<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MONSANTO COMPANY
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MONSANTO COMPANY
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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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:_/
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
THIS PROXY MATERIAL IS SENT TO YOU FOR YOUR INFORMATION AS THE
HOLDER OF A MONSANTO STOCK OPTION OR AS A PARTICIPANT IN THE
MONSANTO EMPLOYEE STOCK PURCHASE PLAN. YOU ARE NOT ENTITLED,
HOWEVER, TO VOTE ANY OPTIONED SHARES OR SHARES UNDER CONTRACT,
EXCEPT TO THE EXTENT THAT YOU WERE A RECORD HOLDER ON FEBRUARY 22,
1994, AS THE RESULT OF YOUR HAVING EXERCISED YOUR OPTION OR
COMPLETED YOUR PAYMENT FOR SHARES UNDER CONTRACT.
Monsanto
------------------------------------
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, Missouri 63167
(314) 694-1000
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1994
You are invited, as a stockholder of Monsanto Company, to be
present or represented by proxy at the Annual Meeting of
Stockholders to be held in K Building at the Company's World
Headquarters, 800 North Lindbergh Boulevard, St. Louis
County, Missouri, on Friday, April 22, 1994, at 1:30 p.m.
for the following purposes:
1. To elect fourteen directors.
2. To consider and act upon the proposed Monsanto
Management Incentive Plan of 1994.
3. To consider and act upon the proposed Searle/Monsanto
Stock Plan of 1994.
4. To consider and act upon the proposed
NutraSweet/Monsanto Stock Plan of 1994.
5. To consider and act upon the proposed annual incentive
program for executive officers.
6. To consider and act upon the proposed long-term
incentive program for executive officers.
7. To ratify the appointment of Deloitte & Touche as
principal independent auditors for the year 1994.
8. To transact such other business as may properly come
before the meeting.
Stockholders of the Company of record at the close of
business on February 22, 1994, are entitled to vote at the
Annual Meeting of Stockholders and all adjournments thereof.
Since a majority of the outstanding shares of stock of the
Company which are entitled to vote at the meeting must be
represented to constitute a quorum, all stockholders are
urged either to attend the meeting or to be represented by
proxy.
If you do not expect to attend the meeting in person, please
mark, sign, date, and return the accompanying proxy in the
enclosed business reply envelope. If you later find that you
can be present or for any other reason desire to revoke your
proxy, you may do so at any time before the voting.
Richard W. Duesenberg
Secretary
St. Louis, Missouri
March 14, 1994
<PAGE> 3
<TABLE>
TABLE OF CONTENTS TO THE PROXY STATEMENT
<CAPTION>
PAGE NO.
--------
<S> <C>
Election of Directors (Proxy Item No. 1)............................................................ 2
Stock Ownership of Management and Certain Beneficial Owners....................................... 5
Board Meetings and Committees; Compensation of Directors.......................................... 6
Executive Compensation............................................................................ 9
Approval of Monsanto Management Incentive Plan of 1994
(Proxy Item No. 2)................................................................................. 17
Approval of Searle/Monsanto Stock Plan of 1994 and NutraSweet/Monsanto Stock Plan of 1994 (Proxy
Items Nos. 3 and 4)................................................................................ 21
Approval of Annual and Long-Term Incentive Programs for Executive Officers
(Proxy Items Nos. 5 and 6)......................................................................... 22
Ratification of Independent Auditors (Proxy Item No. 7)............................................. 24
General Information................................................................................. 24
Appendix A--Monsanto Management Incentive Plan of 1994
</TABLE>
<PAGE> 4
MONSANTO COMPANY
800 N. LINDBERGH BOULEVARD
ST. LOUIS, MISSOURI 63167
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Monsanto Company of
proxies to be voted at the Annual Meeting of Stockholders on April
22, 1994, and at all adjournments thereof. Only stockholders of
record at the close of business on February 22, 1994, will be
eligible to vote at the meeting. Except for shares owned by the
Company, each share of Common Stock, $2 par value, outstanding on
such record date will be entitled to one vote. As of February 22,
1994, 118,759,129 shares of such Common Stock were outstanding and
entitled to vote. This Proxy Statement and the accompanying form
of proxy were first forwarded to stockholders on March 14, 1994.
Unless you indicate to the contrary, the persons named in the
accompanying proxy will vote for
(1) the election as directors of the nominees named below;
(2) the proposed Monsanto Management Incentive Plan of 1994;
(3) the proposed Searle/Monsanto Stock Plan of 1994;
(4) the proposed NutraSweet/Monsanto Stock Plan of 1994;
(5) the proposed annual incentive program for executive officers;
(6) the proposed long-term incentive program for executive
officers; and
(7) the ratification of the appointment of Deloitte & Touche as
principal independent auditors for the year 1994.
A plurality of the shares present at the meeting in person or by
proxy is required for the election of directors, and the
affirmative vote of a majority of the shares present at the
meeting in person or by proxy is required for approval of the
Monsanto Management Incentive Plan of 1994, the Searle/Monsanto
Stock Plan of 1994, the NutraSweet/Monsanto Stock Plan of 1994,
the proposed incentive programs, and ratification of the
appointment of auditors. Pursuant to the Company's By-Laws,
abstentions and votes withheld by brokers in the absence of
instructions from street-name holders (broker non-votes) have the
same effect as votes cast against a particular proposal.
The proxy of a stockholder who is a participant in the Company's
Dividend Reinvestment Plan will also serve as an instruction to
the trustee under this plan to vote the shares held for the
account of the participant in the same way as the shares
represented by such proxy are voted. If a stockholder's proxy is
not received, the shares held in that account in the Dividend
Reinvestment Plan will not be voted.
The Company's Savings and Investment Plan (SIP) and the Payroll
Related Employee Stock Ownership Plan (PAYSOP) permit plan
participants to direct the plan trustees how to vote the Common
Stock of the Company allocated to their accounts. Under the terms
of the SIP trust agreement, the trustee will vote unallocated and
uninstructed shares in proportion to the shares with respect to
which instructions have been received. As to shares held in
PAYSOP, the trustee will not vote those shares of Common Stock for
which participant voting instructions have not been received.
1
<PAGE> 5
<TABLE>
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
<CAPTION>
Fourteen persons have been nominated to serve on the Board of
Directors, each to hold office until the next Annual Meeting or
until a successor is elected and has qualified or until his or her
earlier death, resignation, or removal. All nominees are now
directors of the Company, and all except Gwendolyn S. King were
elected by the stockholders at the last Annual Meeting. Admiral
Stansfield Turner, who has served as a director of the Company for
more than 12 years and who has reached his 70th birthday, will not
be standing for reelection in accordance with the directors'
tenure policy of the Company.
<S> <C>
RICHARD J. MAHONEY PRINCIPAL OCCUPATION: CHAIRMAN AND CHIEF
EXECUTIVE OFFICER, MONSANTO COMPANY
FIRST BECAME DIRECTOR: 1979
AGE: 60
Chairman, Monsanto Company since 1986; Chief
Executive Officer since 1983. Director:
Metropolitan Life Insurance Company; Union Pacific
Corporation. Member: The Business Council; The
Business Roundtable.
JOAN T. BOK PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD,
NEW ENGLAND ELECTRIC SYSTEM
FIRST BECAME DIRECTOR: 1987
AGE: 64
Chairman of the Board, New England Electric System
since 1984; President and Chief Executive Officer,
1988-89. Director: Avery Dennison Corporation;
Federal Reserve Bank of Boston; John Hancock
Mutual Life Insurance Company; New England
Electric System and its subsidiaries Massachusetts
Electric Company, The Narragansett Electric
Company, and New England Power Company.
ROBERT M. HEYSSEL PRINCIPAL OCCUPATION: CONSULTANT; PRESIDENT
EMERITUS, THE JOHNS HOPKINS HEALTH SYSTEM
FIRST BECAME DIRECTOR: 1988
AGE: 65
Consultant; President Emeritus, The Johns Hopkins
Health System since 1992; President and Chief
Executive Officer, The Johns Hopkins Health System
and The Johns Hopkins Hospital, 1987-92.
Professor, The Johns Hopkins Schools of Medicine
and Public Health since 1971 and 1972,
respectively. Director: Signet Banking
Corporation.
GWENDOLYN S. KING PRINCIPAL OCCUPATION: SENIOR VICE PRESIDENT,
CORPORATE AND PUBLIC AFFAIRS, PECO ENERGY
COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 53
Senior Vice President, Corporate and Public
Affairs, PECO Energy Company (formerly
Philadelphia Electric Company) since 1992.
Commissioner, Social Security Administration
1989-92. Executive Vice President, Gogol and
Associates 1988-89. Director: Martin Marietta
Corp.; PECO Power Company.
2
<PAGE> 6
PHILIP LEDER PRINCIPAL OCCUPATION: CHAIRMAN, DEPARTMENT OF GENETICS,
HARVARD MEDICAL SCHOOL AND SENIOR INVESTIGATOR, HOWARD
HUGHES MEDICAL INSTITUTE
FIRST BECAME DIRECTOR: 1990
AGE: 59
Chairman, Department of Genetics, Harvard Medical
School since 1980; John Emory Andrus Professor of
Genetics since 1980. Senior Investigator, Howard
Hughes Medical Institute since 1986. Trustee: The
General Hospital Corporation; Massachusetts
General Hospital; The Charles A. Revson
Foundation; The Rockefeller University.
HOWARD M. LOVE PRINCIPAL OCCUPATION: RETIRED CHIEF EXECUTIVE
OFFICER, NATIONAL INTERGROUP, INC.
FIRST BECAME DIRECTOR: 1977
AGE: 63
Chief Executive Officer, National Intergroup,
Inc., 1981-91; Chairman, 1981-90. Honorary
Chairman, National Steel Corporation, formerly a
subsidiary of National Intergroup, Inc., since
1990; Chairman and Chief Executive Officer,
1984-90. Director: AEA Investors; Broken Hill
Proprietary Petroleum; Communications Satellite
Corporation. Member: The Business Council.
FRANK A. METZ, JR. PRINCIPAL OCCUPATION: RETIRED SENIOR VICE
PRESIDENT, FINANCE AND PLANNING, AND CHIEF
FINANCIAL OFFICER, INTERNATIONAL BUSINESS
MACHINES CORPORATION
FIRST BECAME DIRECTOR: 1990
AGE: 60
Senior Vice President, Finance and Planning; Chief
Financial Officer; and Director, International
Business Machines Corporation, 1986-93. Director:
Allegheny Power System, Inc.; Norrell Corporation.
Trustee and Chairman: St. Luke's Roosevelt
Hospital. Trustee: American Museum of Natural
History.
BUCK MICKEL PRINCIPAL OCCUPATION: CHAIRMAN AND CHIEF
EXECUTIVE OFFICER, R.S.I. HOLDINGS, INC.
FIRST BECAME DIRECTOR: 1975
AGE: 68
Chairman and Chief Executive Officer, R.S.I.
Holdings, Inc. since 1989. Chairman and Chief
Executive Officer, R.S.I. Corporation, 1978-89.
Director: Delta Woodside Industries, Inc.; Duke
Power Company; Emergent Group, Inc.; Fluor
Corporation; Insignia Financial Group, Inc.; The
Liberty Corporation; NationsBank Corporation;
R.S.I. Holdings, Inc.; Textile Hall Corporation.
Member: The Business Council. Life Trustee:
Clemson University; Converse College.
JACOBUS F. M. PETERS PRINCIPAL OCCUPATION: RETIRED CHAIRMAN OF THE
EXECUTIVE BOARD AND CHIEF EXECUTIVE OFFICER,
AEGON N.V.
FIRST BECAME DIRECTOR: 1993
AGE: 62
Chairman of the Executive Board and Chief
Executive Officer, AEGON N.V., 1984-93. Director:
AEGON N.V. Member of Advisory Board: ABN-AMRO
Holding N.V. Member of Supervisory Board: Pakhoed
Holding N.V.; Amsterdam Company for Town
Restoration Ltd.; DAF Trucks N.V.
3
<PAGE> 7
NICHOLAS L. REDING PRINCIPAL OCCUPATION: VICE CHAIRMAN OF THE
BOARD, MONSANTO COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 59
Vice Chairman of the Board, Monsanto Company since
1993; Advisory Director, 1986-92; Executive Vice
President, Environment, Safety, Health and
Manufacturing, 1990-93; Executive Vice President,
Monsanto Company and President, Monsanto
Agricultural Company, 1986-90. Director: CPI
Corp.; Meredith Corporation; Multifoods
Corporation; The Keystone Center.
JOHN S. REED PRINCIPAL OCCUPATION: CHAIRMAN, CITICORP AND
CITIBANK, N.A.
FIRST BECAME DIRECTOR: 1985
AGE: 55
Chairman and Chief Executive Officer, Citicorp and
Citibank, N.A. since 1984. Director: Citicorp;
Citibank, N.A.; Philip Morris Companies, Inc.
Trustee, Rand Corporation. Member, The Business
Council; The Business Roundtable.
WILLIAM D. RUCKELSHAUS PRINCIPAL OCCUPATION: CHAIRMAN AND CHIEF
EXECUTIVE OFFICER, BROWNING-FERRIS
INDUSTRIES, INC.
FIRST BECAME DIRECTOR: 1985
AGE: 61
Chairman and Chief Executive Officer, Browning-
Ferris Industries, Inc. since 1988. Of Counsel,
Perkins Coie since 1985. Administrator,
Environmental Protection Agency, 1983-85.
Director: Browning-Ferris Industries, Inc.;
Cummins Engine Co., Inc.; Nordstrom, Inc.; Texas
Commerce Bancshares, Inc.; Weyerhaeuser Company.
ROBERT B. SHAPIRO PRINCIPAL OCCUPATION: PRESIDENT AND CHIEF
OPERATING OFFICER, MONSANTO COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 55
President and Chief Operating Officer, Monsanto
Company since 1993; Executive Vice President and
Advisory Director, Monsanto Company and President,
The Agricultural Group of Monsanto Company,
1990-93; Chairman and Chief Executive Officer, The
NutraSweet Company, a subsidiary of Monsanto
Company, 1986-90. Director: Liposome Technology,
Inc.
JOHN B. SLAUGHTER PRINCIPAL OCCUPATION: PRESIDENT, OCCIDENTAL
COLLEGE
FIRST BECAME DIRECTOR: 1983
AGE: 59
President, Occidental College since 1988.
Director, National Science Foundation, 1980-82.
Director: Atlantic Richfield Company; Avery
Dennison Corporation; International Business
Machines Corporation; Northrop Corporation.
Member: National Academy of Engineering. Fellow:
Institute of Electrical and Electronic Engineers.
</TABLE>
4
<PAGE> 8
<TABLE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Information is set forth below regarding beneficial ownership of
Common Stock of the Company as of December 31, 1993, by (i) each
person who is a director or nominee; (ii) each executive officer
named in the Summary Compensation Table on page 12; and (iii) all
directors and executive officers as a group. Except as otherwise
noted, each person has sole voting and investment power as to his
or her shares.
<CAPTION>
Shares
Beneficially
Owned(a)(b)
-----------
<S> <C>
Joan T. Bok 2,344
Sheldon G. Gilgore 130,169
Robert M. Heyssel 2,616(c)
Gwendolyn S. King 845
Philip Leder 993
Howard M. Love 3,632(d)
Richard J. Mahoney 785,967(e)
Frank A. Metz, Jr. 1,042
Buck Mickel 20,000
Jacobus F. M. Peters 941
Robert G. Potter 127,564(f)
Nicholas L. Reding 212,416(g)
John S. Reed 6,696
William D. Ruckelshaus 2,622(h)
Robert B. Shapiro 178,059
John B. Slaughter 1,468
Stansfield Turner 893
23 directors and
executive officers
as a group 2,184,428(i)
<FN>
(a) Includes (i) shares covered by stock options granted under
incentive plans and exercisable within 60 days of December 31,
1993: Dr. Gilgore, 103,000; Mr. Mahoney, 638,618; Mr. Potter,
96,000; Mr. Reding, 173,200; Mr. Shapiro, 119,667; and
directors and executive officers as a group, 1,740,531 and
(ii) shares held under either incentive or benefit plans: Dr.
Gilgore, 19,000; Mr. Mahoney, 29,042; Mr. Potter, 5,805; Mr.
Reding, 7,026; Mr. Shapiro, 50,448; and directors and
executive officers as a group, 142,717. With respect to shares
held under incentive and benefit plans, employee directors and
officers have sole voting power and no current investment
power.
(b) Includes the following shares received on varying dates as a
portion of the non-employee director annual retainer and
restricted against sale as described on page 8: Mrs. Bok, 767
shares; Dr. Heyssel, 911 shares; Mrs. King, 845 shares; Dr.
Leder, 938 shares; Mr. Love, 872 shares; Mr. Metz, 938 shares;
Mr. Mickel, 799 shares; Mr. Peters, 941 shares; Mr. Reed, 860
shares; Mr. Ruckelshaus, 860 shares; Dr. Slaughter, 872
shares; and Admiral Turner, 295 shares. With respect to such
shares, non-employee directors have sole voting power and no
current investment power.
(c) Includes 300 shares owned by Dr. Heyssel's wife.
(d) Includes 1,200 shares held in trusts in which Mr. Love has an
income interest as to which he expressly disclaims beneficial
ownership.
(e) Includes 4,000 shares owned by Mr. Mahoney's wife and 100
shares under contract pursuant to the Company's Employee Stock
Purchase Plan.
(f) Includes 3,000 shares owned by Mr. Potter's wife as to which
he expressly disclaims beneficial ownership and 599 shares
jointly owned by Mr. Potter and his wife.
(g) Includes 232 shares owned by Mr. Reding's son.
(h) Includes 200 shares owned jointly by Mr. Ruckelshaus and his
wife.
(i) Includes 4,459 shares as to which certain executive officers
not named above have shared voting and investment power;
28,072 shares beneficially owned by trusts or by members of
the households of other such executive officers, of which
beneficial ownership of 19,484 shares is expressly disclaimed;
and 554 shares under contract pursuant to the Company's
Employee Stock Purchase Plan.
</TABLE>
5
<PAGE> 9
The percentage of shares of outstanding Common Stock, including
options exercisable within 60 days of December 31, 1993,
beneficially owned by all directors and executive officers as a
group is 1.86%. The percentage beneficially owned by any director
or nominee does not exceed 1%.
<TABLE>
The following table sets forth certain information regarding the
only known beneficial owner of more than 5% of the Company's
Common Stock.
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
<S> <C> <C>
Oppenheimer Group, Inc. 5,953,466(a) 5.02%
Oppenheimer Tower
World Financial Center
New York, New York 10281
<FN>
(a) Based on a Schedule 13G filed with the Securities and Exchange
Commission by Oppenheimer Group, Inc., on behalf of itself and
related companies and certain investment advisory clients;
power to vote and dispose of all 5,953,466 shares, including
5,222,521 shares (4.40%) held by Oppenheimer Capital, is
shared. Oppenheimer Group, Inc. and the related companies and
investment advisory clients disclaim beneficial ownership and
shared voting and dispositive power with respect to all
5,953,466 shares.
</TABLE>
BOARD MEETINGS AND COMMITTEES; COMPENSATION OF DIRECTORS
The Board of Directors met nine times during 1993. To assist the
Board in carrying out its duties, the Board has established an
Executive Committee and six functional committees with
responsibilities in specific areas of Board activity. All nominees
who were directors in 1993 attended 75% or more of the aggregate
meetings of the Board and of the Board Committees on which they
served except Messrs. Leder and Peters, whose absences were
unavoidable. A description of each Committee and its current
membership follows.
AUDIT COMMITTEE
Members: Mr. Mickel, Chairman; Mmes. Bok and King, Dr. Heyssel,
Mr. Ruckelshaus, and Dr. Slaughter
The Audit Committee is composed of non-employee directors and met
five times in 1993. The Committee reviews and monitors the
Company's internal accounting controls, financial reports,
accounting practices, and the scope and effectiveness of the
audits performed by the independent auditors and internal
auditors. The Committee also recommends to the full Board the
appointment of the Company's principal independent auditors and
approves in advance all significant audit and non-audit services
provided by such auditors. The Committee discusses audit and
financial reporting matters with representatives of the Company's
financial management, its internal auditors, and its principal
independent auditors. The internal auditors and the principal
independent auditors meet with the Committee, with and without
management representatives present, to discuss the results of
their examinations, the adequacy of the Company's internal
accounting controls, and the quality of the Company's financial
reporting. The Committee encourages the internal auditors and the
principal independent auditors to communicate directly with the
Committee.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Members: Admiral Turner, Chairman; Mmes. Bok and King, Mr.
Ruckelshaus, and Dr. Slaughter
The Corporate Social Responsibility Committee met six times in
1993. The Committee reviews and monitors the Company's performance
as it affects employees, communities, customers, and the
environment and recommends Company policies for consideration when
appropriate. The Committee also identifies and investigates
emerging issues.
6
<PAGE> 10
EXECUTIVE COMMITTEE
Members: Mr. Mahoney, Chairman; Drs. Leder and Slaughter
The Executive Committee has the powers of the Board in directing
the management of the business and affairs of the Company in the
intervals between meetings of the Board (except for certain
matters reserved for the Board). The matters acted upon by the
Executive Committee are typically of a routine nature; thus, the
Committee meets infrequently. During 1993 all actions were taken
by unanimous written consent after the Committee's review of
proposals circulated to the members. Actions of the Committee are
reported at the Board's next regular meeting.
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
Members: Mr. Love, Chairman; Dr. Heyssel, Messrs. Metz and
Mickel
The Executive Compensation and Development Committee is composed
of non-employee directors and met seven times in 1993. The
Committee recommends to the Board amendments to the Company's
management incentive plans and approval or amendment of other
executive incentive plans providing for payments to participants
in the form of securities. The Committee also administers and
interprets the Company's management incentive plans and approves
the establishment, modification, and termination of other
executive compensation plans and agreements. The Committee has
delegated authority to unit compensation committees composed of
senior management to make grants and awards under the incentive
plans and to approve and administer other compensation plans for
all employees except executive officers. The Committee also
reviews plans for management succession and determines the salary
plans of all executive officers of the Company.
FINANCE COMMITTEE
Members: Mr. Reed, Chairman; Messrs. Love, Mahoney, and Metz
The Finance Committee met three times in 1993. The Committee
reviews and monitors the Company's financial planning and
structure to insure compatibility with the Company's requirements
for growth and sound operation. The Committee assists with the
domestic financing program of the Company and also reviews the
financing plans of the Company's ex-U.S. subsidiaries. The
Committee makes recommendations to the Board of Directors
concerning the increase or retirement of debt, issuance and
repurchase of capital stock, foreign currency management, dividend
policy, and commercial and investment banking relationships.
NOMINATING COMMITTEE
Members: Mr. Mickel, Chairman; Messrs. Love and Metz
The Nominating Committee is composed of non-employee directors and
met twice in 1993. At its meeting in January 1994, it approved the
slate of director nominees in this Proxy Statement for submission
to the Board. In addition, the Committee considers candidates for
the Board in case of retirements or other vacancies. The Committee
also develops internal criteria for the selection of non-employee
directors and criteria by which an evaluation of all directors is
made. In performing its responsibilities, the Committee consults
with the Chairman of the Board. This Committee will consider
stockholder nominations, which should be submitted in writing by
year-end to the Company's Secretary, Richard W. Duesenberg.
PENSION AND SAVINGS FUNDS COMMITTEE
Members: Admiral Turner, Chairman; Drs. Heyssel and Leder,
Messrs. Peters and Shapiro
The Pension and Savings Funds Committee met four times in 1993.
The Committee's specific responsibilities include approving the
actuarial assumptions and annual contributions for certain pension
and benefit plans (Plans), selecting trustees and investment
managers for the Plans, and establishing policies for the approval
of related pension trust agreements and other funding
7
<PAGE> 11
instruments. Although the professional trustees and investment
managers have primary investment responsibility with respect to
these funds, the Committee monitors the investment performance of
the Plans and the investment managers.
DIRECTORS' FEES AND OTHER ARRANGEMENTS
Employee directors receive neither retainers nor fees for
attendance at Board or Board Committee meetings. Non-employee
directors receive an annual retainer of $30,000 plus $1,300 per
Board meeting attended. In addition, non-employee Chairmen of the
Executive and the Nominating Committees receive $4,000 per year,
and non-employee Chairmen of all other Board Committees receive
$5,000 per year. Each other non-employee director serving as a
member of Board Committees receives $3,000 per year for each Board
Committee on which the director serves. Committee members,
including the Chairmen, receive a fee of $1,300 per meeting
attended, except that this fee is paid for attendance at only one
Committee meeting on the day of a Board meeting. Each non-employee
director receives $20,000 of the annual retainer in cash and the
$10,000 balance in Common Stock of the Company. The shares
representing the Common Stock portion of the annual retainer for a
five-year period are transferred to each director at the beginning
of the period. These shares are, however, subject to forfeiture to
the Company unless "earned out" by the director through continued
service on the Company's Board during the five years. Thus, the
forfeiture condition is removed on one-fifth of the shares on the
respective dates of the five Annual Meetings following transfer of
the shares if the director is still serving on the Company's
Board. Although the directors have voting and dividend rights,
none of the shares may be sold prior to the date of the fifth such
Annual Meeting so long as the director continues serving on the
Company's Board. Appropriate adjustments are made for directors
whose retirement will occur in less than five years.
The Board has adopted a guideline which provides that non-employee
directors should own Common Stock of the Company having a value of
three times the Board annual retainer by the fifth anniversary of
their election to the Board. The stock component of the Board
annual retainer will allow that stock ownership target to be
achieved.
Non-employee directors do not participate in any of the Company's
incentive, stock option, pension, or benefit plans. The normal
retirement date for non-employee directors is the Annual Meeting
following their 70th birthday. Non-employee directors who retire
with five or more years of service receive an annual retirement
benefit for life paid in cash and equal to the annual retainer at
the time of retirement. If the director dies within fifteen years
after retirement, a designated beneficiary will be entitled to
receive the annual benefit for the remainder of the fifteen-year
period. Reduced benefits will be paid to a director who ceases for
any reason to be a director with fewer than five years of service
and to a director who commences receiving benefits prior to normal
retirement. The Company purchases Company-owned life insurance
contracts on the lives of the non-employee directors. Thus, the
cost of this retirement benefit program, including a factor for
use of money, should be substantially recoverable through the
proceeds of such insurance, depending on realization of the
assumptions as to mortality experience, policy dividends, and
other factors.
The Company has established a Directors' Charitable Contribution
Program for all non-employee directors of the Company which will
be funded through the purchase of life insurance policies on each
of the directors. Upon the death of a director with five or more
years of service, the Company will contribute a total of
$1,000,000 to one or more qualifying charitable institutions
recommended by the director. A reduced contribution will be made
upon the death of a director with fewer years of service.
Directors derive no direct financial benefit from this program
since all charitable deductions accrue to the Company.
The Company has a consulting agreement with Dr. Philip Leder, a
director of the Company, who provides consulting services and the
benefit of his considerable professional skills, knowledge,
experience, and judgment in areas of interest to the Company,
particularly in the field of biological sciences. In 1993 Dr.
Leder received $113,500 under this contract.
8
<PAGE> 12
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
Policies and Objectives. As explained at page 7 above, the
Executive Compensation and Development Committee of the Board of
Directors sets pay for executive officers, administers the
Company's incentive plans, and makes awards to executive officers
under these incentive plans. The purpose of these plans and the
objectives of the Committee are to:
* pay for performance, motivating both long- and short-term
performance on behalf of the stockholders;
* provide a total compensation program competitive with those of
companies with which Monsanto competes for top management
talent;
* place greater emphasis on variable incentive compensation
versus fixed or base pay, particularly for the senior
executives;
* reward business unit executives primarily for the performance
of their units, while including a component which recognizes
corporate performance as well; and
* most importantly, join stockholder and management interests.
In order to further these objectives, the compensation programs
for all Monsanto executives include three components: (1) base
pay, (2) an annual incentive program, and (3) a long-term
incentive program. Salaries and target annual incentives for the
executives named in the Summary Compensation Table on page 12 are
at about the median level for competitive companies, while target
long-term incentive compensation is above median levels. Median
levels are derived from compensation surveys provided by
independent consultants covering several hundred chemical,
pharmaceutical, food, and other manufacturing companies (adjusted
for company size differentials). For several years, it has been
the Committee's policy to increase the pay-at-risk component of
compensation. The portion of total executive compensation
represented by annual and long-term incentives that relate
directly to performance has grown significantly and for the named
executives constitutes over 70% of total compensation.
In recent years the Committee has expanded the number of
individuals eligible for annual incentives and option grants in
order to enhance the commitment of mid-level managers to the
objectives of the corporation, its principal business units, and
the stockholders. Today, 20% (approximately 2,900) of Monsanto's
management and professional employees participate in the annual
incentive plans, and 8% (approximately 1,200) participate in the
stock option plans.
Current Incentive Programs. The annual incentive programs provide
for payment shortly after the year being measured. Awards are paid
in cash and vary significantly from year to year. The amount of
the award, if any, is a function of the achievement of goals set
at the beginning of the year for the corporation (for corporate
executives) and for the respective business units (for unit
executives), the individual's level of responsibility, and the
individual's personal performance.
For corporate executives, including Mr. Mahoney, the Chief
Executive Officer, the principal goal is set in terms of net
income, with its critical importance to return on equity. A target
award is set based on the net income goal; the actual award is
increased or decreased based on actual net income, subject to
discretionary adjustment for non-recurring events. The Committee
may also increase or decrease the award in its discretion based on
downward or upward deviations from a secondary goal set in terms
of year-end capital employed. "Capital employed" consists of
stockholders' equity and debt. The Committee may also adjust the
award in its discretion based on four factors which do not have
pre-set numerical scales: performance compared to competitors
9
<PAGE> 13
(measured by such criteria as total stockholder return, earnings
per share, and return on equity), the impact of the general
economy, the balance achieved between long- and short-term
objectives, and the motivational impact of the award. A comparable
procedure based on unit net income and allocated capital employed
is used for awards to business unit executives. For named
executives, whose awards will be made under the program described
on pages 22-24 (assuming stockholder approval), an award will be
paid only if net income is more than a predetermined percentage of
either the corporate or unit goal, and no award will exceed 1/3
of 1% of corporate net income for the applicable performance year.
The definition of net income applicable for determining whether
the goals have been achieved and computing the maximum payable is
explained on page 23.
For Mr. Mahoney and the other corporate executives, long-term
compensation consists of non-qualified stock options, normally
granted at three-year intervals. Business unit executives receive
stock options annually. In 1993, to link this compensation element
to the Company's 20% return on equity goal, a special grant of
options was made to all employees eligible for options (including
the named officers other than Mr. Mahoney, who received a similar
grant on February 25, 1994). These options become exercisable when
the Company achieves its performance goal of 20% return on equity
or on the ninth anniversary of the grant date, if earlier. (A
fixed exercise date prior to the end of the ten-year term of the
options is required to maintain conventional accounting treatment
for options.) The number of options that normally would have been
granted in 1994, 1995, and 1996 will be reduced by the number of
these performance-based options granted in 1993. Grants of options
by the Committee in 1994 become exercisable based on the same
performance goal as the 1993 special grant.
Business unit executives also participate in cash-based long-term
incentive programs focused on sustained performance against
targets for their units. For the Agricultural and Chemical groups
and NutraSweet, performance is measured annually over a three-year
period, primarily by the net income of the unit, and awards are
made at the end of the three-year period based on performance,
using the same procedure described above for annual incentive
plans. The Committee may also make adjustments to awards based on
the criteria used in modifying annual incentive awards. Awards to
the named executives in these business units will be subject to
the limitations described on pages 22 and 23 (assuming stockholder
approval), including the applicable minimum performance goals and
the formula for computing the maximum award. The Searle long-term
plan uses annual grants of options on "phantom" shares of Searle
which are valued annually.
The Committee makes infrequent grants of restricted stock to
individual executives to motivate achievement of particular
business objectives or to retain those individuals.
1993 Compensation. The Committee increased Mr. Mahoney's salary in
1993 to an annual rate of $900,000, competitive with the median
base salary paid to chief executive officers of comparable
corporations.
Mr. Mahoney received an annual incentive award of $1,188,000 for
performance in 1993. This award is higher than the target award
for 1993 primarily because the Company substantially exceeded the
net income goal set by the Committee at the beginning of the year.
Each of the Company's four operating units improved its
performance year to year. The strong operating performance
reflects record herbicide sales and improved margins on a lowered
cost structure, despite weak markets for chemicals, especially in
Europe and Japan, and heavy launch costs for new pharmaceutical
products. Although the award is predominantly based on net income
results, the Committee also noted the favorable performance of the
Company compared to its competitors on total stockholder return,
earnings per share, and return on equity.
The awards to the other two named corporate executives were also
above target, based on this strong net income performance. The
above-target awards to the business unit executives reflect the
10
<PAGE> 14
substantial year-to-year gains in net income for their units. Mr.
Potter's award also reflects the long-term benefit to the Chemical
unit attributable to aggressive re-engineering of its business.
Dr. Gilgore's award recognizes the enhancement to net income
resulting from higher than expected sales of the pharmaceuticals
launched in 1993.
The Committee granted no options to Mr. Mahoney in 1993. The
number of options granted to the other executives named in the
Summary Compensation Table (including the special grant of
performance-based options discussed above) was consistent with a
grade level schedule based on job responsibilities. The Committee
had previously approved this schedule after considering data from
competitive companies and its policy of targeting long-term
incentive compensation at above median levels.
During 1993, the Committee made awards of restricted shares to
Mr. Shapiro and Dr. Gilgore. Release of the restrictions on both
awards is contingent upon achievement of performance criteria
described in footnote (2) to the Summary Compensation Table. In
each case, the decision to make the award and its size reflect the
exercise of the Committee's judgment in determining a meaningful
incentive appropriate for achieving a critical business objective
associated with the executive's position. The Committee also
awarded Dr. Gilgore units in the Searle long-term incentive plan
described on page 14; the number of units was consistent with a
schedule based on job responsibilities.
Deductibility of Compensation. Under the new Section 162(m) of the
Internal Revenue Code, which is effective beginning in 1994, the
Company could lose the deduction for compensation in excess of
$1,000,000 paid to one or more of the executive officers named.
The Company can preserve the deduction if it complies with certain
conditions in the design and administration of its compensation
arrangements. The Committee intends to comply with those
requirements for the named executives with respect to options and
annual and long-term incentive programs. The Committee is advised
by counsel that option grants to the named executive officers made
under existing option plans and under the plans proposed for
adoption at the 1994 Annual Meeting (see page 17) will comply with
Section 162(m). The Committee has also been advised that the
design of the other incentive programs described above will permit
awards made under these plans to be fully deductible without
regard to the $1,000,000 limitation of Section 162(m).
Management Stock Ownership Guidelines. The Committee and
management also believe that an important adjunct to an incentive
program is significant stock ownership by the senior executives as
demonstrated by Mr. Mahoney's stock ownership as shown on page 5.
Accordingly, the Committee has implemented stock ownership
guidelines for approximately 100 executives. Unexercised stock
options and shares held in the Company's qualified benefit plans
are not counted in satisfying the guidelines. The Board has
adopted a stock ownership guideline for non-employee members of
the Board of Directors which is described on page 8.
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
Howard M. Love, Chairman
Robert M. Heyssel
Frank A. Metz, Jr.
Buck Mickel
11
<PAGE> 15
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Under- All Other
Name and Compen- Stock lying LTIP Compen-
Principal sation Awards Options Payouts sation
Position Year Salary ($) Bonus ($) ($)(1) ($)(2) (#)(3) ($)(3) ($)(4)
--------- ---- ---------- --------- --------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. J. Mahoney 1993 900,000 1,188,000 -0- -0- -0- -0- 119,629
Chairman and CEO and 1992 845,000 500,000 5,698 -0- -0- -0- 121,510
Director 1991 805,000 725,000 -0- 275,000 -0-
S. G. Gilgore 1993 695,000 550,000 137,392(5) 511,880 66,000 -0- 92,817
Chairman and CEO, 1992 663,333 250,000 -0- -0- -0- -0- 96,504
G. D. Searle & Co. 1991 613,333 441,000 875,625 21,000 -0-
R. G. Potter 1993 440,833 550,000 -0- -0- 43,200 -0- 52,943
Executive Vice 1992 420,000 111,300 -0- -0- 10,800 -0- 53,804
President; President, 1991 385,000 235,000 217,972 10,800 -0-
The Chemical Group
N. L. Reding 1993 485,833 600,000 -0- -0- 56,667 -0- 63,287
Vice Chairman of the 1992 440,000 235,000 1,136 -0- -0- -0- 63,785
Board and Director 1991 417,083 309,500 -0- 110,000 -0-
R. B. Shapiro 1993 536,667 750,000 -0- 2,621,900 123,334 -0- 44,514
President and COO 1992 426,250 340,000 -0- -0- 10,800 161,670 56,478
and Director 1991 399,539 370,000 -0- 10,800 485,011
<FN>
(1) Consistent with applicable regulations, certain non-cash
compensation need not be reported.
(2) Dividends are paid or accrued on restricted stock awards at
the same rate as paid to all stockholders. On December 31,
1993:
* Mr. Mahoney held 20,000 restricted shares having a then
current market value of $1,476,260, on which dividends are
paid currently.
* Dr. Gilgore held 19,000 restricted shares having a then
current value of $1,402,447. Of these, 9,000 are the
remaining restricted shares from an award of 15,000 shares
made to Dr. Gilgore on March 1, 1991. Under the terms of
this award, restrictions lapse on one-fifth of the shares
on the first through the fifth anniversary dates of award,
and dividends are paid currently. The remaining 10,000
shares were awarded to Dr. Gilgore on February 26, 1993.
These shares and the dividends thereon vest in February
1996 if certain unit performance goals, which are
confidential for competitive reasons, have been achieved;
if the goals are not achieved, the shares and the
dividends are forfeited.
* Mr. Shapiro held 50,000 restricted shares, having a then
current value of $3,690,650, which he received on January
22, 1993, in connection with his election as president of
the Company. Up to one-fourth of these shares and the
related dividends vest annually, contingent upon the
Company's achievement of its 20% return on equity goal. No
shares have yet vested. Any shares that fail to vest
within five years are forfeited along with any related
dividends.
* Neither Mr. Potter nor Mr. Reding held restricted shares.
Restrictions on the 3,734 shares granted to Mr. Potter in
1991 lapsed in March 1992.
(3) These columns reflect grants and payouts made under various
option programs and long-term incentive plans (LTIPs).
(4) Amounts shown for 1993 include contributions to thrift/savings
plans as follows: Mr. Mahoney, $37,800; Dr. Gilgore, $36,030;
Mr. Potter, $18,515; Mr. Reding, $20,405; and Mr. Shapiro,
$22,540; split dollar life insurance premiums paid as follows:
Mr. Mahoney, $81,829;Dr. Gilgore, $45,202; Mr. Potter,
$34,428; Mr. Reding, $42,882; and Mr. Shapiro, $21,974; costs
12
<PAGE> 16
for supplemental medical, executive disability, and executive
travel accident plans, respectively, as follows: Dr. Gilgore,
$6,611, $4,867, and $107.
(5) Includes $25,327 for personal use of corporate-owned aircraft
and $72,025 for certain club dues and expenses, the bulk of
which is a one-time initiation fee.
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(1)
--------------------------------------------------------------------------- -------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name/Group Granted (#) Fiscal Year ($/Share) Date 0% ($) 5% ($) 10% ($)
---------- ---------- ------------ --------- ---------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
R. J. Mahoney -0- -0-% N/A* N/A -0- N/A N/A
S. G. Gilgore 21,000(2) 53.500 02/28/03 -0- 707,805 1,786,365
1.4%
45,000(4) 51.188 02/25/03 -0- 1,451,180 3,662,501
R. G. Potter 10,800(2) 51.188 02/25/03 -0- 348,283 879,000
0.9%
32,400(4) 51.188 02/25/03 -0- 1,044,850 2,637,001
N. L. Reding 10,000(3) 52.438 01/21/03 -0- 330,359 833,764
1.2%
46,667(4) 51.188 02/25/03 -0- 1,504,938 3,798,177
R. B. Shapiro 61,667(3) 52.438 01/21/03 -0- 2,037,227 5,141,574
2.6%
61,667(4) 51.188 02/25/03 -0- 1,988,665 5,019,011
-------------------
All Stockholders(5) N/A N/A N/A N/A -0- 3,875,085,646 9,779,978,058
All Optionees
(approx. 1,200) 4,757,399 100% 51.188 (6) -0- 153,418,696 387,199,567
Optionee Gain as % of
All Stockholder Gain N/A N/A N/A N/A -0- 4.0% 4.0%
*Not applicable
<FN>
(1) The dollar amounts under these columns are the result of
calculations at 0% and at the 5% and 10% rates set by the
Securities and Exchange Commission and therefore are not
intended to forecast possible future appreciation, if any, of
the stock price of the Company. The Company did not use an
alternative formula for a grant date valuation, as the Company
is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown
factors.
(2) Exercises of one-third of the shares are permitted on the
first, second, and third anniversaries of the grant date.
(3) Exercisable on the first anniversary of the grant date.
(4) Options are exercisable when the Company achieves 20% ROE or
the ninth anniversary of the grant date, whichever is earlier,
as discussed on pages 17 and 18.
(5) Gain for all stockholders was determined based on the number
of shares outstanding as of February 26, 1993, the date when
substantially all of the options were granted, at a price per
share of $51.188.
(6) Options expire on the tenth anniversary of the grant date.
</TABLE>
13
<PAGE> 17
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<CAPTION>
(a) (b) (c) (d) (e)
------------------ ------------ ------------- -------------- -------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
R. J. Mahoney 80,382 3,234,547(1) 363,618/275,000 13,227,342/2,629,743(2)
S. G. Gilgore -0- -0- 56,000/113,000 1,246,903/2,664,554
R. G. Potter -0- -0- 85,200/54,000 2,660,422/1,085,854
N. L. Reding 10,000 492,820(1) 53,200/166,667 1,644,653/2,321,494(2)
R. B. Shapiro -0- -0- 10,800/194,134 144,677/4,585,562
<FN>
(1) Substantially all of the amounts in column (c) reflect the
value of shares received on the exercises of a portion of the
options granted in 1984 and expiring in 1994 and the increase
in value of Monsanto stock from $23.16 at the time of the
grants. Messrs. Mahoney and Reding continue to hold all of the
shares received from these option exercises.
(2) Unexercised options shown in columns (d) and (e) reflect
grants received over an extended period of time, and for
Messrs. Mahoney and Reding, continue to include options to
purchase 50,000 shares and 10,000 shares, respectively,
granted in 1984 and expiring in 1994.
</TABLE>
<TABLE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<CAPTION>
Estimated future payouts under non-stock
price-based plans
-------------------------------------------------------
Number of Performance
shares, or other
units or period until
other rights maturation Threshold Target Maximum
Name (#) or payout ($)
(a) (b) (c) (d) (e) (f)
------------------- ------------ ------------ ---------- ------------------------- -------
0% 5% 10%
-- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
R. J. Mahoney -0- -0- N/A N/A N/A
S. G. Gilgore 50,000 "options" Up to
for units 10 years N/A -0- 724,500 1,828,500 N/A
R. G. Potter -0- -0- N/A N/A N/A
N. L. Reding -0- -0- N/A N/A N/A
R. B. Shapiro -0- -0- N/A N/A N/A
</TABLE>
Dr. Gilgore's "options" were awarded under the Searle Phantom
Stock Option Plan of 1986, pursuant to which participants may
receive the appreciation in the value of a hypothetical share of
Searle stock in cash. Such "shares" represent units of valuation
created solely for purposes of measuring the increase, if any, in
the value of Searle. The current value for each unit held by Dr.
Gilgore is established annually by the ECDC, using such factors
and methods as it deems appropriate. Analyses by independent
investment bankers have been used in establishing this value.
Options to receive the appreciation on the value of these units
are granted for a ten-year period and become exercisable in one-
third increments on each of the first three anniversaries of the
option grant date. Such options are of indeterminate value. The
target values shown are representative amounts based on the value
of the units on the grant date and assuming annual rates of
appreciation of 0%, 5%, and 10% for the term of the grant.
14
<PAGE> 18
<TABLE>
PENSION PLANS
The following table illustrates the annual normal retirement
benefits payable under the Company's defined benefit pension plans
applicable to Messrs. Mahoney, Potter, Reding, and Shapiro.
<CAPTION>
Remuneration Years of Service
------------ ---------------------------------------------------------------------------------------------------
5 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C> <C>
$ 400,000 $ 28,000 $ 56,000 $ 84,000 $113,232 $143,232 $ 173,232 $ 203,232
600,000 42,000 84,000 128,232 173,232 218,232 263,232 308,232
800,000 56,000 113,232 173,232 233,232 293,232 353,232 413,232
1,000,000 70,000 143,232 218,232 293,232 368,232 443,232 518,232
1,200,000 84,000 173,232 263,232 353,232 443,232 533,232 623,232
1,400,000 98,232 203,232 308,232 413,232 518,232 623,232 728,232
1,600,000 113,232 233,232 353,232 473,232 593,232 713,232 833,232
1,800,000 128,232 263,232 398,232 533,232 668,232 803,232 938,232
</TABLE>
Generally, compensation utilized for pension formula purposes
includes salary and annual bonus reported in columns (c) and (d)
of the Summary Compensation Table.
The annual normal retirement benefits payable under the pension
plans to the employees named in the Summary Compensation Table are
the greater of 1.4% of average final compensation multiplied by
years of service, without reduction for Social Security or other
offset amounts, or 1.5% of average final compensation multiplied
by years of service, less a 50% Social Security offset. Average
final compensation for purposes of these plans is the greater of
(a) average compensation received during the final 36 months of
employment or (b) average compensation received during the highest
three of the final five calendar years of employment. The benefit
levels in the table assume retirement at age 65 and payment in the
form of a single life annuity.
Average final compensation under the pension formula and the
respective years of service at Monsanto as of December 31, 1993,
for the employees named in the Summary Compensation Table are as
follows: Mr. Mahoney, $1,498,889 (31.5 years); Mr. Potter,
$622,656 (28.1 years); Mr. Reding, $740,475 (38.3 years); and Mr.
Shapiro, $838,285 (3.6 years). Mr. Shapiro also accrues a benefit
under the NutraSweet defined benefit pension plan described below
which will be based on his years of service at NutraSweet and his
average final compensation at the Company.
<TABLE>
The following table illustrates the annual normal retirement
benefits payable under the Searle and NutraSweet defined benefit
pension plans applicable to Dr. Gilgore and Mr. Shapiro.
<CAPTION>
Remuneration Years of Service
------------ ---------------------------------------------------------------------------------------------------
5 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C> <C>
$ 400,000 $ 34,777 $ 69,553 $104,330 $139,106 $173,883 $ 208,659 $ 208,659
600,000 52,777 105,553 158,330 211,106 263,883 316,659 316,659
800,000 70,777 141,553 212,330 283,106 353,883 424,659 424,659
1,000,000 88,777 177,553 266,330 355,106 443,883 532,659 532,659
1,200,000 106,777 213,553 320,330 427,106 533,883 640,659 640,659
</TABLE>
The annual normal retirement benefits payable under the Searle and
NutraSweet pension plans are (i) 1.8% of average final
compensation (the average compensation for the highest consecutive
five of the last ten calendar years of employment preceding
retirement) multiplied by years of service (up to a maximum of 30
years) less (ii) 1.67% of estimated annual Social Security
benefits at age 65 multiplied by years of service (up to a maximum
of 30 years). Generally, compensation utilized for pension formula
purposes includes salary and bonus reported in columns (c) and (d)
of the Summary Compensation Table. The benefit levels in the table
assume retirement at age 65 and payment in the form of a single
life annuity.
15
<PAGE> 19
Average final compensation under the pension formula and years of
service at Searle or NutraSweet as of December 31, 1993, for Dr.
Gilgore and Mr. Shapiro are as follows: Dr. Gilgore, $926,960 (8.0
years) and Mr. Shapiro, $705,654 (11.5 years).
Mr. Shapiro will be provided supplemental retirement benefits
which recognize his experience prior to employment by the Company.
Subject to certain service requirements, the Company will provide
Mr. Shapiro with supplemental retirement benefits equal to 12% of
average final compensation. The supplemental retirement benefits
become vested in the event of a change of control of the Company.
Supplemental retirement benefits will also be provided to Dr.
Gilgore to recognize his experience prior to employment with
Searle. Under his agreement with Searle, Dr. Gilgore is to be paid
a supplemental amount so that his total retirement income from his
prior employer and Searle will be comparable to the benefit he
would have received under the terms of the Searle pension plans if
his total service at retirement had been with Searle. The
estimated annual supplemental benefits payable upon retirement at
normal retirement age to Dr. Gilgore and Mr. Shapiro are $253,768
and $156,776, respectively.
CERTAIN AGREEMENTS
The Board has authorized agreements with the executive officers
employed by the Company who are named in the Summary Compensation
Table regarding a change of control of the Company. Under these
agreements, the Company will make an additional cash payment if,
within three years following a change in control of the Company
(as defined in those agreements), the individual's employment is
terminated (other than for cause) or the individual resigns for
good reason such as a change in responsibilities, compensation, or
conditions of continued employment. Each of these individuals will
receive an amount up to two times annual base pay and, subject to
certain adjustments, two times his or her target annual bonus. A
similar agreement has been authorized by the Searle Board for Dr.
Gilgore. The Company's Board has also authorized supplemental
agreements to provide supplemental retirement benefits to be
applicable under the same change of control conditions to Messrs.
Potter and Shapiro, who are not yet eligible for unreduced early
retirement benefits. These supplemental benefits will equal the
difference between what the individual would have received under
the Company's pension plans at the time of termination or
resignation (without reduction for early commencement of benefits)
less actual payments received under these plans. A cash medical
allowance of $15,000 for payment of medical insurance premiums
will also be provided if the individual does not qualify for
retiree medical coverage.
All benefits under these change of control agreements and
supplemental agreements will be reduced as necessary to be exempt
from the excise tax and the non-deductibility provision imposed by
the Internal Revenue Code on certain change of control payments
except in those cases in which, notwithstanding the Code, such
reduction would be disadvantageous to the individual.
16
<PAGE> 20
<TABLE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total stockholder return
(assuming reinvestment of dividends) with the cumulative total
stockholder return of the Standard & Poor's 500 Stock Index and
the Standard & Poor's Chemical Index, both of which include the
Company.
TOTAL RETURN TO STOCKHOLDERS
<CAPTION>
Measurement Period Monsanto Company S&P 500 S&P Chemicals Group
------------------ ---------------- ------- -------------------
(Fiscal Year Covered)
---------------------
<S> <C> <C> <C>
Measurement Pt-12/31/88 $100.0 $100.0 $100.0
FYE 12/31/89 145.7 131.6 126.7
FYE 12/31/90 126.5 127.5 107.6
FYE 12/31/91 183.6 166.2 140.4
FYE 12/31/92 161.7 178.8 153.8
FYE 12/31/93 213.9 196.7 172.1
</TABLE>
APPROVAL OF THE MONSANTO MANAGEMENT INCENTIVE PLAN OF 1994 (PROXY ITEM
NO. 2)
The stockholders are asked to consider and vote on the adoption of
the Monsanto Management Incentive Plan of 1994 (1994 Plan) to
replace the Monsanto Management Incentive Plans of 1988/I and
1988/II (1988 Plans). The Board of Directors has adopted the 1994
Plan, subject to stockholder approval, to attract and motivate top
management talent and to continue a competitive compensation
program that effectively joins stockholder and management
interests.
Under the 1994 Plan, the Company expects to continue its practice
of making stock options a significant part of the total
compensation program for a broad group of both mid-level and
senior management employees. The Company believes the increased
emphasis it has placed on management stock ownership in recent
years, evidenced, for example, by doubling the number of managers
receiving annual option grants and establishing stock ownership
targets for directors and senior managers, has been an important
factor in enabling the Company to achieve the strong operating
results demonstrated in 1993.
The Company also plans to continue the practice begun in 1993 of
linking the exercise of a significant portion of the options
granted to the achievement of pre-established business targets,
thus providing an additional tie between stockholder and
management interests. More than half of the options granted in
1993 and all of the options granted in 1994 become exercisable
upon the Company's
17
<PAGE> 21
achievement of its 20% return on equity target (or the ninth
anniversary of the option grant date, if earlier*).
The Company intends to continue its program of repurchasing shares
to satisfy the exercise of stock options. All options exercised
under the 1988 Plans were satisfied with shares purchased on the
open market for that purpose. The Company expects that it will be
able to continue to realize the important benefits gained from
linking stockholder and management interests through stock options
without the issuance of new shares.
The principal differences from the 1988 Plans are:
(1) the addition of a prohibition against repricing options;
(2) the addition of a limit on the number of shares which may be
used for restricted stock or bonus stock awards (1/2 of 1%
of outstanding shares);
(3) the addition of a provision conditioning a portion of the
share authorization on share repurchases;
(4) the combination of the two 1988 Plans into a single plan
covering all participants; and
(5) the elimination of provisions relating to cash bonuses.
Cash bonuses to the named executives will be made pursuant to the
programs described on pages 22-24 (assuming stockholder approval).
Material Features of the 1994 Plan
The material features of the 1994 Plan are outlined below, subject
to the actual provisions of the plan which is set forth in full in
Appendix A.
Authorized Shares; Share Repurchases. The 1994 Plan authorizes the
use of 3,000,000 shares of the Company's Common Stock for grants
of stock options, stock appreciation rights, restricted stock
awards, and bonus stock awards. An additional 2,820,000 shares may
be used, provided the Company repurchases these shares in the open
market. No unused shares from the 1988 Plans may be used for
awards on or after February 1, 1994 (assuming approval of the 1994
Plan).
The closing price of the Company's Common Stock on March 1, 1994
as reported in The Wall Street Journal was $75.00.
Administration. The 1994 Plan is administered by the Executive
Compensation and Development Committee of the Board, which is
composed of two or more non-employee directors. The Committee may
delegate the administration of the plan except as it relates to
those officers subject to the reporting requirements of Section
16(a) of the Securities Exchange Act of 1934.
Eligible Employees. The Committee may grant awards under the plan
to any employee of the Company or its subsidiaries or associated
companies. In practice, awards are made to a group of
approximately 900 management employees. In any three-year period,
the total number of shares for which awards may be made to any one
participant cannot exceed 15% of the total number of shares for
which awards may be made under the plan.
-----
[FN]
*A fixed exercise date prior to the end of the ten-year term of
the options is a condition to maintaining conventional accounting
treatment for options. Without the fixed date, changes in share
price from the option grant price multiplied by the number of
shares under option would be charged to earnings, potentially
resulting in substantial fluctuations in quarterly earnings even
though there would have been no changes in the Company's cash
position and no payment to the optionee.
18
<PAGE> 22
1994 Grants. Subject to stockholder approval of the 1994 Plan,
non-qualified options were granted under the 1994 Plan on February
25, 1994 as follows: Mr. Mahoney, 275,000 shares; Dr. Gilgore,
16,500 shares; Mr. Reding, 93,333 shares; Mr. Shapiro, 123,333
shares; all current executive officers as a group, 617,499 shares;
and all other employees, 1,331,296 shares. The grants to Mr.
Mahoney, Mr. Reding, Mr. Shapiro, and the other corporate staff
executive officers were made pursuant to a program which provides
for grants every three years. Other participants receive option
grants annually; amounts shown reflect the 1994 grant. All of the
1994 grants become exercisable upon the Company's achieving its
20% return on equity goal (or the ninth anniversary of the option
grant date, if earlier). No determination has been made with
respect to any other awards which may be made under the 1994 Plan.
Stock Options. The Committee establishes the terms and conditions
of the options granted under the 1994 Plan, subject to certain
limitations specified in the plan. Under the 1994 Plan, the
exercise price of any option granted must be no less than the fair
market value of the Common Stock at the grant date (or such later
date as the Committee shall determine). Subsequent repricing of
options to decrease the exercise price is expressly prohibited.
The Committee is considering various additional terms for options
in order to enhance the linkage between stockholder and management
interests. Accordingly, the 1994 Plan expressly permits the
Committee to provide for the escalation of the option price over
the term of the option, to permit participants to deliver shares
of the Company's Common Stock in payment of the exercise price, to
offer participants the opportunity to elect to receive an option
grant instead of a salary increase or bonus, to offer participants
the opportunity to purchase options, and to make the exercise or
vesting of options contingent on the satisfaction of performance
criteria. Like the 1988 Plans, the 1994 Plan permits the granting
of dividend equivalent units in connection with option grants; the
Committee makes such grants only infrequently.
The 1994 Plan also provides that the term of any option granted
may not exceed 10 years and, additionally, may not exceed 12
months following the termination of employment unless the
termination is the result of retirement, death, or disability.
Options granted under the 1994 Plan are not transferable except by
will, the laws of descent and distribution, pursuant to a written
beneficiary designation or, in the case of a non-qualified option,
pursuant to a qualified domestic relations order as defined by the
Internal Revenue Code, or in circumstances permitted under Section
16 of the Securities Exchange Act for persons covered by that
statute. All stock options may be exercised during the holder's
lifetime only by the holder or his or her guardian or legal
representative.
Incentive stock options may be granted provided they meet the
requirements of the Code. The Company has no plans to grant
incentive stock options.
Tax Consequences of Stock Options. No taxable income is realized
by the participant upon the grant of a non-qualified stock option,
and no deduction is then available to the Company. Upon exercise
of the option, the excess of the fair market value of the shares
on the date of exercise over the option price will be taxable to
the participant and deductible by the Company. The tax basis of
shares acquired will be the fair market value on the date of
exercise. For shares held for more than one year following
exercise of the option, the participant will realize long-term
capital gain or loss upon disposition.
No taxable income is realized by a participant and no tax
deduction is available to the Company upon either the grant or
exercise of an incentive stock option. If a participant holds the
shares acquired upon the exercise of an incentive stock option for
more than one year after the stock option exercise and more than
two years after the date of the option grant (holding period), the
difference between the option price and the amount realized upon
the sale of the shares will be treated as long-term capital gain
or loss and no deduction will be available to the Company. If the
shares are transferred before the expiration of the holding
period, the participant will realize ordinary income
19
<PAGE> 23
and the Company will be entitled to a deduction on a portion of
the gain, if any, equal to the difference between the option price
and the lesser of the fair market value of the shares on the date
of exercise or the amount realized on the disposition. Any further
gain or loss will be taxable as long-term or short-term capital
gain or loss depending upon the holding period before disposition.
For shares held for more than one year, the participant will
realize long-term capital gain or loss upon disposition.
The Company believes that compensation received by participants on
the exercise of non-qualified options or the disposition of shares
acquired upon the exercise of any incentive stock options will be
considered performance-based compensation and thus not subject to
the $1,000,000 limit of Section 162(m) of the Code.
Participants are responsible for the payment of all withholding
taxes due in connection with the exercise or disposition of a
stock option or the vesting of a restricted stock award. The
Committee plans to continue its current practice of allowing
certain participants to direct the Company to withhold shares to
be issued on an option exercise or stock award to satisfy the
withholding obligation.
Stock Appreciation Rights. The 1994 Plan authorizes the grant of
stock appreciation rights, but only in tandem with stock options.
Any stock appreciation right granted must be exercisable only to
the same extent as the related option. The Company has no stock
appreciation rights currently outstanding and no present plans to
grant any such rights.
Restricted and Unrestricted Shares. The 1994 Plan authorizes the
Committee to use up to 1/2 of 1% of the outstanding shares
(approximately 600,000) for restricted or unrestricted share
grants. The Committee may set the terms and conditions of
restricted share awards including restrictions against sale,
transfer, or other disposition and may make the lapse of such
restrictions contingent on the achievement of performance goals.
The Committee also may grant an award of dividend equivalent units
in connection with a restricted share award. The only restricted
share awards made in 1993 to executive officers provided for the
lapse of restrictions based on the achievement of individually
tailored performance goals. See page 12.
Change of Control. Like the 1988 Plans, the 1994 Plan specifically
authorizes the Committee to take such action as it determines to
be necessary or advisable, and fair and equitable to participants,
with respect to stock options, stock appreciation rights, and
restricted share awards in the event of a merger, consolidation,
acquisition, sale or transfer of assets, tender or exchange offer,
or other reorganization in which the Company will not survive as
an independent, publicly owned company. Provisions regarding such
change of control situations have been incorporated in grants of
stock options, stock appreciation rights, and restricted stock
grants under the 1988 Plans, and the Committee expects to continue
the incorporation of such provisions in awards made under the 1994
Plan.
Amendments. The Board, upon recommendation of the Committee, can
amend the 1994 Plan, but any of the following amendments would
require the prior approval of stockholders: (a) an amendment which
would permit decreasing the option price on any outstanding
option; (b) an amendment which would require the approval of
stockholders under Section 16 of the Securities Exchange Act of
1934 or Section 422 of the Code; or (c) an amendment which would
change the provisions of the plan relating to amendments.
--------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
1994 PLAN.
To be adopted, this proposal would require the affirmative vote of
the majority of the shares present in person or represented by
proxy at the Annual Meeting. If the stockholders do not approve
the 1994 Plan, grants made under the 1994 Plan will be void,
shares remaining in the 1988 Plans may be
20
<PAGE> 24
used for awards, and the Company may submit another incentive plan
for stockholder approval at a later date.
APPROVAL OF THE SEARLE/MONSANTO STOCK PLAN OF 1994 AND THE
NUTRASWEET/MONSANTO STOCK PLAN OF 1994 (PROXY ITEMS NOS. 3 AND 4)
The stockholders are asked to consider and vote on the adoption of
the Searle/Monsanto Stock Plan of 1994 (1994 Searle Plan) and,
separately, on the NutraSweet/Monsanto Stock Plan of 1994 (1994
NutraSweet Plan). Each of the plans replaces a similar predecessor
plan.
The subsidiary plans, like Monsanto's 1994 Plan described above,
are designed to attract and motivate top management talent and to
provide a competitive compensation program linking management and
stockholder interests. Options are a significant part of the
compensation program for both mid-level and senior managers at
Searle and NutraSweet. Like the options granted in 1993 and 1994
to Monsanto employees, approximately half of the options granted
to the subsidiary employees in 1993 and all of the 1994 options
will become exercisable upon the Company's achievement of its 20%
return on equity target (or the ninth anniversary of the option
grant date, if earlier).
The material features of the 1994 Searle and NutraSweet Plans are
substantially the same as those of Monsanto's 1994 Plan except as
outlined below. The description below is qualified by the actual
plan provisions. Copies of the 1994 Searle and NutraSweet Plans
will be provided to stockholders without charge upon telephone
request to (314) 694-2826 or upon written request to the Company's
Investor Relations staff. Copies will also be available at the
Annual Meeting.
Authorized Shares. The 1994 Searle Plan authorizes the use of
1,430,000 shares of the Company's Common Stock for grants of stock
options, stock appreciation rights, restricted stock awards, and
bonus stock awards. The 1994 NutraSweet Plan authorizes the use of
770,000 shares for such awards. No portion of either authorization
is expressly conditioned on share repurchases, although the
Company expects to continue its past practice of satisfying its
obligations with respect to all options granted with shares
acquired through its repurchase program. Assuming stockholder
approval of these plans, no unused shares from any predecessor
plans may be used for awards on or after February 1, 1994.
Administration. The 1994 Searle Plan will be administered by the
Executive Compensation and Development Committee of the Searle
Board of Directors, which may delegate any of its duties to senior
managers of Searle. The 1994 NutraSweet Plan will be administered
by the Special Stock Grant Committee of the NutraSweet Board,
which may delegate any of its duties to senior managers of
NutraSweet.
Eligible Employees. Any employee of Searle or NutraSweet, or any
employees of their respective subsidiaries or associated
companies, may receive awards under their respective plan, except
that awards may not be made under either plan to any person who is
subject to the reporting requirements of Section 16 of the
Securities Exchange Act with respect to the Company's Common
Stock. Since the chief executive officers of both Searle and
NutraSweet are subject to Section 16, grants and awards to these
individuals will, for the foreseeable future, be made by the
Executive Compensation and Development Committee of Monsanto and
not under these plans. In 1993, awards were made to 173 Searle
employees and 151 NutraSweet employees. The total number of shares
for which awards may be made to any one participant cannot exceed
5% of the total number of shares for which awards may be made
under the plan.
1994 Grants. Subject to stockholder approval of the 1994 Searle
and NutraSweet Plans, non-qualified options on 262,584 shares and
185,057 shares were granted to Searle and NutraSweet employees,
respectively, on February 25, 1994. These awards represent the
1994 annual grants to Searle and NutraSweet employees. No
determination has been made with respect to any other awards which
may be made under either plan.
21
<PAGE> 25
Awards. The 1994 Searle and NutraSweet Plans provide for the same
types of awards on the same terms and conditions as are provided
for in Monsanto's 1994 Plan described above.
Change of Control. Each of the plans specifically authorizes the
administrator to take such action as it determines to be necessary
or advisable, and fair and equitable to participants, with respect
to stock options, stock appreciation rights, and restricted share
awards in the event of a merger, consolidation, acquisition, sale
or transfer of assets, tender or exchange offer, or other
reorganization in which the Company will not survive as an
independent, publicly owned company. Provisions regarding such
change of control situations have been incorporated in grants of
stock options, stock appreciation rights, and restricted stock
grants under the predecessor plans, and it is expected that the
incorporation of such provisions will continue to be made in
awards made under the plans.
Amendments. The Searle and NutraSweet Boards may amend their
respective plans, but any of the following amendments would
require the prior approval of stockholders: (a) an amendment which
would permit decreasing the option price on any outstanding
option; (b) an amendment which would require the approval of
stockholders under Section 16 of the Securities Exchange Act or
Section 422 of the Code; or (c) an amendment which would change
the provisions of the plan relating to amendments.
--------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
1994 SEARLE PLAN AND A VOTE "FOR" THE APPROVAL OF THE 1994
NUTRASWEET PLAN.
To be adopted, each of these proposals would require the
affirmative vote of the majority of the shares present in person
or represented by proxy at the Annual Meeting. If the stockholders
do not approve either plan, grants made under that plan will be
void, shares remaining in the existing predecessor plan will be
used for awards, and the Company may submit another incentive plan
for stockholder approval at a later date.
APPROVAL OF ANNUAL AND LONG-TERM INCENTIVE PROGRAMS FOR EXECUTIVE
OFFICERS (PROXY ITEMS NOS. 5 AND 6)
The stockholders are asked to consider and vote on the annual
(Proxy Item No. 5) and the long-term (Proxy Item No. 6) incentive
programs established by the Executive Compensation and Development
Committee of the Board for certain executive officers. Under
Section 162(m) of the Internal Revenue Code, approval of the
stockholders is required to enable the Company to obtain a
deduction for incentives paid under these programs to any of the
executive officers named in the Summary Compensation Table whose
compensation for the taxable year is in excess of $1,000,000.
Annual Incentive Program
Material terms of the annual incentive program for the eligible
executive officers are outlined below.
Eligible Executives. The class of eligible individuals consists of
the Company's executive officers as defined in Rule 3b-7 of the
General Rules and Regulations under the Securities Exchange Act.
There are currently eleven eligible individuals, seven corporate
executives and four business unit executives.
Performance Goal. Each year the Committee will establish
performance goals based on corporate and unit net income. For the
chief executive officer and other corporate executives, the
corporate goal must be achieved in order for any award to be paid.
For the business unit chief executives, either the corporate or
the applicable unit goal must be achieved in order for any award
to be paid. The Committee must certify attainment of the
applicable performance goal before an award is paid.
22
<PAGE> 26
Formula for Computing the Maximum Award. For each eligible
executive the maximum award is 1/3 of 1% of corporate net income
for the applicable performance year.
Net Income. For purposes of determining whether the goals have
been achieved and computing the maximum payable, net income is
defined to exclude unusual events, such as restructuring charges
and the cumulative effect of accounting changes required under
generally accepted accounting principles, as pre-determined by the
Committee.
Determination of Actual Awards. A target award will be set in
terms of a net income objective which is in excess of the
applicable performance goal; the actual award may be higher or
lower, depending on actual net income, but it will not be greater
than the maximum award described above. The Committee may also
increase or decrease the award in its discretion based on downward
or upward deviations from a secondary goal set in terms of year-
end capital employed. "Capital employed" consists of stockholders'
equity and debt. The Committee may also adjust the award in its
discretion based on four factors which do not have pre-set
numerical scales: performance compared to competitors, the impact
of the general economy, the balance achieved between long- and
short-term objectives, and the motivational impact of the award.
These four factors are subject to change in the Committee's
discretion. In 1995 and subsequent years, an additional factor in
setting awards will be management's ability to consistently
achieve pre-established net income targets. Awards will be paid in
cash. A portion of any award made may be withheld and remain at
risk for up to two years.
Amendments. The Committee cannot change the type of performance
goal from net income, or the formula for computing the maximum
award payable, without obtaining stockholder approval.
Long-Term Incentive Program
Long-term incentives for the business unit chief executives of the
Agricultural and Chemical groups and NutraSweet will be
established and awards made in essentially the same manner as
described for annual incentives, except that they will be based on
three-year cycles and the maximum award will be 1/3 of 1% of
corporate net income for the three years. Any award will be
payable at the end of the three-year cycle. For the chief
executives of these units, the cycles will begin in 1994. The
Committee may adopt the same plan for chief executives of other
business units of the Company without seeking stockholder
approval. (The Searle long-term incentive plan described on page
14 will be administered so that payments under the plan will meet
the requirements for deductibility under Section 162(m).)
<TABLE>
Pro Forma Benefits
No determination has been made as to the amount of any annual or
long-term incentives which may be awarded in the future. If the
arrangement described above had been in effect for 1993, the
annual incentives paid to the named executive officers would have
been the same as reported in the Summary Compensation Table and as
shown below.
<CAPTION>
Name and Position Dollar Value
----------------- ------------
<S> <C>
R. J. Mahoney, Chairman, CEO, and Director.........................................$1,188,000
S. G. Gilgore, Chairman and CEO, G. D. Searle & Co................................. 550,000
R. G. Potter, Executive Vice President; President, The Chemical Group.............. 550,000
N. L. Reding, Vice Chairman of the Board and Director.............................. 600,000
R. B. Shapiro, President, COO, and Director........................................ 750,000
Executive Group.................................................................... 5,793,000
Non-Executive Director Group....................................................... -0-
Non-Executive Officer Employee Group............................................... -0-
</TABLE>
23
<PAGE> 27
The maximum annual award that could have been paid to any
executive officer would have been $1,533,200. It is not possible
to determine any long-term incentives that would have been paid in
the past had the arrangement been in effect because no comparable
targets were in effect under previous long-term arrangements.
--------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
ANNUAL INCENTIVE PROGRAM FOR EXECUTIVE OFFICERS AND A VOTE "FOR"
THE APPROVAL OF THE LONG-TERM INCENTIVE PROGRAM FOR EXECUTIVE
OFFICERS.
To be adopted, each of these proposals would require the
affirmative vote of the majority of the shares present in person
or represented by proxy at the Annual Meeting. If the stockholders
do not approve the incentive programs, the Committee will
investigate the reasons for stockholder rejection and consider
alternate incentive programs.
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 7)
The Board of Directors, upon the recommendation of the Audit
Committee, has appointed Deloitte & Touche as the principal
independent auditors to examine the consolidated financial
statements of the Company and its subsidiaries for the year 1994.
Deloitte has acted in this capacity since 1932, is knowledgeable
about the Company's operations and accounting practices, and is
well qualified to act in the capacity of auditor.
Although this appointment is not required to be submitted to a
vote of the stockholders, the Board continues to believe it
appropriate as a matter of policy to request that the stockholders
ratify the appointment of Deloitte as principal independent
auditors. If the stockholders should not ratify, the Audit
Committee will investigate the reasons for stockholder rejection
and the Board will reconsider the appointment.
A formal statement by representatives of Deloitte is not planned
for the Annual Meeting. However, as in past years, they are
expected to be present at the meeting and available to respond to
appropriate questions.
--------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE AS PRINCIPAL INDEPENDENT AUDITORS FOR
THE YEAR 1994.
The affirmative vote of the majority of the shares present in
person or represented by proxy at the Annual Meeting is required
for ratification of this appointment.
GENERAL INFORMATION
For inclusion in the Company's Proxy Statement and form of proxy,
any proposals of stockholders intended to be presented at the 1995
Annual Meeting must be received by the Company no later than
November 14, 1994.
To nominate one or more directors and/or propose proper business
from the floor for consideration at the 1995 Annual Meeting, other
than by inclusion in the Proxy Statement and form of proxy
pursuant to the preceding paragraph, stockholders must provide
written notice. Such notice should be addressed to the Secretary
and be received at the Company's World Headquarters not earlier
than January 22, 1995, and not later than February 21, 1995. The
Company's By-Laws set out specific requirements which such written
notices must satisfy. Copies of those requirements will be
forwarded to any stockholder upon written request.
24
<PAGE> 28
The Board of Directors knows of no matter, other than those
referred to in this Proxy Statement, which will be presented at
the meeting. However, if any other matters properly come before
the meeting or any of its adjournments, the person or persons
voting the proxies will vote in accordance with their best
judgment on such matters. Should any nominee for director be
unwilling or unable to serve at the time of the meeting or any
adjournments thereof, the persons named in the proxy will vote for
the election of such other person for such directorship as the
Board of Directors may recommend, unless, prior to the meeting,
the Board has eliminated that directorship by reducing the size of
the Board. The Board is not aware that any nominee herein will be
unwilling or unable to serve as a director.
A stockholder who wishes to give a proxy to someone other than the
Board's proxy committee may strike out the names appearing on the
enclosed form of proxy, write in the name of any other person,
sign the proxy, and deliver it to the person whose name has been
substituted.
The Company will bear the expense of preparing, printing, and
mailing this proxy material, as well as the cost of any required
solicitation. The Company has engaged Georgeson & Co., a proxy
solicitation firm, to assist by mail or telephone, in person, or
otherwise in the solicitation of proxies. Georgeson's fee is
expected to be approximately $25,000 plus expenses. A few regular
employees may also participate in the solicitation, without
additional compensation. In addition, the Company will reimburse
banks, brokerage firms, and other custodians, nominees, and
fiduciaries for reasonable expenses incurred in forwarding proxy
materials to beneficial owners of the Company's stock and
obtaining their proxies.
You are urged to mark, sign, date, and return your proxy promptly.
You may revoke your proxy at any time before it is voted; and if
you attend the meeting, as we hope you will, you may vote your
shares in person.
RICHARD W. DUESENBERG
Secretary
March 14, 1994
25
<PAGE> 29
APPENDIX A
MONSANTO MANAGEMENT INCENTIVE PLAN OF 1994
I. GENERAL PROVISIONS
1. PURPOSES
The Monsanto Management Incentive Plan of 1994 is designed:
* to attract, motivate and retain for the Company and its
Subsidiaries and Associated Companies personnel of exceptional
ability,
* to encourage ownership of Monsanto common stock by management,
* to align management interests with those of stockholders, and
* to provide a competitive executive compensation program.
This Incentive Plan shall be effective February 1, 1994
("Effective Date"), subject to the approval of this Incentive Plan
by the stockholders of the Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50%
of the outstanding shares of stock normally entitled to vote for
the election of directors (or comparable equity participation and
voting power).
"Award" means any Stock Option, Stock Appreciation Right,
Restricted Share, unrestricted Share, dividend equivalent unit or
other award granted under this Incentive Plan.
"Board" means Board of Directors of the Company.
"Committee" means the ECDC, or its permitted delegate.
"ECDC" means the Executive Compensation and Development Committee
or such other committee consisting of two or more members of the
Board as may be appointed by the Board to administer this
Incentive Plan pursuant to Section 3(a) of this Article I.
"Company" means Monsanto Company, a Delaware corporation.
"Eligible Participant" means any officer or other salaried
employee (including a director who is a salaried employee) of the
Company, a Subsidiary or an Associated Company.
"Incentive Plan" means the Monsanto Management Incentive Plan of
1994, set forth herein.
"Fair Market Value" shall mean, with respect to any given day, the
average of the highest and lowest sales prices of the Shares
reported as the New York Stock Exchange-Composite Transactions for
such day, or if the Shares were not traded on the New York Stock
Exchange on such day, then on the next preceding day on which the
Shares were traded, all as reported by The Wall Street Journal,
mid-west edition, under the heading New York Stock Exchange-
Composite Transactions or by such other source as the Committee
may select.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"1984 Plan" means the Monsanto Management Incentive Plan of 1984,
as amended.
"1988/I Plan" means the Monsanto Management Incentive Plan of
1988/I, as amended.
A-1
<PAGE> 30
"1988/II Plan" means the Monsanto Management Incentive Plan of
1988/II, as amended.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Participant" means an Eligible Participant to whom a Stock Option
or a Stock Appreciation Right has been granted, a bonus commitment
made or a bonus awarded pursuant to this Incentive Plan.
"Reporting Person" means a person subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of
1934 (or any law, rule, regulation or other provision that may
replace such statute) with respect to Shares.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Section 6 of Article II of this
Incentive Plan.
"Shares" means shares of common stock of the Company and any
shares of stock or other securities received as a result of a
Share adjustment as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section 5
of Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair Market
Value" shall mean a value established by the Committee for the
exercise of a Stock Appreciation Right. If such exercise occurs
during any quarterly "window period" as specified by Rule 16b-3 of
the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended from time to time, or any law, rule,
regulation or other provision that may hereafter replace such
Rule, the Committee may establish a common value for exercises
during such window period.
"Stock Option" or "Option" shall mean Incentive Stock Options
and/or Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain; and (ii) for
the purposes of a Non-Qualified Stock Option, a Stock Appreciation
Right or an Award of Shares (restricted or not), any corporation
(or partnership, joint venture, or other enterprise) of which the
Company owns or controls, directly or indirectly, 50% or more of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and
voting power).
"Termination of Employment" means the discontinuance of employment
of a Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock
Option, a change of employment of a Participant within the group
consisting of the Company and its Subsidiaries; and (ii) for the
purpose of a Non-Qualified Stock Option, a Stock Appreciation
Right or an Award of Shares (restricted or not), a change of
employment of a Participant within the group consisting of the
Company and its Subsidiaries, or, if the Committee so determines,
a change of employment of a Participant within the group
consisting of the Company, its Subsidiaries and Associated
Companies.
"Unit Compensation Committee" means one or more committees
appointed by the ECDC composed of one or more senior managers of
the Company or a Subsidiary to whom the ECDC may delegate its
powers (or a portion thereof) to administer this Incentive Plan
pursuant to Section 3(a) of this Article I.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the ECDC, except
to the extent the ECDC delegates administration pursuant to
this paragraph. The ECDC may delegate all or a portion of
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the administration of this Incentive Plan to one or more Unit
Compensation Committees and may authorize further delegation
by the Unit Compensation Committees to senior managers of the
Company or its Subsidiaries; provided that determinations
regarding the timing, pricing, amount and terms of any Award
to a Reporting Person shall be made only by the ECDC. No
person shall be eligible or continue to serve as a member of
the ECDC unless such person is a "disinterested person" within
the meaning of Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended from
time to time, or any law, rule, regulation or other provision
that may hereafter replace such Rule, and no person shall be
eligible for the grant of an Award under this Incentive Plan
while serving as a member of the ECDC.
(b) The Committee shall have the exclusive right to interpret this
Incentive Plan, to select the persons who are to receive
Awards, and to act in all matters pertaining to the granting
of Awards under this Incentive Plan including, without
limitation, the timing, pricing, amount and terms of any Award
and the amendment thereof consistent with the provisions of
this Incentive Plan. No Eligible Participant shall have any
right to be considered for or to receive any Awards. All acts
and decisions of the Committee with respect to any questions
arising in connection with the administration and
interpretation of this Incentive Plan, including the
severability of any and all of the provisions thereof, shall
be conclusive, final and binding upon all Eligible
Participants.
(c) The Committee may adopt and amend from time to time rules and
regulations of general application for the administration of
this Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of
this Article I (and notwithstanding any other provisions of
this Incentive Plan), the Committee is authorized to take such
action as it determines to be necessary or advisable, and fair
and equitable to Participants, with respect to Awards in the
event of: a merger of the Company with, consolidation of the
Company into, or the acquisition of the Company by, another
corporation; a sale or transfer of all or substantially all of
the assets of the Company to another corporation or any other
person or entity, a tender or exchange offer for Shares made
by any corporation, person or entity (other than the Company);
or other reorganization in which the Company will not survive
as an independent, publicly-owned corporation. Such action may
include (but shall not be limited to) establishing, amending
or waiving the forms, terms, conditions and duration of Stock
Options, Stock Appreciation Rights, Awards of Restricted
Shares and other Awards so as to provide for earlier, later,
extended or additional times for exercise or payments,
differing methods for calculating payments, alternate forms
and amounts of payment, accelerated release of restrictions or
other modifications. The Committee may take such actions
pursuant to this Section 3(d) by adopting rules and
regulations of general applicability to all Participants or to
certain categories of Participants, by including, amending or
waiving terms and conditions in Awards (including, without
limitation, agreements with respect to Restricted Shares), or
by taking action with respect to individual Participants. The
Committee may take such actions as part of the Awards, or
before or after the public announcement of any such merger,
consolidation, acquisition, sale or transfer of assets, tender
or exchange offer or other reorganization.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolidation, or
other change in capitalization, or a sale by the Company of all or
part of its assets, or any distribution to stockholders other than
a cash dividend results in (a) the outstanding Shares, or any
securities exchanged therefor or received in their place, being
exchanged for a different number or class of shares of stock or
other securities of the Company, or for shares of stock or other
securities of any other corporation; or (b) new, different or
additional shares or other
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securities of the Company or of any other corporation being
received by the holders of outstanding Shares, then:
(i) the total number of Shares authorized for Awards under this
Incentive Plan;
(ii) the number and class of Shares (A) that may be subject to
Stock Options or Stock Appreciation Rights, (B) which have
not been issued or transferred under outstanding Stock
Options or Stock Appreciation Rights, and (C) which have
been awarded but are undelivered under this Incentive Plan;
and
(iii) the purchase price to be paid per Share under outstanding
Stock Options and the number of Shares to be transferred in
settlement of outstanding Stock Appreciation Rights;
shall in each case be equitably adjusted as determined by the
Committee in its discretion; provided, however, that all
adjustments made as the result of the foregoing in respect of each
Stock Option which is granted as an Incentive Stock Option shall
be made so that such Stock Option shall continue to be an
Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as may be amended from time to time, or any
provisions that may hereafter be enacted in lieu thereof.
5. SHARES AUTHORIZED
The total number of Shares for which awards may be granted under
this Incentive Plan shall not exceed 3,000,000 Shares; provided
that if during the term of this Incentive Plan the Company
repurchases shares of Common Stock, on the open market or
otherwise and in compliance with the rules and regulations of the
Securities and Exchange Commission, additional Shares may be used
for awards up to the lesser of (a) 2,820,000 and (b) the number of
Shares repurchased. Notwithstanding the foregoing, the total
number of Shares that shall be available for Awards of Restricted
or unrestricted Shares shall be 1/2 of 1% of the total number of
Shares outstanding. The limitations in this Section 5 are subject
to the adjustments provided for in Section 4 of this Article I;
the provisions of Section 1(b) of Article II of this Incentive
Plan; and the provisions of Section 3(d) of Article III of this
Incentive Plan.
The total number of Shares for which Awards may be granted under
this Incentive Plan to any one Eligible Participant shall not
exceed in any three-year period 15% of the total number of Shares
for which Awards may be made under this Incentive Plan, subject to
the adjustments provided for in Section 4 of this Article I.
II. AWARDS
1. SHARES USED FOR AWARDS
(a) The Shares for which Options may be granted under this Option
Plan may be authorized but unissued Shares, or treasury
Shares, or both.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason
other than a surrender of the Option pursuant to Section l(c)
of this Article II or the exercise of a Stock Appreciation
Right under Section 5 of this Article II, the Shares subject
to such Option shall again be available for Option grants
under this Option Plan without again being charged against the
authorized Shares set forth in Section 5 of Article I,
provided the Participant whose Stock Option has lapsed or
ceased to be exercisable has received no benefits of ownership
from the Shares. Any amendment of any Option or Stock
Appreciation Right by the Committee pursuant to Article I,
Section 3 of this Incentive Plan shall not be considered the
grant of a new Option for the purpose of Section 5 of Article
I.
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the
consent of the Participant, his legal representative, or in
the event of
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death, a beneficiary designated in writing by the Participant
during his lifetime, authorize payment, in cash or in Shares,
or partly in cash and partly in Shares, as the Committee may
direct, of an amount equal to the difference at the time
between the Fair Market Value of the Shares subject to an
Option and the Option price in consideration of the surrender
of the Option. In such an event the Shares subject to the
Option so surrendered shall be charged against the limitations
set forth in Section 5 of Article I.
(d) In the event that any Award or installment thereof ceases to
be payable for any reason, the Shares subject to such Award
shall again be available for Award without again being charged
against the limitations on the number of Shares set forth in
Section 5 of Article I, provided the Participant whose Award
ceases to be payable has received no benefits of ownership
from the Shares.
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
(a) An Award of Stock Options or Stock Appreciation Rights may be
made at such time or times determined by the Committee
following the Effective Date to any Eligible Participant,
except that Incentive Options may not be awarded to employees
of Associated Companies. Each Stock Option and Stock
Appreciation Right shall be granted subject to such terms and
conditions, if any, not inconsistent with this Incentive Plan,
as shall be determined by the Committee, including any
provisions as to continued employment as consideration for the
grant or exercise of such Option or Stock Appreciation Right,
provisions as to performance conditions and any provisions
which may be advisable to comply with applicable laws,
regulations or rulings of any governmental authority.
(b) An Incentive Stock Option or Stock Appreciation Right shall
not be transferable by the Participant otherwise than by will,
by the laws of descent and distribution, or pursuant to a
written beneficiary designation, and shall be exercisable
during the lifetime of the Participant only by him or by his
guardian or legal representative. A Non-Qualified Stock Option
or Stock Appreciation Right shall not be transferrable except
by will, by the laws of descent and distribution, pursuant to
a written beneficiary designation, pursuant to a qualified
domestic relations order as defined by the Internal Revenue
Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act or the rules thereunder, or in
such circumstances as would not result in the failure to
comply with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule or provision) if the transferor
were a Reporting Person.
(c) Shares purchased upon exercise of a Stock Option shall be paid
for in such amounts, at such times and upon such terms as
shall be determined by the Committee and specified in the
grant of the Option. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of
Stock Options which permit the Participant to deliver Shares
(or other evidence of ownership of Shares satisfactory to the
Company), including, at the Committee's option, Restricted
Shares, with a Fair Market Value equal to the Option price as
payment.
(d) The Option price per share shall be established by the grant
and shall not be decreased thereafter except pursuant to
Section 4 of Article I of this Incentive Plan.
(e) The Committee, in its discretion, may provide for the
escalation of the Option price per Share over all or part of
the term of the Option.
(f) The Committee, in its discretion, may offer Participants the
opportunity to elect to receive an Option grant in lieu of a
salary increase or a bonus or may offer Participants the
opportunity to purchase Options for cash or such other
consideration as the Committee in its discretion determines.
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3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422 of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the
time of the grant of any such Option, or any statutory provision
that may be enacted to replace such Section. Each provision of
this Incentive Plan and of each Incentive Stock Option granted
hereunder shall be construed so that each such Option shall be an
Incentive Stock Option, and any provision thereof that cannot be
so construed shall be disregarded. Incentive Stock Options shall
be granted only to purchase unrestricted Shares and only to
Eligible Participants, each of whom may be granted one or more
such Options at such time or times determined by the Committee
following the Effective Date until January 31, 2004, subject to
the following conditions:
(a) The Option price per Share shall be set by the grant but shall
not be less than 100% of the Fair Market Value at the time of
the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following, Termination
of Employment as shall have been determined by the Committee
and as specified in the Option or Stock Appreciation Right;
provided, however, that such period following Termination of
Employment shall not exceed twelve months unless employment
shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, an applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event such period shall not exceed--
(A) in the case of an Option, the original term of the
Option; and
(B) in the case of a Stock Appreciation Right, one year
after such retirement or disability or after
resignation as an officer or director of the
Company, whichever shall last occur (unless earlier
terminated pursuant to Section 5(b) of this Article
II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which
Incentive Stock Options are first exercisable during any
calendar year by any Eligible Participant shall not exceed
$100,000; however, if the Fair Market Value of Incentive Stock
Option Shares (at date of grant) exceeds $100,000 in the
calendar year in which Incentive Stock Options are first
exercisable, Shares with a Fair Market Value at date of grant
exceeding $100,000 shall not be deemed to be Incentive Stock
Options.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option is granted, does not
own stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company.
(e) Any other terms and conditions which the Committee determines,
upon advice of counsel, should be imposed for the Option to
qualify as an Incentive Stock Option and any other terms and
conditions not inconsistent with this Incentive Plan as
determined by the Committee; including provisions making the
Shares subject to such Option Restricted Shares or provisions
making vesting or the ability to exercise subject to
performance conditions.
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4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at
the time of the grant (or such later date as the Committee
shall determine to be the grant date).
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following, Termination
of Employment as shall have been determined by the Committee
and as specified in the Option or Stock Appreciation Right;
provided, however, that such period following Termination of
Employment shall not exceed twelve months unless employment
shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of the Company, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee, in which
event such period shall not exceed--
(A) in the case of an Option, the original term of the
Option; and
(B) in the case of a Stock Appreciation Right, one year
after such retirement or disability or after
resignation as an officer or director of the
Company, whichever shall last occur (unless earlier
terminated pursuant to Section 5(b) of this Article
II);
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Incentive Plan as determined by the
Committee, including provisions making the Shares subject to
such Option Restricted Shares or provisions making vesting or
the ability to exercise subject to the satisfaction of
performance conditions.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible
Participant in connection with (and only in connection with) an
Incentive Stock Option or a Non-Qualified Option granted under
this Incentive Plan, or under any other incentive plan of the
Company or its Subsidiaries which was approved by the
stockholders, subject to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option within the period specified for the exercise of the
Option in the related Option grant to surrender the
unexercised Option (or a portion thereof) and to receive in
exchange therefor a payment in cash or Shares having an
aggregate value equal to the product of (i) the amount by
which (A) the SAR Fair Market Value of each Share exceeds (B)
the Option price per Share, times (ii) the number of Shares
under the Option, or portion thereof, which is surrendered.
(b) Except as expressly provided herein, each Stock Appreciation
Right granted hereunder shall be subject to the same terms and
conditions as the related Option. It shall be exercisable only
to the
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extent such Option is exercisable and shall terminate or lapse
and cease to be exercisable when the related Option terminates
or lapses. The Committee may grant Stock Appreciation Rights
concurrently with grants of Options or in connection with
previously granted Options under this Incentive Plan, or under
any other incentive plan of the Company or its Subsidiaries
which was approved by the stockholders, which are unexercised
and have not terminated or lapsed. With respect to Stock
Appreciation Rights granted in connection with such previously
granted Options, the Committee shall provide that such Stock
Appreciation Rights shall not be exercisable until the holder
completes six (6) months (or such longer period as the
Committee shall determine) of service with the Company, a
Subsidiary, or an Associated Company immediately following the
date of the grant of such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine in each
case whether the payment will be in the form of all cash, all
Shares (which may, at the Committee's discretion, be
Restricted Shares), or any combination thereof. If payment is
to be made in Shares, the number of Shares shall be determined
as follows: the amount payable in Shares shall be divided by
the SAR Fair Market Value of Shares. The payments to be made,
in whole or in part, in cash upon the exercise of Stock
Appreciation Rights by any officer of the Company shall be
made in accordance with the provisions relating to the
exercise of stock appreciation rights of Rule 16b-3 of the
General Rules and Regulations under the Securities Exchange
Act of 1934, as in effect at the time of such exercise, or any
law, rule, regulation or other provision that may hereafter
replace such Rule.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented
by the Option or portion thereof which is surrendered. To the
extent that a Stock Appreciation Right shall be exercised, any
Shares transferred upon such exercise shall not be charged
against the maximum limitations upon the grant of Options set
forth in this Incentive Plan under which such Option shall
have been granted but the Option in connection with which a
Stock Appreciation Right shall have been granted shall be
deemed to have been exercised for the purpose of such maximum
limitations.
(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof
upon exercise of Stock Appreciation Rights hereunder, whether
in a lump sum, in annual installments or otherwise deferred
and the Committee shall have sole discretion to determine
whether such payments may bear amounts equivalent to interest
or cash dividends.
(f) For purposes of this paragraph 5(f) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for
any stock exchange;
(ii) "Offer" means any tender or exchange offer made by an
Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such
Shares;
(iii) "Change of Control" means any acquisition, beneficially
or otherwise, by any Unrelated Party of 25% or more of
the combined voting power of the common and preferred
stock of the Company and shall be deemed to occur upon
the date that the Unrelated Party attains control of
said 25% or more of the combined voting power;
(iv) "Change of Control Market Value" of the Shares means the
higher of--
(A) the value for which such Shares may be exchanged or
offered under any Offer pursuant to which Shares are
actually exchanged or purchased; or
(B) the Fair Market Value of such Shares on the date of
exercise of a Stock Appreciation Right.
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Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Offer or
Change of Control, a Participant holding an unexercised Stock
Appreciation Right may exercise such Stock Appreciation Right
and elect to be paid solely in cash in an amount equal to the
difference between the Option price and the Change of Control
Market Value of the Shares, unless within five (5) business
days after receipt of notification of such election by the
Secretary of the Company, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only: (x)
during the thirty (30) day period following the first exchange
or purchase of Shares pursuant to an Offer; or (y) during the
thirty (30) day period following the date on which sufficient
Shares are acquired to constitute a Change of Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) the Company, its
directors and officers, or (B) any nominee holder for
any stock exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common
and preferred stock of the Company specified by the
Committee (but not less than 10%) and shall be deemed
to occur upon the date that the Unrelated Party attains
control of said percentage of the combined voting
power;
(iii) "Change of Control Termination of Employment" means the
termination of employment of a Participant by the
Company, the Subsidiaries or the Associated Companies
without cause (as defined by the Committee) or by the
Participant for good reason (as defined by the
Committee) within a period of time specified by the
Committee following an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of the Shares
means the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Alternate
Change of Control and a Change of Control Termination of
Employment, a Participant holding an unexercised Stock
Appreciation Right who is selected by the Committee may
exercise such Stock Appreciation Right and elect to be paid
solely in cash in an amount equal to the difference between
the Option price and the Alternate Change of Control Market
Value of the Shares, unless within five (5) business days
after receipt of notification of such election by the
Secretary of the Company, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only
during the thirty (30) day period following a Change of
Control Termination of Employment.
6. BONUS SHARES AND RESTRICTED SHARES
(a) An Award of Shares or Restricted Shares may be made at such
time or times determined by the Committee following the
Effective Date to any person who is an Eligible Participant.
The Committee shall have full discretion to determine the
terms and conditions of payment of any award, including
without limitation, what part of such award shall be paid in
unrestricted Shares and Restricted Shares, the time or times
of payment of any Award, and the time or times of the lapse of
the restrictions on Restricted Shares.
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(b) For the purpose of determining the number of Shares to be used
in payment of an Award, the amount of the Award payable in
Shares shall be divided by the Fair Market Value of the Shares
on the date of the determination of the amount of the Award by
the Committee, or if the Committee so directs, the date
immediately preceding the date the Award is paid.
(c) The portion of an Award payable in Restricted Shares shall be
paid at the time of the award either by book-entry
registration or by delivering to the Participant, or a
custodian or escrow designated by the Committee and the
Participant, a certificate or certificates for such Restricted
Shares, registered in the name of such Participant. The
Participant shall have all of the rights of a stockholder with
respect to such Shares, subject to such terms and conditions,
including forfeitures or resale to the Company, if any, as may
be determined by the Committee. The Committee and the
Participant may designate the Company or one or more of its
employees to act as custodian or escrow for the certificates.
(d) Restricted Shares shall be subject to such terms and
conditions, including forfeiture, if any, and to such
restrictions against sale, transfer or other disposition as
may be determined by the Committee at the time a Non-Qualified
Option for the purchase of Restricted Shares is granted, at
the time a Stock Appreciation Right to be settled with
Restricted Shares is granted or at the time of making a bonus
award of Restricted Shares. Any new or additional or different
Shares or other securities resulting from any adjustment of
such Shares of the type described in Section 4 of Article I
shall be subject to the same terms, conditions, and
restrictions as the Restricted Shares prior to such
adjustment. The Committee may, in its discretion, remove,
modify or accelerate the release of restrictions on any
Restricted Shares in the event of hardship or disability of
the Participant while employed, in the event that the
Participant ceases to be an employee of the Company, a
Subsidiary or Associated Company, as the result of death or
otherwise, in the event of a relocation of a Participant to
another country or for such other reasons as the Committee may
deem appropriate. In the event of the death of a Participant
following the transfer of Restricted Shares to him, the legal
representative of the Participant, the beneficiary designated
in writing by the Participant during his lifetime, or the
person receiving such Shares under his will or under the laws
of descent and distribution shall take such Shares subject to
the same restrictions, conditions and provisions in effect at
the time of his death, to the extent applicable.
7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered. The Committee may provide, however,
that a Participant to whom an Option has been awarded which is
exercisable in whole or in part at a future time for Shares or
a Participant who has been awarded Shares payable in whole or
in part at a future time, shall be entitled to receive an
amount per Share, equal in value to the cash dividends, if
any, paid per Share on issued and outstanding Shares, as of
the dividend record dates occurring during the period between
the date of the award and the time each such Share is
delivered. Such amounts (herein called "dividend equivalents")
may, in the discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior to
or at the time of the delivery of such Shares or upon
expiration of the Option if it shall not have been fully
exercised (except that payment of the dividend
equivalents on Incentive Options may not be made prior
to exercise); or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in
such manner, at such value, and deliverable at such time
or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall
be charged against the limitations set forth in Section 5 of
Article I.
A-10
<PAGE> 39
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any Award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
(c) The Committee, in its discretion, may provide that dividends
paid on restricted Shares shall, during the applicable
restricted period, be held by the Company to be paid upon the
lapse of restrictions or to be forfeited upon forfeiture of
the Shares.
III. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option nor a Stock Appreciation Right shall be
transferable except as provided for herein. If any Participant
makes such a transfer in violation hereof, any obligation of
the Company with respect to such Stock Option or Stock
Appreciation Right shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other document
describing or referring to this Incentive Plan shall be deemed
to confer on any employee or Participant the right to continue
in the employ of his employer or affect the right of his
employer to terminate the employment of any such person with or
without cause.
3. Nothing contained herein shall require the Company to segregate
any monies from its general funds, or to create any trusts, or
to make any special deposits for any immediate or deferred
amounts payable to any Participant.
4. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
5. The Company may make such provisions and take such steps as it
may deem necessary or appropriate for the withholding of any
taxes which the Company is required by any law or regulation of
any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Stock
Option or the exercise thereof, any Stock Appreciation Right or
the exercise thereof, or the payment of any bonus award,
including, but not limited to, the withholding of cash or
Shares which would be paid or delivered pursuant to such
exercise or award or another exercise or award under this
Incentive Plan until the Participant reimburses the Company for
the amount the Company is required to withhold with respect to
such taxes, or cancelling any portion of such award or another
award under this Incentive Plan in an amount sufficient to
reimburse itself for the amount it is required to so withhold,
or selling any property contingently credited by the Company
for the purpose of paying such award or another award under
this Incentive Plan, in order to withhold or reimburse itself
for the amount it is required to so withhold. The Committee may
permit a Participant (or any beneficiary or other person
authorized to act) to elect to pay a portion or all of any
amounts required or permitted to be withheld to satisfy
federal, state, local, or foreign tax obligations by directing
the Company to withhold a number of whole Shares which would
otherwise be distributed and which have a fair market value
sufficient to cover the amount of such required or permitted
withholding taxes.
IV. AMENDMENTS
1. The Board, upon recommendation of the Committee but not
otherwise, may from time to time amend or modify this Incentive
Plan, including, but not limited to, an amendment which would
authorize the Committee to make Awards payable in other
securities or other forms of property of a kind to be
determined by the Committee, and such other amendments as may
be necessary or desirable to implement such Awards, or
discontinue this Incentive Plan or any provision thereof,
provided that no amendments or modifications to this Incentive
Plan shall, without the
A-11
<PAGE> 40
prior approval of the stockholders normally entitled to vote
for the election of directors of the Company:
(a) permit the Company to decrease the Option price on any
outstanding Option;
(b) permit any change which would require the approval of
stockholders under Section 16 of the Securities Exchange
Act of 1934 or the rules thereunder or under Section 422 of
the Internal Revenue Code of 1986, or the rules thereunder
(or any law, rule, regulation or other provision that may
replace such statutes or rules); or
(c) change any of the provisions of this Article IV.
2. No amendment to or discontinuance of this Incentive Plan or any
provision thereof by the Board or the stockholders of the
Company shall, without the written consent of the Participant,
adversely affect any Stock Option or Stock Appreciation Right
theretofore granted or bonus commitment or bonus award
theretofore made to such Participant under this Incentive Plan.
V. INTERPRETATION
1. Except as authorized herein with respect to Stock Appreciation
Rights, this Incentive Plan is not intended to and shall not
affect any option or stock appreciation right grant or bonus
commitment or award under the 1984 Plan, the 1988/I Plan or the
1988/II Plan (or any other incentive plan of the Company, its
Subsidiaries and Associated Companies). No stock options or
stock appreciation rights or Awards of Restricted or
unrestricted Shares shall be granted under either the 1988/I
Plan or the 1988/II Plan after February 1, 1994.
2. This Incentive Plan is not intended to and shall not preclude
the establishment or operation by the Company or any Subsidiary
of (a) any thrift, savings and investment, achievement award,
stock purchase, employee recognition or other benefit plan or
arrangement for any group of employees, or (b) any other
incentive or bonus plan or arrangement for any employees
(hereinafter "Other Plan"), and any such Other Plan may be
authorized and payments made thereunder independently of this
Incentive Plan; provided, however, that no such Other Plan,
other than a plan for G. D. Searle & Co. and a plan for The
NutraSweet Company, shall provide for the granting of options
or stock appreciation rights to purchase or receive the
appreciation on the shares of any class of stock of the
Company, or the making of bonus commitments or bonus awards
payable in any class of stock of the Company, which in either
form or substance are comparable to those authorized under this
Incentive Plan, unless such Other Plan is established or
operated in connection with the assumption by the Company or a
Subsidiary of the plans, options, stock appreciation rights,
bonus commitments or bonus awards of another corporation, or
the substitution of an Other Plan or options, stock
appreciation rights, bonus commitments or bonus awards under
such Other Plan in lieu of the plans, options, stock
appreciation rights, bonus commitments or bonus awards of such
other corporation, arising out of a merger or consolidation
with, or the acquisition of assets or stock of, such other
corporation, or other transaction described in Section 424(a)
of the Internal Revenue Code of 1986, as may be amended from
time to time, as in effect at the time.
A-12
<PAGE> 41
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
MONSANTO
<PAGE> 42
MONSANTO
PLACE: World Headquarters
800 N. Lindbergh Blvd.
St. Louis County, Mo.
Common Stock
PROXY
Annual
Meeting
1:30 P.M.
April 22, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Richard J. Mahoney, Robert B. Shapiro,
and Richard W. Duesenberg, and each of them, with full power of
substitution, proxies to vote all shares of Common Stock of Monsanto
Company which the undersigned is entitled to vote at the 1994 Annual
Meeting of Stockholders, and any adjournments thereof, as specified
upon the matters indicated on the reverse side and in their discretion
upon such other matters as may properly come before the meeting.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN U.S.A.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED "FOR" ITEMS 1, 2, 3, 4, 5, 6, AND 7.
- -----------, 1994 ---------------------------------------------PLEASE SIGN
Date
Please sign your name or names exactly as printed hereon. When shares
are held by joint tenants, both should sign. Trustees and other
fiduciaries should so indicate when signing.
<PAGE> 43
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 3, 4, 5, 6,
AND 7.
1. Election of Directors / / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as written to vote for all
to the contrary below) nominees listed
below
R. J. Mahoney, J. T. Bok, R. M. Heyssel, G. S. King, P. Leder,
H. M. Love, F. A. Metz, Jr., B. Mickel, J. F. M. Peters,
N. L. Reding, J. S. Reed, W. D. Ruckelshaus, R. B. Shapiro, and J.
B. Slaughter.
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in this space.)
2. Approval of Monsanto Management Incentive Plan of 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of Searle/Monsanto Stock Plan of 1994.
/ / FOR / / AGAINST / / ABSTAIN
4. Approval of NutraSweet/Monsanto Stock Plan of 1994.
/ / FOR / / AGAINST / / ABSTAIN
5. Approval of Annual Incentive Program for Executive Officers.
/ / FOR / / AGAINST / / ABSTAIN
6. Approval of Long-Term Incentive Program for Executive Officers.
/ / FOR / / AGAINST / / ABSTAIN
7. Ratification of Deloitte & Touche as principal independent auditors
for 1994. / / FOR / / AGAINST / / ABSTAIN
PLEASE SIGN ON REVERSE SIDE.
<PAGE> 44
TO PARTICIPANTS IN: SAVINGS AND INVESTMENT PLAN (SIP) AND
PAYROLL RELATED EMPLOYEE STOCK OWNERSHIP PLAN
Participants may instruct the Trustee as to the manner in which
Monsanto stock held for their accounts and entitled to vote shall be
voted at Stockholders' meetings. The enclosed Notice of Annual Meeting
of Stockholders and Proxy Statement for Monsanto Company's 1994 Annual
Meeting is being provided to you by the Trustee. If you desire to
instruct the Trustee in the voting of your Plan shares, you should fill
in the reverse side of this voting form, date, sign, and return this
form in the enclosed envelope. No postage is required if mailed in the
U.S.A. The shares will be voted at the Annual Meeting to be held at the
Company's World Headquarters, 800 North Lindbergh Blvd., St. Louis
County, Missouri, on April 22, 1994, at 1:30 p.m., or at any
adjournment thereof.
THE TRUSTEE MUST RECEIVE THIS FORM ON OR PRIOR TO APRIL 18, 1994. THE
TRUSTEE WILL VOTE YOUR SHARES AS YOU DIRECT ONLY IF THE SIGNED FORM IS
RECEIVED ON OR PRIOR TO APRIL 18, 1994, AND YOU HAVE SPECIFIED YOUR
DIRECTIONS HEREIN. OTHERWISE, THE TRUSTEE WILL VOTE YOUR SIP SHARES IN
PROPORTION TO THE VOTES OF THE OTHER SIP PARTICIPANTS.
MONSANTO
---------, 1994 --------------------------
Date Signature
<PAGE> 45
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 3, 4, 5, 6,
AND 7 AND TO "GRANT AUTHORITY" FOR ITEM 8.
1. Election of / / FOR all nominees listed below / / WITHHOLD AUTHORITY
Directors (except as written to the to vote for all
contrary below) nominees listed
below
R. J. Mahoney, J. T. Bok, R. M. Heyssel, G. S. King, P. Leder,
H. M. Love, F. A. Metz, Jr., B. Mickel, J. F. M. Peters,
N. L. Reding, J. S. Reed, W. D. Ruckelshaus, R. B. Shapiro, and J.
B. Slaughter.
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in this space.)
2. Approval of Monsanto Management Incentive Plan of 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of Searle/Monsanto Stock Plan of 1994.
/ / FOR / / AGAINST / / ABSTAIN
4. Approval of NutraSweet/Monsanto Stock Plan of 1994.
/ / FOR / / AGAINST / / ABSTAIN
5. Approval of Annual Incentive Program for Executive Officers.
/ / FOR / / AGAINST / / ABSTAIN
6. Approval of Long-Term Incentive Program for Executive Officers.
/ / FOR / / AGAINST / / ABSTAIN
7. Ratification of Deloitte & Touche as principal independent auditors
for 1994. / / FOR / / AGAINST / / ABSTAIN
- ------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO "GRANT AUTHORITY" FOR ITEM 8.
8. In the Trustee's discretion, upon such other matters as may
properly come before the meeting.
/ / GRANT AUTHORITY / / WITHHOLD AUTHORITY
THE PROXY FOR WHICH YOUR INSTRUCTIONS ARE REQUESTED IS SOLICITED ON
BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
(Please sign on reverse side.)
<PAGE> 46
(THIS PLAN IS BEING SUBMITTED PURSUANT TO INSTRUCTION 3 TO ITEM 10 OF SCHEDULE
14A. IT IS NOT PRINTED IN THE PROXY STATEMENT CIRCULATED TO INVESTORS.)
NUTRASWEET/MONSANTO STOCK PLAN
OF 1994
I. GENERAL PROVISIONS
1. PURPOSES
The NutraSweet/Monsanto Stock Plan of 1994 is designed:
* to attract, motivate and retain for the Company and its
Subsidiaries and Associated Companies personnel of exceptional
ability,
* to encourage ownership of Monsanto common stock by management,
* to align management interests with those of stockholders, and
* to provide a competitive executive compensation program.
This Incentive Plan shall be effective February 1, 1994 ("Effective
Date"), subject to the approval of this Incentive Plan by the
stockholders of Monsanto Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50% of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting
power).
"Award" means any Stock Option, Stock Appreciation Right, Restricted
Share, unrestricted Share, or dividend equivalent unit awarded under
this Incentive Plan.
"Board" means Board of Directors of the Company.
"Committee" means the NutraSweet/Monsanto Stock Grant Committee of
the Board, or its permitted delegate.
"Company" means The NutraSweet Company.
"Eligible Participant" means any officer or other salaried employee
(including a director who is a
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<PAGE> 47
salaried employee) of the Company, a Subsidiary or an Associated
Company except that no Reporting Person shall be an Eligible
Participant.
"Incentive Plan" means the NutraSweet/Monsanto Stock Plan of 1994,
set forth herein.
"Fair Market Value" shall mean, with respect to any given day, the
average of the highest and lowest sales prices of the Shares
reported as the New York Stock Exchange-Composite Transactions for
such day, or if the Shares were not traded on the New York Stock
Exchange on such day, then on the next preceding day on which the
Shares were traded, all as reported by The Wall Street Journal, mid-
west edition, under the heading New York Stock Exchange-Composite
Transactions or by such other source as the Committee may select.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"Monsanto" means Monsanto Company, a Delaware corporation.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Participant" means an Eligible Participant to whom an Award has
been granted pursuant to this Incentive Plan.
"Reporting Person" means a person subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934
(or any law, rule, regulation or other provision that may replace
such statute) with respect to Shares.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Section 6 of Article II of this
Incentive Plan.
"Shares" means shares of common stock of Monsanto and any shares of
stock or other securities received as a result of a Share adjustment
as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section 5 of
Article II of this Incentive Plan.
"Stock Appreciation Right Fair Market Value" or "SAR Fair Market
Value" shall mean a value established by
2
<PAGE> 48
the Committee for the exercise of a Stock Appreciation Right.
"Stock Option" or "Option" shall mean Incentive Stock Options and/or
Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in
one of the other corporations in such chain; and (ii) for the
purposes of a Non-Qualified Stock Option, an Award of Shares
(restricted or not) or a Stock Appreciation Right, any corporation
(or partnership, joint venture, or other enterprise) of which the
Company owns or controls, directly or indirectly, 50% or more of the
outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting
power).
"Termination of Employment" means the discontinuance of employment
of a Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock Option,
a change of employment of a Participant within the group consisting
of Monsanto and its Subsidiaries; and (ii) for the purpose of a Non-
Qualified Stock Option, a Stock Appreciation Right or an Award of
Shares (restricted or not), a change of employment of a Participant
within the group consisting of Monsanto and its Subsidiaries, or, if
the Committee so determines, a change of employment of a Participant
within the group consisting of Monsanto, its Subsidiaries and
Associated Companies.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the
NutraSweet/Monsanto Stock Grant Committee of the Board, except
to the extent the NutraSweet/Monsanto Stock Grant Committee
delegates administration pursuant to this paragraph. The
NutraSweet/Monsanto Stock Grant Committee may delegate all or
a portion of the administration of this Incentive Plan to the
Executive Compensation and Development Committee of the Board
or to any Committee consisting of one
3
<PAGE> 49
or more senior managers of the Company or its Subsidiaries.
(b) The Committee shall have the exclusive right to interpret this
Incentive Plan, to select from among the Eligible Participants
the persons who are to receive Awards, and to act in all
matters pertaining to the granting of Awards under this
Incentive Plan including, without limitation, the timing,
pricing, amount and terms of any Award and the amendment
thereof consistent with the provisions of this Incentive Plan.
No Eligible Participant shall have any right to be considered
for or to receive any Awards. All acts and decisions of the
Committee with respect to any questions arising in connection
with the administration and interpretation of this Incentive
Plan, including the severability of any and all of the
provisions thereof, shall be conclusive, final and binding
upon all Eligible Participants.
(c) The Committee may adopt and amend from time to time, rules and
regulations of general application for the administration of
this Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of
this Article I (and notwithstanding any other provisions of
this Incentive Plan), the Committee is authorized to take such
action as it determines to be necessary or advisable, and fair
and equitable to Participants, with respect to Options, Stock
Appreciation Rights, Awards of Restricted Shares and other
Awards in the event of: a merger of Monsanto with,
consolidation of Monsanto into, or the acquisition of Monsanto
by, another corporation; a sale or transfer of all or substan-
tially all of the assets of Monsanto to another corporation or
any other person or entity, a tender or exchange offer for
Shares made by any corporation, person or entity (other than
Monsanto); or other reorganization in which Monsanto will not
survive as an independent, publicly-owned corporation. Such
action may include (but shall not be limited to) establishing,
amending or waiving the forms, terms, conditions and duration
of Stock Options, Stock Appreciation Rights, Awards of
Restricted Shares and other Awards so as to provide for
earlier, later, extended or additional times for exercise or
payments, differing methods for calculating payments,
alternate forms and amounts of payment, accelerated release of
restrictions or
4
<PAGE> 50
other modifications. The Committee may take such actions
pursuant to this Section 3(d) by adopting rules and
regulations of general applicability to all Participants
or to certain categories of Participants, by including,
amending or waiving terms and conditions in Option and Stock
Appreciation Right grants, Awards (including, without limita-
tion, agreements with respect to Restricted Shares), or by
taking action with respect to individual Participants. The
Committee may take such actions as part of the Awards, or
before or after the public announcement of any such merger,
consolidation, acquisition, sale or transfer of assets, tender
or exchange offer or other reorganization.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock dividend,
stock split, recapitalization, merger, consolidation, or other
change in capitalization, or a sale by Monsanto of all or part of
its assets, or any distribution to stockholders other than a cash
dividend results in (a) the outstanding Shares, or any securities
exchanged therefor or received in their place, being exchanged for
a different number or class of shares of stock or other securities
of Monsanto, or for shares of stock or other securities of any other
corporation; or (b) new, different or additional shares or other
securities of Monsanto or of any other corporation being received by
the holders of outstanding Shares, then:
(i) the total number of Shares authorized for Awards under this
Incentive Plan;
(ii) the number and class of Shares (A) that may be subject to
Stock Options or Stock Appreciation Rights, (B) which have not
been issued or transferred under outstanding Stock Options or
Stock Appreciation Rights, and (C) which have been awarded but
are undelivered under this Incentive Plan; and
(iii) the purchase price to be paid per Share under outstanding
Stock Options and the number of Shares to be transferred in
settlement of outstanding Stock Appreciation Rights;
shall in each case be equitably adjusted as determined by the
Committee in its discretion; provided, however, that all adjustments
made as the result of the foregoing in respect of each Stock Option
which is
5
<PAGE> 51
granted as an Incentive Stock Option shall be made so that
such Stock Option shall continue to be an Incentive Stock Option as
defined in Section 422 of the Internal Revenue Code of 1986, as may
be amended from time to time, or any provisions that may hereafter
be enacted in lieu thereof.
5. SHARES AUTHORIZED
The total number of Shares for which Awards may be granted under
this Incentive Plan shall not exceed 770,000 Shares.
Notwithstanding the foregoing, the total number of Shares that shall
be available for Awards of Restricted or unrestricted Shares shall
be 1/2 of 1% of the total number of outstanding Shares. The
limitations in this Section 5 are subject to the adjustments
provided for in Section 4 of this Article I and the provisions of
Sections 1(b) and 1(d) of Article II of this Incentive Plan.
The total number of Shares for which Awards may be granted under
this Incentive Plan to any one Eligible Participant shall not exceed
in any one calendar year 5% of the total number of Shares for which
Awards may be made under this Incentive Plan, subject to the
adjustments provided for in Section 4 of this Article I.
II. AWARDS
1. SHARES USED FOR AWARDS
(a) The Shares for which Awards may be granted under this
Incentive Plan may be authorized but unissued Shares, or
treasury Shares, or both.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason
other than a surrender of the Option pursuant to Section l(c)
of this Article II or the exercise of a Stock Appreciation
Right under Section 5 of this Article II, the Shares subject
to such Option shall again be available for award without
again being charged against the authorized Shares set forth in
Section 5 of Article I, provided the Participant whose Stock
Option has lapsed or ceased to be exercisable has received no
benefits of ownership from the Shares. Any amendment of any
Option or Stock Appreciation Right by the Committee pursuant
to Article I, Section 3 of this Incentive Plan shall not be
considered the grant of a new Option for the purpose of
Section 5 of Article I.
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<PAGE> 52
(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the
consent of the Participant, his legal representative, or in
the event of death, a beneficiary designated in writing by the
Participant during his lifetime, authorize payment, in cash or
in Shares, or partly in cash and partly in Shares, as the
Committee may direct, of an amount equal to the difference at
the time between the Fair Market Value of the Shares subject
to an Option and the Option price in consideration of the
surrender of the Option. In such an event the Shares subject
to the Option so surrendered shall be charged against the
limitations set forth in Section 5 of Article I.
(d) In the event that any Restricted or unrestricted Share Award
or installment thereof ceases to be payable for any reason,
the Shares subject to such Award shall again be available for
Award without again being charged against the limitations on
the number of Shares set forth in Section 5 of Article I,
provided the Participant whose Award ceases to be payable has
received no benefits of ownership from the Shares.
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
(a) An Award of Stock Options or Stock Appreciation Rights may be
made at such time or times determined by the Committee
following the Effective Date to any Eligible Participant,
except that Incentive Options may not be awarded to employees
of Associated Companies. Each Stock Option and Stock
Appreciation Right shall be granted subject to such terms and
conditions, if any, not inconsistent with this Incentive Plan,
as shall be determined by the Committee, including any
provisions as to continued employment as consideration for the
grant or exercise of such Option or Stock Appreciation Right,
provisions as to performance conditions and any provisions
which may be advisable to comply with applicable laws,
regulations or rulings of any governmental authority.
(b) An Incentive Stock Option shall not be transferable by the
Participant except by will, by the laws of descent and
distribution, or pursuant to a written beneficiary
designation, and shall be exercisable during the lifetime of
the Participant only by him or by his guardian or legal
representative. A Non-Qualified Stock Option or
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<PAGE> 53
Stock Appreciation Right shall not be transferrable except by
will, by the laws of descent and distribution, pursuant to a
written beneficiary designation, pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income
Security Act or the rules thereunder, or in such circumstances
as would not result in the failure to comply with Rule 16b-3
under the Securities Exchange Act of 1934 (or any successor
rule or provision) if the transferor were a Reporting Person.
(c) Shares purchased upon exercise of a Stock Option shall be paid
for in such amounts, at such times and upon such terms as
shall be determined by the Committee and specified in the
grant of the Option. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of
Stock Options which permit the Participant to deliver Shares
(or other evidence of ownership of Shares satisfactory to the
Company), including, at the Committee's option, Restricted
Shares, with a Fair Market Value equal to the Option price as
payment.
(d) The Option price per share shall be established by the grant
and shall not be decreased thereafter except pursuant to
Section 4 of Article I of this Incentive Plan.
(e) The Committee, in its discretion, may provide for the
escalation of the Option price per Share over all or part of
the term of the Option.
(f) The Committee, in its discretion, may offer Participants the
opportunity to elect to receive an Option grant in lieu of a
salary increase or a bonus or may offer Participants the
opportunity to purchase Options for cash or such other
consideration as the Committee in its discretion determines.
(g) The Committee, in its discretion, may require as a condition
to the grant or vesting of Options, the deposit of Shares
owned by the Participant receiving such grant, and the
forfeiture of such Options, if such deposit is not made or
maintained during the required holding period. Such deposited
Shares may not be otherwise sold, pledged or disposed of
during the applicable holding period.
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3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422 of the Internal Revenue Code of 1986,
as may be amended from time to time, as in effect at the time of the
grant of any such Option, or any statutory provision that may be
enacted to replace such Section. Each provision of this Incentive
Plan and of each Incentive Stock Option granted hereunder shall be
construed so that each such Option shall be an Incentive Stock
Option, and any provision thereof that cannot be so construed shall
be disregarded. Incentive Stock Options shall be granted only to
purchase unrestricted Shares each of whom may be granted one or more
such Options at such time or times determined by the Committee
following the Effective Date until January 31, 2004, subject to the
following conditions:
(a) The Option price per Share shall be set by the grant but shall
not be less than 100% of the Fair Market Value at the time of
the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following, Termination
of Employment as shall have been determined by the Committee
and as specified in the Option or Stock Appreciation Right;
provided, however, that such period following Termination of
Employment shall not exceed twelve months unless employment
shall have terminated:
(i) as a result of retirement pursuant to, and as defined in
an applicable pension plan of Monsanto, its Subsidiary
or Associated Company or total and permanent disability
as determined by the Committee;
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend
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the original exercise period of the Option or related Stock
Appreciation Right, if any.
(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which
Incentive Stock Options are first exercisable during any
calendar year by any Eligible Participant shall not exceed
$100,000; however, if the Fair Market Value of Incentive Stock
Option Shares (at date of grant) exceeds $100,000 in the
calendar year in which Incentive Stock Options are first
exercisable, Shares with a Fair Market Value at date of grant
exceeding $100,000 shall not be deemed to be Incentive Stock
Options.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option is granted, does not
own stock possessing more than 10% of the total combined
voting power of all classes of stock of Monsanto.
(e) Any other terms and conditions which the Committee determines,
upon advice of counsel, should be imposed for the Option to
qualify as an Incentive Stock Option and any other terms and
conditions not inconsistent with this Incentive Plan as
determined by the Committee; including provisions making the
Shares subject to such Option Restricted Shares or provisions
making vesting or the ability to exercise subject to
performance conditions.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at
the time of the grant (or such later date as the Committee
shall determine to be the grant date).
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and
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cease to be exercisable upon, or within such period following,
Termination of Employment as shall have been determined by the
Committee and as specified in the Option or Stock Appreciation
Right; provided, however, that such period following Termination
of Employment shall not exceed twelve months unless employment
shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of Monsanto, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee;
or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Incentive Plan as determined by the
Committee, including provisions making the Shares subject to
such Option Restricted Shares or provisions making vesting or
the ability to exercise subject to the satisfaction of
performance conditions.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible Participant
in connection with (and only in connection with) an Incentive Stock
Option or a Non-Qualified Option granted under this Plan, or under
any other incentive plan of Monsanto or its Subsidiaries which was
approved by the Monsanto shareholders, subject to the following
terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option within the period specified for the exercise of the
Option in the related Option grant to surrender the
unexercised Option (or a portion thereof) and to receive in
exchange therefor a payment in cash or Shares having an
aggregate value equal to the product of (i) the amount by
which (A) the SAR Fair Market Value of
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each Share exceeds (B) the Option price per Share, times (ii) the
number of Shares under the Option, or portion thereof, which is
surrendered.
(b) Except as otherwise expressly provided herein, each Stock
Appreciation Right granted hereunder shall be subject to the
same terms and conditions as the related Option. It shall be
exercisable only to the extent such Option is exercisable and
shall terminate or lapse and cease to be exercisable when the
related Option terminates or lapses. The Committee may grant
Stock Appreciation Rights concurrently with grants of Options
or in connection with previously granted Options under this
Incentive Plan which are unexercised and have not terminated
or lapsed. With respect to Stock Appreciation Rights granted
in connection with such previously granted Options, the
Committee shall provide that such Stock Appreciation Rights
shall not be exercisable until the holder completes six (6)
months (or such longer period as the Committee shall
determine) of service with the Company, a Subsidiary, or an
Associated Company immediately following the date of the grant
of such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine in each
case whether the payment will be in the form of all cash, all
Shares (which may, at the Committee's discretion, be
Restricted Shares), or any combination thereof. If payment is
to be made in Shares, the number of Shares shall be determined
as follows: the amount payable in Shares shall be divided by
the SAR Fair Market Value of Shares.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented
by the Option or portion thereof which is surrendered. To the
extent that a Stock Appreciation Right shall be exercised, any
Shares transferred upon such exercise shall not be charged
against the maximum limitations upon the grant of Options set
forth in this Incentive Plan under which such Option shall
have been granted but the Option in connection with which a
Stock Appreciation Right shall have been granted shall be
deemed to have been exercised for the purpose of such maximum
limitations.
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(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof
upon exercise of Stock Appreciation Rights hereunder, whether
in a lump sum, in annual installments or otherwise deferred
and the Committee shall have sole discretion to determine
whether such payments may bear amounts equivalent to interest
or cash dividends.
(f) For purposes of this paragraph 5(f) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) Monsanto, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Offer" means any tender or exchange offer made by an
Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such
Shares;
(iii) "Change of Control" means any acquisition, beneficially
or otherwise, by any Unrelated Party of 25% or more of
the combined voting power of the common and preferred
stock of Monsanto and shall be deemed to occur upon the
date that the Unrelated Party attains control of said
25% or more of the combined voting power;
(iv) "Change of Control Market Value" of the Shares means the
higher of--
(A) the value for which such Shares may be exchanged
or offered under any Offer pursuant to which
Shares are actually exchanged or purchased; or
(B) the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Offer or
Change of Control, a Participant holding an unexercised Stock
Appreciation Right may exercise such Stock Appreciation Right
and elect to be paid solely in cash in an amount equal to the
difference between the Option price and the Change of Control
Market Value of the Shares, unless within five (5) business
days after receipt of notification of
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such election by the Secretary of Monsanto, the Committee acts to
disapprove the cash election. Unless it acts to disapprove, the
Committee's consent shall be deemed to be given at the close of
business on the fifth business day after the Secretary's receipt
of notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only:
(x) during the thirty (30) day period following the first
exchange or purchase of Shares pursuant to an Offer; or (y)
during the thirty (30) day period following the date on which
sufficient Shares are acquired to constitute a Change of
Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) Monsanto, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common
and preferred stock of Monsanto specified by the
Committee (but not less than 10%) and shall be deemed to
occur upon the date that the Unrelated Party attains
control of said percentage of the combined voting power;
(iii) "Change of Control Termination of Employment" means the
termination of employment of a Participant by Monsanto,
the Subsidiaries or the Associated Companies without
cause (as defined by the Committee) or by the Partici-
pant for good reason (as defined by the Committee)
within a period of time specified by the Committee
following an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of the Shares
means the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3 of
Article I of this Incentive Plan, in the event of an Alternate
Change of Control and a Change of Control
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Termination of Employment, a Participant holding an unexercised
Stock Appreciation Right who is selected by the Committee may
exercise such Stock Appreciation Right and elect to be paid
solely in cash in an amount equal to the difference between
the Option price and the Alternate Change of Control Market
Value of the Shares, unless within five (5) business days
after receipt of notification of such election by the
Secretary of Monsanto, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only
during the thirty (30) day period following a Change of
Control Termination of Employment.
6. BONUS SHARES AND RESTRICTED SHARES
(a) An Award of Shares or Restricted Shares may be made at such
time or times determined by the Committee following the
Effective Date to any Eligible Participant. The Committee
shall have full discretion to determine the terms and
conditions of payment of any Award, including without
limitation, what part of such Award shall be paid in
unrestricted Shares and Restricted Shares, the time or times
of payment of any Award, and the time or times of the lapse of
the restrictions on Restricted Shares.
(b) For the purpose of determining the number of Shares to be used
in payment of an Award, the amount of the Award payable in
Shares shall be divided by the Fair Market Value of the Shares
on the date of the determination of the amount of the Award by
the Committee, or if the Committee so directs, the date
immediately preceding the date the Award is paid.
(c) The portion of an Award payable in Restricted Shares shall be
paid at the time of the Award either by book-entry
registration or by delivering to the Participant, or a
custodian or escrow designated by the Committee and the
Participant, a certificate or certificates for such Restricted
Shares, registered in the name of such Participant. The
Participant shall have all of the rights of a stockholder with
respect to such
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Shares, subject to such terms and conditions, including
forfeitures or resale to the Company, if any, as may
be determined by the Committee. The Committee and the
Participant may designate the Company, Monsanto or one or more
employees to act as custodian or escrow for the certificates.
(d) The Committee, in its discretion, may require as a condition
to the grant of any Shares or Restricted Shares, the deposit
of Shares owned by the Participant receiving such grant, and
the forfeiture of the Award of Shares or Restricted Shares, if
such deposit is not made or maintained during any applicable
restricted period. Such deposited Shares may not be otherwise
sold, pledged or disposed of during any applicable restricted
period.
(e) Restricted Shares shall be subject to such terms and condi-
tions, including forfeiture, if any, and to such restrictions
against sale, transfer or other disposition as may be
determined by the Committee at the time a Non-Qualified Option
for the purchase of Restricted Shares is granted, at the time
a Stock Appreciation Right to be settled with Restricted
Shares is granted or at the time of making an Award of
Restricted Shares. Any new or additional or different Shares
or other securities resulting from any adjustment of such
Shares of the type described in Section 4 of Article I shall
be subject to the same terms, conditions, and restrictions as
the Restricted Shares prior to such adjustment. The Committee
may, in its discretion, remove, modify or accelerate the
release of restrictions on any Restricted Shares in the event
of hardship or disability of the Participant while employed,
in the event that the Participant ceases to be an employee of
Monsanto, a Subsidiary or Associated Company, as the result of
death or otherwise, in the event of a relocation of a
Participant to another country or for such other reasons as
the Committee may deem appropriate. In the event of the death
of a Participant following the transfer of Restricted Shares
to him, the legal representative of the Participant, the
beneficiary designated in writing by the Participant during
his lifetime, or the person receiving such Shares under his
will or under the laws of descent and distribution shall take
such Shares subject to the same restrictions, conditions and
provisions in effect at the time of his death, to the extent
applicable.
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7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered or on Shares subject to unexercised
Options. The Committee may provide, however, that a
Participant to whom an Option has been awarded which is
exercisable in whole or in part at a future time for Shares or
a Participant who has been awarded Shares payable in whole or
in part at a future time, shall be entitled to receive an
amount per Share, equal in value to the cash dividends, if
any, paid per Share on issued and outstanding Shares, as of
the dividend record dates occurring during the period between
the date of the Award and the time each such Share is
delivered. Such amounts (herein called "dividend
equivalents") may, in the discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior to
or at the time of the delivery of such Shares or upon
expiration of the Option if it shall not have been fully
exercised (except that payment of dividend equivalents
on Incentive Options may not be made prior to exercise);
or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in
such manner, at such value, and deliverable at such time
or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited) shall
be charged against the limitations set forth in Section 5 of
Article I.
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any Award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
(c) The Committee, in its discretion, may provide that dividends
paid on Restricted Shares shall, during the applicable
restricted period, be held by the Company to be paid upon the
lapse of restrictions or to be forfeited upon forfeiture of
the Shares.
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III. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option nor Stock Appreciation Right shall be
transferable except as provided for herein. If any Participant
makes such a transfer in violation hereof, any obligation of the
Company with respect to such Stock Option or Stock Appreciation
Right shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other document
describing or referring to this Incentive Plan shall be deemed to
confer on any employee or Participant the right to continue in the
employ of his employer or affect the right of his employer to termi-
nate the employment of any such person with or without cause.
3. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
4. The Company may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes which
the Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Stock Option or the exercise
thereof, any Stock Appreciation Right or the exercise thereof, or
the grant of any other Award, including, but not limited to, the
withholding of cash or Shares which would be paid or delivered
pursuant to such exercise or Award or another exercise or Award
under this Incentive Plan until the Participant reimburses the
Company for the amount the Company is required to withhold with
respect to such taxes, or cancelling any portion of such Award or
another Award under this Incentive Plan in an amount sufficient to
reimburse itself for the amount it is required to so withhold, or
selling any property contingently credited by the Company for the
purpose of paying such Award or another Award under this Incentive
Plan, in order to withhold or reimburse itself for the amount it is
required to so withhold. The Committee may permit a Participant (or
any beneficiary or other person authorized to act) to elect to pay
a portion or all of any amounts required or permitted to be withheld
to satisfy federal, state, local or foreign tax obligations by
directing the Company to withhold a number of whole Shares which
would otherwise be distributed and which have a Fair Market Value
sufficient to cover the amount of such required or permitted
withholding taxes.
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IV. AMENDMENTS
1. The Board may from time to time amend or modify this Incentive Plan,
provided that no amendments or modifications to this Incentive Plan
shall, without the prior approval of the stockholders normally
entitled to vote for the election of directors of Monsanto:
(a) permit the Company to decrease the Option price on any
outstanding Option;
(b) permit any change which would require the approval of
stockholders of Monsanto under Section 16 of the Securities
Exchange Act of 1934 or the rules thereunder or under Section
422 of the Internal Revenue Code of 1986, or the rules
thereunder (or any laws, rules, regulations or other
provisions that may replace such statutes or rules); or
(c) change any of the provisions of this Article IV.
2. No amendment to or discontinuance of this Incentive Plan or any
provision thereof by the Board or the stockholders of Monsanto
shall, without the written consent of the Participant, adversely
affect any Stock Option or Stock Appreciation Right theretofore
granted or other Award theretofore made to such Participant under
this Incentive Plan.
V. INTERPRETATION
1. Except as authorized herein with respect to Stock Appreciation
Rights, this Incentive Plan is not intended to and shall not affect
any option or stock appreciation right grant or other award under
any other incentive plan of Monsanto, its Subsidiaries and
Associated Companies. No stock options, stock appreciation rights
or Restricted Share awards shall be granted under the
NutraSweet/Monsanto Stock Plan of 1991 after February 1, 1994.
2. This Incentive Plan is not intended to and shall not preclude the
establishment or operation by the Company or any Subsidiary of (a)
any thrift, savings and investment, achievement award, stock
purchase, employee recognition or other benefit plan or arrangement
for any group of employees, or (b) any other incentive or bonus plan
or arrangement for any employees (hereinafter "Other Plan"), and any
such Other Plan may be authorized and payments made thereunder
independently of this Incentive Plan.
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(THIS PLAN IS BEING SUBMITTED PURSUANT TO INSTRUCTION 3 TO ITEM 10 OF SCHEDULE
14A. IT IS NOT PRINTED IN THE PROXY STATEMENT CIRCULATED TO INVESTORS.)
SEARLE/MONSANTO STOCK PLAN
OF 1994
I. GENERAL PROVISIONS
1. PURPOSES
The Searle/Monsanto Stock Plan of 1994 is designed:
* to attract, motivate and retain for the Company and its
Subsidiaries and Associated Companies personnel of exceptional
ability,
* to encourage ownership of Monsanto common stock by management,
* to align management interests with those of stockholders, and
* to provide a competitive executive compensation program.
This Incentive Plan shall be effective February 1, 1994 ("Effective
Date"), subject to the approval of this Incentive Plan by the
stockholders of Monsanto Company.
2. DEFINITIONS
Except where the context otherwise indicates, the following
definitions apply:
"Associated Company" means any corporation (or partnership, joint
venture, or other enterprise), of which the Company owns or
controls, directly or indirectly, 10% or more, but less than 50% of
the outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting
power).
"Award" means any Stock Option, Stock Appreciation Right,
Restricted Share, unrestricted Share, dividend equivalent unit, or
other award awarded under this Incentive Plan.
"Board" means Board of Directors of the Company.
"Committee" means the Executive Compensation and Development
Committee of the Board, or its permitted delegate.
"Company" means G. D. Searle & Co.
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"Eligible Participant" means any officer or other salaried employee
(including a director who is a salaried employee) of the Company,
a Subsidiary or an Associated Company except that no Reporting
Person shall be an Eligible Participant.
"Incentive Plan" means the Searle/Monsanto Stock Plan of 1994, set
forth herein.
"Fair Market Value" shall mean, with respect to any given day, the
average of the highest and lowest sales prices of the Shares
reported as the New York Stock Exchange-Composite Transactions for
such day, or if the Shares were not traded on the New York Stock
Exchange on such day, then on the next preceding day on which the
Shares were traded, all as reported by The Wall Street Journal,
mid-west edition, under the heading New York Stock
Exchange-Composite Transactions or by such other source as the
Committee may select.
"Incentive Stock Option" or "Incentive Option" means an option
meeting the definition of that term as set forth in Section 3 of
Article II of this Incentive Plan.
"Monsanto" means Monsanto Company, a Delaware corporation.
"Non-Qualified Stock Option" or "Non-Qualified Option" means an
option referred to in Section 4 of Article II of this Incentive
Plan.
"Participant" means an Eligible Participant to whom an Award has
been granted pursuant to this Incentive Plan.
"Reporting Person" means a person subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of
1934 (or any law, rule, regulation or other provision that may
replace such statute) with respect to Shares.
"Restricted Shares" means Shares that were made subject to
restrictions in accordance with Section 6 of Article II of this
Incentive Plan.
"Shares" means shares of common stock of Monsanto and any shares of
stock or other securities received as a result of a Share
adjustment as set forth in Section 4 of this Article I.
"Stock Appreciation Right" means a right referred to in Section 5 of
Article II of this Incentive Plan.
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"Stock Appreciation Right Fair Market Value" or "SAR Fair Market
Value" shall mean a value established by the Committee for the
exercise of a Stock Appreciation Right.
"Stock Option" or "Option" shall mean Incentive Stock Options and/or
Non-Qualified Stock Options.
"Subsidiary" means: (i) for the purpose of an Incentive Stock
Option, any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in
one of the other corporations in such chain; and (ii) for the
purposes of a Non-Qualified Stock Option, an Award of Shares
(restricted or not), or a Stock Appreciation Right, any corporation
(or partnership, joint venture, or other enterprise) of which the
Company owns or controls, directly or indirectly, 50% or more of the
outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and voting
power).
"Termination of Employment" means the discontinuance of employment
of a Participant for any reason other than a Transfer.
"Transfer" means: (i) for the purpose of an Incentive Stock Option,
a change of employment of a Participant within the group consisting
of Monsanto and its Subsidiaries; and (ii) for the purpose of a
Non-Qualified Stock Option, a Stock Appreciation Right or an Award
of Shares (restricted or not), a change of employment of a Partici-
pant within the group consisting of Monsanto and its Subsidiaries,
or, if the Committee so determines, a change of employment of a
Participant within the group consisting of Monsanto, its
Subsidiaries and Associated Companies.
3. ADMINISTRATION
(a) This Incentive Plan shall be administered by the Executive
Compensation and Development Committee of the Board (the
"ECDC"), except to the extent the ECDC delegates
administration pursuant to this paragraph. The ECDC may
delegate all or a portion of the administration of this
Incentive Plan to any Committee consisting of one or more
senior managers of the Company or its Subsidiaries.
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(b) The Committee shall have the exclusive right to interpret
this Incentive Plan, to select from among the Eligible
Participants the persons who are to receive Awards, and to
act in all matters pertaining to the granting of Awards under
this Incentive Plan including, without limitation, the timing,
pricing, amount and terms of any Award and the amendment
thereof consistent with the provisions of this Incentive Plan.
No Eligible Participant shall have any right to be considered
for or to receive any Awards. All acts and decisions of the
Committee with respect to any questions arising in connection
with the administration and interpretation of this Incentive
Plan, including the severability of any and all of the
provisions thereof, shall be conclusive, final and binding
upon all Eligible Participants.
(c) The Committee may adopt and amend from time to time rules and
regulations of general application for the administration of
this Incentive Plan.
(d) Without limiting the foregoing Sections 3(a), (b) and (c) of
this Article I (and notwithstanding any other provisions of
this Incentive Plan), the Committee is authorized to take such
action as it determines to be necessary or advisable, and fair
and equitable to Participants, with respect to Options, Stock
Appreciation Rights, Awards of Restricted Shares and other
Awards in the event of: a merger of Monsanto with,
consolidation of Monsanto into, or the acquisition of
Monsanto by, another corporation; a sale or transfer of all or
substantially all of the assets of Monsanto to another
corporation or any other person or entity, a tender or
exchange offer for Shares made by any corporation, person or
entity (other than Monsanto); or other reorganization in which
Monsanto will not survive as an independent, publicly-owned
corporation. Such action may include (but shall not be
limited to) establishing, amending or waiving the forms,
terms, conditions and duration of Stock Options, Stock
Appreciation Rights, Awards of Restricted Shares and other
Awards so as to provide for earlier, later, extended or
additional times for exercise or payments, differing methods
for calculating payments, alternate forms and amounts of
payment, accelerated release of restrictions or other
modifications. The Committee may take such actions pursuant
to this Section 3(d) by adopting rules and regulations of
general applicability to
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all Participants or to certain categories of Participants, by
including, amending or waiving terms and conditions in Option and
Stock Appreciation Right grants, other Awards (including, without
limitation, agreements with respect to Restricted Shares), or by
taking action with respect to individual Participants. The
Committee may take such actions as part of the grants,
commitments or awards, or before or after the public announcement
of any such merger, consolidation, acquisition, sale or transfer
of assets, tender or exchange offer or other reorganization.
4. SHARE ADJUSTMENTS
In the event that at any time or from time to time a stock
dividend, stock split, recapitalization, merger, consolidation, or
other change in capitalization, or a sale by Monsanto of all or part
of its assets, or any distribution to stockholders other than a
cash dividend results in (a) the outstanding Shares, or any
securities exchanged therefor or received in their place, being
exchanged for a different number or class of shares of stock or
other securities of Monsanto, or for shares of stock or other
securities of any other corporation; or (b) new, different or
additional shares or other securities of Monsanto or of any other
corporation being received by the holders of outstanding Shares,
then:
(i) the total number of Shares authorized for Awards under this
Incentive Plan;
(ii) the number and class of Shares (A) that may be subject to
Stock Options or Stock Appreciation Rights, (B) which have
not been issued or transferred under outstanding Stock Options
or Stock Appreciation Rights, and (C) which have been
awarded but are undelivered under this Incentive Plan; and
(iii) the purchase price to be paid per Share under outstanding
Stock Options and the number of Shares to be transferred in
settlement of outstanding Stock Appreciation Rights;
shall in each case be equitably adjusted as determined by the
Committee in its discretion; provided, however, that all adjustments
made as the result of the foregoing in respect of each Stock Option
which is granted as an Incentive Stock Option shall be made so
that such Stock Option shall continue to be an
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Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as may be amended from time to time, or any
provisions that may hereafter be enacted in lieu thereof.
5. SHARES AUTHORIZED
The total number of Shares for which Awards may be granted under
this Incentive Plan shall not exceed 1,430,000 Shares.
Notwithstanding the foregoing, the total number of Shares that
shall be available for Awards of Restricted or unrestricted Shares
shall be 1/2 of 1% of the total number of Shares outstanding. The
limitations in this Section 5 are subject to the adjustments
provided for in Section 4 of this Article I and the provisions of
Sections 1(b) and 1(d) of Article II of this Incentive Plan.
The total number of Shares for which Awards may be granted under
this Incentive Plan to any one Eligible Participant shall not
exceed in any one calendar year 5% of the total number of Shares
for which Awards may be made under this Incentive Plan, subject to
the adjustments provided for in Section 4 of this Article I.
II. AWARDS
1. SHARES USED FOR AWARDS
(a) The Shares for which Awards may be granted under this
Incentive Plan may be authorized but unissued Shares, or
treasury Shares, or both.
(b) In the event that any unexercised Stock Option granted
hereunder lapses or ceases to be exercisable for any reason
other than a surrender of the Option pursuant to Section l(c)
of this Article II or the exercise of a Stock Appreciation
Right under Section 5 of this Article II, the Shares subject
to such Option shall again be available for award without
again being charged against the authorized Shares set forth in
Section 5 of Article I, provided the Participant whose Stock
Option has lapsed or ceased to be exercisable has received no
benefits of ownership from the Shares. Any amendment of any
Option or Stock Appreciation Right by the Committee pursuant
to Article I, Section 3 of this Incentive Plan shall not be
considered the grant of a new Option for the purpose of
Section 5 of Article I.
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(c) In the event of death or total and permanent disability as
determined by the Committee, the Committee may, with the
consent of the Participant, his legal representative, or in
the event of death, a beneficiary designated in writing by the
Participant during his lifetime, authorize payment, in cash
or in Shares, or partly in cash and partly in Shares, as the
Committee may direct, of an amount equal to the difference at
the time between the Fair Market Value of the Shares subject
to an Option and the Option price in consideration of the
surrender of the Option. In such an event the Shares subject
to the Option so surrendered shall be charged against the
limitations set forth in Section 5 of Article I.
(d) In the event that any Restricted or unrestricted Share Award
or installment thereof ceases to be payable for any reason,
the Shares subject to such Award shall again be available for
award without again being charged against the limitations on
the number of Shares set forth in Section 5 of Article I,
provided the Participant whose Award ceases to be payable has
received no benefits of ownership from the Shares.
2. INCIDENTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
(a) An award of Stock Options or Stock Appreciation Rights may be
made at such time or times determined by the Committee
following the Effective Date to any Eligible Participant,
except that Incentive Options may not be awarded to employees
of Associated Companies. Each Stock Option and Stock
Appreciation Right shall be granted subject to such terms and
conditions, if any, not inconsistent with this Incentive
Plan, as shall be determined by the Committee, including any
provisions as to continued employment as consideration for the
grant or exercise of such Option or Stock Appreciation Right,
provisions as to performance conditions and any provisions
which may be advisable to comply with applicable laws,
regulations or rulings of any governmental authority.
(b) An Incentive Stock Option shall not be transferable by the
Participant except by will, by the laws of descent and
distribution, or pursuant to a written beneficiary designation,
and shall be exercisable during the lifetime of the
Participant only by him or by his guardian or legal
representative. A Non-Qualified Stock Option or
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Stock Appreciation Right shall not be transferable except by
will, by the laws of descent and distribution, pursuant to a
written beneficiary designation, pursuant to a qualified
domestic relations order as defined by the Internal Revenue
Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act or the rules thereunder, or in
such circumstances as would not result in the failure to
comply with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule or provision) if the transferor
were a Reporting Person.
(c) Shares purchased upon exercise of a Stock Option shall be
paid for in such amounts, at such times and upon such terms
as shall be determined by the Committee and specified in the
grant of the Option. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of
Stock Options which permit the Participant to deliver Shares
(or other evidence of ownership of Shares satisfactory to the
Company), including, at the Committee's option, Restricted
Shares, with a Fair Market Value equal to the Option price as
payment.
(d) The Option price per share shall be established by the grant
and shall not be decreased thereafter except pursuant to
Section 4 of Article I of this Incentive Plan.
(e) The Committee, in its discretion, may provide for the
escalation of the Option price per Share over all or part of
the term of the Option.
(f) The Committee, in its discretion, may offer Participants the
opportunity to elect to receive an Option grant in lieu of a
salary increase or a bonus or may offer Participants the
opportunity to purchase Options for cash or such other
consideration as the Committee in its discretion determines.
(g) The Committee, in its discretion, may require as a condition
to the grant or vesting of Options, the deposit of Shares
owned by the Participant receiving such grant, and the
forfeiture of such Options, if such deposit is not made or
maintained during the required holding period. Such deposited
Shares may not be otherwise sold, pledged or disposed of
during the applicable holding period.
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3. INCENTIVE OPTIONS
An Incentive Option shall be an "Incentive Stock Option" as that
term is defined in Section 422 of the Internal Revenue Code of
1986, as may be amended from time to time, as in effect at the time
of the grant of any such Option, or any statutory provision that may
be enacted to replace such Section. Each provision of this
Incentive Plan and of each Incentive Stock Option granted hereunder
shall be construed so that each such Option shall be an Incentive
Stock Option, and any provision thereof that cannot be so construed
shall be disregarded. Incentive Stock Options shall be granted only
to purchase unrestricted Shares each of whom may be granted one or
more such Options at such time or times determined by the Committee
following the Effective Date until January 31, 2004, subject to the
following conditions:
(a) The Option price per Share shall be set by the grant but
shall not be less than 100% of the Fair Market Value at the
time of the grant.
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following,
Termination of Employment as shall have been determined by
the Committee and as specified in the Option or Stock
Appreciation Right; provided, however, that such period
following Termination of Employment shall not exceed twelve
months unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined in
an applicable pension plan of Monsanto, its Subsidiary
or Associated Company or total and permanent disability
as determined by the Committee; or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
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(c) The aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which
Incentive Stock Options are first exercisable during any
calendar year by any Eligible Participant shall not exceed
$100,000; however, if the Fair Market Value of Incentive
Stock Option Shares (at date of grant) exceeds $100,000 in
the calendar year in which Incentive Stock Options are first
exercisable, Shares with a Fair Market Value at date of grant
exceeding $100,000 shall not be deemed to be Incentive Stock
Options.
(d) Incentive Stock Options shall be granted only to an Eligible
Participant who, at the time the Option is granted, does not
own stock possessing more than 10% of the total combined
voting power of all classes of stock of Monsanto.
(e) Any other terms and conditions which the Committee determines,
upon advice of counsel, should be imposed for the Option to
qualify as an Incentive Stock Option and any other terms and
conditions not inconsistent with this Incentive Plan as
determined by the Committee; including provisions making the
Shares subject to such Option Restricted Shares or provisions
making vesting or the ability to exercise subject to
performance conditions.
4. NON-QUALIFIED OPTIONS
One or more Options may be granted as Non-Qualified Options to
purchase unrestricted Shares or Restricted Shares to an Eligible
Participant at such time or times determined by the Committee,
following the Effective Date, subject to the following terms and
conditions:
(a) The Option price per Share shall be established by the grant
but shall not be less than 100% of the Fair Market Value at
the time of the grant (or such later date as the Committee
shall determine to be the grant date).
(b) The Option and its related Stock Appreciation Right, if any,
may be exercised in full or in part from time to time within
ten (10) years from the date of the grant, or such shorter
period as may be specified by the Committee in the grant,
provided that in any event each shall lapse and cease to be
exercisable upon, or within such period following, Termina-
tion of Employment as shall have been determined by the
Committee and as
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specified in the Option or Stock Appreciation Right;
provided, however, that such period following
Termination of Employment shall not exceed twelve months
unless employment shall have terminated:
(i) as a result of retirement pursuant to, and as defined
in, the applicable pension plan of Monsanto, its
Subsidiary or Associated Company or total and permanent
disability as determined by the Committee; or
(ii) as a result of death or death shall have occurred
following Termination of Employment and while the Option
or Stock Appreciation Right was still exercisable; and
provided, further, that such period following Termination of
Employment shall in no event extend the original exercise
period of the Option or related Stock Appreciation Right, if
any.
(c) The Option grant may include any other terms and conditions
not inconsistent with this Incentive Plan as determined by the
Committee, including provisions making the Shares subject to
such Option Restricted Shares or provisions making vesting
or the ability to exercise subject to the satisfaction of
performance conditions.
5. STOCK APPRECIATION RIGHTS
A Stock Appreciation Right may be granted to an Eligible
Participant in connection with (and only in connection with) an
Incentive Stock Option or a Non-Qualified Option granted under this
Plan, or under any other incentive plan of Monsanto or its
Subsidiaries which was approved by the Monsanto shareholders,
subject to the following terms and conditions:
(a) Such Stock Appreciation Right shall entitle a holder of an
Option within the period specified for the exercise of the
Option in the related Option grant to surrender the
unexercised Option (or a portion thereof) and to receive in
exchange therefor a payment in cash or Shares having an
aggregate value equal to the product of (i) the amount by
which (A) the SAR Fair Market Value of each Share exceeds (B)
the Option price per Share, times (ii) the number of Shares
under the Option, or portion thereof, which is surrendered.
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(b) Except as otherwise expressly provided herein, each Stock
Appreciation Right granted hereunder shall be subject to the
same terms and conditions as the related Option. It shall be
exercisable only to the extent such Option is exercisable and
shall terminate or lapse and cease to be exercisable when the
related Option terminates or lapses. The Committee may grant
Stock Appreciation Rights concurrently with grants of
Options or in connection with previously granted Options
under this Incentive Plan which are unexercised and have not
terminated or lapsed. With respect to Stock Appreciation
Rights granted in connection with such previously granted
Options, the Committee shall provide that such Stock Appreci-
ation Rights shall not be exercisable until the holder
completes six (6) months (or such longer period as the
Committee shall determine) of service with the Company, a
Subsidiary, or an Associated Company immediately following the
date of the grant of such Stock Appreciation Rights.
(c) The Committee shall have sole discretion to determine in each
case whether the payment will be in the form of all cash, all
Shares (which may, at the Committee's discretion, be
Restricted Shares), or any combination thereof. If payment is
to be made in Shares, the number of Shares shall be determined
as follows: the amount payable in Shares shall be divided by
the SAR Fair Market Value of Shares.
(d) Upon exercise of a Stock Appreciation Right, the number of
Shares subject to exercise under the related Option shall
automatically be reduced by the number of Shares represented
by the Option or portion thereof which is surrendered. To the
extent that a Stock Appreciation Right shall be exercised,
any Shares transferred upon such exercise shall not be
charged against the maximum limitations upon the grant of
Options set forth in this Incentive Plan under which such
Option shall have been granted but the Option in connection
with which a Stock Appreciation Right shall have been granted
shall be deemed to have been exercised for the purpose of such
maximum limitations.
(e) The Committee shall have sole discretion as to the timing of
any payment made in cash, Shares, or a combination thereof
upon exercise of Stock Appreciation Rights hereunder, whether
in a lump sum, in annual installments or otherwise deferred
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<PAGE> 77
and the Committee shall have sole discretion to determine
whether such payments may bear amounts equivalent to interest
or cash dividends.
(f) For purposes of this paragraph 5(f) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) Monsanto, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Offer" means any tender or exchange offer made by an
Unrelated Party for the Shares and shall be deemed to
occur upon the first purchase or exchange of such
Shares;
(iii) "Change of Control" means any acquisition, beneficially
or otherwise, by any Unrelated Party of 25% or more of
the combined voting power of the common and preferred
stock of Monsanto and shall be deemed to occur upon
the date that the Unrelated Party attains control of
said 25% or more of the combined voting power;
(iv) "Change of Control Market Value" of the Shares means the
higher of--
(A) the value for which such Shares may be exchanged
or offered under any Offer pursuant to which
Shares are actually exchanged or purchased; or
(B) the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3
of Article I of this Incentive Plan, in the event of an Offer
or Change of Control, a Participant holding an unexercised
Stock Appreciation Right may exercise such Stock Appreciation
Right and elect to be paid solely in cash in an amount equal
to the difference between the Option price and the Change of
Control Market Value of the Shares, unless within five (5)
business days after receipt of notification of such election
by the Secretary of Monsanto, the Committee acts to disapprove
the cash election. Unless it acts to disapprove, the
Committee's consent shall be deemed to be given at the close
of business on the fifth business day after the
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Secretary's receipt of notification of such election and payment
shall be made as soon as practicable after expiration of such
five (5) business day period. The election provided herein shall
apply only: (x) during the thirty (30) day period following the
first exchange or purchase of Shares pursuant to an Offer; or
(y) during the thirty (30) day period following the date on
which sufficient Shares are acquired to constitute a Change of
Control.
(g) For purposes of this paragraph 5(g) of Article II:
(i) "Unrelated Party" means any party or group of parties
acting together other than (A) Monsanto, its directors
and officers, or (B) any nominee holder for any stock
exchange;
(ii) "Alternate Change of Control" means any acquisition,
beneficially or otherwise, by any Unrelated Party of a
percentage of the combined voting power of the common
and preferred stock of Monsanto specified by the
Committee (but not less than 10%) and shall be deemed
to occur upon the date that the Unrelated Party attains
control of said percentage of the combined voting power;
(iii) "Change of Control Termination of Employment" means the
termination of employment of a Participant by Monsanto,
the Subsidiaries or the Associated Companies without
cause (as defined by the Committee) or by the Partici-
pant for good reason (as defined by the Committee)
within a period of time specified by the Committee
following an Alternate Change of Control;
(iv) "Alternate Change of Control Market Value" of the Shares
means the Fair Market Value of such Shares on the date
of exercise of a Stock Appreciation Right.
Notwithstanding the foregoing provisions of this Section 5 of
Article II and without limiting the provisions of Section 3
of Article I of this Incentive Plan, in the event of an
Alternate Change of Control and a Change of Control
Termination of Employment, a Participant holding an
unexercised Stock Appreciation Right who is selected by the
Committee may exercise such Stock Appreciation Right and elect
to be paid solely in cash in an amount equal to the difference
between
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the Option price and the Alternate Change of Control
Market Value of the Shares, unless within five (5) business
days after receipt of notification of such election by the
Secretary of Monsanto, the Committee acts to disapprove the
cash election. Unless it acts to disapprove, the Committee's
consent shall be deemed to be given at the close of business
on the fifth business day after the Secretary's receipt of
notification of such election and payment shall be made as
soon as practicable after expiration of such five (5) business
day period. The election provided herein shall apply only
during the thirty (30) day period following a Change of
Control Termination of Employment.
6. BONUS SHARES AND RESTRICTED SHARES
(a) An Award of Shares or Restricted Shares may be made at such
time or times determined by the Committee following the
Effective Date to any Eligible Participant. The Committee
shall have full discretion to determine the terms and
conditions of payment of any Award, including without
limitation, what part of such Award shall be paid in
unrestricted Shares and Restricted Shares, the time or times
of payment of any Award, and the time or times of the lapse of
the restrictions on Restricted Shares.
(b) For the purpose of determining the number of Shares to be
used in payment of an Award, the amount of the Award payable
in Shares shall be divided by the Fair Market Value of the
Shares on the date of the determination of the amount of the
Award by the Committee, or if the Committee so directs, the
date immediately preceding the date the Award is paid.
(c) The portion of an Award payable in Restricted Shares shall be
paid at the time of the Award either by book-entry
registration or by delivering to the Participant, or a
custodian or escrow designated by the Committee and the
Participant, a certificate or certificates for such Restricted
Shares, registered in the name of such Participant. The
Participant shall have all of the rights of a stockholder with
respect to such Shares, subject to such terms and conditions,
including forfeitures or resale to the Company, if any, as may
be determined by the Committee. The Committee and the
Participant may designate the
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<PAGE> 80
Company, Monsanto or one or more employees to act as custodian or
escrow for the certificates.
(d) The Committee, in its discretion, may require as a condition
to the grant of any Shares or Restricted Shares, the deposit
of Shares owned by the Participant receiving such grant, and
the forfeiture of the Award of Shares or Restricted Shares,
if such deposit is not made or maintained during any
applicable restricted period. Such deposited Shares may not
be otherwise sold, pledged or disposed of during any
applicable restricted period.
(e) Restricted Shares shall be subject to such terms and condi-
tions, including forfeiture, if any, and to such restrictions
against sale, transfer or other disposition as may be
determined by the Committee at the time a Non-Qualified
Option for the purchase of Restricted Shares is granted, at
the time a Stock Appreciation Right to be settled with
Restricted Shares is granted or at the time of making an
Award of Restricted Shares. Any new or additional or
different Shares or other securities resulting from any
adjustment of such Shares of the type described in Section 4
of Article I shall be subject to the same terms, conditions,
and restrictions as the Restricted Shares prior to such
adjustment. The Committee may, in its discretion, remove,
modify or accelerate the release of restrictions on any
Restricted Shares in the event of hardship or disability of
the Participant while employed, in the event that the
Participant ceases to be an employee of Monsanto, a
Subsidiary or Associated Company, as the result of death or
otherwise, in the event of a relocation of a Participant to
another country or for such other reasons as the Committee
may deem appropriate. In the event of the death of a
Participant following the transfer of Restricted Shares to
him, the legal representative of the Participant, the benefi-
ciary designated in writing by the Participant during his
lifetime, or the person receiving such Shares under his will
or under the laws of descent and distribution shall take such
Shares subject to the same restrictions, conditions and
provisions in effect at the time of his death, to the extent
applicable.
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7. DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS
(a) No cash dividends shall be paid on Shares which have been
awarded but not delivered or on Shares subject to unexercised
Options. The Committee may provide, however, that a
Participant to whom an Option has been awarded which is
exercisable in whole or in part at a future time for Shares or
a Participant who has been awarded Shares payable in whole or
in part at a future time, shall be entitled to receive an
amount per Share, equal in value to the cash dividends, if
any, paid per Share on issued and outstanding Shares, as of
the dividend record dates occurring during the period between
the date of the Award and the time each such Share is
delivered. Such amounts (herein called "dividend
equivalents") may, in the discretion of the Committee, be:
(i) paid in cash or Shares either from time to time prior
to or at the time of the delivery of such Shares or upon
expiration of the Option if it shall not have been
fully exercised (except that payment of dividend
equivalents on Incentive Options may not be made prior
to exercise); or
(ii) converted into contingently credited Shares (with
respect to which dividend equivalents shall accrue) in
such manner, at such value, and deliverable at such time
or times, as may be determined by the Committee.
Such Shares (whether delivered or contingently credited)
shall be charged against the limitations set forth in Section
5 of Article I.
(b) The Committee, in its discretion, may authorize payment of
interest equivalents on any portion of any Award payable at a
future time in cash, and interest equivalents on dividend
equivalents which are payable in cash at a future time.
(c) The Committee, in its discretion, may provide that dividends
paid on Restricted Shares shall, during the applicable
restricted period, be held by the Company to be paid upon the
lapse of restrictions or to be forfeited upon forfeiture of
the Shares.
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III. MISCELLANEOUS PROVISIONS
1. Neither a Stock Option nor Stock Appreciation Right shall be
transferable except as provided for herein. If any Participant
makes such a transfer in violation hereof, any obligation of the
Company with respect to such Stock Option or Stock Appreciation
Right shall forthwith terminate.
2. Nothing in this Incentive Plan or any booklet or other document
describing or referring to this Incentive Plan shall be deemed to
confer on any employee or Participant the right to continue in the
employ of his employer or affect the right of his employer to termi-
nate the employment of any such person with or without cause.
3. This Incentive Plan and all actions taken hereunder shall be
governed by the laws of the State of Delaware.
4. The Company may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes
which the Company is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or
foreign, to withhold in connection with any Stock Option or the
exercise thereof, any Stock Appreciation Right or the exercise
thereof, or the grant of any other Award, including, but not limited
to, the withholding of cash or Shares which would be paid or
delivered pursuant to such exercise or Award or another exercise or
Award under this Incentive Plan until the Participant reimburses the
Company for the amount the Company is required to withhold with
respect to such taxes, or cancelling any portion of such Award or
another Award under this Incentive Plan in an amount sufficient to
reimburse itself for the amount it is required to so withhold, or
selling any property contingently credited by the Company for the
purpose of paying such award or another award under this Incentive
Plan, in order to withhold or reimburse itself for the amount it is
required to so withhold. The Committee may permit a Participant (or
any beneficiary or other person authorized to act) to elect to pay
a portion or all of any amounts required or permitted to be withheld
to satisfy federal, state, local or foreign tax obligations by
directing the Company to withhold a number of whole Shares which
would otherwise be distributed and which have a Fair Market Value
sufficient to cover the amount of such required or permitted
withholding taxes.
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IV. AMENDMENTS
1. The Board may from time to time amend or modify this Incentive
Plan, provided that no amendments or modifications to this
Incentive Plan shall, without the prior approval of the stockholders
normally entitled to vote for the election of directors of Monsanto:
(a) permit the Company to decrease the Option price on any
outstanding Option;
(b) permit any change which would require the approval of
stockholders of Monsanto under Section 16 of the Securities
Exchange Act of 1934 or the rules thereunder or under Section
422 of the Internal Revenue Code of 1986, or the rules
thereunder (or any laws, rules, regulations or other
provisions that may replace such statutes or rules); or
(c) change any of the provisions of this Article IV.
2. No amendment to or discontinuance of this Incentive Plan or any
provision thereof by the Board or the stockholders of Monsanto
shall, without the written consent of the Participant, adversely
affect any Stock Option or Stock Appreciation Right theretofore
granted or other Award theretofore made to such Participant under
this Incentive Plan.
V. INTERPRETATION
1. Except as authorized herein with respect to Stock Appreciation
Rights, this Incentive Plan is not intended to and shall not affect
any option or stock appreciation right grant or other award under
any other incentive plan of Monsanto, its Subsidiaries and
Associated Companies. No stock options, stock appreciation rights
or Restricted Share awards shall be granted under the Searle
Monsanto Stock Option Plan of 1986 after February 1, 1994.
2. This Incentive Plan is not intended to and shall not preclude the
establishment or operation by the Company or any Subsidiary of (a)
any thrift, savings and investment, achievement award, stock
purchase, employee recognition or other benefit plan or arrangement
for any group of employees, or (b) any other incentive or bonus plan
or arrangement for any employees (hereinafter "Other Plan"), and any
such Other Plan may be authorized and payments made thereunder
independently of this Incentive Plan.
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APPENDIX
1. The legend appearing at the top of the Notice of Annual Meeting of
Stockholders appears in the printed document vertically in red along
the left side of the Notice. The printed documents containing this
legend will be distributed only to participants in Monsanto's
stock option and Employee Stock Purchase Plans. The legend will
not appear on documents delivered to other stockholders.
2. On pages 2 through 4 of the proxy statement, the blank space to
the left of each director's biography contains a 1-1/8 by 1-5/16
inch black and white photograph of the respective director.
3. The column of stock ownership information appearing on page 5
of the proxy statement is presented in two columns in the
proxy statement.
4. The asterisks on the following pages are bullets in the printed
documents: pages 9 and 12 of the proxy statement, page 1 of the
NutraSweet/Monsanto Stock Plan of 1994, and page 1 of the
Searle/Monsanto Stock Plan of 1994.
5. The Stock Price Performance Graph on page 17 of the proxy
statement is being transmitted in a format which can be processed
by Edgar. As instructed, a paper copy of the proxy statement
containing this graph is being mailed to John F. Murphy, Branch
Chief.
6. On page 20 of the proxy statement, "The Board of Directors
recommends a vote "FOR" the approval of the 1994 Plan." is in
bold-face type.
7. On page 22 of the proxy statement, "The Board of Directors
recommends a vote "FOR" the approval of the 1994 Searle Plan
and a vote "FOR" the approval of the 1994 NutraSweet Plan."
is in bold-face type.
8. On page 24 of the proxy statement, "The Board of Directors
recommends a vote "FOR" the approval of the annual incentive
program for executive officers and a vote "FOR" the approval
of the long-term incentive program for executive officers."
and "The Board of Directors recommends a vote "FOR" the
ratification of the appointment of Deloitte as principal
independent auditors for the year 1994." are in bold-face
type.
9. On the back of the proxy card, "The Board of Directors
recommends a vote "FOR" items 1, 2, 3, 4, 5, 6, and 7." is
in bold-face type.
10. On the back of the voting instruction card, "The Board
of Directors recommends a vote "FOR" items 1, 2, 3, 4, 5, 6,
and 7 and to "GRANT AUTHORITY" for item 8." and "The Board
of Directors recommends a vote to "GRANT AUTHORITY" for item
8." are in bold-face type.
