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
/X/ Definitive Proxy Statement                   Commission Only (as permitted
/ / Definitive Additional Materials              by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
    Rule 14a-11(c) or Rule 14a-12

                                 SOLUTIA INC.
               (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):

    /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:

- --------------------------------------------------------------------------------



*******************************************************************************
* THIS PROXY MATERIAL IS SENT TO YOU FOR YOUR INFORMATION AS THE HOLDER OF    *
* SOLUTIA STOCK OPTIONS. YOU ARE NOT ENTITLED, HOWEVER, TO VOTE ANY OPTIONED  *
* SHARES. IF YOU WERE A RECORD HOLDER ON MARCH 1, 1999, AS THE RESULT OF YOUR *
* HAVING PARTIALLY EXERCISED YOUR OPTIONS, YOU WILL RECEIVE A PROXY CARD FOR  *
* THOSE SHARES.                                                               *
*******************************************************************************
 
             SOLUTIA LOGO

             10300 Olive Boulevard
             P.O. Box 66760
             St. Louis, MO 63166-6760
 
             NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 

             DATE:     Wednesday, April 28, 1999
 
             TIME:     1:45 p.m., Central Daylight Time
 
             PLACE:    St. Louis Marriott West Hotel
                       660 Maryville Centre Drive
                       St. Louis, Missouri 63141
 
             PURPOSE:  *  Elect three directors
                       *  Ratify the appointment of Deloitte & Touche LLP 
                          as principal independent auditors for the year 1999
                       *  Conduct other business if properly raised
 
             Only stockholders of record at the close of business on March
             1, 1999, may vote at the meeting. Your vote is important.
             Whether you plan to attend the annual meeting or not, PLEASE
             CAST YOUR VOTE BY PHONE OR ON THE INTERNET, OR COMPLETE, DATE,
             AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE
             PROVIDED. If you attend the meeting and prefer to vote in
             person, you may do so even if you have previously voted by
             proxy.
 
             If you wish to attend the annual meeting, you will need to
             present your admission ticket at the door. Your admission
             ticket and directions to the annual meeting are printed on the
             back cover of this proxy statement.
 

                                                   /s/ Karl R. Barnickol
 
                                                   Karl R. Barnickol
                                                   Secretary
 
             March 15, 1999
 



                      TABLE OF CONTENTS


                                                                PAGE NO.
                                                                --------
                                                             
 
Information About the Annual Meeting........................        1
 
Election of Directors (Proxy Item No. 1)....................        3
     Structure of the Board.................................        3
     Nominees For a Three-Year Term That Will Expire in
       2002.................................................        4
     Directors Whose Terms Will Expire in 2000..............        5
     Directors Whose Terms Will Expire in 2001..............        6
     Board Meetings and Committees..........................        6
     Compensation of Directors..............................        8
 
Ownership of Company Common Stock...........................        9
     Ownership by Directors and Executive Officers..........        9
     Ownership by Others....................................       10
 
Compensation of Executive Officers..........................       11
     Stock Price Performance Graph..........................       11
     Report of the Executive Compensation and
       Development Committee................................       12
     Summary Compensation Table.............................       15
     Aggregated Option Exercises in 1998 and
       Year-End Option Values...............................       16
     Long-Term Incentive Plan--Awards in Last Fiscal Year...       17
     Pension Plans..........................................       17
     Change-of-Control Agreements...........................       18
 
Ratification of Independent Auditors (Proxy Item No. 2).....       18
 
Additional Information......................................       19
     Information About Stockholder Proposals................       19
     Multiple Copies of Annual Report to Stockholders.......       19

 

PROXY STATEMENT FOR THE SOLUTIA INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
 
INFORMATION ABOUT THE ANNUAL MEETING
 
WHY AM I RECEIVING THESE PROXY MATERIALS?
 
Solutia's Board of Directors is soliciting proxies to be voted at the 1999
Annual Meeting of Stockholders. This proxy statement includes information about
the issues to be voted upon at the meeting.
 
On March 15, 1999, we began mailing these proxy materials to all stockholders
of record at the close of business on March 1, 1999. On this date, there were
111,664,547 shares of Solutia common stock outstanding. Each share is entitled
to one vote on each matter properly brought before the annual meeting.
 
As required by Delaware law, a list of stockholders entitled to vote at the
annual meeting will be available at the St. Louis Marriott West Hotel on April
28, 1999, and for 10 days prior to the meeting, during normal business hours,
at Solutia Inc., 10300 Olive Boulevard, St. Louis, Missouri 63141.
 
HOW MANY VOTES DO I HAVE?
 
You may vote all shares of Solutia common stock that you owned at the close of
business on March 1, 1999, the record date. These shares include:
 
    * Shares held directly in your name as the "stockholder of record," and
 
    * Shares held for you as the beneficial owner through a broker, bank, or
      other nominee in "street name."
 
IF I AM A STOCKHOLDER OF RECORD, HOW CAN I VOTE MY SHARES?
 
You can vote by proxy or in person.
 
HOW DO I VOTE BY PROXY?
 
If you are a stockholder of record, you may vote your proxy by telephone,
Internet, or mail. Our telephone and Internet voting procedures are designed to
authenticate stockholders by using individual control numbers. Voting by
telephone or by Internet should help reduce costs for the company.
 
    * Voting Your Proxy by Telephone

      In the U.S. and Canada, you can vote your shares by telephone by calling
      the toll-free telephone number on your proxy card. Telephone voting is
      available 24 hours a day, 7 days a week. Easy-to-follow voice prompts
      allow you to vote your shares and confirm that your instructions have been
      properly recorded. If you vote by telephone, you do not need to return
      your proxy card.
 
    * Voting Your Proxy By Internet

      You can also choose to vote via the Internet. The web site for Internet
      voting is on your proxy card. Internet voting is available 24 hours a day,
      7 days a week. If you vote via the Internet, you do not need to return 
      your proxy card.
 
    * Voting Your Proxy By Mail

      If you choose to vote by mail, simply mark your proxy, date and sign it,
      and return it to First Chicago Trust Company, a division of EquiServe, in
      the postage-paid envelope provided.
 
                                       1
 

If you vote by proxy using any of these three methods, the persons named on the
card (your "proxies") will vote your shares in the manner you indicate. You may
specify whether your shares should be voted for all, some, or none of the
nominees for director and whether your shares should be voted for or against
the ratification of the appointment of the principal independent auditors for
1999. If you vote by telephone or Internet and choose to vote with the
recommendation of Solutia's Board of Directors, or if you vote by mail, sign
your proxy card, and do not indicate specific choices, your shares will be
voted:
 
    * "FOR" the election of all three nominees for director, and
 
    * "FOR" ratification of the appointment of the principal independent
      auditors for 1999.
 
If any other matter is presented, your proxies will vote in accordance with
their best judgment. At the time this proxy statement went to press, we knew of
no matters that needed to be acted on at the annual meeting other than those
discussed in this proxy statement.
 
If you wish to give a proxy to someone other than the persons named on the
enclosed proxy card, you may strike out the names appearing on the card and
write in the name of any other person, sign the proxy, and deliver it to the
person whose name has been substituted.
 
MAY I REVOKE MY PROXY?
 
If you give a proxy, you may revoke it at any time before it is exercised. You
may revoke your proxy in any one of three ways:
 
    * Submit a valid, later-dated proxy,
 
    * Notify Solutia's Secretary in writing before the annual meeting that you
      have revoked your proxy, or
 
    * Vote in person at the annual meeting.
 
HOW DO I VOTE IN PERSON?
 
If you are a stockholder of record, you may cast your vote in person at the
annual meeting. Please bring your admission ticket, which can be found on the
back cover of this proxy statement.
 
IF I HOLD SHARES IN STREET NAME, HOW CAN I VOTE MY SHARES?
 
You can submit voting instructions to your broker or nominee. In most
instances, you will be able to do this over the Internet, by telephone, or by
mail. Please refer to the voting instruction card included in these materials
by your broker or nominee.
 
HOW DO I VOTE MY SHARES HELD IN THE COMPANY'S DIVIDEND REINVESTMENT PLAN?
 
If you are a participant in the Dividend Reinvestment Plan for stockholders of
Solutia that is administered by First Chicago Trust Company, your proxy will
also serve as an instruction to vote the shares held under this plan in the
manner indicated on the proxy. If your proxy is not received, your shares held
in the Dividend Reinvestment Plan will not be voted.
 
HOW DO I VOTE MY SOLUTIA COMMON STOCK HELD IN SIP?
 
If you are both a registered stockholder of the company and a participant in
either the Solutia Inc. Savings and Investment Plan or the Monsanto Savings and
Investment Plan, you will receive a single proxy card that covers shares of
Solutia common stock credited to your plan account as well as shares of record
registered in exactly the same name. Accordingly, your proxy card also serves
as a voting instruction for the trustee of the plan in which you are a
participant. If your plan account is not carried in exactly the same name as
your shares of record, you will receive separate proxy cards for individual and
plan holdings. If you own shares through one of these plans and you do not
return your proxy card by Friday, April 23, 1999, the trustee will vote your
shares in the same proportion as the shares that are voted by the other
participants in the plan. The trustee will also vote unallocated shares of
Solutia common stock held in the plan in direct proportion
 
                                       2
 

to the voting of allocated shares in the plan for which voting instructions
have been received unless doing so would be inconsistent with the trustee's
duties.
 
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
 

                                     
 
Election of Three Directors             The three directors who receive the most votes will be
(Proxy Item No. 1)                      elected. If you do not vote for a particular nominee, or you
                                        indicate "withhold authority to vote" for a particular
                                        nominee on your proxy card, your vote will not count either
                                        "for" or "against" the nominee.
 
Ratification of Appointment             The affirmative vote of a majority of the shares present in
of Independent Auditors                 person or by proxy at the annual meeting is required to
(Proxy Item No. 2)                      ratify the appointment of the principal independent auditors
                                        for 1999. If you "abstain" from voting, it has the same
                                        effect as if you voted "against" this proposal.

 
If a broker indicates on its proxy that it does not have authority to vote
certain shares on particular proposals, the shares not voted ("broker
non-votes") will have the same effect as a vote against these proposals. Broker
non-votes occur when brokers do not have discretionary voting authority on
certain proposals under the rules of the New York Stock Exchange and the broker
has not received instructions on how to vote on these proposals.
 
WHAT ARE THE COSTS OF SOLICITING THESE PROXIES?
 
The company is paying the cost of preparing, printing, and mailing these proxy
materials. We will reimburse banks, brokerage firms, and others for their
reasonable expenses in forwarding proxy materials to beneficial owners and
obtaining their instructions. The company has engaged Georgeson & Company Inc.,
a proxy solicitation firm, to assist in the solicitation of proxies. We expect
Georgeson's fee to be approximately $12,500 plus out-of-pocket expenses. A few
officers and employees of the company may also participate in the solicitation,
without additional compensation.
 
HOW CAN I GAIN ADMITTANCE TO THE ANNUAL MEETING?
 
If you plan to attend the annual meeting, you will need to bring your admission
ticket. Stockholders who do not have admission tickets will be admitted upon
verification of ownership at the door. You will find an admission ticket and
directions to the St. Louis Marriott West Hotel on the back cover of this proxy
statement.
 
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
 
STRUCTURE OF THE BOARD
 
Our Board of Directors is divided into three classes. Directors for each class
are elected at the annual meeting of stockholders held in the year in which the
term for their class expires.
 
The terms of three directors will expire at the 1999 Annual Meeting. Directors
nominated for election at the 1999 Annual Meeting would hold office for a
three-year term that will expire at the annual meeting in 2002 (or until their
respective successors are elected and qualified, or until their earlier death,
resignation, or removal). However, in accordance with the company's mandatory
retirement policy for directors who are not employees of the company, Mrs. Joan
T. Bok and Mr. Howard M. Love will resign as directors effective as of the date
of the 2000 Annual Meeting of Stockholders.
 
All of the nominees are now directors of the company. They were previously
elected by Monsanto Company, acting as sole stockholder of the company, prior
to the spinoff of the company from Monsanto Company on September 1, 1997. On
the date of the 1999 Annual Meeting, Robert G. Potter, who is now chairman and
chief executive officer of Solutia, will step down as chief executive officer
but remain as chairman. John C. Hunter III, who is now president and chief
operating officer of Solutia, will succeed Robert G. Potter as chief executive
officer. Mr. Hunter will also continue as president.
 
                                       3
 

If a nominee is unavailable for election, your proxy authorizes us to vote for
a replacement nominee if the Board names one. As an alternative, the Board may
reduce the number of directors to be elected at the meeting. The Board is not
aware that any nominee named in this proxy statement will be unwilling or
unable to serve as a director.
 
Other directors are not up for election this year and will continue in office
for the remainder of their terms or until their earlier death, resignation, or
removal.
 
NOMINEES FOR A THREE-YEAR TERM THAT WILL EXPIRE IN 2002
 

                          
JOAN T. BOK                  PRINCIPAL OCCUPATION: CHAIRMAN EMERITUS, NEW ENGLAND
                               ELECTRIC SYSTEM
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 69
 
[PHOTO]                      Mrs. Bok was Chairman of the Board of the New England
                             Electric System from 1984 to 1998 and is currently Chairman
                             Emeritus. She is a Director of Avery Dennison Corporation,
                             John Hancock Mutual Life Insurance Company, and the New
                             England Electric System. Mrs. Bok is a Trustee of the
                             National Osteoporosis Foundation, the Woods Hole
                             Oceanographic Institution, the Worcester Foundation for
                             Biomedical Research, and The Urban Institute.
 
HOWARD M. LOVE               PRINCIPAL OCCUPATION: RETIRED CHIEF EXECUTIVE OFFICER,
                               NATIONAL INTERGROUP, INC.
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 68
 
[PHOTO]                      Mr. Love was Chief Executive Officer of National Intergroup,
                             Inc. from 1981 to 1991 and has been Honorary Chairman of
                             National Steel Corporation, formerly a subsidiary of
                             National Intergroup, Inc., since 1990. He served as Chairman
                             and Chief Executive Officer of National Steel Corporation
                             from 1984 to 1990. Mr. Love is a Director of AEA Investors,
                             an Advisory Director of COMSAT, and a member of The Business
                             Council. He is also a Trustee of the University of
                             Pittsburgh.
 
ROBERT G. POTTER             PRINCIPAL OCCUPATION: CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
                               SOLUTIA INC.
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 59
 
[PHOTO]                      Mr. Potter has been Chairman and Chief Executive Officer of
                             Solutia Inc. since 1997. He served as chief executive of the
                             chemical businesses of Monsanto Company from 1986 to 1997.
                             He was also an Executive Vice President of Monsanto Company
                             from 1990 to 1997 and an Advisory Director of Monsanto
                             Company from 1986 to 1997. Mr. Potter is a Director of both
                             Southdown Inc. and Stepan Company.


      -------------------------------------------------------------------
        YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE NOMINEES.
      -------------------------------------------------------------------
 

 
                                       4
 


DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000
 
                          
ROBERT T. BLAKELY            PRINCIPAL OCCUPATION: EXECUTIVE VICE PRESIDENT AND CHIEF
                               FINANCIAL OFFICER, TENNECO INC.
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 57
 
[PHOTO]                      Mr. Blakely has been Chief Financial Officer of Tenneco Inc.
                             since 1981 and Executive Vice President since 1996. He is a
                             Director of Vlasic Foods International, Inc. He also serves
                             as a Director of the New York City Ballet, the Manhattan and
                             Bronx Council of the Boy Scouts of America, and the United
                             Way of Greenwich. In addition, he is a Trustee of Cornell
                             University.

PAUL H. HATFIELD             PRINCIPAL OCCUPATION: PRINCIPAL, HATFIELD CAPITAL GROUP
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 63
 
[PHOTO]                      Mr. Hatfield has been a Principal of Hatfield Capital Group
                             since 1997. He was Chairman of the Board, President, and
                             Chief Executive Officer of Petrolite Corporation from 1995
                             to 1997. From 1987 to 1995, Mr. Hatfield was Vice President
                             of Ralston Purina Co. and Chief Executive Officer of Protein
                             Technologies International, Inc., a subsidiary of Ralston
                             Purina Co. Mr. Hatfield is a Director of Penford
                             Corporation.
 
ROBERT H. JENKINS            PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD AND CHIEF
                               EXECUTIVE OFFICER, SUNDSTRAND CORPORATION
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 56
 
[PHOTO]                      Mr. Jenkins has been Chairman of the Board and Chief
                             Executive Officer of Sundstrand Corporation since 1997. He
                             was President and Chief Executive Officer of Sundstrand
                             Corporation from 1995 to 1997 and Executive Vice President
                             of Illinois Tool Works, Inc. from 1990 to 1995. Mr. Jenkins
                             is a Director of Sundstrand Corporation, AK Steel Holdings
                             Corporation, and Cordant Technologies.
 
FRANK A. METZ, JR.           PRINCIPAL OCCUPATION: RETIRED SENIOR VICE PRESIDENT, FINANCE
                               AND PLANNING, AND CHIEF FINANCIAL OFFICER, INTERNATIONAL
                               BUSINESS MACHINES CORPORATION
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 65
 
[PHOTO]                      Mr. Metz was Senior Vice President, Finance and Planning,
                             and Chief Financial Officer of International Business
                             Machines Corporation from 1986 to 1993 and Director from
                             1991 to 1993. Mr. Metz is a Director of Allegheny Energy,
                             Inc. and Norrell Corporation.

 
                                       5
 



DIRECTORS WHOSE TERMS WILL EXPIRE IN 2001
 
                          
JOHN C. HUNTER III           PRINCIPAL OCCUPATION: PRESIDENT AND CHIEF OPERATING OFFICER,
                               SOLUTIA INC.
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 52
 
[PHOTO]                      Mr. Hunter has been President and Chief Operating Officer of
                             Solutia Inc. since 1997. From 1995 to 1997, he was President
                             of the Fibers Business Unit of Monsanto Company. From 1993
                             to 1995, he served as Vice President and General Manager of
                             the Fibers Division and Asia-Pacific region of the Chemical
                             Group of Monsanto Company. Mr. Hunter is a Director of both
                             Advanced Elastomer Systems, L.P. and Penford Corporation. He
                             is also on the board of directors of Missouri Baptist
                             Hospital.
 
WILLIAM D. RUCKELSHAUS       PRINCIPAL OCCUPATION: CHAIRMAN, BROWNING-FERRIS INDUSTRIES,
                               INC.
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 66
 
[PHOTO]                      Mr. Ruckelshaus has been Chairman of Browning-Ferris
                             Industries, Inc. since 1988. He has been a Principal of
                             Madrona Investment Group L.L.C. since 1996. From 1988 to
                             1995, Mr. Ruckelshaus was also Chief Executive Officer of
                             Browning-Ferris Industries, Inc. He was Of Counsel to
                             Perkins Coie from 1985 to 1988. He served as Administrator
                             of the Environmental Protection Agency from 1983 to 1985.
                             Mr. Ruckelshaus is a Director of Browning-Ferris Industries,
                             Inc.; Coinstar, Inc.; Cummins Engine Co., Inc.; Gargoyles
                             Inc.; Monsanto Company; Nordstrom, Inc.; and Weyerhaeuser
                             Company.
 
JOHN B. SLAUGHTER            PRINCIPAL OCCUPATION: PRESIDENT, OCCIDENTAL COLLEGE
                             FIRST BECAME DIRECTOR: 1997
                             AGE: 64
 
[PHOTO]                      Dr. Slaughter has been President of Occidental College since
                             1988. He was a Director of the National Science Foundation
                             from 1980 to 1982. Dr. Slaughter is a Director of Atlantic
                             Richfield Company, Avery Dennison Corporation, International
                             Business Machines Corporation, and Northrop Grumman Corp. He
                             is a member of the American Academy of Arts and Sciences and
                             the National Academy of Engineering. He is also a Fellow of
                             the American Association for the Advancement of Science and
                             the Institute of Electrical and Electronic Engineers.

 
BOARD MEETINGS AND COMMITTEES
 
Our Board of Directors met eight times in 1998. In addition to meetings of the
full Board, directors attended meetings of Board committees. Each director
attended at least 92% of the aggregate Board meetings and meetings of
committees of which he or she is a member. A description of each committee and
its current membership follows.
 
Audit and Finance Committee
 
Members: Mr. Metz, Chairman; Mr. Blakely and Dr. Slaughter
 
The Audit and Finance Committee, composed of non-employee directors, met six
times in 1998. The committee reviews and monitors the company's internal
controls, financial reports, and accounting practices as well as the scope and
extent of the audits performed by both the independent and internal auditors.
The committee also recommends to the full Board the selection of the company's
principal independent auditors,
 
                                       6
 

and it approves in advance all significant audit and nonaudit services provided
by these auditors. The internal and principal independent auditors meet with
this committee, with and without management representatives present, to discuss
the results of their examination, the adequacy of the company's internal
accounting controls, and the quality of the company's financial reporting.
 
The Audit and Finance Committee also reviews and monitors the company's
financial policies, including planning and structure, so that they conform to
the company's requirements for growth and sound operation.
 
Executive Compensation and Development Committee
 
Members: Mr. Love, Chairman; Mr. Hatfield and Mr. Metz
 
The Executive Compensation and Development Committee, composed of non-employee
directors, met six times in 1998. The committee recommends to the Board the
establishment and modification of the company's management incentive plans. The
committee makes grants and awards under these plans to senior management of the
company (including its executive officers) and administers and interprets these
plans. The committee has delegated authority to a compensation committee
composed of senior managers to make grants and awards under the incentive plans
to employees other than senior management. The Executive Compensation and
Development Committee also has authority to approve the establishment,
modification, and termination of other executive compensation programs and
agreements. In addition, the committee reviews plans for executive succession
and determines the salaries of the company's senior management (including its
executive officers).
 
Governance Committee
 
Members: Mr. Ruckelshaus, Chairman; Mrs. Bok, Mr. Jenkins, and Dr. Slaughter
 
The Governance Committee, composed of non-employee directors, met four times in
1998. The committee serves as a nominating committee to consider candidates for
the Board. As such, it approved the slate of director nominees in this proxy
statement for submission to the Board. The committee develops internal criteria
for the selection of directors. In performing these responsibilities, the
committee consults with the Chairman of the Board. The committee will consider
candidates for election as director whose nomination is recommended by
stockholders. Any stockholder wishing to make such a recommendation should
submit the nominee's name, together with the nominee's qualifications and
consent to being considered as a nominee, in writing by year-end to the
company's Secretary.
 
The Governance Committee also develops principles and procedures for the Board.
It reevaluates these principles and procedures annually to ensure that the
Board is fulfilling its responsibilities in a manner that effectively serves
the interests of the company's stockholders. The Governance Committee also
reviews and monitors the company's performance as it affects employees,
communities, customers, and the environment.
 
                                       7
 


COMPENSATION OF DIRECTORS
 
Directors who are Solutia employees do not receive payment for their services
as directors.
 
The following table displays all components of compensation for non-employee
directors:
 

- ----------------------------------------------------------------------------

        Form of Compensation                  Amount of Compensation
- ----------------------------------------------------------------------------
                                    
  Annual Board Retainer<F*>                           $50,000
- ----------------------------------------------------------------------------
  Annual Retainer for Committee
     Chairman                                          $5,000
- ----------------------------------------------------------------------------
  Committee Attendance Fee
     (each meeting)                                    $1,000
- ----------------------------------------------------------------------------
  Initial Option Grant                   option on 8,000 shares of company
     (upon first election to Board)         common stock
- ----------------------------------------------------------------------------
                                         option on 2,000 shares of company
  Annual Option Grant<F**>                  common stock
- ----------------------------------------------------------------------------

<FN>
 
   <F*>  At least half of the annual retainer is credited to the
         director's deferred stock account in quarterly installments
         and is paid out in company common stock following the
         termination of the director's service on the Board. Each
         non-employee director may elect to receive the other half of
         the annual retainer in cash or to defer all or a part into
         the deferred stock account, an interest-bearing cash
         account, or both.
 
   <F**> The annual option grant is normally made on the date of the
         annual meeting of stockholders to newly elected directors
         and those directors who are continuing in office. The annual
         option grant for a director's first year is prorated if the
         director is elected at a time other than the date of the
         annual meeting of stockholders. The exercise price of these
         non-qualified stock options is equal to the fair market
         value of the company's common stock on the date of the
         grant. The stock options generally become exercisable in
         three equal annual installments. The stock options have a
         term of ten years but terminate two years after a director's
         Board service ends for any reason, if earlier.

 
On April 22, 1998, each of the current non-employee directors received an
option to buy 2,000 shares of the company's common stock at an exercise price
of $29.438.
 
Non-employee directors do not have a retirement plan nor do they participate in
the company's benefit plans. They are, however, covered under the company's
business travel accident insurance policy while traveling on the company's
business.
 
Because non-employee directors are required to take at least half of their
annual retainer in the form of deferred common stock, they will have an ever
increasing stake in the company. Therefore, the Board has not considered it
necessary to adopt a stock ownership requirement for non-employee directors.
 
                                       8
 


OWNERSHIP OF COMPANY COMMON STOCK
 
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
 
The following table shows the company common stock owned beneficially by the
company's directors and executive officers, including deferred shares credited
to the account of each non-employee director, as of December 31, 1998. In
general, "beneficial ownership" includes those shares a person has the power to
vote, or the power to transfer, and stock options that are exercisable
currently or become exercisable within 60 days. Except as otherwise noted, each
person has sole voting and investment power over his or her shares.
 

- ----------------------------------------------------------------------------------------------------------------

                                                                        Shares Underlying
                                           Shares of Common Stock      Options Exercisable
                  Name                   Beneficially Owned <Fa><Fb>   Within 60 Days <Fc>             Total
                  ----                   ---------------------------   -------------------             -----
                                                                                     
- ----------------------------------------------------------------------------------------------------------------
  Karl R. Barnickol                                 58,832<Fd>                284,159                  342,991
- ----------------------------------------------------------------------------------------------------------------
  Robert T. Blakely                                  1,428                      3,111                    4,539
- ----------------------------------------------------------------------------------------------------------------
  Joan T. Bok                                        4,023                      3,111                    7,134
- ----------------------------------------------------------------------------------------------------------------
  Robert A. Clausen                                 42,868                    259,237                  302,105
- ----------------------------------------------------------------------------------------------------------------
  Paul H. Hatfield                                   7,252                      3,111                   10,363
- ----------------------------------------------------------------------------------------------------------------
  John C. Hunter III                                76,685                    362,614                  439,299
- ----------------------------------------------------------------------------------------------------------------
  Robert H. Jenkins                                  3,022<Fe>                  3,111                    6,133
- ----------------------------------------------------------------------------------------------------------------
  Howard M. Love                                     5,255<Ff>                  3,111                    8,366
- ----------------------------------------------------------------------------------------------------------------
  Frank A. Metz, Jr.                                 3,206                      3,111                    6,317
- ----------------------------------------------------------------------------------------------------------------
  Michael E. Miller                                 56,122<Fg>                404,408                  460,530
- ----------------------------------------------------------------------------------------------------------------
  Robert G. Potter                                 203,662<Fh>              1,088,468                1,292,130
- ----------------------------------------------------------------------------------------------------------------
  William D. Ruckelshaus                             5,774<Fi>                  3,111                    8,885
- ----------------------------------------------------------------------------------------------------------------
  John B. Slaughter                                  3,228<Fj>                  3,111                    6,339
- ----------------------------------------------------------------------------------------------------------------
  All directors and executive officers
     (21 persons)                                  566,543<Fk>              3,313,098                3,879,641
- ----------------------------------------------------------------------------------------------------------------

<FN>
<Fa> The number of shares shown includes shares held indirectly
     by executive officers under the Solutia Inc. Savings and
     Investment Plan ("SIP"): Mr. Potter, 68,093; Mr. Barnickol,
     29,405; Mr. Clausen, 2,738; Mr. Hunter, 23,631; Mr. Miller,
     11,265; and directors and executive officers as a group,
     185,759. Executive officers have sole discretion over voting
     shares held under SIP and, within limitations provided by
     SIP, sole discretion over investment of shares. Shares are
     voted by the trustees of SIP in accordance with instructions
     from participants. If the trustees do not receive
     instructions as to the voting of particular shares, the
     shares are voted in proportion to instructions actually
     received from other participants in SIP.

<Fb> The number of shares shown includes deferred shares credited
     to the account of each non-employee director, as follows:
     Mr. Blakely, 1,428 shares; Mrs. Bok, 1,428 shares; Mr.
     Hatfield, 2,852 shares; Mr. Jenkins, 2,852 shares; Mr. Love,
     1,428 shares; Mr. Metz, 1,428 shares; Mr. Ruckelshaus, 2,852
     shares; and Dr. Slaughter, 1,428 shares. As noted under
     "Compensation of Directors" on page 8, a minimum of half of
     a non-employee director's annual retainer is credited to the
     director's deferred stock account and is paid out in two
     installments following the termination of the director's
     service on the Board. The non-employee directors have no
     current voting or investment power over these deferred
     shares.

<Fc> The shares shown represent stock options granted under the
     company's incentive plans, including stock options resulting
     from the conversion of Monsanto Company stock options at the
     time of the spinoff.

 
                                       9
 


<Fd> The number of shares shown for Mr. Barnickol includes 2,000
     shares of company restricted stock received in the spinoff
     as a dividend on shares of Monsanto restricted stock that
     Mr. Barnickol held under a Monsanto incentive plan. With
     respect to these shares, Mr. Barnickol has sole voting power
     and no current investment power. The number of shares shown
     for Mr. Barnickol also includes 1,778 shares owned jointly
     by Mr. Barnickol and his wife.

<Fe> The number of shares shown for Mr. Jenkins includes 170
     shares owned jointly by Mr. Jenkins and his wife.

<Ff> The number of shares shown for Mr. Love includes 1,200
     shares held in trust in which Mr. Love has an income
     interest. Mr. Love expressly disclaims beneficial ownership
     of these shares.

<Fg> The number of shares shown for Mr. Miller includes 44,856
     shares with respect to which Mr. Miller shares voting and
     investment power.

<Fh> The number of shares shown for Mr. Potter includes 6,520
     shares owned by Mr. Potter's wife. Mr. Potter expressly
     disclaims beneficial ownership of these shares. The number
     of shares shown for Mr. Potter also includes 99 shares owned
     jointly by Mr. Potter and his wife.

<Fi> The number of shares shown for Mr. Ruckelshaus includes 120
     shares of company restricted stock received in the spinoff
     by Mr. Ruckelshaus as a dividend on the stock-based portion
     of his non-employee director annual retainer from Monsanto
     Company. Mr. Ruckelshaus has sole voting power and no
     current investment power over these shares. The number of
     shares shown for Mr. Ruckelshaus also includes 200 shares
     owned jointly by Mr. Ruckelshaus and his wife.

<Fj> The number of shares shown for Dr. Slaughter includes 137
     shares owned by Dr. Slaughter's wife. Dr. Slaughter
     expressly disclaims beneficial ownership of these shares.

<Fk> The number of shares shown for all directors and executive
     officers as a group includes:

     * 90 shares owned by a member of the household of an
       executive officer not named above. The officer disclaims
       beneficial ownership of these shares.

     * 2,466 shares over which an executive officer not named
       above shares investment and voting power.

 
The total share holdings reported above for all directors and executive
officers as a group equal approximately 3.43% of the number of shares of
company common stock outstanding on December 31, 1998. Mr. Potter's total share
holdings equal approximately 1.14%.
 
OWNERSHIP BY OTHERS
 
The following table shows, as of December 31, 1998, all persons or entities
that the company knows are "beneficial owners" of more than five percent of
company common stock.
 


                                                  Amount and Nature of
                                                 Beneficial Ownership of            Percent
Name and Address of Beneficial Owner              Company Common Stock              of Class
- ------------------------------------             -----------------------            --------
                                                                              
FMR Corp.                                             7,622,589<Fa>                  6.284%
82 Devonshire Street
Boston, Massachusetts 02109

<FN>
<Fa> This information is based on a Schedule 13G filed with the
     Securities and Exchange Commission by FMR Corp. ("FMR") on
     behalf of itself, two wholly-owned subsidiaries of FMR, and
     certain FMR shareholders. Fidelity Management & Research
     Company, one of these subsidiaries, is the beneficial owner
     of 7,078,500 of these shares (5.835% of Solutia common
     stock). This subsidiary, and FMR through its control of this
     subsidiary, each have sole power to dispose of 7,078,500
     shares but no sole or shared power to vote or direct the
     voting of these shares. Through its control of Fidelity
     Management Trust Company, FMR has sole power to dispose of
     the remaining 544,089 shares and sole power to vote or
     direct the voting of 362,349 shares.

 
                                      10
 


COMPENSATION OF EXECUTIVE OFFICERS
 
STOCK PRICE PERFORMANCE GRAPH
 
The graph below compares the cumulative total return to stockholders (stock
price appreciation plus reinvested dividends) on the company's common stock
with the cumulative total return on each of three indices: the Standard &
Poor's ("S&P") 500 Index, the S&P Chemicals (Diversified) Index, and the S&P
Chemicals (Specialty) Index. We have chosen to compare Solutia's performance
with that of these two chemicals indices because Solutia has a diversified
portfolio of products, including a large number of specialty chemicals. The
graph assumes that
 
    * you invested $100 in the company's common stock and in each of the
      indices at the closing price on August 20, 1997 (the date on which the
      company's common stock began trading on the New York Stock Exchange),
 
    * all dividends were reinvested, and
 
    * you continued to hold your investment through December 31, 1998.
 
                                    [GRAPH]
 

- ----------------------------------------------------------------------------------------------------------------------------------

                             20-AUG-97      30-SEP-97      31-DEC-97      31-MAR-98      30-JUN-98      30-SEP-98      31-DEC-98
                                                                                                
- ----------------------------------------------------------------------------------------------------------------------------------
 SOLUTIA INC.                   100             93            124            138            134            106            104
- ----------------------------------------------------------------------------------------------------------------------------------
 S&P 500(R)                     100            101            104            119            123            110            134
- ----------------------------------------------------------------------------------------------------------------------------------
 S&P(R) CHEMICALS               100             97             95            115            120            110            101
 (DIVERSIFIED)
- ----------------------------------------------------------------------------------------------------------------------------------
 S&P(R) CHEMICALS               100            101            105            105             94             78             88
 (SPECIALTY)
- ----------------------------------------------------------------------------------------------------------------------------------

 
                                      11
 


REPORT OF THE EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
 
The Executive Compensation and Development Committee of the Board of Directors
is comprised of three non-employee directors. The committee establishes
compensation policy for the company and administers the compensation program
for the company's senior management, including its thirteen executive officers
and the other members of the company's executive leadership team.
 
In 1997, in anticipation of the spinoff of Solutia by Monsanto Company, Solutia
engaged the services of a nationally recognized compensation consulting firm to
assist in developing the company's overall compensation structure and in
determining an appropriate and effective compensation program for the company's
executive officers. The consulting firm reviewed historical pay practices for
Monsanto's chemical businesses. It also provided information on base salary
levels, annual bonus levels, and long-term incentives at a broad group of
companies (the "survey group"), which included but was not limited to companies
represented in the S&P specialty and diversified chemicals indices. Based on
this comparative pay data, the financial parameters that are critical to the
achievement of the company's success, and the compensation-related objectives
that the committee wishes to foster, the committee adopted, following the
spinoff, an executive compensation program that it considers appropriate for
the company. A description of that program follows.
 
Policies and Objectives
 
The committee's objectives reflected in the company's compensation programs,
including its executive compensation program, are to:
 
    * achieve a successful "one enterprise" culture focused on stockholder
      value and profitable long-term growth;
 
    * recognize business unit and site accomplishments;
 
    * focus and reward employees based upon the key measures of the company's
      success: cash management, earnings growth, and stock price increases; and
 
    * build an ownership mentality throughout the company.
 
The key components of the company's executive compensation program are base
salary, annual incentive compensation, and long-term incentive compensation.
The intention is to maintain base salaries for the executives named in the
Summary Compensation Table and other members of the executive leadership team
at approximately the 50th percentile of companies of comparable size in the
survey group. Annual bonuses are also targeted at about the 50th percentile.
Target long-term incentive compensation is pegged at approximately the 75th
percentile.
 
Annual Incentive Program
 
The annual incentive program for the executive leadership team, including the
chief executive officer, and all other management level employees provides for
awards to be determined shortly after the end of the year being measured.
Threshold levels of free cash flow and earnings per share must be attained in
order for the plan to be funded. Actual awards depend principally upon
achieving free cash flow and earnings per share targets set at the beginning of
the year. The committee may adjust awards in its discretion based on the
individual's personal performance as measured against his or her particular
responsibilities. Awards may vary significantly from year to year.
 
Long-Term Incentive Program
 
For the executive officers, including the chief executive officer, and other
members of the executive leadership team, the 1998-1999 long-term incentive
program has two components: a long-term incentive opportunity based upon
cumulative enterprise results for 1998 and 1999 and a non-qualified stock
option grant. Together these two components are intended to result in long-term
compensation at the 75th percentile of companies of comparable size in the
survey group, assuming performance at target levels.
 
                                      12
 


1998-1999 LONG-TERM INCENTIVE OPPORTUNITY. This opportunity is intended to
focus senior management on the financial performance required during this
critical post-spinoff period. Awards will depend principally upon achieving
cumulative earnings per share and free cash flow targets for 1998 and 1999.
These cumulative targets are more aggressive than the earnings per share and
free cash flow targets established for the annual incentive plan. Threshold
levels of cumulative earnings per share and cumulative free cash flow must be
achieved for any awards to be earned. The committee retains the discretion to
adjust awards. Awards earned will be paid in the first quarter of the year
2000. To discourage senior management from focusing solely on this two-year
performance period at the expense of the longer term prospects of the company,
awards will be paid in the form of shares of company common stock that are
restricted against sale or other disposition until December 31, 2004, to the
extent that sufficient shares are available for this purpose under the
company's stock-based incentive plan. To the extent that sufficient shares are
not available, awards will be paid in the form of "performance shares," which
are bookkeeping units that replicate to the extent practicable the terms and
conditions of the restricted stock. The restricted stock or performance shares
are forfeitable if the executive leaves the company voluntarily (other than as
the result of retirement) before the restrictions lapse.
 
STOCK OPTIONS. The size of option grants to management level employees is
generally based upon a table that reflects their level of responsibility. The
committee approved this table after considering data from the survey group and
the committee's policy of targeting total long-term compensation at the 75th
percentile.
 
In 1998, none of the named executive officers received a grant of stock
options. In fact, the only options granted were to newly hired employees, to
employees promoted into new positions, or for retention purposes. The reason is
that in September 1997, in order to create an immediate sense of ownership in
the company, approximately 750 management level employees received option
grants that were larger than called for by the table. Grants to members of
management below the level of the executive leadership team were two and
one-half times the normal annual grant. Because of the opportunity for stock
ownership provided by the long-term incentive opportunity for 1998-1999, stock
option grants to members of the executive leadership team were two times the
size of the normal annual grant.
 
The stock options that were granted in September 1997 have a ten-year term and
an exercise price equal to the fair market value of a share of company common
stock on the grant date. The options granted to members of the executive
leadership team become exercisable on the earlier of the achievement of four
pre-established increases in the fair market value of the company's common
stock or on the ninth anniversary of the option grant date. Three of these
pre-established increases have been attained, and 75% of these options are now
exercisable. Options granted to other management level employees become
exercisable in thirds on each of the first three anniversaries of the stock
option grant date.
 
The next general annual grant of options to management level employees will be
made in the fall of 1999.
 
Compensation for 1998
 
Effective August 1, 1998, the committee increased Mr. Potter's base salary to
an annual rate of $650,000 and Mr. Hunter's base salary to an annual rate of
$475,000. These increases were in recognition of the outstanding performance of
both the chief executive officer and chief operating officer since the spinoff.
These increases also brought the salaries for both of these executive officers
in line with median salaries for comparable positions in the survey group, in
accordance with the committee's policy. Mr. Miller's base salary was increased
to $350,000, effective May 1, 1998, based on his new responsibilities as vice
chairman.
 
The committee awarded Mr. Potter an annual cash incentive award of $1,000,000.
It awarded Mr. Hunter an annual cash incentive award of $550,000. The principal
determinants of annual incentive awards are free cash flow and earnings per
share. Although 1998 was a difficult year for the chemical industry, the
company achieved excellent free cash flow and earnings per share as a result of
its cost and cash management efforts, substantially exceeding the targets set
by the committee at the beginning of 1998 as the outstanding performance level.
In addition the company continued to improve upon its already strong safety
performance. These accomplishments were due in large part to the continuing
strong leadership and direction given by both Mr. Potter and Mr. Hunter. Annual
incentive awards to the other named executive officers reflected their
contribution to these overall results.
 
                                      13
 


Deductibility of Executive 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 plans in order to avoid losing the tax 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
 
Because the committee and management believe that the financial well-being of
senior executives should be linked to the creation of stockholder value, the
committee has implemented stock ownership requirements for all executive
officers and other members of the executive leadership team. Stock ownership
requirements are as follows: six times base salary for the chief executive
officer and the chief operating officer, three times base salary for the vice
chairman and three senior vice presidents, and two times base salary for all
other members of the executive leadership team. These requirements are to be
achieved in accordance with the following schedule: 25% by September 1999, 50%
by September 2000, and 100% by September 2002. Restricted stock and shares held
through the company's 401(k) plan count toward achievement of these
requirements as do shares held by the executive directly or in a trust.
Unexercised stock options do not count.
 


EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE

Howard M. Love, Chairman
Paul H. Hatfield
Frank A. Metz, Jr.
 
                                      14
 



SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------------


                                                                                       Long-Term Compensation
                                                                              --------------------------------------
                                          Annual Compensation                         Awards                Payouts
                          ------------------------------------------------------------------------------------------
           (a)                (b)         (c)           (d)           (e)         (f)          (g)           (h)           (i)
                                                                     Other                 
                                                                    Annual     Restricted   Securities                  All Other
        Name and                                                    Compen-      Stock      Underlying       LTIP        Compen-
        Principal            Year        Salary        Bonus        sation       Awards      Options       Payouts       sation
        Position             <F1>         ($)           ($)         ($)<F2>     ($)<F3>      (#)<F4>       ($)<F5>       ($)<F6>
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                               
  R. G. Potter               1998       620,833      1,000,000        -0-         -0-          -0-           -0-         117,614
  Chairman, Chief            1997       566,667      1,082,000       2,898        -0-        311,692      1,489,537       96,139
  Executive Officer, and     1996       500,000        940,000        -0-         -0-        800,000         -0-          54,138
  Director
- -----------------------------------------------------------------------------------------------------------------------------------
  K. R. Barnickol            1998       250,000        280,000        -0-         -0-          -0-           -0-          40,378
  Senior Vice President,     1997       231,250        357,200        -0-         -0-        123,612       121,740        28,618
  General Counsel, and       1996       197,925        207,789        -0-       491,500        -0-           -0-          19,022
  Secretary
- -----------------------------------------------------------------------------------------------------------------------------------
  R. A. Clausen              1998       270,000        300,000        -0-         -0-          -0-           -0-          41,547
  Senior Vice President      1997       255,000        346,000        600         -0-         76,245       160,563        27,504
  and Chief Financial        1996       230,000        307,150        -0-         -0-        250,000         -0-          21,762
  Officer
- -----------------------------------------------------------------------------------------------------------------------------------
  J. C. Hunter III           1998       445,834        550,000        -0-         -0-          -0-           -0-          86,002
  President, Chief           1997       391,667        687,000        -0-         -0-        250,117      1,204,893       51,580
  Operating Officer, and     1996       250,000        340,000        -0-         -0-        250,000         -0-          28,077
  Director
- -----------------------------------------------------------------------------------------------------------------------------------
  M. E. Miller               1998       325,000        360,000        -0-         -0-          -0-           -0-          38,369
  Vice Chairman              1997       263,750        325,000       3,069        -0-        136,789      1,577,168       41,759
                             1996       260,000        362,000        -0-         -0-        250,000         -0-          24,337
- -----------------------------------------------------------------------------------------------------------------------------------

<FN>
 
<F1> Excluding the 1997 annual bonus, compensation for 1996 and the first eight
     months of 1997 was determined solely by Monsanto Company.
 
<F2> The figures for 1997 represent reimbursement for taxes on amounts received
     in connection with the termination of the Monsanto Employee Benefits
     Trust. The trust, which was established to provide a means for employees
     to save for post-retirement medical expenses, was terminated prior to the
     spinoff.
 
<F3> The dollar figure opposite Mr. Barnickol's name for 1996 represents the
     value of the award of Monsanto restricted stock made to Mr. Barnickol
     under a Monsanto Company incentive plan on January 24, 1996. On December
     31, 1998, Mr. Barnickol held 2,000 of the 3,000 shares of Solutia
     restricted stock received as a dividend on the shares of Monsanto
     restricted stock as a result of the spinoff. These 2,000 shares had a
     value of $44,750 on December 31, 1998. In accordance with the terms of the
     original Monsanto Company award, 1,000 of these Solutia restricted shares
     vested on January 25, 1999, and the remaining 1,000 shares will vest on
     January 25, 2000. Dividends are paid on these shares at the same rate as
     paid to all stockholders.

     None of the other named executive officers held shares of restricted stock
     on December 31, 1998.
 
<F4> The stock option grants shown for 1997 represent options on Solutia common
     stock. The stock option grants shown for 1996 represent options on
     Monsanto common stock. Under the Employee Benefits and Compensation
     Allocation Agreement between Solutia and Monsanto, these Monsanto stock
     options were converted, in connection with the spinoff, into two awards: a
     replacement option on Solutia common stock and an adjusted option on
     Monsanto common stock, with the two awards preserving the economic value
     of the original Monsanto grant at the time of the spinoff. As a result,
     Mr. Potter's stock options for 1996 were converted into (a) an option on
     432,614 shares of Solutia common stock and (b) an option on 667,220 shares 
     of Monsanto common stock. For each of Messrs. Clausen, Hunter, and Miller, 
     the grants were converted into (a) an option on 135,192 shares of Solutia 
     common stock and (b) an option on 208,506 shares of Monsanto common stock.

<F5> Includes payment in 1997 of (a) awards earned by Messrs. Potter, Hunter,
     and Miller under Monsanto's 1994-1996 long-term incentive program and (b)
     "banked" amounts and sustained performance 

 
                                      15
 


     adjustments for all of the named executive officers under Monsanto's
     annual incentive program for the years 1994 through 1996.
 
<F6> Amounts shown for 1998 include contributions to thrift/savings plans as
     follows: Mr. Potter, $79,499; Mr. Barnickol, $27,158; Mr. Clausen,
     $29,101; Mr. Hunter, $50,718; and Mr. Miller, $30,576; split dollar life
     insurance premiums, as follows: Mr. Potter, $38,012; Mr. Barnickol,
     $13,117; Mr. Clausen, $12,343; Mr. Hunter, $35,181; and Mr. Miller,
     $7,690; and costs for executive travel accident protection, as follows:
     Messrs. Potter, Barnickol, Clausen, Hunter, and Miller, $103.



AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
- -------------------------------------------------------------------------------------------------------------------

    (a)                             (b)               (c)                  (d)                         (e)
                                                                         Number of                     
                                                                         Securities                  Value of
                                                                         Underlying                Unexercised
                                                                        Unexercised                In-the-Money
                                                                     Options at FY-End          Options at FY-End
                                                                            (#)                      ($)<F1>
                                   Shares                         -------------------------------------------------
                                 Acquired on     Value Realized         Exercisable/               Exercisable/
     Name                        Exercise (#)        ($)<F2>           Unexercisable              Unexercisable
                                                                               
- -------------------------------------------------------------------------------------------------------------------
  R. G. Potter                     108,154          2,016,423         1,088,468/60,000          9,870,146/172,500
- -------------------------------------------------------------------------------------------------------------------
  K. R. Barnickol                  27,039            676,218           284,159/12,500            3,368,300/35,938
- -------------------------------------------------------------------------------------------------------------------
  R. A. Clausen                    10,000            157,690           259,237/12,500            1,922,009/35,938
- -------------------------------------------------------------------------------------------------------------------
  J. C. Hunter III                   -0-               -0-             362,614/40,000           1,856,097/115,000
- -------------------------------------------------------------------------------------------------------------------
  M. E. Miller                       -0-               -0-             404,408/12,500            3,779,892/35,938
- -------------------------------------------------------------------------------------------------------------------

<FN>
 
<F1> These year-end values represent the difference between (a) the fair market
     value of the company common stock underlying the options on December 31,
     1998 and (b) the exercise prices of the options. "In-the-money" means that
     the fair market value of the underlying stock is greater than the option's
     exercise price on the valuation date.
 
<F2> The amounts in this column reflect the fair market value of shares
     received on the exercise date minus the exercise price.

 
                                      16
 


In accordance with regulations of the Securities and Exchange Commission, the
following table describes potential awards to named executive officers under
the Solutia Inc. 1998-1999 Long-Term Incentive Plan (the "Plan"). No payments
were actually made in 1998 under this Plan. Furthermore, there is no assurance
that the company will achieve cumulative two-year results that would lead to
payments under the Plan.


LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------

                                                                                         Estimated Future Payouts Under
                                         Number of            Performance or              Non-Stock Price-Based Plans
                                     Shares, Units, or         Other Period
                                        Other Rights         Until Maturation      Threshold         Target         Maximum
       Name                                #<F1>                or Payout             ($)             ($)             ($)
       (a)                                  (b)                    (c)                (d)             (e)             (f)
                                                                                                 
- ------------------------------------------------------------------------------------------------------------------------------
  R. G. Potter                              N/A             1/1/98 - 12/31/99         N/A           931,250        2,793,748
- ------------------------------------------------------------------------------------------------------------------------------
  K. R. Barnickol                           N/A             1/1/98 - 12/31/99         N/A           200,000          600,000
- ------------------------------------------------------------------------------------------------------------------------------
  R. A. Clausen                             N/A             1/1/98 - 12/31/99         N/A           216,000          648,000
- ------------------------------------------------------------------------------------------------------------------------------
  J. C. Hunter III                          N/A             1/1/98 - 12/31/99         N/A           668,751        2,006,253
- ------------------------------------------------------------------------------------------------------------------------------
  M. E. Miller                              N/A             1/1/98 - 12/31/99         N/A           260,000          780,000
- ------------------------------------------------------------------------------------------------------------------------------

<FN>
 
<F1> Although actual awards, if any, under the Plan will not be determined or
     paid until 2000, long-term incentive opportunities were established for
     executives at the beginning of the two-year performance period, based on a
     percentage of each executive's aggregate salary during the performance
     period. The percentage varies with the level of responsibility of the
     executive. Actual awards will depend principally upon achievement of
     cumulative earnings per share and free cash flow targets for the two-year
     performance period. Threshold levels of cumulative earnings per share and
     cumulative free cash flow must be achieved for any awards to be earned.
     The amount of any award is subject to the discretion of the Executive
     Compensation and Development Committee.

     Any awards earned will be paid no later than March 15, 2000, in the
     form of shares of company common stock that are restricted against sale or
     other disposition until December 31, 2004, to the extent that sufficient
     shares are available for this purpose under the company's stock-based
     incentive plan. To the extent that sufficient shares are not available,
     payment will be made in the form of performance shares (bookkeeping units
     that entitle a participant to payment in cash based on the value of a
     share of company common stock) that replicate to the extent practicable
     the terms and conditions of the restricted stock. The number of shares of
     restricted stock or performance shares granted to an executive will be
     determined by dividing the dollar amount of the executive's award by the
     average of the fair market value of the company's common stock on each of
     the three consecutive days immediately preceding the grant date on which
     the New York Stock Exchange is open for trading. The restricted stock or
     performance shares are forfeitable if the executive leaves the company
     voluntarily (other than as the result of retirement) before the
     restrictions lapse.

 
PENSION PLANS
 
The named executive officers are eligible for benefits payable under the
defined benefit pension plans applicable to the company's regular full-time
employees. An executive's benefits are based on his service with Monsanto
Company prior to the spinoff and service with Solutia since the spinoff. The
company's 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 Monsanto Company's defined benefit pension
      plans, 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 was the greater of 1.4% of average final
      compensation multiplied by years of service, without reduction for Social
      Security or other offset amounts, or 1.5% of average final compensation
      multiplied by years of service, less a 50% Social Security offset. Average
      final compensation for
 
                                      17
 


      purposes of determining the opening balance was the greater of (1) average
      compensation received during the 36 months of employment with Monsanto 
      prior to 1997 or (2) average compensation received during the highest 
      three of the five calendar years of employment with Monsanto prior to 
      1997. For each year of the executive's continued employment with Solutia 
      (including all of 1997), the executive's Prior Plan Account increases by 
      4% to recognize that prior plan benefits would have grown as a result of 
      pay increases.
 
    * For each year during which the executive is employed by Solutia, 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) is 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 Monsanto Company's defined benefit pension plans before 1997 are
      credited each year (for up to ten years based on prior years of service
      with Monsanto Company before 1997) during which the executive is employed
      by Solutia (including all of 1997) 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.
Potter, $894,989; Mr. Barnickol, $320,980; Mr. Clausen, $443,645; Mr. Hunter,
$715,685; and Mr. Miller, $516,053.
 
CHANGE-OF-CONTROL AGREEMENTS
 
Each executive officer named in the Summary Compensation Table is a party to a
change-of-control employment agreement. These agreements become effective upon
a "change of control" of the company (as defined in the agreements). The
agreements provide 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
own employment for "good reason" (each as defined in the change-of-control
employment agreement), the executive is entitled to severance benefits equal to
three times his annual compensation (including bonus) and continuation of
certain benefits for three years (or the shorter number of years until the
executive's normal retirement date). In addition, each of these executives is
entitled to receive the severance benefits if he voluntarily terminates his own
employment during the 30-day period beginning on the first anniversary of
certain changes of control. Finally, each of these executives is entitled to an
additional payment, if necessary, to make him 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 ten percent, in which event the payments will be reduced to avoid
the excise tax).
 
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)
 
We are asking you to ratify the Board's appointment of Deloitte & Touche LLP
("Deloitte") as principal independent auditors to examine the consolidated
financial statements of the company and its subsidiaries for the year 1999. The
Audit and Finance Committee recommended the selection of Deloitte to the Board.
Deloitte was originally appointed to act as the company's independent auditors
in September 1997 when the company became an independent entity. Deloitte is
knowledgeable about the company's operations and accounting practices and is
well qualified to act as auditor.
 
Although we are not required to seek your approval of this appointment, the
Board believes it to be sound corporate practice to do so. If you do not ratify
the appointment of independent auditors, the Audit and Finance Committee will 
investigate the reasons for your rejection and the Board will reconsider the 
appointment.
 
                                      18




Representatives of Deloitte do not plan to make a formal statement at the
annual meeting. However, they will attend the meeting and be available to
respond to appropriate questions.

- -------------------------------------------------------------------------------
        THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE
  APPOINTMENT OF DELOITTE AS PRINCIPAL INDEPENDENT AUDITORS FOR THE YEAR 1999.
- -------------------------------------------------------------------------------
 
ADDITIONAL INFORMATION
 
INFORMATION ABOUT STOCKHOLDER PROPOSALS
 
If you wish to submit proposals for possible inclusion in our 2000 proxy
materials, we must receive them on or before November 16, 1999. Proposals
should be mailed to:
 
                      Solutia Inc.
                      P.O. Box 66760
                      St. Louis, Missouri 63166-6760
                      Attention: Karl R. Barnickol, Secretary
 
If you wish to nominate directors and/or propose proper business from the floor
for consideration at the 2000 Annual Meeting of Stockholders, our By-Laws
provide that:
 
    * You must notify Solutia's Secretary in writing.
 
    * Your notice must be received at Solutia's world headquarters not earlier
      than December 30, 1999 and not later than January 29, 2000.
 
    * Your notice must contain the specific information required in our
      By-Laws. We will send copies of these requirements to any stockholder who
      writes to us requesting this information.
 
Please note that these three requirements apply only to matters that you wish
to bring before your fellow stockholders at the 2000 Annual Meeting without
submitting them for possible inclusion in our 2000 proxy materials.
 
MULTIPLE COPIES OF ANNUAL REPORT TO STOCKHOLDERS
 
If more than one copy of Solutia's Annual Report is currently being sent to
your address, we will discontinue the mailing of reports on the accounts you
select if you mark the designated box on the appropriate proxy card(s), or
follow the prompts when you vote if you are a stockholder of record voting by
telephone or Internet.
 
At least one account must continue to receive the Annual Report. Mailing of
dividends, dividend reinvestment account statements, and any special notices
will not be affected by your election to discontinue future duplicate mailings
of the Annual Report. To discontinue or resume the mailing of an Annual Report
to an account, you may call First Chicago Trust Company at 1-888-987-6588.
 
If you own common stock through a bank, broker or other nominee and receive
more than one Solutia Annual Report, contact the holder of record to eliminate
duplicate mailings.
 
                                      KARL R. BARNICKOL
                                      Secretary
 
March 15, 1999
 
                                      19
 



DIRECTIONS TO
ST. LOUIS
MARRIOTT                         [MAP]
WEST HOTEL
 
FROM LAMBERT
INTERNATIONAL AIRPORT:
 
Take I-70 West 
approximately 3 miles 
to I-270 South, then 8 
miles to the I-64/40 
West exit.
 
FROM DOWNTOWN
ST. LOUIS:
 
Take Highway 40/I-64 
West
 
From Highway 40/I-64, 
exit Maryville Centre 
Drive (exit # 23). Go 
North 1/8 of a mile. The 
St. Louis Marriott West 
Hotel will be on the 
left. Turn into the
parking lot and follow 
the Solutia signs.
 

              ------------------------------------
                         [SOLUTIA LOGO]
 
                  Annual Meeting of Stockholders

                  St. Louis Marriott West Hotel
                    660 Maryville Centre Drive
                    St. Louis, Missouri 63141

                          April 28, 1999
                            1:45 P.M.

                         ADMISSION TICKET
               ------------------------------------


                    
                                    SOLUTIA INC.
[SOLUTIA LOGO]                      COMMON STOCK
                THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                                 1999 ANNUAL MEETING
                 ST. LOUIS MARRIOTT WEST HOTEL, 660 MARYVILLE CENTRE DRIVE
                              ST. LOUIS, MISSOURI 63141
                             APRIL 28, 1999 AT 1:45 P.M.
 P  
 R   The undersigned hereby appoints Robert G. Potter, John C. Hunter III, and
 O   Karl R. Barnickol, and each of them, with full power of substitution, 
 X   proxies to vote all shares of Common Stock of Solutia Inc. that the
 Y   undersigned is entitled to vote at the 1999 Annual Meeting of Stockholders,
     and any adjournments thereof, as specified upon the matters indicated on
     the reverse side and in their discretion upon such other matters as may
     properly come before the meeting.

     If the undersigned is a participant in the Solutia Inc. Savings and
     Investment Plan or the Monsanto Savings and Investment Plan, and this
     proxy card is received on or prior to April 23, 1999, then this card
     also provides voting instructions to the trustee of such plan to vote
     at the 1999 Annual Meeting, and any adjournments thereof, all shares of
     Common Stock of Solutia held in the undersigned's plan account as specified
     upon the matters indicated on the reverse side and in its discretion upon
     such other matters as may properly come before the meeting. If the
     undersigned is a participant in one of these plans and does not instruct
     the trustee by April 23, 1999, then the trustee will vote the undersigned's
     plan account shares in proportion to the votes of the other participants 
     in that plan. In addition, the trustee will vote unallocated shares in the
     plan in direct proportion to voting by allocated shares for which 
     instructions have been received.

         Election of directors to a term of three years to expire at the
         Annual Meeting in 2002 (see reverse). Nominees are (1) Joan T. Bok,
         (2) Howard M. Love, and (3) Robert G. Potter.


- --------------------------------------------------------------------------------
   *FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL*






              PLEASE SEE REVERSE SIDE FOR INFORMATION ON VOTING
                    YOUR PROXY BY TELEPHONE OR INTERNET.


      IF YOU WILL BE ATTENDING THE MEETING, PLEASE BRING THE ADMISSION
          TICKET PRINTED ON THE BACK COVER OF THE PROXY STATEMENT.




/X/ PLEASE MARK YOUR                                                      
    VOTE AS IN THIS 
    EXAMPLE .

  THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" ITEMS 1 AND 2. 

- -------------------------------------------------------------------------------
         THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2. 
- -------------------------------------------------------------------------------
                             FOR        WITHHELD
1. Election of 
   Directors                 / /          / /
   to term listed 
   on reverse. 

For, except withheld from the following nominee(s):


- -------------------------------------------------------------------------------


                             FOR        AGAINST      ABSTAIN
2. Ratification of 
   Deloitte & Touche 
   LLP as principal          / /          / /          / /
   independent auditors 
   for 1999.

- ---------------------------
      SPECIAL ACTION 

  Check box if you wish 
  to discontinue Annual            / /
  Report mailing for this
  Account because 
  another household 
  member receives one.
- ---------------------------


                                   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. 



                                   ------------------------------------------


                                   ------------------------------------------
                                    SIGNATURE(S)                    DATE



- --------------------------------------------------------------------------------
   *FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL*





                               [SOLUTIA LOGO]



Solutia Inc. encourages you to vote your shares electronically by
telephone or through the Internet. This eliminates the need to return
your proxy card. 

To vote your shares electronically, you must use the control numbers
printed in the box above, just below the perforation.  The series of
numbers that appear in the box above must be used to access the system.

1.   To vote by telephone:
   * On a touch-tone telephone, call 1-800-OK2-VOTE (1-800-652-8683) 24
     hours a day, 7 days a week.

2.   To vote over the Internet
   * Log onto the Internet and go to the website http://www.vote-by-net.com

Your electronic vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed, dated and returned the proxy
card.

If you choose to vote your shares electronically, there is no need for
you to mail back your proxy card.



             YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING. 





                                 APPENDIX

1.  The legend appearing at the top of the Notice of Annual Meeting of
    Stockholders in the EDGAR filing appears in the printed document
    vertically in red along the left side of the Notice. The printed
    documents containing this legend will be distributed only to
    participants in Solutia's stock option plans. The legend will not
    appear on documents delivered to other stockholders.

2.  On printed pages 4 through 6, the blank spaces to the left of each
    director's biography depicted by the word "[PHOTO]," contain a 1-1/8
    inch by 1-5/8 inch black-and-white photograph of the respective
    director.

3.  On printed page 4, "Your Board of Directors recommends a vote "FOR"
    these nominees" is in bold-face type.

4.  On printed page 11, the trademarks are designated by the superscript
    letter "R" in a circle.

5.  On printed page 11, the Stock Price Performance Graph is being
    transmitted in a format which can be processed by EDGAR.

6.  On printed pages 1, 2, 10, 11, 12, 17, 18 and 19, the bullets in
    the printed document are represented by asterisks in the EDGAR document.

7.  On printed page 19, "The Board recommends that you vote "FOR" the
    ratification of the appointment of Deloitte as principal independent
    auditors for the year 1999" is in bold-face type.




8.  On the outside back cover of the printed copy, a map is presented
    showing the location of the Solutia Inc. 1999 Annual Meeting of
    Stockholders. This is depicted in the EDGAR copy as "[MAP]".

9.  On the back of the proxy card, "This proxy, when properly executed
    will be voted in the manner directed by the undersigned stockholder.
    If no direction is given, this proxy will be voted "FOR" Items 1 and 2,"
    and "The Board of Directors recommends a vote "FOR" Items 1 and 2" are 
    in bold-face type.

10. On the front of the proxy card "THIS PROXY IS SOLICITED ON BEHALF
    OF THE BOARD OF DIRECTORS." is in bold-face type.