TERRA INDUSTRIES INC
DESCRIPTION OF COMPENSATORY ARRANGEMENTS
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<TYPE>EX-10.1.26
<SEQUENCE>7
<FILENAME>c02860exv10w1w26.htm
<DESCRIPTION>DESCRIPTION OF COMPENSATORY ARRANGEMENTS
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.1.26</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TERRA INDUSTRIES INC.<BR>
DESCRIPTION OF COMPENSATORY ARRANGEMENTS FOR 2006<BR>
APPLICABLE TO NAMED EXECUTIVE OFFICERS</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Set forth below are compensatory arrangements as of March&nbsp;1, 2006, applicable to Terra&#146;s current
executive officers who will be named in the summary compensation table of Terra&#146;s proxy statement
for the 2006 annual meeting of shareholders (&#147;Named Executive Officers&#148;). These arrangements are in
addition to the various other compensatory plans and arrangements in which Terra&#146;s Named Executive
Officers participate and which are filed as exhibits to this report on Form 10-K for the year ended
December&nbsp;31, 2005.
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Annual Base Pay </B></U>
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<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael L. Bennett</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">President and Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Francis G. Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">334,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Senior Vice President and Chief Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">W. Mark Rosenbury</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">255,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Senior Vice President and Chief Administrative Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph D. Giesler</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Senior Vice President, Commercial Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mark A. Kalafut</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">218,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vice President, General Counsel and Corporate Secretary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Executive Retention Agreements </B></U>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each of the Named Executive Officers has entered into an executive retention agreement, the details
of which are set out in Terra&#146;s proxy statement under the caption &#147;Employee Contracts, Termination
of Employment and Change of Control Arrangements.&#148;
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Bonuses </B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each of the Named Executive Officers received a bonus for 2005, payable in 2006, the details of
which are set out in Terra&#146;s proxy statement in the Summary Compensation Table.
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