EXHIBIT 10
Fiscal Year 2006 Annual Incentive Plan Summary
(September 1, 2005 through August 31, 2006 Performance Period)
General:
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o The Fiscal Year 2006 Annual Incentive Plan ("Plan") will cover the
performance period September 1, 2005 through August 31, 2006 ("Performance
Period")
>> Any payout, as determined by the Board People and Compensation
Committee ("Committee"), is made in November 2006
o Eligibility includes regular employees who do not participate in a local
sales or manufacturing annual incentive plan
>> Funding of the Plan is determined by the Company's attainment of
certain financial goals and the Committee's determination that such
attainment satisfies certain subjective performance criteria as
determined by the Committee. In addition, regardless of the attainment
of any one or more of the Plan's financial goals, the Committee, in
its sole discretion, shall determine whether the incentive pool should
be funded and the amount of such funding, if any
>> A Target Annual Incentive Opportunity, expressed as a percentage of
base pay, is established for each participant with respect to the
Performance Period
o Various performance levels are approved by the Committee with a payout
level associated with each level of performance:
Potential Payout
As a Percent of Target Annual
Performance Level Incentive Opportunity
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Threshold 35%
Budget 100%
Outstanding 200%
o The cost at the Budget level of performance for the Performance Period is
as follows:
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Officers $ 3.6M
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Management $41.3M
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Non-Management $11.8M
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Total $56.7M
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Financial Goals:
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o The Committee approves Threshold, Budget and Outstanding levels of
performance for the Performance Period relating to:
>> Sales Growth 10% weighting
>> Earnings Per Share 50% weighting
>> Cash Flow 40% weighting
o Sales Growth, Earnings Per Share and Cash Flow are determined in accordance
with the "Definition of Performance Metrics"
o Following the end of the Performance Period, the Committee evaluates
Company performance for the Performance Period relative to the financial
goals
>> The Committee may consider subjective criteria in determining whether
or not any financial goal has been attained and the amount of
incentive pool funding with respect to any financial goal
Process: Funding of Incentive Pool and Payout of Awards:
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o A Target incentive award pool is calculated, equal to the sum of base
salaries of all Plan participants at the end of the Performance Year
multiplied by their respective Target Annual Incentive Opportunities
o After the end of the Performance Period, the Committee determines the
actual funding of the incentive pool for the Plan based upon the Company's
performance for the Performance Period, measured against the Plan's
financial goals and other subjective performance factors
>> The Committee may, in its judgment, consider subjective factors in
determining to what extent, if any, the incentive pool will be funded
o The amount of money available for awards (i.e. the funding of the incentive
pool) is determined by multiplying the value of the Target incentive award
pool by the percentage of overall Company performance achieved, as
determined by the Committee
>> Special considerations regarding attainment of financial goals and
funding of incentive pool:
o The incentive pool will be funded at no less than 20% of Budget
level funding in the event Monsanto pays dividends with respect
to each of its financial quarters ending during the Performance
Year
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o In the event Monsanto does pay dividends with respect to each of
the Company's fiscal quarters ending during the Performance
Period, but the Company does not attain the Threshold level of
performance with respect to the Earnings Per Share financial goal
(considering the financial goal metrics for Earnings Per Share
and other subjective performance factors), the incentive pool may
not fund at greater than 20% of Budget level funding
o If the Company exceeds the Outstanding level of performance with
respect to any one or more financial goals, the incentive pool
may be funded above the Outstanding level
o Individual awards are determined based on team and individual performance
>> People managers: 50% of award based on development of people, team and
personal development (including diversity); 50% based on business
results
>> Non-managers: 75% of award based on business results; 25% on personal
development
o The payment and amount of any award are subject to the sole discretion of
the Committee or its delegate
Events Affecting Payout of Individual Performance Year Incentives:
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o If an employee commences employment during the Performance Period, he/she
is eligible for an award reflecting actual months of participation to the
nearest whole month
o If a participant's Target Annual Incentive Opportunity changes during the
Performance Period, he/she is eligible for an award reflecting the Target
Annual Incentive Opportunity on the last day of the Performance Period
o If a participant's pay changes during the Performance Period, any incentive
award received is based on base pay on the last day of the Performance
Period
o If a participant transfers within the Company, his/her award will come from
the unit in which he/she is working on the last day of the Performance
Period, but performance for the entire Performance Period will be
considered
o A participant who:
>> voluntarily resigns may be considered for an award only if the
resignation occurs after the end of the Performance Period
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>> involuntarily separates without cause, is eligible for an award
reflecting participation to the nearest whole month if he/she has
already worked at least three months in the Performance Period
>> retires, dies, or becomes permanently disabled, is eligible for an
award reflecting actual participation to the nearest whole month
provided that he/she worked at least three months during the
Performance Period. Retirement is defined as termination at or after
age 50.
>> incurs a termination of employment for cause, forfeits all rights to
any award
o Any award would be paid in November 2006
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