equity Incentive Plan)


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TABLE OF CONTENTS

 
   
   
  Page  

1.

 

ESTABLISHMENT AND PURPOSE

    B-1  

 

1.1

 

Establishment

    B-1  

 

1.2

 

Purpose

    B-1  

2.

 

DEFINITIONS

   
B-1
 

3.

 

PLAN ADMINISTRATION

   
B-6
 

 

3.1

 

General

    B-6  

 

3.2

 

Delegation by the Committee or the Board

    B-7  

 

3.3

 

Limitations on Authority

    B-7  

 

3.4

 

Deferral Arrangement

    B-8  

 

3.5

 

No Liability

    B-8  

 

3.6

 

Book Entry

    B-8  

4.

 

STOCK SUBJECT TO THE PLAN

   
B-8
 

 

4.1

 

Number of Shares

    B-8  

 

4.2

 

Individual Award Limits

    B-8  

 

4.3

 

Share Counting

    B-9  

5.

 

ELIGIBILITY AND PARTICIPATION

   
B-9
 

6.

 

STOCK OPTIONS

   
B-9
 

 

6.1

 

Grant of Options

    B-9  

 

6.2

 

Award Agreement

    B-9  

 

6.3

 

Exercise of Option

    B-10  

 

6.4

 

Termination of Service

    B-11  

 

6.5

 

Limitations on Incentive Stock Options

    B-11  

 

6.6

 

Transferability

    B-11  

 

6.7

 

Family Transfers

    B-11  

 

6.8

 

Rights of Holders of Options

    B-11  

7.

 

STOCK APPRECIATION RIGHTS

   
B-12
 

 

7.1

 

Grant of Stock Appreciation Rights

    B-12  

 

7.2

 

Award Agreement

    B-12  

 

7.3

 

Exercise of Stock Appreciation Right

    B-13  

 

7.4

 

Effect of Exercise

    B-13  

 

7.5

 

Termination of Service

    B-13  

 

7.6

 

Transferability

    B-13  

8.

 

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

   
B-13
 

 

8.1

 

Grant of Restricted Stock or Restricted Stock Units

    B-13  

 

8.2

 

Award Agreement

    B-13  

 

8.3

 

Restrictions on Transfer

    B-14  

 

8.4

 

Forfeiture; Other Restrictions

    B-14  

 

8.5

 

Restricted Stock Units

    B-14  

 

8.6

 

Termination of Service

    B-14  

 

8.7

 

Stockholder Privileges

    B-14  

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  Page  

9.

 

QUALIFIED PERFORMANCE BASED COMPENSATION

    B-14  

 

9.1

 

Grant or Vesting of Award Subject to Objective Performance Goals

    B-14  

 

9.2

 

Establishment of Performance Goals

    B-15  

 

9.3

 

Value of Performance Shares, Performance Units and Cash-Based Awards

    B-15  

 

9.4

 

Achievement of Performance Goals; Earning of Awards

    B-16  

 

9.5

 

Payment of Performance Awards

    B-16  

 

9.6

 

Termination of Service

    B-16  

 

9.7

 

Transferability

    B-16  

 

9.8

 

Stockholder Rights

    B-16  

10.

 

OTHER STOCK-BASED AWARDS

   
B-16
 

11.

 

DIVIDENDS AND DIVIDEND EQUIVALENTS

   
B-17
 

12.

 

TAX WITHHOLDING

   
B-17
 

13.

 

PARACHUTE LIMITATIONS

   
B-17
 

14.

 

EFFECT OF CHANGES IN CAPITALIZATION

   
B-18
 

 

14.1

 

Changes in Stock

    B-18  

 

14.2

 

Change of Control

    B-18  

 

14.3

 

Reorganization in Which the Company Is the Surviving Entity and in Which No Change of Control Occurs

    B-20  

 

14.4

 

Adjustment

    B-20  

 

14.5

 

No Limitations on the Company

    B-20  

15.

 

REQUIREMENTS OF LAW

   
B-21
 

 

15.1

 

General

    B-21  

 

15.2

 

Rule 16b-3

    B-21  

16.

 

GENERAL PROVISIONS

   
B-21
 

 

16.1

 

Disclaimer of Rights

    B-21  

 

16.2

 

Nontransferability of Awards

    B-22  

 

16.3

 

Changes in Accounting or Tax Rules

    B-22  

 

16.4

 

Nonexclusivity of the Plan

    B-22  

 

16.5

 

Captions

    B-22  

 

16.6

 

Other Award Agreement Provisions

    B-22  

 

16.7

 

Other Employee Benefits

    B-22  

 

16.8

 

Severability

    B-23  

 

16.9

 

Governing Law

    B-23  

 

16.10

 

Section 409A

    B-23  

 

16.11

 

Recoupment of Awards

    B-23  

 

16.12

 

Repricing

    B-23  

17.

 

AMENDMENT, MODIFICATION AND TERMINATION

   
B-24
 

 

17.1

 

Amendment, Modification, and Termination

    B-24  

 

17.2

 

Awards Previously Granted

    B-24  

18.

 

STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN

   
B-24
 

19.

 

DURATION

   
B-24
 

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INTREPID POTASH, INC.
EQUITY INCENTIVE PLAN
(Amended and Restated Effective May 29, 2012)
(Originally Adopted on April 20, 2008, as the Intrepid Potash, Inc. 2008 Equity Incentive Plan)

        

1.     ESTABLISHMENT AND PURPOSE

2.     DEFINITIONS

        For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply:

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B-3


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3.     PLAN ADMINISTRATION

        

B-6


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4.     STOCK SUBJECT TO THE PLAN

        

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5.     ELIGIBILITY AND PARTICIPATION

        Individuals eligible to participate in this Plan include all Service Providers of the Company or any Affiliate; provided, however, to the extent required under Section 409A of the Code, an Affiliate of the Company shall include only an entity in which the Company possesses at least twenty percent (20%) of the total combined voting power of the entity's outstanding voting securities or such other threshold ownership percentage permitted or required under Section 409A of the Code. Subject to the provisions of this Plan, the Committee may, from time to time, select from all eligible individuals, those individuals to whom Awards shall be granted. An eligible person may receive more than one Award, subject to such restrictions as are provided herein.

6.     STOCK OPTIONS

        

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7.     STOCK APPRECIATION RIGHTS

        

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8.     RESTRICTED STOCK AND RESTRICTED STOCK UNITS

        

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9.     QUALIFIED PERFORMANCE BASED COMPENSATION

        

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