<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
Monsanto Company
----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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. If you were a record holder *
* on February 24, 1997, as the result of your having exercised your *
* option or completed your payment for shares under contract, you will *
* receive a proxy card for those shares. *
********************************************************************************
MONSANTO
------------------------------------------------
MONSANTO COMPANY
800 N. LINDBERGH BOULEVARD
ST. LOUIS, MISSOURI 63167
(314) 694-1000
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1997
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 25, 1997, at 1:30
p.m. for the following purposes:
1. To elect fourteen directors.
2. To ratify the appointment of Deloitte & Touche LLP as principal
independent auditors for the year 1997.
3. To consider a stockholder proposal relating to a report on certain
of the Company's employment policies and practices.
4. 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
24, 1997, 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.
/s/ R. William Ide III
Secretary
St. Louis, Missouri
March 13, 1997
<PAGE> 3
TABLE OF CONTENTS TO THE PROXY STATEMENT
<TABLE>
<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.................. 7
Executive Compensation.................................................... 10
Other Information Regarding Management.................................... 21
Ratification of Independent Auditors (Proxy Item No. 2)....................... 22
Stockholder Proposal Relating to a Report on Certain of the Company's
Employment Policies and Practices (Proxy Item No. 3)........................ 23
General Information........................................................... 26
</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 25, 1997, and at all adjournments thereof.
Only stockholders of record at the close of business on February 24, 1997, 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 24, 1997, 590,744,207 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
13, 1997.
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; and
(2) the ratification of the appointment of Deloitte & Touche LLP as
principal independent auditors for the year 1997;
and against
(3) the stockholder proposal relating to a report on certain of the
Company's employment policies and practices.
A plurality of the shares present at the meeting in person or by proxy is
required for the election of directors. The affirmative vote of a majority of
the shares present at the meeting in person or by proxy is required to ratify
the appointment of auditors and to adopt the stockholder proposal. 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 vote the shares held for
the account of the participant under this plan in the manner indicated on the
proxy. 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
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
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.
Except for Michael Kantor, all nominees are now directors of the Company. All
current directors, except John E. Robson, were elected by the stockholders at
the last Annual Meeting.
<TABLE>
<C> <S> <C>
[PHOTO] ROBERT B. SHAPIRO PRINCIPAL OCCUPATION: CHAIRMAN, PRESIDENT, AND
CHIEF EXECUTIVE OFFICER, MONSANTO COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 58
Chairman, President and Chief
Executive Officer, Monsanto
Company since 1995; President and
Chief Operating Officer, Monsanto
Company, 1993-95; Executive Vice
President and Advisory Director,
Monsanto Company, and President,
The Agricultural Group of Monsanto
Company, 1990-93. Director:
Citicorp; Silicon Graphics, Inc.;
Barnes-Jewish Hospital. Trustee:
Washington University; Missouri
Botanical Garden. Member: The
Business Council; The Business
Roundtable.
[PHOTO] JOAN T. BOK PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD,
NEW ENGLAND ELECTRIC SYSTEM
FIRST BECAME DIRECTOR: 1987
AGE: 67
Chairman of the Board, New England
Electric System since 1984.
Director: Avery Dennison
Corporation; 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. Trustee:
National Osteoporosis Foundation;
Woods Hole Oceanographic Institution;
Worcester Foundation for Biomedical
Research.
[PHOTO] ROBERT M. HEYSSEL PRINCIPAL OCCUPATION: CONSULTANT; PRESIDENT
EMERITUS, THE JOHNS HOPKINS HEALTH SYSTEM
FIRST BECAME DIRECTOR: 1988
AGE: 68
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, 1972-92. Professor,
The Johns Hopkins Schools of
Medicine and Public Health since
1971 and 1972, respectively.
Director: Signet Banking
Corporation.
[PHOTO] MICHAEL KANTOR PRINCIPAL OCCUPATION: PARTNER; MAYER, BROWN &
PLATT
AGE: 57
Partner, Mayer, Brown & Platt since
1997; U.S. Secretary of Commerce,
1996-97; U. S. Trade Representative,
1993-96; National Chairman for the
Clinton/Gore Campaign, 1992;
Partner, Manatt, Phelps, Phillips
& Kantor, 1975-92.
2
<PAGE> 6
[PHOTO] GWENDOLYN S. KING PRINCIPAL OCCUPATION: SENIOR VICE
PRESIDENT, CORPORATE AND PUBLIC AFFAIRS, PECO
ENERGY COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 56
Senior Vice President, Corporate
and Public Affairs, PECO Energy
Company (formerly Philadelphia
Electric Company) since 1992.
Commissioner, Social Security
Administration, 1989-92. Director:
Adwin Equipment Co., Adwin Realty
Co.; Eastern Pennsylvania
Development Corp.; Lockheed
Martin Corp.
[PHOTO] PHILIP LEDER PRINCIPAL OCCUPATION: CHAIRMAN, DEPARTMENT OF
GENETICS, HARVARD MEDICAL SCHOOL, AND SENIOR
INVESTIGATOR, HOWARD HUGHES MEDICAL INSTITUTE
FIRST BECAME DIRECTOR: 1990
AGE: 62
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. Director:
Genome Therapeutics Corporation.
Trustee: The General Hospital
Corporation; The Hadassah Medical
Organization; Massachusetts General
Hospital; The Charles A. Revson
Foundation; The Rockefeller
University.
[PHOTO] HOWARD M. LOVE PRINCIPAL OCCUPATION: RETIRED CHIEF EXECUTIVE
OFFICER, NATIONAL INTERGROUP, INC.
FIRST BECAME DIRECTOR: 1977
AGE: 66
Chief Executive Officer, National
Intergroup, Inc., 1981-91; Honorary
Chairman, National Steel
Corporation, formerly a subsidiary
of National Intergroup, Inc., since
1990; Chairman and Chief Executive
Officer, 1984-90. Director: AEA
Investors; COMSAT Corp. Member: The
Business Council.
[PHOTO] 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: 63
Senior Vice President, Finance and
Planning, and Chief Financial
Officer, International Business
Machines Corporation, 1986-93;
Director, 1991-93. Director:
Allegheny Power System, Inc.;
Norrell Corporation.
[PHOTO] JACOBUS F. M. PETERS PRINCIPAL OCCUPATION: RETIRED CHAIRMAN OF THE
EXECUTIVE BOARD AND CHIEF EXECUTIVE OFFICER,
AEGON N.V.
FIRST BECAME DIRECTOR: 1993
AGE: 65
Chairman of the Executive Board
and Chief Executive Officer,
AEGON N.V., 1984-93.
Director: Kleinwort Endowment
Policy Trust Plc. Member of
Supervisory Board: AEGON
N.V.; Amsterdam Company for
Town Restoration Ltd.; DAF
Trucks N.V.; IBM International
Centre for Asset Management
N.V.; Koninklijke Pakhoed
Holding N.V.; Randstad Holding
N.V.; SAMAS Group N.V.; United
Flower Auctions Aalsmeer.
3
<PAGE> 7
[PHOTO] NICHOLAS L. REDING PRINCIPAL OCCUPATION: VICE CHAIRMAN OF THE
BOARD, MONSANTO COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 62
Vice Chairman of the Board,
Monsanto Company since 1993;
Advisory Director, 1986-92;
Executive Vice President,
Environment, Safety, Health
and Manufacturing, 1990-93.
Director: CPI Corp.; Meredith
Corporation; Multifoods
Corporation; The Keystone
Center.
[PHOTO] JOHN S. REED PRINCIPAL OCCUPATION: CHAIRMAN, CITICORP AND
CITIBANK, N.A.
FIRST BECAME DIRECTOR: 1985
AGE: 58
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.
[PHOTO] JOHN E. ROBSON PRINCIPAL OCCUPATION: SENIOR ADVISOR,
ROBERTSON, STEPHENS & COMPANY
FIRST BECAME DIRECTOR: 1996
AGE: 66
Senior Advisor, Robertson, Stephens
& Company since 1993; Distinguished
Faculty Fellow, Yale University
School of Management, and Visiting
Fellow, The Heritage Foundation,
1993; Deputy Secretary of the U. S.
Department of the Treasury, 1989-92;
Dean, Emory University Business
School, 1986-89; President and Chief
Executive Officer, G.D. Searle &
Co., 1985-86; Executive Vice
President, G. D. Searle & Co.,
1978-85. Director: Northrop Grumman
Corp.; Calgene, Inc.; Security
Capital Industrial Trust (REIT).
[PHOTO] WILLIAM D. RUCKELSHAUS PRINCIPAL OCCUPATION: CHAIRMAN,
BROWNING-FERRIS INDUSTRIES, INC.
FIRST BECAME DIRECTOR: 1985
AGE: 64
Chairman, Browning-Ferris
Industries, Inc., since 1995;
Principal, Madrona Investment
Group L.L.C., since 1996; Chairman
and Chief Executive Officer,
Browning-Ferris Industries, Inc.,
1988-95. Of Counsel, Perkins Coie
since 1985. Administrator,
Environmental Protection Agency,
1983-85. Director: Browning-Ferris
Industries, Inc.; Cummins Engine
Co., Inc.; Gargoyles Inc.;
Nordstrom, Inc.; Weyerhaeuser
Company.
[PHOTO] JOHN B. SLAUGHTER PRINCIPAL OCCUPATION: PRESIDENT, OCCIDENTAL
COLLEGE
FIRST BECAME DIRECTOR: 1983
AGE: 62
President, Occidental College
since 1988. Director, National
Science Foundation, 1980-82.
Director: Atlantic Richfield
Company; Avery Dennison
Corporation; International Business
Machines Corporation; Northrop
Grumman Corp. Member: American
Academy of Arts and Sciences;
National Academy of Engineering.
Fellow: American Association for the
Advancement of Science; Institute
of Electrical and Electronic
Engineers.
4
</TABLE>
<PAGE> 8
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Information is set forth below regarding beneficial ownership of common stock
of the Company by (i) each person who is a director or nominee; (ii) each
executive officer named in the Summary Compensation Table on page 15; 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. All
information is as of December 31, 1996.
<TABLE>
<CAPTION>
Shares of Shares Underlying
Common Stock Options Exercisable
Owned Directly Within 60
Name or Indirectly <Fa><Fb> Days <Fc> Total
---- ---------------------- ------------------- -----
<S> <C> <C> <C>
Joan T. Bok 13,348 -- 13,348
Richard U. De Schutter 98,056 402,000 500,056
Robert M. Heyssel 14,025<Fd> -- 14,025
Michael Kantor 0<Fe> -- 0
Gwendolyn S. King 4,539 -- 4,539
Philip Leder 8,851 -- 8,851
Howard M. Love 19,785<Ff> -- 19,785
Frank A. Metz, Jr. 10,120 -- 10,120
Jacobus F. M. Peters 4,705 -- 4,705
Robert G. Potter 251,495<Fg> 947,390 1,198,885
Nicholas L. Reding 300,175<Fh> 1,398,000 1,698,175
John S. Reed 37,305 -- 37,305
John E. Robson 1,354 -- 1,354
William D. Ruckelshaus 14,610<Fi> -- 14,610
Robert B. Shapiro 409,724 1,758,835 2,168,559
John B. Slaughter 9,646<Fj> -- 9,646
Hendrik A. Verfaillie 157,002<Fk> 675,890 832,892
25 directors and executive
officers as a group 1,961,131<Fl> 7,418,010 9,379,141
<FN>
<Fa> Includes shares held under Monsanto Company's Savings and Investment Plan (SIP): Mr. De
Schutter, 14,476; Mr. Potter, 31,020; Mr. Reding, 37,440; Mr. Shapiro, 3,527; Mr. Verfaillie,
14,647; and directors and executive officers as a group, 130,482. With respect to shares held
under SIP, employee directors and officers have sole discretion as to voting and, within
limitations provided by SIP, investment of shares. Shares are voted by the trustees in
accordance with instructions from participants. If instructions are not received by the
trustees as to the voting of particular shares, shares are to be voted in proportion to
instructions actually received from other participants in SIP. Also includes shares held under
other benefit and incentive plans: Mr. De Schutter, 1,080; Mr. Potter, 1,390; Mr. Reding,
1,570; Mr. Shapiro, 125,000; Mr. Verfaillie, 31,485; and directors and executive officers as a
group, 231,375. With respect to shares held under other benefit and incentive plans, employee
directors and officers have sole voting power and no current investment power.
<Fb> 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 9: Mrs. Bok, 2,500
shares; Dr. Heyssel, 4,555 shares; Mrs. King, 4,225 shares; Dr. Leder, 3,245 shares; Mr. Love,
3,465 shares; Mr. Metz, 3,245 shares; Mr. Peters, 4,705 shares; Mr. Reed, 3,340 shares; Mr.
Robson, 1,350 shares; Mr. Ruckelshaus, 3,340 shares; and Dr. Slaughter, 3,465 shares. With
respect to such shares, non-employee directors have sole voting power and no current investment
power.
<Fc> The Securities and Exchange Commission deems a person to have beneficial ownership of all
shares which that person has the right to acquire within 60 days. The shares indicated
represent stock options granted under incentive plans. The shares under option cannot be voted.
<Fd> Includes 1,500 shares owned by Dr. Heyssel's wife.
5
<PAGE> 9
<Fe> On December 31, 1996, Mr. Kantor was still employed by the federal government.
<Ff> Includes 6,000 shares held in trusts in which Mr. Love has an income interest as to which he
expressly disclaims beneficial ownership.
<Fg> Includes 32,600 shares owned by Mr. Potter's wife as to which he expressly disclaims beneficial
ownership and 495 shares owned jointly by Mr. Potter and his wife.
<Fh> Includes 633 shares owned by Mr. Reding's son.
<Fi> Includes 1,000 shares owned jointly by Mr. Ruckelshaus and his wife.
<Fj> Includes 681 shares owned by Dr. Slaughter's wife as to which he expressly disclaims beneficial
ownership.
<Fk> Includes 14,620 shares owned jointly by Mr. Verfaillie and his wife.
<Fl> Includes 27,170 shares as to which certain executive officers not named above have shared
voting and investment power; and 1,133 shares under contract pursuant to the Company's Employee
Stock Purchase Plan.
</TABLE>
The percentage of shares of outstanding common stock, including options
exercisable within 60 days of December 31, 1996, beneficially owned by all
directors and executive officers as a group is 1.58%. The percentage of such
shares beneficially owned by any director or nominee does not exceed 1%.
--------------------------
The following table sets forth certain information regarding the only known
beneficial owners of more than 5% of the Company's common stock.
<TABLE>
<CAPTION>
Amount and
Nature Percent
Name and Address of Beneficial of
of Beneficial Owner Ownership Class
------------------- ------------- -----
<S> <C> <C>
Oppenheimer Group, Inc. 31,232,321<Fa> 5.31%
Oppenheimer Tower
World Financial Center
New York, New York 10281
FMR Corp. 29,935,145<Fb> 5.09%
82 Devonshire Street
Boston, Massachusetts 02109
<FN>
<Fa> Based on a Schedule 13G filed with the Securities and Exchange Commission (SEC) by Oppenheimer
Group, Inc., on behalf of itself and related companies and certain investment advisory clients;
power to vote and dispose of all 31,232,321 shares, including 30,923,115 shares (5.26%) 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 31,232,321 shares.
<Fb> Based on a Schedule 13G filed with the SEC by FMR Corp. (FMR) on behalf of itself, certain
related companies, and certain shareholders; FMR, through its subsidiaries Fidelity Management
& Research Company and Fidelity Management Trust Company, and through Fidelity International
Limited, had sole dispositive power over all 29,935,145 shares, shared voting power as to none
of these shares, and sole voting power as to 4,483,385 of these shares.
</TABLE>
6
<PAGE> 10
BOARD MEETINGS AND COMMITTEES; COMPENSATION OF DIRECTORS
The Board of Directors met eight times during 1996. To assist the Board in
carrying out its duties, the Board has established an Executive Committee and
seven functional committees with responsibilities in specific areas of Board
activity. All nominees attended 75% or more of the aggregate meetings of the
Board and of the Board Committees on which they served during the period they
held office in 1996 except that, due to unavoidable circumstances, Mr. Reed
attended one meeting less than 75% of such meetings. A description of each
Committee and its current membership follows.
AUDIT COMMITTEE
Members: Mr. Metz, Chairman; Dr. Heyssel, Mrs. King, Mr. Ruckelshaus, and
Dr. Slaughter
The Audit Committee is composed of non-employee directors and met four times in
1996. 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: Mrs. Bok, Chairman; Mrs. King, Mr. Ruckelshaus, and Dr. Slaughter
The Corporate Social Responsibility Committee met four times in 1996. 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.
EXECUTIVE COMMITTEE
Members: Mr. Shapiro, 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 1996 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 Ruckelshaus
The Executive Compensation and Development Committee is composed of
non-employee directors and met four times in 1996. The Committee recommends to
the Board the establishment and modification of the Company's management
incentive plans. 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 a compensation committee composed of senior
management to make grants and awards under the incentive plans and to
7
<PAGE> 11
approve and administer other compensation plans for all employees except
executive officers. The Committee also reviews plans for executive succession
and determines the salaries of all executive officers of the Company.
FINANCE COMMITTEE
Members: Mr. Reed, Chairman; Mrs. Bok, Messrs. Metz, Peters, and Robson
The Finance Committee met three times in 1996. 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
provides advice regarding the worldwide financing programs of the Company and
reviews specific financing plans as requested by management. 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. Ruckelshaus, Chairman; Dr. Heyssel, Messrs. Love and Metz
The Nominating Committee is composed of non-employee directors and met twice in
1996. At its meeting in January 1997, 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.
PENSION AND SAVINGS FUNDS COMMITTEE
Members: Dr. Heyssel, Chairman; Dr. Leder, Messrs. Love and Peters
The Pension and Savings Funds Committee met four times in 1996. 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 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.
SPECIAL COMMITTEE OF THE BOARD REGARDING AGRICULTURAL BIOTECHNOLOGY MATTERS
Members: Mr. Shapiro, Chairman; Mrs. King, Dr. Leder, Messrs. Metz and
Ruckelshaus
The Special Committee of the Board Regarding Agricultural Biotechnology Matters
was formed to review and approve acquisitions by the Company of assets or
securities or other business combination transactions, or contributions of
capital or loans to third parties, in the area of agricultural biotechnology,
either directly or indirectly. The Committee met twice in 1996 via telephone
conference and took one action 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.
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
8
<PAGE> 12
$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
such director serves. Committee members, including 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.
In 1993 the Board 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.
Non-employee directors do not participate in any of the Company's incentive,
stock option, pension, or benefit plans except that they are covered under the
Company's business travel accident insurance policy while traveling on Company
business. 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 Board intends to review the compensation arrangements for non-employee
directors contemporaneously with the anticipated spin-off of the Company's
chemical businesses with a view toward discontinuing this retirement plan with
respect to all current directors. Compensation for non-employee directors is
expected to be increasingly based on Company stock.
The Company has established a Directors' Charitable Contribution Program for
all non-employee directors of the Company which will be funded through life
insurance policies which have been purchased 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 1996 Dr.
Leder received $132,600 under this contract.
Mr. John E. Robson, a director of the Company, serves on the board of directors
of Calgene, Inc. (Calgene) at the request of the Company. In consideration of
such service, in May 1996, the Company transferred to Mr. Robson 15,000 shares
of common stock of Calgene valued at $6.00 per share at the time of transfer.
These shares are subject to a three-year vesting period, under which one-third
of the shares become non-forfeitable on each March 31, commencing March 31,
1997. These shares are in addition to the standard director compensation
arrangements that Calgene has with its non-employee directors.
9
<PAGE> 13
EXECUTIVE COMPENSATION
STOCK PRICE PERFORMANCE GRAPH
The graph below compares total stockholder return (assuming reinvestment of
dividends) with the cumulative total return of the Standard & Poor's 500 Stock
Index and the Standard & Poor's Chemical Index, both of which include the
Company, and a new peer group index. Because the Company is involved in
agricultural, pharmaceutical and food businesses, in addition to chemical
businesses, no published peer group accurately mirrors the Company's portfolio
of businesses. Accordingly, the Company has created a peer group index that
includes companies in the principal lines of businesses in which the Company
operates. The companies in the peer group index are Dow Chemical Company,
DuPont (E.I.) de Nemours and Company, Hoechst AG, Lilly (Eli) & Co., Novartis
AG, Schering-Plough Corp., and Zeneca Group PLC. The peer group index reflects
the separate performance of Ciba-Geigy AG, and Sandoz AG, prior to their merger
pursuant to which Novartis AG was formed in December 1996. Zeneca Group PLC is
included in the peer group index beginning with its formation in June 1993.
TOTAL RETURN TO STOCKHOLDERS
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1991
[GRAPH]
<TABLE>
<CAPTION>
DEC-91 DEC-92 DEC-93 DEC-94 DEC-95 DEC-96
<S> <C> <C> <C> <C> <C> <C>
Monsanto 100 88 117 116 207 334
S&P 500(R) 100 108 118 120 165 203
S&P(R) Chemicals 100 110 122 142 185 245
Peer Group 100 104 123 133 190 272
</TABLE>
10
<PAGE> 14
REPORT OF THE EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
Policies and Objectives
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 (as explained at
pages 7-8 above). The purpose of these plans and the objectives of the Committee
are to:
* focus management on business performance that creates stockholder value;
* recognize the contribution of each business unit to stockholder value;
* build an ownership mentality throughout the Company;
* encourage innovative approaches to the business;
* reward for results rather than on the basis of seniority, tenure, or other
entitlement;
* continue the emphasis on variable incentive compensation versus fixed or base
pay, particularly for senior executives; and
* create an environment that encourages taking higher risks with an opportunity
for higher reward.
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. In November 1995,
base salaries for the current executives named in the Summary Compensation
Table on page 15 and other senior executives were set at what was then about
the 75th percentile of competitive companies to reflect the Company's
performance expectations for its managers. At that time salaries were frozen by
the Committee for a three to four year period, except to recognize increased
responsibility or major changes in competitive pay levels. Annual bonuses are
also targeted at about the 75th percentile, consistent with the aggressive
business goals which have been set for the Company. Target long-term incentive
compensation continues to be at or above the 75th percentile. Levels of
compensation at competitive companies are derived from compensation surveys
provided by independent consultants covering several hundred chemical,
pharmaceutical, food, and other manufacturing companies (adjusted for company
size differentials).
Incentive Programs
Annual Incentive Program. The annual incentive program provides for cash awards
to be determined shortly after the year being measured. These annual awards
depend upon 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 the Chief Executive Officer, the principal
annual goal for the years 1994-1996 was set in terms of net income. A target
award was set based on the net income goal; the actual award was increased or
decreased based on actual net income, subject to adjustment for non-recurring
events. The Committee also had discretion to increase or decrease the target
award based on downward or upward deviations from a secondary goal set in terms
of year-end capital employed, consisting of stockholders' equity and debt. The
Committee could also adjust the target award based on four factors which did
not have pre-set numerical scales: performance compared to competitors
(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 has been used for awards to business unit executives.
11
<PAGE> 15
The annual incentive program for the years 1994-1996 was designed to encourage
sustained performance by withholding a percentage of each annual award (15% of
the 1994 award and 30% of the awards for 1995 and 1996) and adjusting the
portion withheld upward or downward based on sustained performance during the
remainder of the three-year period. Because performance in 1996 was
substantially above goal for the third consecutive year, 30% of the annual
award for 1996, together with the percentage of the awards previously withheld
and adjusted, was adjusted upward before the scheduled payment in March 1997.
The funding for annual incentive awards for 1994 and 1995 was increased by an
amount equal to 40% of the target awards described above because the Company
achieved 20% or better return on equity. For 1996, the funding for the annual
incentive awards was similarly increased because the Company's audited
financial statements would have shown a return on equity of 20% or greater but
for the significant charges taken in 1996 in connection with the anticipated
spin-off of the Company's chemical businesses. Awards attributable to the
additional funding were payable as part of the annual incentive program, but no
portion was withheld or adjusted.
For 1997, the majority of the annual incentive award for all executives,
including the Chief Executive Officer, will continue to be paid in cash, with
the amount determined shortly after the close of the year based upon the
achievement of Economic Value Added (EVA<F*>) goals and the factors described
above. EVA is determined by taking net operating profit after tax and
subtracting a charge for the capital used to generate that profit. In any
event, no award can be made to certain executive officers, including the Chief
Executive Officer, if net income does not exceed an amount set by the Committee
within the first 90 days of the performance year. To continue the emphasis on
sustained performance, a portion of the anticipated cash award for 1997 has been
replaced by performance stock options granted in February 1997. The same factors
that are used in determining actual cash awards will be used to determine how
many of these options become exercisable in 1998.
Long-term Compensation. For the Chief Executive Officer and the other corporate
executives, long-term compensation has traditionally consisted of non-qualified
stock options granted for designated three-year cycles. Business unit
executives normally receive stock options annually. The practice since 1993,
for options other than the premium priced options described below, has been to
link these options to a specific performance goal. For options granted through
1996, the goal has been 20% or greater return on equity. Performance options
granted prior to 1996 became exercisable because the Company achieved its 20%
return on equity goal for both 1994 and 1995. The Committee determined that the
options granted in February 1996 to business unit executives and approximately
1,200 other optionees should become exercisable in February 1997 based upon the
fact that the 20% return on equity goal for 1996 would have been achieved but
for the significant charges taken in connection with the anticipated spin-off
of the Company's chemical businesses.
For the period 1994-1996, business unit executives also participated in
cash-based long-term incentive programs focused on sustained performance
against targets for the cycle. For all of the business units except Searle,
performance was measured primarily by the net income and capital employed of
the unit, but also based on the other criteria used by the Committee in
determining annual incentive awards. The Searle long-term plan used annual
grants of options on "phantom" shares of Searle which were valued annually.
For the period 1997-1999, long-term compensation for the Chief Executive
Officer, other corporate executives, and business unit presidents has two
aspects designed to increase the alignment of long-term compensation with
stockholder value. The first is the premium priced options granted in April
1996. Eighty percent of these options could be exercised only if the Company's
stock met or exceeded three specific price targets higher than the fair market
value at the time of grant for a period of ten consecutive trading days and did
so within prescribed times. The options can be exercised only at or above the
target stock prices. Thus,
[FN]
- ----------
<F*>EVA is a trademark of Stern Stewart & Co.
12
<PAGE> 16
stockholders must realize significant returns on their investment before
executives receive gains on their options. Two of these targets, $35 per share
and $40 per share, although aggressive when set, have already been met. Each
five dollar increment in target price represents an increase in stockholder
value of approximately three billion dollars. The options must be held for a
minimum of one year before they can be exercised. The remaining 20% of the
options were granted at the fair market value at the time of grant.
The second aspect of long-term compensation is the value derived as owners of
Monsanto stock purchased under the Monsanto Executive Stock Purchase Incentive
Plan approved by stockholders in 1996. This plan encourages stock ownership and
creates an environment in which the executive takes higher risks with an
opportunity for higher reward. Under this plan the Chief Executive Officer,
other corporate executives, and business unit presidents purchased the number
of shares of Monsanto common stock specified in their purchase award at fair
market value on the specified purchase date. These executives are eligible to
receive a deferred cash incentive award limited by the amount of the
full-recourse loan obtained to purchase the stock plus accrued interest. The
cash incentive award must be applied to repay the loan. Two-thirds of this
award is based on the Company's common stock performance relative to the
performance of the common stock of corporations in the Standard & Poor's
Industrials. This basis of comparison means that for the executives to be
rewarded the Company must perform well when compared with approximately 400
companies, not just the eight companies in the S & P Chemical Index or the
seven companies currently in the peer group index. The other third of this
award is based upon continued service with the Company and positive cumulative
net income. None of the performance-based portion of the incentive is paid
unless the total return to Monsanto's shareowners for the period of the
executive's participation in the plan is at or above the total shareholder
return of companies at the 50th percentile of the Standard & Poor's
Industrials. For maximum incentives, Monsanto's total shareholder return must
be at or above the 75th percentile. Under this plan, executives share in both
the upside and downside potential inherent in stock ownership as do
stockholders. Thus, the Company's stock must perform well for all shareowners
in order for executives to receive the full benefit of the plan.
The Committee also makes infrequent grants of restricted stock to individual
executives to motivate achievement of particular business objectives or to hire
or retain those individuals. None were made to the named executives in 1996.
Additional option grants may be made to reflect increased responsibility or a
shift from business unit to corporate responsibilities.
1996 Compensation
Mr. Shapiro's salary, which was set at $800,000 in November 1995, remained at
that level, consistent with the salary freeze described above.
The Committee approved an annual incentive award of $2,120,000 for Mr. Shapiro
for 1996. This award includes $320,000 attributable to the additional funding
in recognition of the Company's return on equity performance, as noted above.
In accordance with the annual incentive program designed to encourage sustained
performance, the Committee adjusted 30% of Mr. Shapiro's annual award to reward
sustained performance over the three-year period. Mr. Shapiro's annual
incentive award is higher than the target award for 1996 because the Company's
1996 net income was substantially in excess of the goal set by the Committee
(after excluding the significant charges taken in connection with the
anticipated spin-off of the Company's chemical businesses). The goal was set at
a level which required substantial improvement in the Company's performance
following the outstanding performance of the two prior years. Thus this award
reflects the achievement of increasingly difficult goals for the third straight
year. Total return to shareholders for the year 1996, including dividends, was
61%. Net income, excluding the one-time charges, was at an all-time record, 20%
above the record set in 1995. Many of the Company's business units also
substantially exceeded their net income goals, with pharmaceuticals and the
agricultural segment producing record operating income. In making the award,
the Committee also considered capital employed.
13
<PAGE> 17
The awards to the other named corporate executives were also above target,
based on the same factors. The award to Mr. De Schutter reflects the record
operating income for pharmaceuticals, which resulted from substantial sales
increases for several of Searle's products.
As with all other awards conditioned upon achievement of the Company's 20%
return on equity goal for 1996, the Committee determined that the effect of the
significant charges taken in connection with the anticipated spin-off of the
chemical businesses would not be utilized in determining whether Mr. Shapiro's
and Mr. Verfaillie's restricted shares should vest in February 1997.
The number of options granted to corporate executives and business unit
presidents was consistent with a schedule determined by job responsibilities.
The executives who were granted premium priced options in April 1996, including
the Chief Executive Officer and all of the other named executive officers,
received significantly larger grants than in past years because of the enhanced
risk inherent in options that can be exercised only at prices well above the
fair market value at the time of grant. All of the named executive officers,
including the Chief Executive Officer, were also granted purchase awards under
the Monsanto Executive Stock Purchase Incentive Plan. Together, the premium
priced options and the purchase awards are designed to achieve a long-term
compensation opportunity above the 75th percentile for senior executives in
comparable positions in other companies.
Deductibility of Compensation
The Committee is complying with the requirements of Section 162(m) of the
Internal Revenue Code with respect to options and annual and long-term
incentive programs, as well as the limits approved by the Company's
stockholders at the Annual Meeting, in order to avoid losing the deduction for
compensation in excess of $1,000,000 paid to one or more of the executive
officers named in the Summary Compensation Table.
Management Stock Ownership Requirements
The Committee and management also believe that an important adjunct to an
incentive program is significant stock ownership by the senior executives.
Accordingly, the Committee has implemented stock ownership requirements for
approximately 30 executives. Stock ownership requirements are four times salary
for the Company's top management group (currently seven including the Chief
Executive Officer) and two-and-one-half times salary for the other senior
executives. Unexercised stock options and shares received under Company benefit
plans or as restricted shares (other than by newly hired executives) are not
counted in satisfying these requirements. Shares purchased pursuant to the
Monsanto Executive Stock Purchase Incentive Plan do count towards these
requirements. The Board has adopted a stock ownership guideline for
non-employee members of the Board of Directors, which is described on page 9.
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
Howard M. Love, Chairman
Robert M. Heyssel
Frank A. Metz, Jr.
William D. Ruckelshaus
14
<PAGE> 18
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Under- Other
Name and Compen- Stock lying LTIP Compen-
Principal sation Awards Options Payouts sation
Position Year Salary ($) Bonus ($)<F1> ($)<F2> ($)<F3> (#)<F4> ($)<F4> ($)<F5>
--------- ---- ---------- ------------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. B. Shapiro 1996 800,000 2,120,000 -0- -0- 2,950,000 -0- 89,709
Chairman and CEO 1995 685,417 1,235,600 -0- -0- 262,500 -0- 50,627
and Director 1994 567,500 893,905 -0- -0- 616,665 560,000 42,956
R. U. De Schutter<F6> 1996 500,000 806,000<F7> -0- -0- 350,000 -0- 50,856
Chairman and CEO 1995 453,635 556,000 -0- -0- 200,000 -0- 61,719
G. D. Searle & Co. 1994 -- -- -- -- -- -- --
R. G. Potter 1996 500,000 940,000 -0- -0- 800,000 -0- 54,138
Executive 1995 470,834 807,926 -0- -0- 351,390 -0- 51,240
Vice President 1994 456,667 645,720 -0- -0- -0- 785,000 52,778
N. L. Reding 1996 515,000 944,200 -0- -0- 800,000 -0- 51,135
Vice Chairman of 1995 515,000 869,200 -0- -0- -0- -0- 60,742
the Board and 1994 504,583 741,825 -0- -0- 466,665 -0- 56,421
Director
H. A. Verfaillie 1996 500,000 940,000 -0- -0- 800,000 -0- 61,633
Executive 1995 393,333 715,200 -0- -0- 351,390 -0- 42,461
Vice President 1994 320,000 459,650 -0- -0- -0- 500,000 39,295
<FN>
NOTE: Information regarding shares and options reported in this table and in
succeeding tables has been adjusted to reflect the 5-for-1 stock split in
1996.
<F1> As described on page 12, 30% of the 1996 bonus amounts shown above
(excluding the portion attributable to achievement of the Company's return
on equity (ROE) goal) for each of the named executives will be adjusted to
recognize sustained long-term performance as described in footnote 1 of
the Long-Term Incentive Plans Table on page 18, and paid in March 1997.
<F2> Applicable regulations set reporting levels for certain non-cash
compensation.
<F3> There were no grants of restricted stock to named executive officers
during the period covered in this table. Restricted stock holdings on
December 31, 1996 were as follows:
* Mr. Shapiro held 125,000 restricted shares having a value on December 31,
1996, of $4,929,750. These were the remaining restricted shares from an
award of 250,000 shares received on January 22, 1993, when the award had a
value of $2,621,900. Dividends on these shares accrue at the same rate as
paid to all stockholders. In each of February 1995 and February 1996,
62,500 shares and the related dividends vested because the Company achieved
its 20% ROE goal for 1994 and 1995, respectively. An additional 62,500 of
the restricted shares and the related dividends vested in February 1997
because the Executive Compensation and Development Committee (ECDC)
determined that the effect of the significant charges taken in connection
with the anticipated spin-off of the chemical businesses would not be
utilized in determining whether the Company achieved its 1996 ROE goal. The
final 62,500 shares will vest in February 1998 if the Company achieves 20%
ROE for 1997. Failure to achieve 20% ROE for 1997 will result in forfeiture
of the final 62,500 shares along with any related dividends.
* Mr. Verfaillie held 31,250 restricted shares having a value on December 31,
1996, of $1,232,438. These were the remaining restricted shares from an
award of 75,000 shares received on January 22, 1993, when the award had a
value of $786,570. Dividends on these shares accrue at the same rate as
paid to all stockholders. In February 1995, 12,500 shares and the related
dividends vested because the return on capital goal for his business unit
was achieved for 1994. In February 1996, 31,250 shares and the related
dividends vested because the Company achieved its 20% ROE goal for 1995.
These remaining 31,250 restricted shares vested in February 1997 because
the ECDC determined that the effect of the
15
<PAGE> 19
significant restructuring charges taken in connection with the
anticipated spin-off of the chemical businesses would not be utilized in
determining whether the Company achieved its 1996 ROE goal.
* On December 31, 1996, no restricted shares were held by Mr. De Schutter,
Mr. Potter, or Mr. Reding.
<F4> These columns reflect grants and payouts made under various option
programs and long-term incentive plans (LTIPs), respectively. No LTIP
payments were made in 1996.
<F5> Amounts shown for 1996 include contributions to thrift/savings plans as
follows: Mr. Shapiro, $33,600; Mr. De Schutter, $24,930; Mr. Potter,
$21,000; Mr. Reding, $21,630; and Mr. Verfaillie, $21,000; split dollar
life insurance premiums paid as follows: Mr. Shapiro, $55,963; Mr. De
Schutter, $16,145; Mr. Potter, $32,468; Mr. Reding, $29,359; and Mr.
Verfaillie, $40,487; costs for supplemental medical plans as follows: Mr.
De Schutter, $6,463; and Mr. Potter, $524; costs for executive disability,
as follows: Mr. De Schutter, $3,211; and costs for executive travel
accident plans, as follows: Mr. Shapiro, $146; Mr. De Schutter, $107; Mr.
Potter, $146; Mr. Reding, $146; and Mr. Verfaillie, $146.
<F6> Mr. De Schutter became an executive officer of the Company during 1995.
<F7> Consistent with the policy in the Searle business unit, the portion of Mr.
De Schutter's bonus attributable to achievement of the Company's ROE goal
was capped at $6,000.
</TABLE>
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Grant
Date
Individual Grants Value
- --------------------------------------------------------------------------------- ---------
(a) (b) (c) (d) (e) (f)
Number of % of Total Grant
Securities Options Exercise Date
Underlying Granted to or Base Present
Options Employees in Price Expiration Value
Name Granted (#) Fiscal Year ($/Share) Date ($)<F3>
---- ----------- ------------ --------- ---------- -------
<S> <C> <C> <C> <C> <C>
R. B. Shapiro 590,000<F1> 2.4 30.338 04/25/06 5,380,800
885,000 3.5 35.000 04/25/06 6,398,550
885,000 3.5 40.000 04/25/06 4,982,550
590,000 2.4 45.000 04/25/06 3,634,400<F4>
R. U. De Schutter 100,000<F2> 0.4 27.125 02/21/06 719,000
50,000<F1> 0.2 30.338 04/25/06 456,000
75,000 0.3 35.000 04/25/06 542,250
75,000 0.3 40.000 04/25/06 422,250
50,000 0.2 45.000 04/25/06 308,000<F4>
R. G. Potter 160,000<F1> 0.6 30.338 04/25/06 1,459,200
240,000 1.0 35.000 04/25/06 1,735,200
240,000 1.0 40.000 04/25/06 1,351,200
160,000 0.6 45.000 04/25/06 985,600<F4>
N. L. Reding 160,000<F1> 0.6 30.338 04/25/06 1,459,200
240,000 1.0 35.000 04/25/06 1,735,200
240,000 1.0 40.000 04/25/06 1,351,200
160,000 0.6 45.000 04/25/06 985,600<F4>
H. A. Verfaillie 160,000<F1> 0.6 30.338 04/25/06 1,459,200
240,000 1.0 35.000 04/25/06 1,735,200
240,000 1.0 40.000 04/25/06 1,351,200
160,000 0.6 45.000 04/25/06 985,600<F4>
<FN>
<F1> The exercise price of $30.338 for this tranche of options was the fair
market value per underlying share on April 26, 1996, the date of grant.
The three succeeding tranches have pre-established "premium"
exercise prices (prices higher than the fair market value per underlying
share on the date of grant) which
16
<PAGE> 20
must be attained within 4, 5, and 6 years, respectively, from the
date of grant and maintained for ten consecutive trading days in order to
avoid forfeiture of the options in the tranche. The $35 and $40
pre-established exercise prices have been met. All options must be held
for a minimum of one year from the date of grant before they may be
exercised. These options expire on the tenth anniversary of the grant date
unless forfeited earlier. The options carry stock tax withholding rights.
<F2> The exercise price of $27.125 was the fair market value per underlying
share on February 22, 1996, the date of grant. These options were to
become exercisable upon the earliest of the attainment of the Company's
20% ROE target for 1996, the attainment of other criteria as specified by
the ECDC, or the ninth anniversary of the option grant date, but in no
event earlier than the first anniversary of the option grant date. The
options have now become exercisable because the ECDC determined that the
20% ROE goal for 1996 would have been achieved but for the significant
charges taken in connection with the anticipated spin-off of the Company's
chemical businesses. The options have a ten-year term and carry stock tax
withholding rights.
<F3> In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. Accordingly, there is no assurance that the value
realized by an executive, if any, will be at or near the value estimated
by the Black-Scholes model. Future compensation resulting from option
grants is based solely on the performance of the Company's stock price.
Except as set forth in footnote 4 below, the following assumptions were
made for purposes of calculating the original Grant Date Present Value: an
option term of 4.5 years, volatility of 25%, dividend yield of 1.5%, and a
risk-free interest rate of 6.28%.
<F4> Two of the assumptions used to calculate the Grant Date Present Value of
these options varied from the assumptions set forth in footnote 3 above
because the pre-established exercise price of these options has not yet
been attained. The option term was assumed to be 6.0 years, and the
risk-free interest rate 6.37%.
</TABLE>
AGGREGATED OPTION EXERCISES IN 1996 AND OPTION VALUES ON DECEMBER 31, 1996
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
- ------------------------------ ------------ --------- ------------- -------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#)<F2> FY-End ($)<F2>
Shares Value
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($)<F1> Unexercisable Unexercisable
- ---- ------------ --------- ------------- -------------
<S> <C> <C> <C> <C>
R. B. Shapiro 82,500 1,492,739 1,758,835/2,950,000 46,418,358/9,296,630
R. U. De Schutter 84,500 1,295,434 302,000/350,000 7,354,426/2,019,150
R. G. Potter -0- -0- 947,390/800,000 25,961,332/2,521,120
N. L. Reding 64,000 1,153,756 1,398,000/800,000 36,913,500/2,521,120
H. A. Verfaillie -0- -0- 675,890/800,000 17,919,762/2,521,120
<FN>
<F1> The amounts in column (c) reflect the value of shares received on the
exercises of options granted up to nine years ago at fair market values
ranging from $8.706 to $11.600.
<F2> Unexercised options shown in columns (d) and (e) reflect grants received
over an extended period of time.
</TABLE>
17
<PAGE> 21
LONG-TERM INCENTIVE PLANS--AWARDS IN 1996
<TABLE>
<CAPTION>
Number of Performance Estimated future payouts under non-stock
shares, or other price-based plans
units or period until ----------------------------------------
other rights maturation Threshold Target Maximum
Name (#) or payout ($) ($) ($)
(a) (b) (c) (d) (e) (f)
---- ------------ ------------ ---------- ------ -------
<S> <C> <C> <C> <C> <C>
R. B. Shapiro * N/A<F1> N/A N/A 424,500 N/A
* 180,000 units<F2> 12/31/00 2,215,317<F3> 3,322,976<F3> 6,645,951<F3>
R. U. De Schutter * N/A<F1> N/A N/A 243,000 N/A
* 20,000 units<F2> 12/31/00 246,146<F3> 369,220<F3> 738,439<F3>
* 25,000 "options" N/A N/A -0-(0%) N/A
for units<F4> 630,000(5%)
1,590,000(10%)
R. G. Potter * N/A<F1> N/A N/A 242,813 N/A
* 65,000 units<F2> 12/31/00 799,976<F3> 1,199,964<F3> 2,399,927<F3>
N. L. Reding * N/A<F1> N/A N/A 228,750 N/A
* 65,000 units<F2> 12/31/00 799,976<F3> 1,199,964<F3> 2,399,927<F3>
H. A. Verfaillie * N/A<F1> N/A N/A 224,250 N/A
* 65,000 units<F2> 12/31/00 799,976<F3> 1,199,964<F3> 2,399,927<F3>
<FN>
<F1> The amount shown in this line represents the sustained performance
adjustment applied this year to both the portion of the 1996 bonus
described in footnote 1 to the Summary Compensation Table and the portion
of the annual bonus withheld for 1995 because net income and capital
employed objectives were met for all three performance years under the
annual incentive program for the years 1994-1996. These sustained
performance adjustments are as follows: Mr. Shapiro, $424,500; Mr.
De Schutter, $243,000; Mr. Potter, $242,813; Mr. Reding, $228,750;
and Mr. Verfaillie, $224,250. The total of all adjustments for
sustained performance relative to an individual's cumulative incentive
awards over the 1994-1996 performance period that will be paid in March
1997 ranges from 20% to 25% of the awards that will actually be paid for
the three-year period.
<F2> The units represent shares purchased under the Monsanto Executive Stock
Purchase Incentive Plan (Executive Plan) described on page 13. Pursuant to
the Executive Plan, each named executive officer purchased with a
full-recourse interest-bearing loan from the Company the number of shares
of the Company's common stock equal to the number of units next to his
name. The interest rate was 6.36%, the applicable federal rate (as
determined by Section 1274(d) of the Internal Revenue Code) in effect at
the time of purchase. The estimated future payouts shown in this table are
based upon the principal amount of the loan plus unpaid interest at the
end of the performance period (Ending Loan Amount) and cannot exceed the
amount to be repaid. The threshold payout represents 33 1/3% of the
estimated Ending Loan Amount. In order to achieve the threshold payout,
the executive must not sell the stock purchased and must remain employed
with the Company during the entire performance cycle (which ends December
31, 2000), and the Company must have positive cumulative net income for
this period (Service Award). Each named executive officer may also receive
an additional award of up to the remaining 66 2/3% of the Ending Loan Amount
(Performance Award). The size of this Performance Award depends upon the
total shareholder return to the Company's stockholders through the year
2000 as compared with the total shareholder return for companies in the
Standard & Poor's Industrials (Index). In order to achieve the maximum
payout shown in the table, the executive must
18
<PAGE> 22
earn the full Service Award, and the Company's total shareholder return
through the year 2000 must be at or above the total shareholder return of
companies at the 75th percentile of the Index, entitling the executive to
the maximum Performance Award. To achieve the target award shown in the
table, the executive must earn the full Service Award, and the Company's
total shareholder return through the year 2000 must be at or above the
50th percentile of the Index, entitling the executive to the minimum
Performance Award. Amounts paid must be applied by the executive towards
payment of the outstanding principal and accrued interest on the loan. If
only the threshold or target award is received, the outstanding loan
balance would significantly exceed the payment to the executives under the
Executive Plan, and the executive would be required to either sell some or
all of the shares or use other personal assets to pay off the remainder of
the loan.
<F3> Assumes current annual dividend remains unchanged through December 31,
2000. An increase in the dividend would reduce the amount of the deferred
incentive award. Similarly, a decrease in the dividend would increase the
amount of the deferred incentive award. Assumes also that the named
executive officer keeps the shares of stock purchased under the Executive
Plan and remains an employee of the Company until December 31, 2000.
<F4> Mr. De Schutter's "options" were awarded under the Searle Phantom Stock
Option Plan of 1986 (Searle Phantom Plan), which gave participants the
opportunity to receive the appreciation in the value of a hypothetical
share of Searle stock. Such "shares" represented units of valuation
created solely for purposes of measuring the increase, if any, in the
value of Searle as determined by using such factors and methods as deemed
appropriate, including analyses by independent investment bankers. Options
to receive the appreciation in the value of these units were granted for a
ten-year period. The target values shown above assume various hypothetical
rates of appreciation over the original term of the grant. In February
1997, the ECDC decided to terminate the Searle Phantom Plan and to credit
Mr. De Schutter and other active participants with a combination of cash
and options on Monsanto common stock representing current and anticipated
future appreciation of the units.
</TABLE>
PENSION PLANS
The following table illustrates the annual normal retirement benefits payable
under the Company's defined benefit pension plans in effect in 1996 and
applicable to Messrs. Shapiro, De Schutter, Potter, Reding, and Verfaillie. The
benefit levels in the table assume retirement at age 65 and payment in the form
of a single life annuity.
<TABLE>
<CAPTION>
Remuneration Years of Service
- ------------ --------------------------------------------------------------------------------
5 10 15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $ 42,000 $ 84,000 $127,512 $172,512 $217,512 $262,512 $ 307,512 $ 352,512
800,000 56,000 112,512 172,512 232,512 292,512 352,512 412,512 472,512
1,000,000 70,000 142,512 217,512 292,512 367,512 442,512 517,512 592,512
1,200,000 84,000 172,512 262,512 352,512 442,512 532,512 622,512 712,512
1,400,000 98,000 202,512 307,512 412,512 517,512 622,512 727,512 832,512
1,600,000 112,512 232,512 352,512 472,512 592,512 712,512 832,512 952,512
1,800,000 127,512 262,512 397,512 532,512 667,512 802,512 937,512 1,072,512
2,000,000 142,512 292,512 442,512 592,512 742,512 892,512 1,042,512 1,192,512
</TABLE>
Generally, compensation utilized for pension formula purposes includes salary
and annual bonus reported in columns (c) and (d) of the Summary Compensation
Table. However, the portion of the annual bonus attributable to achievement of
20% ROE, as described on page 12, is not included in the pension formula.
The annual normal retirement benefits payable under the Company's pension plans
to the executive officers 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
19
<PAGE> 23
36 months of employment or (b) average compensation received during the highest
three of the final five calendar years of employment.
Average final compensation and the respective years of service at Monsanto as
of December 31, 1996, are as follows: Mr. Shapiro, $1,582,795 (6.6 years); Mr.
Potter, $1,073,223 (31.1 years); Mr. Reding, $1,188,695 (41.3 years); and Mr.
Verfaillie, $789,222 (13.0 years). Mr. De Schutter's benefit under the
Company's defined benefit pension plans will be based on his years of service
with the Company and his average final compensation at Searle, which were as of
December 31, 1996, $888,722 (21.5 years); Mr. Shapiro and Mr. De Schutter also
accrue benefits under the Searle and NutraSweet defined benefit pension plans
described below. Mr. Shapiro's benefit will be based on his years of service at
NutraSweet and his average final compensation at the Company. Mr. De Schutter's
benefit will be based on both his years of service and average final
compensation at Searle.
In addition to the retirement benefits for Mr. Verfaillie based on his 13 years
of service as a U. S. employee, Mr. Verfaillie is also eligible for regular
retirement benefits based on his 7.8 years of service as a non-U.S. employee.
In addition, he participates in Monsanto's regular, non-qualified pension plan
designed to protect retirement benefits for employees serving in more than one
country. However, his total retirement benefits from the combined plans when
considering his total service of 20.8 years are expected to be generally
comparable to the benefits described in this section.
The following table illustrates the annual normal retirement benefits payable
under the Searle and NutraSweet defined benefit pension plans applicable to Mr.
De Schutter and Mr. Shapiro. The benefit levels in the table assume retirement
at age 65 and payment in the form of a single life annuity.
<TABLE>
<CAPTION>
Remuneration Years of Service
- ------------ --------------------------------------------------------------------
5 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $ 52,664 $105,328 $157,992 $210,656 $263,320 $315,984 $315,984
800,000 70,664 141,328 211,992 282,656 353,320 423,984 423,984
1,000,000 88,664 177,328 265,992 354,656 443,320 531,984 531,984
1,200,000 106,664 213,328 319,992 426,656 533,320 639,984 639,984
1,400,000 124,664 249,328 373,992 498,656 623,320 747,984 747,984
1,600,000 142,664 285,328 427,992 570,656 713,320 855,984 855,984
</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 60 of the last 120 months 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. However, the portion of the annual bonus attributable to achievement of
20% ROE, as described on page 12, is not included in the pension formula.
Average final compensation under the pension formula and years of service at
Searle or NutraSweet as of December 31, 1996 for Mr. De Schutter and Mr.
Shapiro are as follows: Mr. De Schutter, $731,700 (11.5 years) and Mr. Shapiro,
$1,303,661 (11.5 years).
Effective January 1, 1997, the defined benefit pension plans for the Company,
Searle and NutraSweet were changed. The new defined benefit pension plans will
consist of two accounts: a Prior Plan Account and a Cash Balance Account. The
opening balance of the Prior Plan Account will be the lump sum value of the
executive's December 31, 1996 monthly retirement benefit earned prior to
January 1, 1997 under the old defined benefit pension plans described above,
calculated using the assumption that the monthly benefit would be payable at
age 55 with no reduction for early payment. For each year of the executive's
continued employment with the Company, his Prior Plan Account will be increased
by 4% to recognize that prior plan benefits would have grown as a result of pay
increases. For each year following December 31, 1996 during which the executive
is employed, 3% of annual compensation in excess of the Social Security wage
base and a percentage (based on age) of annual compensation (salary and annual
bonus) will be credited to the Cash
20
<PAGE> 24
Balance Account. The applicable percentages and age ranges are: 3% before age
30, 4% for ages 30 to 39, 5% for ages 40 to 44, 6% for ages 45 to 49, and 7%
for age 50 and over. In addition, the Cash Balance Account of executives who
earned benefits under the Company's old defined benefit pension plans will be
credited each year (for up to ten years based on prior years of service with
the Company) following December 31, 1996 during which the executive is employed
with an amount equal to a percentage (based on age) of annual compensation. The
applicable percentages and age ranges are: 2% before age 30, 3% for ages 30 to
39, 4% for ages 40 to 44, 5% for ages 45 to 49, and 6% for age 50 and over.
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. The estimated annual supplemental benefits payable to Mr. Shapiro upon
retirement at age 65 are $253,194. Mr. Shapiro will also receive the same
Company contribution to the retiree medical plan as an eligible retiree with 30
years of service. The value of this benefit will be determined at retirement
based on age, the premium paid for medical coverage, and projected premium cost
increases.
If the total of the benefits payable to Mr. De Schutter under the Company's and
Searle's defined benefit pension plans described above do not equal the benefit
Mr. De Schutter would have received if all his service had been with the
Company, he will be provided supplemental retirement benefits in an amount
equal to the benefits he would have received under the Company's plans had all
his years of service been with the Company less the benefits provided by the
Searle plans. It is estimated that there will be no annual supplemental benefit
payable to Mr. De Schutter if he retires at age 65.
CERTAIN AGREEMENTS
The Board has authorized agreements with the executive officers currently
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. The Company's Board has also authorized a
supplemental agreement to provide supplemental retirement benefits to be
applicable under the same change of control conditions to Mr. Verfaillie, who
is not yet eligible for unreduced early retirement benefits. These supplemental
benefits will equal the difference between what he 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 to Mr. Verfaillie if he 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.
OTHER INFORMATION REGARDING MANAGEMENT
TRANSACTIONS AND RELATIONSHIPS
Mr. John E. Robson, Senior Advisor, Robertson, Stephens & Company, was elected
a director of the Company on September 26, 1996. Robertson, Stephens & Company
has provided investment banking services to the Company in 1996 and is
continuing to provide similar services to the Company in 1997.
21
<PAGE> 25
Mr. Michael Kantor, a nominee for director, is a partner at the law firm of
Mayer, Brown & Platt, which provided services to the Company in 1996 and is
providing services to the Company in 1997.
Consistent with applicable regulations, no information has been solicited or
provided regarding transactions between the Company and any individual for the
period during which the individual did not serve as a director or executive
officer.
INDEBTEDNESS
During 1996, Mr. Shapiro, the other executives named in the Summary
Compensation Table, and the other nine executive officers of the Company
received full-recourse, interest-bearing loans for the purchase price of the
Monsanto common stock they purchased pursuant to the terms of the Monsanto
Executive Stock Purchase Incentive Plan (Executive Plan) described on page 13
of this Proxy Statement. The loans have an eight-year term and accrue interest
at the applicable federal rate (as determined by Section 1274(d) of the
Internal Revenue Code) on the purchase date for loans of such maturity,
compounded annually. For Mr. Shapiro and the other named executive officers the
applicable federal rate is 6.36%. For two other executive officers who
purchased shares at a later date because of promotion or hiring into a position
eligible for participation in the Executive Plan, the rates are 6.72% and
6.60%, respectively. In addition, the loans are secured by a pledge of the
shares of common stock acquired under the Executive Plan.
Interest is payable prior to maturity to the extent of dividends paid on the
shares purchased, with the balance due at the maturity of the loan. The
proceeds of the deferred cash incentives awarded during the performance cycle
under the Executive Plan must also be applied to prepay the loans. Following
such prepayment, the balance of the loans at the end of the performance cycle,
together with accrued and unpaid interest thereon, will generally be payable in
three equal installments (plus interest) on the first three anniversaries of
the end of the performance cycle. The payment of the loan will be accelerated
if an executive officer's service is terminated during the performance cycle
for any reason other than retirement or following a change of control. In the
event of retirement, there is no loan acceleration. In the event of a change of
control, the loan must be repaid over a three-year period following such event.
The loan may also be prepaid at any time at the executive officer's option.
On May 10, 1996, Mr. Shapiro and the other named executive officers received
loans in the following amounts: Mr. Shapiro, $5,433,768; Mr. De Schutter,
$603,752; Mr. Potter, $1,962,194; Mr. Reding, $1,962,194; and Mr. Verfaillie,
$1,962,194. The aggregate amount of loans made pursuant to the Executive Plan
to all executive officers as a group (including the named executive officers)
during 1996 was $21,902,996. As of December 31, 1996, the aggregate principal
balance of such loans was $22,436,741.
In addition, one executive officer (not a named executive officer) who
participates in the Executive Plan also has a loan from the Company pursuant to
the terms of the Company's Employee Stock Purchase Plan (Employee Plan), a plan
open generally to all regular full-time and regular part-time employees of the
Company, for shares of stock he contracted to purchase over a 40-month period
by means of payroll deductions. No interest is charged on loans under the
Employee Plan, and participants receive certificates periodically as they
complete payment for each five-share block of stock purchased under the
Employee Plan. The executive has two contracts to purchase shares outstanding,
one entered into on December 21, 1994, and the other on June 28, 1996. The
executive's largest aggregate amount of indebtedness outstanding during 1996
under the Employee Plan was $32,792, and the aggregate amount outstanding as of
December 31, 1996 under the Employee Plan was $24,741.
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP as the principal independent auditors to
examine the consolidated financial statements of the
22
<PAGE> 26
Company and its subsidiaries for the year 1997. 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 1997.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting is required for ratification of this
appointment.
STOCKHOLDER PROPOSAL (PROXY ITEM NO. 3)
PROPOSAL RELATING TO A REPORT ON CERTAIN OF THE COMPANY'S EMPLOYMENT POLICIES
AND PRACTICES.
The Amalgamated Bank of New York LongView Collective Investment Fund has given
notice of its intention to introduce the following resolution at the Annual
Meeting. In support thereof, the Fund has furnished the written statement set
forth below.
To be adopted, this proposal, WHICH IS OPPOSED BY THE BOARD OF DIRECTORS, would
require the affirmative vote of the majority of the shares present in person or
represented by proxy at the Annual Meeting.
--------------------------
"RESOLVED; the shareholders request that Monsanto Company reaffirm its public
commitment to non-discriminatory employment practices and equal employment
opportunity by preparing a report at reasonable cost and excluding confidential
information that would be available by September 1997. The report should
include, but not be limited to, the following:
"1. A chart identifying employees according to their sex and race in each of
the nine major EEOC-defined job categories for 1994, 1995 and 1996,
listing either numbers or percentages for each category.
"2. A summary description of affirmative action policies and programs to
improve performance, including job categories where women and minorities
are underutilized.
"3. A description of any policies and programs oriented specifically toward
increasing the number of managers who are qualified females and/or belong
to ethnic minorities.
"4. A general description of how Monsanto publicizes our company's affirmative
action policies and programs to merchandise suppliers and service
providers.
"5. A description of any policies and programs favoring the purchase of goods
and services from minority-and/or female-owned business enterprises."
Supporting Statement of Proponent
"In June 1996, the Monsanto Company agreed to pay $18.25 million as part of a
settlement in an age, race and disability discrimination lawsuit filed by the
U.S. Equal Employment Opportunity Commission (EEOC) and 43 former employees of
Ortho Consumer Products. The $18.25 million settlement is reportedly one of the
largest in a job discrimination suit.
23
<PAGE> 27
"The Chairman of the EEOC noted that there was "substantial evidence" that
Monsanto had destroyed important records in connection with the case,
indicating a lack of commitment by management to end discrimination in the
workplace.
"Employment discrimination may deprive corporations of the services of
productive employees, leading to less efficient corporate operations, which in
turn can have a negative impact on shareholder value.
"Negative news and editorial coverage about a company's employment practices
and its litigation tactics in defending them can undermine consumer confidence
and lead to a loss of business revenue and shareholder value.
"Recent news stories concerning Texaco's alleged discriminatory conduct and
destruction of documents illustrate the adverse impact that reports of such
conduct can have on a company's shares, as Texaco saw a sharp drop in its stock
price after the discrimination allegations were covered in the news media.
"We believe that preparation of the requested report would be an important way
for Monsanto to reaffirm its commitment on this important issue.
"We urge you to vote FOR this resolution."
--------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE FOREGOING RESOLUTION
FOR THE FOLLOWING REASONS:
The Company is strongly committed to equal employment opportunity as evidenced
by our policies, practices, and programs. We comply with both federal and state
employment opportunity laws, and, as a federal contractor, with Executive Order
11246. The Company provides equal employment opportunity in all employment
decisions without regard to race, color, sex, religion, national origin, age,
or disability status. Employment practices that unlawfully discriminate against
any employee or applicant for employment are prohibited throughout the
corporation. The Company is committed to affirmative action and other programs
to assure fair employment, including equal treatment in hiring, promotion,
transfer, training, compensation, termination, and disciplinary action. The
Company is also committed to programs to intensively recruit minorities and
females.
In 1996, the Company took a number of steps that are beyond the federal and
state requirements to support our mission of equal employment opportunity and
affirmative action. These steps include the following: (1) We established a
consulting arrangement with an outside firm that assists in training and
evaluation of the Company's affirmative action program. This outside firm works
directly with our sites to establish "state of the art" affirmative action
plans. (2) All equal employment opportunity and affirmative action coordinators
are given ongoing training in updating information, assisting in development of
affirmative action plans, and evaluating corrective action plans. (3) We hired
a diversity consultant to develop action plans and employ methods to ensure a
more diversified, multi-cultural workplace. We named a new director of equal
employment opportunity affairs with significant community relations experience
and various related corporate assignments. (4) We developed an internal audit
process to ensure that specific locations are up to date and in compliance with
Executive Order 11246 and that a current affirmative action plan is in place.
(5) We updated and strengthened the Company's anti-harassment policy. (6) We
continue to require annually that all of our employees certify that they are in
compliance with the Company's guidelines for employee conduct, which include a
guideline on equal employment policies and practices. (7) The Company's
procurement group has established a goal to expend $100,000,000 annually with
minority and women-owned businesses. A Company manager is dedicated full-time
to overseeing this process.
The settlement that the proponent cites in its supporting statement needs to be
viewed in context. In 1993, when the Company acquired the Ortho Consumer
Products Division from Chevron Chemical Company, the Company, recognizing that
there was a business need to reduce the size of the sales force, hired
approximately 75% of the Ortho workforce. Because the Company did not have
direct knowledge of Ortho
24
<PAGE> 28
employee performance, the Company relied on three years of Chevron's
performance ratings to make hiring and layoff decisions. Subsequently, a number
of former Ortho employees who were not hired, and others who were hired but
subsequently laid off, filed discrimination claims against both the Company and
Chevron. The EEOC intervened on behalf of these plaintiffs. In order to avoid
the cost of protracted litigation, the Company and Chevron agreed to a consent
decree under which the Company and Chevron paid a total of $18,250,000, which
included the plaintiffs' attorneys' fees. The Company was required to indemnify
Chevron for its part of the settlement by virtue of the agreement governing our
purchase of the Ortho Consumer Products Division from Chevron. As part of the
consent decree, both the Company and Chevron denied any wrongdoing and
reaffirmed their established policies of equal employment opportunity.
A look around the Company demonstrates that we have made progress in hiring and
retaining minorities and women. Women and minorities hold positions of
significant authority in both the Company's staff functions and our business
units. The Corporate Social Responsibility Committee of the Board of Directors,
composed entirely of outside directors, reviews the Company's development plans
and monitors our progress against goals. We are pleased with the progress we
have made and intend to continue on the path we have set.
Despite our long-standing commitment to equal opportunity in employment, we
believe that no purpose would be served by complying with the proponent's
request that we make available the information that the proponent seeks
regarding employment statistics. The Board of Directors does not believe that
the public dissemination of reports that contain sensitive information
protected from public disclosure by federal law promotes the ends of social
equality and equal opportunity in any meaningful way. The Company compiles and
files federally mandated statistical reports regarding employment practices at
significant time and expense to the Company. While the information in these
reports in fact illustrates the Company's commitment to equal opportunity, the
compilation and dissemination of these reports, of themselves, would do nothing
to promote this commitment. Additional reports, as requested by the proponent,
would increase the Company's expenditures and would not assist management in
providing a workplace where each individual is judged fairly according to his
or her efforts and abilities.
The Company believes that the information that the proponent seeks is sensitive
and potentially susceptible to misinterpretation by persons who may, for
whatever reason, be interested in distracting management or initiating
unfounded legal action. Specifically, the requested reporting could provide
certain groups with the false impression of statistical underutilization and
encourage them to initiate baseless legal actions, which could prove costly to
the Company and distracting to management.
In conclusion, the Board of Directors believes that the Company's commitment to
equal employment opportunity is manifest. Although we share the proponent's
ultimate objective of equal employment opportunity, the Board does not believe
that expending significant resources, both human and financial, to produce and
distribute additional reports--reports that could be misinterpreted--would
advance the Company's business performance or its commitment to equal
employment opportunity or be in the stockholders' best interests. Given our
existing equal opportunity policies and programs and our continuing efforts to
improve them, the significance the Company already places on locating and
fostering minority and women-owned business enterprises, and the fact that the
Company already submits detailed statistical information on equal employment
opportunity to the federal government, the Board believes that this proposal is
both unnecessary and inappropriate.
ACCORDINGLY, WE RECOMMEND THAT STOCKHOLDERS VOTE "AGAINST" THIS RESOLUTION.
--------------------------
Further information regarding the address and stockholdings of the sponsor of
the stockholder proposal will be furnished orally or in writing as requested
promptly upon receipt of any oral or written request made to the Secretary of
the Company.
25
<PAGE> 29
GENERAL INFORMATION
For inclusion in the Company's Proxy Statement and form of proxy, any proposals
of stockholders intended to be presented at the 1998 Annual Meeting must be
received by the Company no later than November 13, 1997.
To nominate one or more directors and/or propose proper business from the floor
for consideration at the 1998 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 25, 1998, and not later than February 24, 1998. 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.
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, including a stockholder proposal excluded from this Proxy Statement
pursuant to the rules of the SEC, 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 $20,000 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.
R. WILLIAM IDE III
Secretary
March 13, 1997
26
<PAGE> 30
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
MONSANTO
<PAGE> 31
MONSANTO
PLACE: World Headquarters
800 N. Lindbergh Blvd.
St. Louis County, Mo.
Common Stock
PROXY
Annual
Meeting
1:30 P.M.
April 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert B. Shapiro, Nicholas L. Reding, and
R. William Ide III, 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 1997 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 AND 2 AND "AGAINST" ITEM 3.
- ------------------- , 1997 ------------------------------------------ PLEASE
Date Please sign your name or names exactly as SIGN
printed hereon. When shares are held by
joint tenants, both should sign. Trustees
and other fiduciaries should so indicate
when signing.
<PAGE> 32
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2 AND "AGAINST"
ITEM 3.
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. B. Shapiro, J. T. Bok, R. M. Heyssel, M. Kantor, G. S. King, P. Leder,
H. M. Love, F. A. Metz, Jr., J. F. M. Peters, N. L. Reding, J. S. Reed,
J. E. Robson, W. D. Ruckelshaus, and J. B. Slaughter.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in this space.)
2. Ratification of Deloitte & Touche LLP
as principal independent auditors for 1997. / / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3.
3. Stockholder proposal relating to a report
on certain of the Company's employment
policies and practices. / / FOR / / AGAINST / / ABSTAIN
PLEASE SIGN ON REVERSE SIDE.
<PAGE> 33
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 1997 Annual Meeting are 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 25, 1997 at 1:30 p.m., or at any adjournment
thereof.
THE TRUSTEE MUST RECEIVE THIS FORM ON OR PRIOR TO APRIL 21, 1997. THE TRUSTEE
WILL VOTE YOUR SHARES AS YOU DIRECT ONLY IF THE SIGNED FORM IS RECEIVED ON OR
PRIOR TO APRIL 21, 1997, 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 ----------------, 1997 ---------------------------------------
DATE SIGNATURE
<PAGE> 34
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors / / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as to vote for all
written to the contrary nominees listed
below) below
R. B. Shapiro, J. T. Bok, R. M. Heyssel, M. Kantor, G. S. King, P. Leder,
H. M. Love, F. A. Metz, Jr., J. F. M. Peters, N. L. Reding, J. S. Reed,
J. E. Robson, W. D. Ruckelshaus, and J. B. Slaughter.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in this space.)
2. Ratification of Deloitte & Touche LLP
as principal independent auditors
for 1997. / / FOR / / AGAINST / / ABSTAIN
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3; AND TO "GRANT
AUTHORITY" FOR ITEM 4.
3. Stockholder proposal relating to a report
on certain of the Company's
employment policies and practices. / / FOR / / AGAINST / / ABSTAIN
4. 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> 35
APPENDIX
1. The legend appearing at the top of the Notice of Annual
Meeting of Stockholders in the EDGAR filing 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 plans and Employee Stock
Purchase Plan. The legend will not appear on documents
delivered to other stockholders.
2. On printed pages 2 through 4, the blank spaces to the
left of each director's biography designated by the
word "[PHOTO]," contain a 1-1/8 by 1-5/8 inch black and
white photograph of the respective director.
3. On printed page 10, the trademark is designated by the
superscript letter "R" in a circle.
4. On printed page 10, the Stock Price Performance Graph
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
Roger Schwall, Assistant Director.
5. On printed pages 11, 15, 16, and 18, the bullets are
represented by asterisks in the EDGAR document.
6. On printed page 23, "The Board of Directors recommends
a vote "FOR" the ratification of the appointment of
Deloitte as principal independent auditors for the year
1997" is bold-face italic type.
7. On printed page 23 "which is opposed by the Board of
Directors" is in bold-face type.
8. On printed page 24 "The Board of Directors recommends a
vote "AGAINST" the foregoing resolution for the
following reasons:" is in bold-face italic type.
9. On printed page 25 "Accordingly, we recommend that
stockholders vote "AGAINST" this resolution." is in
bold-face italic type.
10. On the back of the proxy card, "The Board of Directors
recommends a vote "FOR" items 1 and 2 and "AGAINST"
item 3" and "The Board of Directors recommends a vote
"AGAINST" item 3" are in bold-face type.
11. On the back of the voting instruction card, "The Board
of Directors recommends a vote "FOR" items 1 and 2" and
"The Board of Directors recommends a vote "AGAINST"
item 3; and to "GRANT AUTHORITY" for item 4" are in
bold-face type.
