<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
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] 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.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MONSANTO LOGO
MONSANTO COMPANY
800 N. LINDBERGH BOULEVARD
ST. LOUIS, MISSOURI 63167
(314) 694-1000
NOTICE OF
ANNUAL MEETING OF SHAREOWNERS
APRIL 24, 1998
You are invited, as a shareowner of Monsanto Company, to be present or
represented by proxy at the Annual Meeting of Shareowners to be held at The
Field Museum, Roosevelt Road and Lake Shore Drive, Chicago, Cook County,
Illinois, on Friday, April 24, 1998, at 1:30 p.m. for the following purposes:
1. To elect three directors.
2. To ratify the appointment of Deloitte & Touche LLP as principal
independent auditors for the year 1998.
3. To consider and act upon a shareowner proposal.
4. To transact such other business as may properly come before the meeting.
Shareowners of the Company of record at the close of business on March 5, 1998,
are entitled to vote at the Annual Meeting of Shareowners and all adjournments
thereof. The Company will make available an alphabetical list of shareowners
entitled to vote at the Annual Meeting for examination by any shareowner. The
shareowner list will be available for inspection, during ordinary business
hours, at the offices of the Company's transfer agent, First Chicago Trust
Company of New York, Shareholder Services, One North State Street, 11th Floor,
Chicago, Illinois, from April 14, 1998, until the Annual Meeting. 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 shareowners
are urged either to attend the meeting or to be represented by proxy.
Whether or not you expect to attend the meeting in person, please mark, sign,
date, and return the accompanying proxy in the enclosed business reply envelope
at your earliest convenience. If you attend the meeting and wish to change your
vote or for any other reason desire to revoke your proxy, you may do so at any
time before the voting. Attendance at the Annual Meeting of Shareowners will not
in itself constitute a revocation of a previously furnished proxy, and
shareowners who attend the Annual Meeting in person need not revoke their proxy
(if previously furnished) and vote in person.
If you plan to attend the Annual Meeting, you must present your admittance
ticket at the door. Your admittance ticket and directions to the Annual Meeting
are included on pages 27 and 28 of this Proxy Statement.
/s/ R. WILLIAM IDE III
R. WILLIAM IDE III
Secretary
St. Louis, Missouri
March 13, 1998
<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................................. 11
Other Information Regarding Management................. 22
Ratification of Independent Auditors (Proxy Item No. 2)..... 23
Shareowner Proposal Relating to Cumulative Voting (Proxy
Item No. 3)............................................... 23
General Information......................................... 25
</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 Shareowners on April 24, 1998, and at all adjournments thereof. Only
shareowners of record at the close of business on March 5, 1998, 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 March 5, 1998, 598,019,408 shares of such common
stock were outstanding and entitled to vote. This Proxy Statement and the
accompanying form of proxy were first forwarded to shareowners on March 13,
1998.
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 1998;
and against
(3) the shareowner proposal relating to cumulative voting.
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 shareowner 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 shareowner 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 shareowner'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 Solutia Inc. Savings and
Investment Plan permit plan participants to direct the plan trustee how to vote
the common stock of the Company allocated to their accounts. Under the terms of
the respective trust agreements, the trustee will vote unallocated and
uninstructed shares in proportion to the shares with respect to which
instructions have been received.
1
<PAGE> 5
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
Three persons have been nominated to serve on the Board of Directors, each to
hold office until the Annual Meeting to be held in 2001 or until a successor is
elected and has qualified or until his or her earlier death, resignation or
removal. All nominees are now directors of the Company.
The Company's Certificate of Incorporation and By-Laws provide that the
directors shall be divided into three classes, as nearly equal in number as
possible. Mr. Nicholas L. Reding, Vice Chairman of the Board, whose term will
expire at the Annual Meeting, has announced that he plans to retire and,
therefore, has declined to stand for reelection. In order to comply with the
requirement that the Board of Director classes be as nearly equal in number as
possible, Dr. Philip Leder has resigned from the class of directors whose terms
will expire at the 1999 Annual Meeting, has been appointed by the Board of
Directors to serve in the class of directors whose terms will expire at the 1998
Annual Meeting, and has been nominated to be elected at the 1998 Annual Meeting
for a term expiring in 2001. The Board of Directors has reduced the size of the
Board, effective April 24, 1998, to nine Directors.
The Board does not contemplate that any of the nominees will be unable to stand
for election, but should any nominee become unavailable for election, all
proxies (except proxies marked to the contrary) will be voted for the election
of a substitute nominee nominated by the Board. The principal occupations,
directorships held and other information as of February 1, 1998, with respect to
the nominees and directors whose terms will continue after the Annual Meeting
are shown below.
TO BE ELECTED FOR TERMS EXPIRING IN 2001:
<TABLE>
<S> <C> <C>
PHOTO PHILIP LEDER PHILIP LEDER PRINCIPAL OCCUPATION: CHAIRMAN, DEPARTMENT OF
GENETICS, HARVARD MEDICAL SCHOOL, AND SENIOR
INVESTIGATOR, HOWARD HUGHES MEDICAL INSTITUTE
FIRST BECAME DIRECTOR: 1990
AGE: 63
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 JOHN E. ROBSON JOHN E. ROBSON PRINCIPAL OCCUPATION: SENIOR ADVISOR, BANCAMERICA
ROBERTSON STEPHENS
FIRST BECAME DIRECTOR: 1996
AGE: 67
Senior Advisor, BancAmerica ROBERTSON STEPHENS, 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.; Security Capital Industrial Trust (REIT).
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C> <C>
PHOTO WILLIAM D. WILLIAM D. RUCKELSHAUS PRINCIPAL OCCUPATION: CHAIRMAN, BROWNING-FERRIS
RUCKELSHAUS INDUSTRIES, INC.
FIRST BECAME DIRECTOR: 1985
AGE: 65
Chairman, Browning-Ferris Industries, Inc., since 1995; Principal, Madrona Investment
Group L.L.C., since 1996; Of Counsel, Perkins Coie, 1985-88; Chairman and Chief
Executive Officer, Browning-Ferris Industries, Inc., 1988-95; Administrator,
Environmental Protection Agency, 1983-85. Director: Browning-Ferris Industries, Inc.;
Coinstar, Inc.; Cummins Engine Co., Inc.; Gargoyles Inc.; Nordstrom, Inc.; Solutia
Inc.; Weyerhaeuser Company.
TO CONTINUE IN OFFICE UNTIL 2000:
PHOTO MICHAEL KANTOR MICHAEL KANTOR PRINCIPAL OCCUPATION: PARTNER, MAYER, BROWN & PLATT
FIRST BECAME DIRECTOR: 1997
AGE: 58
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 and Kantor, 1975-92.
PHOTO GWENDOLYN S. KING GWENDOLYN S. KING PRINCIPAL OCCUPATION: RETIRED SENIOR VICE PRESIDENT,
CORPORATE AND PUBLIC AFFAIRS, PECO ENERGY COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 57
Senior Vice President, Corporate and Public Affairs, PECO Energy Company (formerly
Philadelphia Electric Company), 1992-98; Commissioner, Social Security Administration,
1989-92. Director: Lockheed Martin Corp.
PHOTO JOHN E. ROBSON 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.
</TABLE>
3
<PAGE> 7
TO CONTINUE IN OFFICE UNTIL 1999:
<TABLE>
<S> <C> <C>
PHOTO ROBERT B. SHAPIRO ROBERT B. SHAPIRO PRINCIPAL OCCUPATION: CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, MONSANTO COMPANY
FIRST BECAME DIRECTOR: 1993
AGE: 59
Chairman and Chief Executive Officer, Monsanto Company since 1997; Chairman, President
and Chief Executive Officer, Monsanto Company, 1995-97; 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. Member: The Business Council; The Business Roundtable.
PHOTO ROBERT M. HEYSSEL ROBERT M. HEYSSEL PRINCIPAL OCCUPATION: CONSULTANT; PRESIDENT EMERITUS,
THE JOHNS HOPKINS HEALTH SYSTEM
FIRST BECAME DIRECTOR: 1988
AGE: 69
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.
PHOTO JACOBUS F. M. JACOBUS F. M. PETERS PRINCIPAL OCCUPATION: RETIRED CHAIRMAN OF THE
PETERS EXECUTIVE BOARD AND CHIEF EXECUTIVE OFFICER, AEGON
N.V.
FIRST BECAME DIRECTOR: 1993
AGE: 66
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.; 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.
</TABLE>
4
<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 16; 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, 1997.
<TABLE>
<CAPTION>
Shares of Shares Underlying
Common Stock Options Exercisable
Owned Directly Within 60
Name or Indirectly(a)(b) Days(c) Total
---- ------------------- ------------------- ---------
<S> <C> <C> <C>
Richard U. De Schutter............... 109,973 790,173 900,146
Robert M. Heyssel.................... 14,173(d) -- 14,173
Michael Kantor....................... 800 -- 800
Gwendolyn S. King.................... 4,591 -- 4,591
Philip Leder......................... 8,956 -- 8,956
Jacobus F. M. Peters................. 4,705 -- 4,705
Nicholas L. Reding................... 297,452(e) 2,198,000 2,495,452
John S. Reed......................... 38,625 -- 38,625
Robert W. Reynolds................... 97,891(f) 918,615 1,016,506
John E. Robson....................... 2,870(g) -- 2,870
William D. Ruckelshaus............... 14,610(h) -- 14,610
Robert B. Shapiro.................... 1,128,114 3,179,865 4,307,979
Hendrik A. Verfaillie................ 196,420(i) 1,408,890 1,605,310
21 directors and executive
officers as a group................ 2,414,039(j) 13,680,963 16,095,002
</TABLE>
(a) Includes shares held under Monsanto Company's Savings and Investment Plan
(SIP): Mr. De Schutter, 16,393; Mr. Reding, 40,887; Mr. Reynolds, 14,898;
Mr. Shapiro, 3,869; and Mr. Verfaillie, 15,715; and directors and executive
officers as a group, 125,641. 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. With respect to shares
held under other benefit and incentive plans, employee directors and
officers have sole voting power and no current investment power.
(b) Includes the following shares received on varying dates as a portion of the
non-employee director annual retainer and restricted against sale as
described on page 9: Dr. Heyssel, 4,555 shares; Mrs. King, 4,225 shares;
Dr. Leder, 3,245 shares; Mr. Reed, 1,500 shares; Mr. Robson, 1,350 shares;
and Mr. Ruckelshaus, 1,500 shares. With respect to such shares,
non-employee directors have sole voting power and no current investment
power.
(c) 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.
(d) Includes 1,500 shares owned by Dr. Heyssel's wife.
(e) Includes 258 shares owned by Mr. Reding's son.
(f) Includes 26,000 shares owned jointly by Mr. Reynolds and his wife.
(g) Includes 1,370 shares owned jointly by Mr. Robson and his wife.
(h) Includes 1,000 shares owned jointly by Mr. Ruckelshaus and his wife.
5
<PAGE> 9
(i) Includes 115,470 shares owned jointly by Mr. Verfaillie and his wife.
(j) Includes 2,955 shares as to which certain executive officers not named
above have shared voting and investment power; and 3,125 shares under
contract pursuant to the Company's Employee Stock Purchase Plan.
The percentage of shares of outstanding common stock, including options
exercisable within 60 days of December 31, 1997, beneficially owned by all
directors and executive officers as a group is 2.61%. 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>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
<S> <C> <C>
Janus Capital
Corporation 39,169,463(a) 6.6%
100 Fillmore Street
Denver, Colorado 80206
Oppenheimer Capital 34,969,483(b) 5.9%
Oppenheimer Tower
World Financial Center
New York, New York 10281
</TABLE>
(a) As reported in its Schedule 13G dated February 13, 1998, Janus Capital
Corporation (Janus), through its role as investment adviser or sub-adviser
to several investment companies and individual and institutional clients,
and Thomas H. Bailey, who owns approximately 12.2% of Janus, may be deemed
to be the beneficial owners of these shares with shared voting power and
shared dispositive power.
(b) Based on information furnished by Oppenheimer Capital on behalf of itself
and certain investment advisory clients. Power to vote and dispose of all
34,969,483 shares is shared.
6
<PAGE> 10
BOARD MEETINGS AND COMMITTEES; COMPENSATION OF DIRECTORS
Prior to September 1997, the committees of the Board of Directors (and the
number of times such committees met prior to September 1997) were the Audit
Committee (three), the Corporate Social Responsibility Committee (four), the
Executive Committee (none), the Executive Compensation and Development Committee
(five), the Finance Committee (four), the Nominating Committee (two), the
Pension and Savings Funds Committee (two), and the Special Committee of the
Board Regarding Agricultural Biotechnology Matters (the Ag-Biotech Committee)
(three). In September 1997, in order to increase the overall efficiency of the
committees, the Board revised the duties and powers of the Executive Committee,
disbanded all other committees with the exception of the Ag-Biotech Committee,
and reassigned the duties and powers of the disbanded committees among four new
committees. During 1997, the Board of Directors met eight times and took three
actions by unanimous written consent. All incumbent directors 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 1997 except that, due to
unavoidable circumstances, Mr. Reed attended two meetings less than 75% of such
meetings. A description of each Committee and its current membership follows.
EXECUTIVE COMMITTEE
Members: Mr. Shapiro, Chair; Mrs. King and Dr. Leder
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 otherwise delegated by the Board, or which
by statute, the Company's Certificate of Incorporation or By-Laws are reserved
for the Board). The Committee meets infrequently. The Committee met once during
1997 via telephone conference. Actions of the Committee are reported at the
Board's next regular meeting.
FINANCE COMMITTEE
Members: Mr. Reed, Chair; Messrs. Kantor, Peters, and Robson
The Finance Committee is composed of non-employee directors who are independent
of management and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of independent judgment. 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 reviews and
monitors the Company's financial planning and structure to ensure compatibility
with the Company's requirements for growth and sound operation. The Committee
provides advice regarding the worldwide financing programs of the Company and
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,
and dividend policy. The Committee also appointed, and receives periodic reports
from, a management committee which approves the actuarial assumptions and annual
contributions for certain pension and benefit plans (Plans), selects trustees
and investment managers for the Plans, and establishes 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 and its appointed
management committee monitor the investment performance of the Plans and the
investment managers. After its formation in September 1997, the Committee met
three times in 1997.
7
<PAGE> 11
PEOPLE COMMITTEE
Members: Mr. Ruckelshaus, Chair; Drs. Heyssel and Leder and Mrs. King
The People Committee is composed of independent non-employee directors. 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 approve and administer other compensation plans for all
employees except executive officers. The Committee also reviews plans for
executive succession, determines the salaries of all executive officers of the
Company, and monitors the Company's performance as it affects employees,
including issues such as diversity and morale. At its meeting in February 1998,
the Committee 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 nominees is made. In performing its responsibilities,
the Committee consults with the Chairman of the Board. This Committee will
consider shareowner nominations, which should be submitted in writing by
year-end to the Company's Secretary. After its formation in September 1997, the
Committee met three times in 1997.
PUBLIC POLICY COMMITTEE
Members: Mrs. King, Chair; Messrs. Kantor, Peters, and Ruckelshaus
The Public Policy Committee reviews and monitors the Company's performance as it
affects communities, customers, and the environment. The Committee also
identifies and investigates emerging issues that will affect the Company's
impact on society. After its formation in September 1997, the Committee met
three times in 1997.
SCIENCE AND TECHNOLOGY COMMITTEE
Members: Dr. Leder, Chair; Dr. Heyssel, Messrs. Reed and Robson
The Science and Technology Committee reviews and monitors the Company's science
and technology initiatives in areas such as information technology,
technological programs, pharmaceuticals, research, and agricultural
biotechnology. The Committee also identifies and investigates significant
emerging science and technology issues. After its formation in September 1997,
the Committee met three times in 1997.
SPECIAL COMMITTEE OF THE BOARD REGARDING AGRICULTURAL BIOTECHNOLOGY MATTERS
Members: Mr. Reding, Chair; Mrs. King, Dr. Leder, and Mr. 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. After the Board Committees were reorganized in
September 1997, the Committee met once in 1997 via telephone conference. Actions
of the Committee are reported at the Board's next regular meeting.
DIRECTORS' FEES AND OTHER ARRANGEMENTS
In order to more closely align the interests of Monsanto's directors with its
shareowners, the Company redesigned its director compensation program during
1997. The following are descriptions of the director compensation program that
was in effect during the first part of 1997 and the new program. Employee
directors do not participate in either the old or new director compensation
program.
8
<PAGE> 12
Previous Director Compensation Program
Prior to September 1, 1997, non-employee directors received 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 received $4,000 per
year, and non-employee chairmen of all other Board Committees received $5,000
per year. Each other non-employee director serving as a member of Board
Committees received $3,000 per year for each Board Committee on which such
director served. Committee members, including chairmen, received a fee of $1,300
per meeting attended, except that this fee was paid for attendance at only one
Committee meeting on the day of a Board meeting. Each non-employee director
received $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 were transferred to each director at
the beginning of the period. These shares are, however, subject to forfeiture to
the Company unless "earned out" by the director through continued service on the
Company's Board during the five years. Thus, the forfeiture condition is removed
on one-fifth of the shares on the respective dates of the five Annual Meetings
following transfer of the shares if the director is still serving on the
Company's Board. Although the directors have voting and dividend rights, none of
the shares may be sold prior to the date of the fifth such Annual Meeting so
long as the director continues serving on the Company's Board. Appropriate
adjustments are made for directors whose retirement will occur in less than five
years. The cash Board and Board Committee retainers were prorated to reflect
adoption of the new director compensation program during 1997. Directors who,
because shares for the preceding five-year period had been completely "earned
out," were entitled to receive common stock as part of their 1997 annual
retainer were instead paid cash in an amount equal to the value of shares they
would have "earned out" from the date of grant until the adoption of the new
director compensation program. As discussed below, for those directors who have
not yet reached the end of the five-year period for their previous common stock
grant, the value of compensation paid under the new director compensation
program will be reduced to take account of these shares.
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. Prior to August 1997, non-employee
directors who retired with five or more years of service received an annual
retirement benefit for life paid in cash and equal to the annual retainer at the
time of retirement. If the director died within fifteen years after retirement,
a designated beneficiary was entitled to receive the annual benefit for the
remainder of the fifteen-year period. Reduced benefits were paid to a director
who ceased for any reason to be a director with fewer than five years of service
and to a director who commenced receiving benefits prior to normal retirement.
The Company purchased 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, was anticipated to be substantially
recoverable through the proceeds of such insurance, depending on realization of
the assumptions as to mortality experience, policy dividends, and other factors.
In addition, prior to August 1997, the Company had established a Directors'
Charitable Contribution Program for all non-employee directors of the Company
which was funded through life insurance policies which were 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.
Current Director Compensation Program
During 1997, the Board eliminated Board and Board Committee retainers, suspended
grants of restricted stock, terminated the director retirement plan with respect
to currently active non-employee directors, and
9
<PAGE> 13
closed the charitable contribution program to new participants. Non-employee
directors who would have been entitled to receive a grant of restricted stock in
1997 were paid in cash the pro rata value of such shares for the period
beginning on the date the grant would have been made and ending on the effective
date of the new director compensation program. Non-employee directors were given
a choice of receiving their vested benefits under the retirement plan in a lump
sum payment or in deferred payments. Non-employee directors who elect to defer
payments may choose to have such deferred amounts credited to either a cash
balance account which accrues interest at the Moody's Baa Bond Index Rate (the
Moody's Bond Rate) or a stock unit account with the value of each stock unit
equal to a share of the Company's common stock.
Non-employee directors now receive annual compensation having a total annual
value of $90,000 ($100,000 for directors who serve as Chair of a Board
Committee). As discussed above, this amount is reduced to take account of the
previously granted restricted stock being earned by certain directors. One-half
of this amount is in the form of stock options to purchase shares of the
Company's common stock. Each director may elect the form of the other half of
compensation, choosing any combination of additional options, cash paid
currently, deferred cash, common stock that is subject to forfeiture if the
director does not complete his or her term, or common stock the delivery of
which is deferred. Directors make this election at the beginning of each term
for which he or she is elected.
The value of the options is determined in accordance with the Black-Scholes
option valuation method used for employee option grants, with an exercise price
equal to the value of a share of the Company's common stock on the date of
grant. Options granted for a term will vest in pro rata installments on the day
before each Annual Meeting of Shareowners during that term. After vesting,
options will generally be exercisable until the tenth anniversary of the date of
grant. When a director's service as a director of the Company ends, any unvested
options will be forfeited.
The portion, if any, which a director elects to receive in cash is paid on a pro
rata basis throughout the director's term. Deferred cash will accrue interest at
an interest rate equal to the average Moody's Bond Rate for the prior calendar
year until it is paid either in a lump sum or in installments after the
director's service as a director terminates.
A director who elects to receive a portion of Board compensation in restricted
stock will be issued the number of shares of the Company's common stock having a
value, as of the first day of the term to which the compensation relates, equal
to such portion. Restricted stock will be forfeitable and nontransferrable until
it vests in pro rata installments on the day before each Annual Meeting of
Shareowners during the term. The portion, if any, of director compensation which
a director elects to receive in deferred stock will be provided by crediting a
stock unit account maintained by the Company for the director with a number of
stock units representing hypothetical shares of the Company's common stock
having a value, as of the first day of the term to which the compensation
relates, equal to such portion. Stock units are paid in shares of the Company's
common stock either in a lump sum or in installments after the director's
service as a director terminates. Whenever the Company declares a dividend or
other distribution with respect to its common stock, deferred stock accounts
will be credited with additional stock units equal to the number of shares of
the Company's common stock having a value equal to the dividend or other
distribution that the director would have received had the stock units on the
record date of such dividend or other distribution been shares of the Company's
common stock.
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 1997, Dr.
Leder received $134,172 under this contract.
Mr. John E. Robson, a director of the Company, served 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 were in addition to the standard director compensation arrangements
that Calgene had with its non-employee directors. In May 1997, the Company
acquired for $8.00 per share in cash all outstanding equity interests of
Calgene, including Mr. Robson's 15,000 shares.
10
<PAGE> 14
EXECUTIVE COMPENSATION
STOCK PRICE PERFORMANCE GRAPH
The graph below compares total shareowner return on the Company's common stock
(assuming reinvestment of dividends) with the cumulative total return of the
Standard & Poor's 500 Stock Index which includes the Company, an "old" peer
group index and a "new" peer group index. Because the Company is involved in
agricultural, pharmaceutical and food businesses, no published peer group
accurately mirrors the Company's portfolio of businesses. Accordingly, in 1997
the Company created a peer group index that included companies in the principal
lines of business in which the Company operated. The companies in this "old"
peer group 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. In 1997, Eli Lilly sold their stake in Dow Elanco to Dow Chemical
Company. As the life sciences industry evolved and the Company's peers in the
industry became clearer, the Company adjusted its peer group. The "new" peer
group includes Bayer AG ADR, Dow Chemical Company, DuPont (E.I.) de Nemours and
Company, Hoechst AG, Novartis AG, Rhone-Poulenc S.A., and Zeneca Group PLC. Both
peer group indices reflect 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 indices beginning with its
formation in June 1993.
TOTAL RETURN TO SHAREOWNERS
Cummulative Total Return
Based on reinvestment of $100 beginning December 31, 1992
<TABLE>
<CAPTION>
MEASUREMENT PERIOD "OLD" PEER "NEW" PEER
(FISCAL YEAR COVERED) MONSANTO S&P 500 (R) GROUP GROUP
<S> <C> <C> <C> <C>
DEC-92 100 100 100 100
DEC-93 132 110 118 123
DEC-94 131 112 126 128
DEC-95 235 153 180 171
DEC-96 380 189 258 256
DEC-97 454 252 388 333
</TABLE>
11
<PAGE> 15
REPORT OF THE PEOPLE COMMITTEE ON EXECUTIVE COMPENSATION
Policies and Objectives
The People 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 page 8 above). The purpose
of these plans and the objectives of the Committee are to:
- - focus management on business performance that creates shareowner value;
- - recognize the contribution of each business unit to shareowner 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 16
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. During 1997, base salaries were increased for some
executives when the Company spun-off its chemicals business and responsibilities
were changed. 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 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
Company (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 1995-1997 was set in terms of Company net income. A
target award was set based on the Company's net income goal; the actual award
was increased or decreased based on actual net income and Economic Value Added
(EVA* ), subject to adjustment for non-recurring events. EVA is determined by
taking net operating profit after tax and subtracting a charge for the capital
used to generate that profit. The Committee may 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 shareowner 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 EVA has been used for awards to business unit executives.
- ---------------
* EVA is a trademark of Stern Stewart & Co.
12
<PAGE> 16
The annual incentive program for 1997 was designed to transition the Company to
a life sciences business following the spin-off of the Company's chemicals
business. In February 1997, 30% of the annual incentive opportunity at the
outstanding performance level was replaced by performance stock options. The
remaining 70% was cash-based. The options vest and the cash awards are paid
based on achievement of net income and EVA goals. 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.
Long-term Compensation. For the period 1997-1999, long-term compensation for the
Chief Executive Officer, other corporate executives, and business unit
presidents has two separate programs designed to increase the alignment of
long-term compensation with shareowner value. The first program is the premium
priced options granted in April 1996 to designated executives, including the
Chief Executive Officer. A limited number of executives were subsequently
included in the plan during 1997. In addition, some executives received
additional grants when responsibilities were changed as a result of the spin-off
of the Company's chemicals business. Eighty percent of these options could be
exercised only if the Company's stock price met or exceeded three specific price
targets which were 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,
shareowners must realize significant returns on their investment before
executives receive gains on their options. Targets set in April 1996 at $31.89
per share, $36.45 per share, and $41.01 per share (the targets have been
adjusted to reflect the spin-off of the Company's chemicals business), although
aggressive when set, have already been met. For those executives added in 1997,
certain targets have not yet been met. Each five dollar increment in target
price represents an increase in shareowner value of approximately $3 billion.
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 program is the Monsanto Executive Stock Purchase Incentive Plan
approved by shareowners in 1996. This program 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 with the proceeds of a full-recourse loan
obtained from the Company. These executives are eligible to receive a deferred
cash incentive award limited by the amount of the full-recourse loan 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 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
shareowner return of companies at the 50th percentile of the Standard & Poor's
Industrials. For maximum incentives, Monsanto's total shareowner 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 shareowners.
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 any of the executive officers in
1997. Additional option grants may be made to reflect increased responsibility
or a shift from business unit to corporate responsibilities.
1997 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.
13
<PAGE> 17
In February 1997, the Committee replaced 30% of Mr. Shapiro's annual incentive
opportunity at the outstanding performance level with performance stock options.
The remaining 70% of Mr. Shapiro's annual incentive opportunity was to be paid
in cash. Additional performance stock options were granted which vest based on
performance against an EVA goal set at the outstanding level for the Company.
The total number of shares subject to these two option grants was 79,811.
Based on the Company's 1997 performance discussed below, the Committee vested
41,183 performance stock options and approved a cash annual incentive award of
$965,000 for Mr. Shapiro for 1997. Because the Company did not achieve its
outstanding level for the EVA goal, options based on the EVA goal were not
vested and will not become exercisable until the ninth anniversary of the grant.
Both the number of performance stock options which replaced 30% of the annual
incentive opportunity and which vested, and the cash annual incentive award were
substantially above target performance levels but below the outstanding levels
established by the Committee. These goals were set at levels which required a
substantial improvement in the Company's performance following the outstanding
performance of the prior three years, reflecting increasingly difficult goals
for the fourth straight year. Net income, excluding unusual charges, was at an
all-time record, 11% above the record set in 1996. The pharmaceuticals and
agricultural segments produced record operating income, excluding unusual
charges. The spin-off of the Company's chemicals business was successfully
completed. Investment in new products targeted for rapid commercialization
increased significantly. In making the award, the Committee also considered
total return to shareowners and performance compared to competitors.
The payment of cash awards and the vesting of performance stock options for the
other named corporate executives were based on the same factors. 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 for the performance period 1997-1999,
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, have been 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.
In February 1997, the Committee terminated the Searle Phantom Stock Option Plan
of 1986 which gave participants, including Mr. De Schutter, the opportunity to
receive the appreciation in value of a hypothetical share of Searle stock by
receiving phantom stock options for a ten-year period. In terminating this plan,
the Committee provided Mr. De Schutter and other active participants with a
combination of cash and options to acquire Monsanto common stock representing
current and anticipated future appreciation of the Searle phantom stock options.
As payment for the present value and anticipated future value of canceled Searle
phantom stock options, Mr. De Schutter received $1,495,000 in cash and 227,474
Monsanto stock options. An additional $2,445,000 was deferred to comply with
Section 162(m) of the Internal Revenue Code discussed below.
Premium Option Purchase Program
In order to further align the interests of the Company's senior management with
the interests of shareowners, the People Committee adopted a premium stock
option purchase program in 1998. Under this program, the People Committee
offered approximately 30 members of senior management, including all of the
executive officers, an opportunity to purchase premium stock options from the
Company at 50% of the options' Black-Scholes value. Executives may purchase the
options with cash or through base salary reduction of up to 50% of the
executive's salary over a two year period. The option strike price is 50% above
the value of Monsanto common stock on the date the options were offered, which
means that the price of Monsanto common stock will have to increase more than
50% before the premium options have any value. The options will expire if the
50% premium is not achieved within five years. Executives who elect to commit at
least 10% of their base
14
<PAGE> 18
salary to this program will receive in 1998 a premium option grant, representing
competitive long-term compensation for the year 2000. These premium options will
have the same 50% premium. Executives who decline to participate in the premium
option purchase program will not receive this premium option grant until 2000.
The shares to be used for this program will be issued under the Monsanto
Management Incentive Plan of 1996, which was approved by the Company's
shareowners. The People Committee believes that permitting executives to
purchase options which have no value unless the Company's stock appreciates
significantly is a powerful and aggressive mechanism to reward executives for
increasing shareowner value.
Increasing Shareowner Value
The Committee has established annual and long-term compensation designed to
encourage executives to significantly increase shareowner value. Annual
incentive compensation is based on net income and EVA goals, both of which
affect shareowner value. Long-term compensation is closely tied to providing
outstanding returns for shareowners. In 1996, the shareowners approved two
long-term incentive plans which authorize the premium option grants and
executive stock purchases described on page 13. Aggressive stock price targets
were set when the premium options were granted. Shareowner value has increased
significantly and executives now have significant gain on their premium options
and the performance stock options previously granted. In addition to the options
having value, the purchased stock has increased in value. The new premium stock
option purchase program implemented in 1998 is also designed to reward
executives for increasing shareowner value.
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 shareowners, in order
to avoid losing the deduction for compensation in excess of $1,000,000 paid to
one or more of the executive officers named in the Summary Compensation Table.
Management Stock Ownership Requirements
The Committee and management also believe that an important adjunct to an
incentive program is significant stock ownership by the senior executives.
Accordingly, the Committee has implemented stock ownership requirements for
approximately 30 executives. Stock ownership requirements are five times base
salary for the Company's top management group (currently six including the Chief
Executive Officer) and three times salary for the other senior executives.
Unexercised stock options and shares received under Company benefit plans or as
restricted shares (other than by newly hired executives) are not counted in
satisfying these requirements. Shares purchased pursuant to the Monsanto
Executive Stock Purchase Incentive Plan do count towards these requirements.
These stock ownership requirements must be met by December 31, 2000. The Board
has adopted a stock ownership guideline for non-employee members of the Board of
Directors, which is described on page 9.
PEOPLE COMMITTEE
William D. Ruckelshaus, Chair
Robert M. Heyssel
Gwendolyn S. King
Philip Leder
15
<PAGE> 19
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (g) (h)
Other (f) Securities
Annual Restricted Under-
Name and Compen- Stock lying LTIP
Principal sation Awards Options Payouts
Position Year Salary($) Bonus($) ($)(1) ($)(2) (#) ($)
--------- ---- --------- -------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
R. B. Shapiro 1997 800,000 965,000 69,466 0 79,811 750,365(3)
Chairman and CEO 1996 800,000 2,120,000 0 0 2,950,000 0
and Director 1995 685,417 1,235,600 0 0 262,500 0
R. U. De Schutter 1997 525,000 700,000 0 0 460,391 6,757,745(4)
Vice Chairman 1996 500,000 806,000(6) 0 0 350,000 0
of the Company and 1995 453,635 556,000 0 0 200,000 0
Chairman and CEO
G.D. Searle & Co.
N. L. Reding 1997 571,667 640,000 0 0 35,965 475,823(3)
Vice Chairman of 1996 515,000 944,200 0 0 800,000 0
the Board and 1995 515,000 869,200 0 0 0 0
Director
R. W. Reynolds 1997 533,333 680,000 1,228 0 136,578 321,275(3)
Vice Chairman 1996 400,000 267,800 0 0 600,000 0
of the Company 1995 281,667 193,282 0 0 0 0
H. A. Verfaillie 1997 566,667 645,000 0 0 34,917 979,000(3)
President 1996 500,000 940,000 0 0 800,000 0
1995 393,333 715,200 0 0 351,390 0
<CAPTION>
- --------------------- ---------
(a)
(i)
All Other
Name and Compen-
Principal sation
Position ($)(5)
--------- ---------
<S> <C>
R. B. Shapiro 171,624
Chairman and CEO 89,709
and Director 50,627
R. U. De Schutter 66,339
Vice Chairman 50,856
of the Company and 61,719
Chairman and CEO
G.D. Searle & Co.
N. L. Reding 94,433
Vice Chairman of 51,135
the Board and 60,742
Director
R. W. Reynolds 88,507
Vice Chairman 50,488
of the Company 27,014
H. A. Verfaillie 96,146
President 61,633
42,461
</TABLE>
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 and the spin-off of the Company's chemicals business in 1997.
(1) Applicable regulations set reporting levels for certain non-cash
compensation. The 1997 amount for Mr. Shapiro includes $53,891 for personal
use, as directed by resolution of the Board of Directors, of Company
aircraft and other perquisites totaling $15,575. The 1997 amount for Mr.
Reynolds includes $1,228 for reimbursement of taxes related to the
termination of the Monsanto Company Employee Benefits Trust.
(2) There were no grants of restricted stock to named executive officers during
the period covered in this table. Restricted stock holdings on December 31,
1997, were as follows:
- Mr. Shapiro held 62,500 restricted shares having a value on December 31,
1997, of $2,625,000. 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 shareowners. In February of each of 1995, 1996, and 1997,
62,500 shares and the related dividends vested because the Company
achieved its 20% ROE goal for 1994, 1995, and 1996, respectively. An
additional 62,500 of the restricted shares and the related dividends
vested in February 1998 because the People Committee determined that the
Company achieved its 1997 ROE goal.
- On December 31, 1997, no restricted shares were held by Messrs. De
Schutter, Reding, Reynolds, or Verfaillie.
(3) 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,
for certain employees working in selected business units, including Mr.
Verfaillie, a cash long-term incentive opportunity. These amounts were
adjusted upward or downward based on sustained performance during the
three-year period. The amount shown represents the March 1997 payment of the
sustained performance adjustment applied to the withheld amounts because net
income and capital employed objectives were met for all three performance
years under the annual incentive program for the years 1994-1996.
16
<PAGE> 20
(4) Prior to February 1997, Mr. De Schutter participated in 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.
In February 1997, the Executive Compensation and Development Committee
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. The amount shown represents payment of $1,495,000
in cash, $2,445,000 deferred cash (deferred to avoid losing the compensation
deduction under Section 162(m) of the Internal Revenue Code), and the value
of 227,474 Monsanto stock options, with a strike price equal to the fair
market value per underlying share on the date of grant, paid to Mr. De
Schutter in connection with the termination of the Searle Phantom Plan, plus
$403,848 in payment of the sustained performance adjustment discussed in
footnote 3 to this Summary Compensation Table.
(5) Amounts shown for 1997 include contributions to thrift/savings plans as
follows: Mr. Shapiro, $127,541; Mr. De Schutter, $40,123; Mr. Reding,
$71,196; Mr. Reynolds, $61,154; and Mr. Verfaillie, $67,423; split dollar
life insurance premiums paid as follows: Mr. Shapiro, $43,937; Mr. De
Schutter, $26,070; Mr. Reding, $23,091; Mr. Reynolds, $25,269; and Mr.
Verfaillie, $28,577; costs for executive travel accident plans as follows:
Mr. Shapiro, $146; Mr. De Schutter, $146; Mr. Reding, $146; Mr. Reynolds,
$146; and Mr. Verfaillie, $146; and contributions to the employee benefits
trust as follows: Mr. Reynolds, $1,938.
(6) 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 $6,000.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
- ---------------------------------------------------------------------- ----------------
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base Grant Date
Options Employees in Price Expiration Present Value
Name Granted (#) Fiscal Year ($/Share) Date ($)(1)
---- ----------- ------------ --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
R. B. Shapiro 79,811(2) 0.3 33.650 2/26/07 1,072,225
R. U. De Schutter 34,917(2) 0.1 33.650 2/26/07 469,090
29,301(3) 0.1 33.650 2/26/07 310,935
198,173(3) 0.7 33.650 2/26/07 2,102,962
39,600(4) 0.1 37.872 9/24/07 501,336
59,400(4) 0.2 45.000 9/24/07 737,154
59,400(4) 0.2 50.000 9/24/07 644,490
39,600(4) 0.1 55.000 9/24/07 375,804
N. L. Reding 35,965(2) 0.1 33.650 2/26/07 483,168
R. W. Reynolds 27,934(2) 0.1 33.650 2/26/07 375,277
21,729(5) 0.1 36.220 4/24/07 274,437
32,593(5) 0.1 41.000 4/24/07 348,093
32,593(5) 0.1 45.560 4/24/07 381,664
21,729(5) 0.1 50.110 4/24/07 225,112
H. A. Verfaillie 34,917(2) 0.1 33.650 2/26/07 469,090
</TABLE>
(1) 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.
17
<PAGE> 21
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. The following weighted-average
assumptions were made for purposes of calculating the original Grant Date
Present Value: an option term of 5.2 years, volatility of 27%, dividend
yield of 0.29%, and a risk-free interest rate of 6.41%.
(2) As discussed on page 13, 30% of the executive's 1997 annual incentive
opportunity at the outstanding performance level was replaced by performance
stock options. The exercise price of $33.65 was the fair market value per
underlying share on February 27, 1997, the date of grant. The options were
to become exercisable upon the earliest of the Company's attainment of
goals, as determined by the People Committee (the most important factor will
be the Company's performance against its EVA goal, but the People Committee
will also consider net income expectations and results, the efforts put
forth regarding the spin-off of the Company's chemicals business, the impact
of the general economy, the balance achieved between long- and short-term
objectives, and motivational impact), or the ninth anniversary of the option
grant date, but in no event earlier than the first anniversary of the option
grant date. Based on the Company's 1997 performance, in February 1998 the
People Committee determined that (i) these options have become exercisable
for the following number of shares: Mr. Shapiro, 41,183; Mr. De Schutter,
19,485; Mr. Reding, 18,559; Mr. Reynolds, 14,414; and Mr. Verfaillie,
18,018; performance criteria will be assigned to the following number of
option shares to determine future vesting: Mr. Shapiro, 6,704; Mr. De
Schutter, 1,466; Mr. Reding, 3,021; Mr. Reynolds, 2,347; and Mr. Verfaillie,
2,933; and the remainder of these options will not be exercisable until the
ninth anniversary of the grant date.
(3) As discussed in footnote 4 to the Summary Compensation Table, these options
were granted to Mr. De Schutter as partial payment for his balance in the
Searle Phantom Plan.
(4) The exercise price of $37.872 for this tranche of options, granted to Mr. De
Schutter due to increased responsibilities, was the fair market value per
underlying share on September 25, 1997, 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 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. 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.
(5) The exercise price of $36.22 for this tranche of options, granted to Mr.
Reynolds due to increased responsibilities, was the fair market value per
underlying share on April 25, 1997, 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 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 $41.00 pre-established exercise price has
been met. All options must be held for a minimum of one year from the date
of grant before they may be exercised. These options expire on the tenth
anniversary of the grant date unless forfeited earlier. The options carry
stock tax withholding rights.
18
<PAGE> 22
AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES ON DECEMBER 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
---------------------- ------------ ---------- ----------------- --------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options At Options at
FY-End (#)(2) FY-End ($)(2)
Shares Value
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(1) Unexercisable Unexercisable
---- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
R. B. Shapiro 1,528,970 46,741,110 3,179,865/79,811 29,283,819/666,422
R. U. De Schutter 60,000 1,779,750 592,000/262,391 10,470,455/2,190,965
N. L. Reding 0 0 2,198,000/35,965 48,339,963/300,308
R. W. Reynolds 0 0 918,615/136,578 14,147,350/391,436
H. A. Verfaillie 67,000 2,735,673 1,408,890/34,917 24,283,575/291,557
</TABLE>
(1) The amounts in column (c) reflect the value of shares received on the
exercises of options granted up to ten years ago at fair market values
ranging from $6.656 to $15.550. Mr. Shapiro and Mr. Verfaillie continue to
hold all of the shares received from these option exercises, other than
shares sold to pay the option exercise price and anticipated taxes related
to the exercise. Mr. De Schutter substantially increased his ownership of
Monsanto stock as a result of the exercise of these options.
(2) Unexercised options shown in columns (d) and (e) reflect grants received
over an extended period of time.
LONG-TERM INCENTIVE PLANS--AWARDS IN 1997
<TABLE>
<CAPTION>
Estimated future payouts under non-stock
price-based plans
Number of Performance ----------------------------------------
shares, or other
units or period until
other rights maturation Threshold Target Maximum
Name (#) or payout ($) ($) ($)
(a) (b) (c) (d)(2) (e)(2) (f)(2)
---- ------------ ------------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
R. U. De Schutter 17,200 units(1) 12/31/00 349,363 524,049 1,048,098
R. W. Reynolds 6,000 units(1) 12/31/00 110,151 165,227 330,454
</TABLE>
(1) The units represent shares purchased under the Monsanto Executive Stock
Purchase Incentive Plan (Executive Plan) described on page 13. Pursuant to
the Executive Plan, Messrs. De Schutter and Reynolds 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 5.69% for Mr. De Schutter and 6.80% for Mr. Reynolds,
the applicable federal rate (as determined by Section 1274(d) of the
Internal Revenue Code) in effect at the time of their respective purchases.
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).
The executive 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 shareowner return to the Company's
shareowners through the year 2000 as compared with the total shareowner
return for companies in the Standard & Poor's Industrials (Index). In order
to achieve the maximum payout shown in the table, the executive must earn
the full Service Award, and the Company's total shareowner return through
the year 2000 must be at or above the total shareowner 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
19
<PAGE> 23
executive must earn the full Service Award, and the Company's total
shareowner 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.
(2) 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.
PENSION PLANS
The named executive officers (as well as other employees of Monsanto) are
eligible for retirement benefits payable under the Company's defined benefit
pension plans. Effective January 1, 1997, the defined benefit pension plans for
the Company, Searle and NutraSweet were changed. The new defined benefit pension
plans consist of two accounts: a "Prior Plan Account" and a "Cash Balance
Account."
The opening balance of the Prior Plan Account was 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 below,
calculated using the assumption that the monthly benefit would be payable at age
55 with no reduction for early payment. The formula used to calculate the
opening balance for employment with Monsanto was the greater of 1.4% (1.2% for
employees hired by the Company on or after April 1, 1986) 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 determining the opening balance was the greater of
(1) average compensation received during the 36 months of employment prior to
1997 or (2) average compensation received during the highest three of the five
calendar years of employment prior to 1997. The annual normal retirement
benefits under the Searle and NutraSweet pension plans used to determine the
opening balance for employment with Searle or NutraSweet was (1) 1.8% of average
compensation (the average compensation for the highest consecutive 60 of the
last 120 months of employment preceding 1997) multiplied by years of service (up
to a maximum of 30 years) less (2) 1.67% of estimated annual Social Security
benefits at age 65 multiplied by years of service (up to a maximum of 30 years).
For each year of the executive's continued employment with the Company, the
executive's 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 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 10 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.
The estimated annual benefits payable as a single life annuity beginning at age
65 (assuming that each executive officer remains employed by the Company until
age 65 and receives 4% annual compensation increases) are as follows: Mr.
Shapiro, $750,239; Mr. De Schutter, $768,395; Mr. Reding, $877,927; Mr.
Reynolds, $637,699; and Mr. Verfaillie, $669,659.
20
<PAGE> 24
Mr. Shapiro will be provided supplemental retirement benefits to 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 $224,728. 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 his 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
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.
In addition to the retirement benefits for Mr. Verfaillie based on his years of
service as a U.S. employee, Mr. Verfaillie is also eligible for regular
retirement benefits based on his years of service as a non-U.S. employee. In
addition, he participates in the Company'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 are expected to be generally comparable to the
benefits described in this section.
CERTAIN AGREEMENTS
The Board has authorized the Company to enter into Change of Control Employment
Agreements with each of the executive officers who are named in the Summary
Compensation Table and certain other key executives. Each such Change of Control
Employment Agreement becomes effective upon a "change of control" of the Company
(as defined in the Change of Control Employment Agreement). Each Change of
Control Employment Agreement provides for the continuing employment of the
executive after the change of control on terms and conditions no less favorable
than those in effect before the change of control. If the executive's employment
is terminated by the Company without "cause" or if the executive terminates his
or her own employment for "good reason" (each as defined in the Change of
Control Employment Agreement), the executive is entitled to severance benefits
equal to a "multiple" of his or her annual compensation (including bonus) and
continuation of certain benefits for a number of years equal to the multiple.
The multiple is three for the executive officers who are named in the Summary
Compensation Table and two or three for the other executives (or, in either
case, the shorter number of years until the executive's normal retirement date).
In addition, each of the executive officers who are named in the Summary
Compensation Table and the other executives who are entitled to a severance
multiple of three is entitled to receive the severance benefits if he or she
voluntarily terminates his or her own employment during the 30-day period
beginning on the first anniversary of certain changes of control. Finally, the
executives are entitled to an additional payment, if necessary, to make them
whole as a result of any excise tax imposed by the Internal Revenue Code on
certain change of control payments (unless the safe harbor below which the
excise tax is imposed is not exceeded by more than 10%, in which event the
payments will be reduced to avoid the excise tax). 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.
21
<PAGE> 25
OTHER INFORMATION REGARDING MANAGEMENT
TRANSACTIONS AND RELATIONSHIPS
Mr. John E. Robson is a Senior Advisor at BancAmerica ROBERTSON STEPHENS.
BancAmerica ROBERTSON STEPHENS has provided investment banking services to the
Company in 1997 and is continuing to provide similar services to the Company in
1998.
Mr. Michael Kantor is a partner at the law firm of Mayer, Brown & Platt, which
provided services to the Company in 1997 and is providing services to the
Company in 1998.
INDEBTEDNESS
In May 1996, Mr. Shapiro, the other executives named in the Summary Compensation
Table, and nine other 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 these loans
the applicable federal rate is 6.36%. For two other executive officers who
purchased shares at a later date in 1996 and one executive officer who purchased
shares in 1997 because of increased responsibilities or hiring into a position
eligible for participation in the Executive Plan, the rates are 6.60%, 6.72%,
and 6.80%, respectively. In addition, three executive officers, including
Messrs. De Schutter and Reynolds each received an additional loan, with a rate
of 6.80% (5.69% for Mr. De Schutter), to purchase additional shares after their
responsibilities were changed in 1997. Each loan is 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.
As of December 31, 1997, Mr. Shapiro and the other named executive officers had
outstanding loans made pursuant to the Executive Plan in the following amounts:
Mr. Shapiro, $5,835,233; Mr. De Schutter, $648,359; Mr. Reding, $2,107,167; Mr.
Reynolds, $1,894,214; and Mr. Verfaillie, $2,107,167. As of December 31, 1997,
the aggregate principal balance of loans made pursuant to the Executive Plan to
all executive officers as a group (including the named executive officers) was
$21,804,105.
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. 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 1997
under the Employee Plan was $59,867, and the aggregate amount outstanding as of
December 31, 1997, under the Employee Plan was $36,059.
22
<PAGE> 26
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)
The Board of Directors, upon the recommendation of the Finance Committee, has
appointed Deloitte & Touche LLP (Deloitte) as the principal independent auditors
to examine the consolidated financial statements of the Company and its
subsidiaries for the year 1998. 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
shareowners, the Board continues to believe it appropriate as a matter of policy
to request that the shareowners ratify the appointment of Deloitte as principal
independent auditors. If the shareowners should not ratify, the Finance
Committee will investigate the reasons for shareowner 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 1998.
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.
SHAREOWNER PROPOSAL (PROXY ITEM NO. 3)
PROPOSAL RELATING TO CUMULATIVE VOTING.
Management has been advised that a shareowner intends to present the following
proposal at the Annual Meeting. 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.
------------------------------
"WHEREAS,
"Monsanto has nomination procedures that make it DIFFICULT for stockholders
to have their nominees elected to the Board of Directors and
"Directors are now elected for a THREE YEAR TERM (rather than one year
terms previously) with ONE VOTE available for each nominee for each share
voted.
"BE IT RESOLVED THAT THE STOCKHOLDERS REQUEST MONSANTO TO IMPLEMENT THE PROPOSAL
BELOW:
"Change the election procedure for the Board of Directors TO ALLOW
CUMULATIVE VOTING (total votes are equal to the number of shares times the
number of directors to be elected). This proposal would only be effective
for nominees for Director at meetings subsequent to the 1998 Annual Meeting
and would, therefore, not affect the unexpired terms of the existing
Directors.
"If you agree with this proposal, please mark your proxy FOR. Otherwise,
abstentions may have the same effect as 'no' votes."
Supporting Statement of Proponent
"This proposal would allow stockholders to have more influence on the election
of THEIR (not management's) Board and, consequently, the future of THEIR
company.
23
<PAGE> 27
"Cumulative voting allows stockholders to select the nominee(s) they want to
vote for and to cast all their votes for a single (or several) candidate(s).
Therefore, nominee(s) that are receptive to stockholders' rights (such as better
nomination procedures and annual terms for Directors) could be more easily
elected. CALIFORNIA LAW has required state pension and college funds to be voted
in FAVOR of cumulative voting proposals. Many successful corporations, such as
PENNZOIL, LOCKHEED-MARTIN, AND INGERSOLL-RAND allow cumulative voting. ALLEGHENY
POWER SYSTEMS TRIED to take away cumulative voting, but their stockholders did
not allow this change which would have reduced stockholder rights.
"Current procedures allow nominations to the Nominating Committee. However, this
Committee rarely, if ever, approves any stockholder candidates and effectively
becomes a "GATEKEEPER" for the Board. This pre-empts stockholder rights.
Nomination at the Annual Meeting itself is a SHAM since only "TOKEN" votes will
be counted, because most ballots are cast by proxy BEFORE THE MEETING.
"Cumulative voting would allow stockholders to remove these directors if the
stockholders wanted to.
" 'Corporate Democracy, Inc.' supports cumulative voting. I strongly encourage
you to mark FOR on your ballot. Thanks."
------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE FOREGOING RESOLUTION FOR
THE FOLLOWING REASONS:
The Board of Directors believes that the adoption of cumulative voting would be
detrimental to the best interests of the Company by reducing the effectiveness
of Monsanto's Board of Directors. Each director is now elected by a plurality of
the votes cast at an Annual Meeting of Shareowners. Monsanto's directors are
chosen for their accomplishment, commitment, integrity and diversity of
background and experience, and share the common objective of advancing the best
interests of all shareowners. Monsanto's Board Charter states that in selecting
non-employee directors, the Company will seek individuals "who will represent
all Monsanto shareowners and not a special interest or a particular
constituency."
Cumulative voting has the appearance of fairness, but in reality would benefit
special interest groups. Cumulative voting could permit a shareowner or group of
shareowners owning substantially less than a majority of the Company's stock to
elect a director to advance a group's narrow interests. This could alter the
proper balance, diversity and independence of the Board and would introduce the
likelihood of factionalism and discord within the Board and may undermine its
ability to work effectively on behalf of the interests of all of the
shareowners.
Factionalism and discord within the Board would inhibit its discussions and
decision-making, shifting the Board's attention away from the Company's
strategic plans to the director's single interest agenda. The proponent has
given no reason, and the Board of Directors knows of none, why the present
method of voting should not continue to work as successfully in the future as it
has in the past. Eight of Monsanto's ten directors are independent non-employee
directors and all are nominated for the Board by Monsanto's People Committee,
which consists entirely of independent directors. This helps assure the
continued independence of the Board in representing all of the shareowners.
ACCORDINGLY, WE RECOMMEND THAT SHAREOWNERS VOTE "AGAINST" THIS RESOLUTION.
------------------------------
Further information regarding the name, address, and stockholdings of the
sponsor of the shareowner 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.
24
<PAGE> 28
GENERAL INFORMATION
For inclusion in the Company's Proxy Statement and form of proxy, any proposals
of shareowners intended to be presented at the 1999 Annual Meeting must be
received by the Company no later than November 13, 1998.
To nominate one or more directors and/or propose proper business from the floor
for consideration at the 1999 Annual Meeting, other than by inclusion in the
Proxy Statement and form of proxy pursuant to the preceding paragraph,
shareowners 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 24, 1999, and not later than February 23, 1999. The Company's By-Laws
set out specific requirements which such written notices must satisfy. Copies of
those requirements will be forwarded to any shareowner 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 shareowner 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 shareowner 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 $15,000 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, 1998
25
<PAGE> 29
(This page intentionally left blank)
26
<PAGE> 30
1998 MONSANTO COMPANY
ANNUAL MEETING OF SHAREOWNERS
You are cordially invited to attend the 1998 Annual Meeting of Shareowners of
Monsanto Company on Friday, April 24, 1998, at 1:30 p.m. at the Field Museum in
Chicago, Illinois.
Doors open at 12:00 Noon, and the meeting will begin promptly at 1:30 p.m. in
the James Simpson Theatre. After the meeting, all attendees are invited to visit
the galleries of the Field Museum as guests of Monsanto Company.
The Field Museum is located near Chicago's lakefront and is easy to reach by car
or public transportation.
Complimentary valet parking will be available at the West Entrance of the Field
Museum. Please display the shareowner admittance ticket below for valet parking.
The James Simpson Theatre is most easily accessible through the Field Museum's
West Entrance.
PLEASE BRING YOUR SHAREOWNER ADMISSION TICKET TO THE MEETING.
SHAREOWNER ADMITTANCE TICKET
Monsanto Company
Annual Meeting of Shareowners
<TABLE>
<CAPTION>
Date Place
- ---- -----
<S> <C>
April 24, 1998 James Simpson Theatre
The Field Museum
Time Chicago, Illinois
- -----------------------
1:30 p.m. Central Time
</TABLE>
27
- --- ----------------------------------------------------
CUT HERE ,
<PAGE> 31
MONSANTO MAP
How to Get There
From the North take I-90 and from Northwest I-94, exit at Roosevelt Road, head
east to Columbus Drive, right on Columbus Drive to McFetridge Drive, left on
McFetridge Drive, the Museum will be on your left.
From the West take I-88 to I-290 east through the City to Columbus Drive, right
on Columbus Drive to McFetridge Drive, turn left on McFetridge Drive, the Museum
will be on your left.
From the Southwest take I-55, exit on Lake Shore Drive, drive north past Soldier
Field to McFetridge Drive, right on McFetridge Drive, the Museum will be on your
left.
From the South or Southeast take I-80/94 to the Calumet Expressway I-94 north to
the Dan Ryan Expressway to the Lake Shore Drive exit, I-55 east to Lake Shore
Drive north, north past Soldier Field to McFetridge Drive, right on McFetridge,
the Museum will be on your left.
In all cases, as you drive east on McFetridge Drive you must make a U-turn at
the first stop sign, then proceed west into the parking lot.
28
<PAGE> 32
NOTICE OF ANNUAL MEETING
OF SHAREOWNERS
AND PROXY STATEMENT
[MONSANTO LOGO]
<PAGE> 33
PROXY
[MONSANTO LOGO]
Common Stock
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting
The Field Museum
Roosevelt Road and Lake Shore Drive
Chicago, Cook County, Illinois
1:30 P.M., April 24, 1998
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 1998 Annual Meeting of Shareowners, 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 SHAREOWNER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" ITEMS 1 AND 2; AND "AGAINST" ITEM 3.
(Please sign on reverse side)
FOLD AND DETACH HERE
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors / / FOR all nominees listed / / WITHHOLD AUTHORITY
for Terms Expiring 2001 below (except as written to vote for all
to the contrary below) nominees listed
below
P. Leder, J. E. Robson, and W. D. Ruckelshaus.
(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
1998.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3.
3. Shareowner proposal relating to cumulative voting.
/ / FOR / / AGAINST / / ABSTAIN
Mark the box below if you will be attending the Annual Meeting.
/ / WILL ATTEND
Please sign your name or names exactly as
printed hereon. When shares are held by
joint tenants, both should sign. Trustees
and other fiduciaries should so indicate
when signing.
The signer(s) hereby revokes all proxies
heretofore given by the signer(s) to vote at
said meeting or any adjournment thereof.
- ----------------------
- ----------------------
SIGNATURE(S) DATE
FOLD AND DETACH HERE
IMPORTANT: PLEASE MARK, SIGN, AND DATE
YOUR PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
IF YOU WILL BE ATTENDING THE MEETING,
PLEASE BRING THE ADMITTANCE TICKET
INCLUDED ON PAGE 27 OF THE PROXY STATEMENT
<PAGE> 34
PROXY
[MONSANTO LOGO]
TO PARTICIPANTS IN: THE MONSANTO SAVINGS AND INVESTMENT PLAN (SIP)
Participants may instruct the Trustee as to the manner in which Monsanto stock
held for their account and entitled to vote shall be voted at Shareowners'
meetings. The enclosed Notice of Annual Meeting of Shareowners and Proxy
Statement for Monsanto Company's 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 the 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 Field Museum, Roosevelt Road and Lake Shore Drive, Chicago, Cook County,
Illinois, on April 24, 1998, at 1:30 p.m., or at any adjournment thereof.
THE TRUSTEE MUST RECEIVE THIS FORM ON OR PRIOR TO APRIL 20, 1998. THE TRUSTEE
WILL VOTE YOUR SHARES AS YOU DIRECT ONLY IF THE SIGNED FORM IS RECEIVED ON OR
PRIOR TO APRIL 20, 1998, 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.
THE PROXY FOR WHICH YOUR INSTRUCTIONS ARE REQUESTED IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS.
(Please sign on reverse side)
FOLD AND DETACH HERE
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors for Terms Expiring in 2001
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as written to to vote for all
the contrary below) nominees listed
below
P. Leder, J. E. Robson, and W. D. Ruckelshaus.
(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
1998.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3; AND TO "GRANT
AUTHORITY" FOR ITEM 4.
3. Shareowner proposal relating to cumulative voting.
/ / FOR / / AGAINST / / ABSTAIN
4. In the Trustee's discretion, upon such other matters as may properly come
before the meeting.
/ / GRANT AUTHORITY / / WITHHOLD AUTHORITY
Mark this box if you will be attending the Annual Meeting.
/ / WILL ATTEND
The signer hereby revokes
all proxies heretofore given by
the signer to vote at said
meeting or any adjournment thereof.
- -------------------------
SIGNATURE DATE
FOLD AND DETACH HERE
IMPORTANT: PLEASE MARK, SIGN, AND DATE
YOUR PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
IF YOU WILL BE ATTENDING THE MEETING,
PLEASE BRING THE ADMITTANCE TICKET
INCLUDED ON PAGE 27 OF THE PROXY STATEMENT
<PAGE> 35
PROXY
[MONSANTO LOGO]
TO PARTICIPANTS IN: THE SOLUTIA INC. SAVINGS AND INVESTMENT PLAN (SIP)
Participants may instruct the Trustee as to the manner in which Monsanto stock
held for their account and entitled to vote shall be voted at Shareowners'
meetings. The enclosed Notice of Annual Meeting of Shareowners and Proxy
Statement for Monsanto Company's 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 the 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 Field Museum, Roosevelt Road and Lake Shore Drive, Chicago, Cook County,
Illinois, on April 24, 1998, at 1:30 p.m., or at any adjournment thereof.
THE TRUSTEE MUST RECEIVE THIS FORM ON OR PRIOR TO APRIL 20, 1998. THE TRUSTEE
WILL VOTE YOUR SHARES AS YOU DIRECT ONLY IF THE SIGNED FORM IS RECEIVED ON OR
PRIOR TO APRIL 20, 1998, 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.
THE PROXY FOR WHICH YOUR INSTRUCTIONS ARE REQUESTED IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS.
(Please sign on reverse side)
FOLD AND DETACH HERE
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors for Terms Expiring in 2001
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as written to to vote for all
the contrary below) nominees listed
below
P. Leder, J. E. Robson, and W. D. Ruckelshaus.
(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
1998.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3; AND TO "GRANT
AUTHORITY" FOR ITEM 4.
3. Shareowner proposal relating to cumulative voting.
/ / FOR / / AGAINST / / ABSTAIN
4. In the Trustee's discretion, upon such other matters as may properly come
before the meeting.
/ / GRANT AUTHORITY / / WITHHOLD AUTHORITY
Mark this box if you will be attending the Annual Meeting.
/ / WILL ATTEND
The signer hereby revokes all
proxies heretofore given by the
signer to vote at said meeting
or any adjournment thereof.
- -------------------------
SIGNATURE DATE
FOLD AND DETACH HERE
IMPORTANT: PLEASE MARK, SIGN, AND DATE
YOUR PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
IF YOU WILL BE ATTENDING THE MEETING,
PLEASE BRING THE ADMITTANCE TICKET
INCLUDED ON PAGE 27 OF THE PROXY STATEMENT
