Exhibit 10.3
GENERAL MILLS, INC.
1998 SENIOR MANAGEMENT STOCK PLAN

1.   PURPOSE OF THE PLAN       The purpose of the General Mills, Inc. 1998
Senior Management Stock Plan (the “Plan”) is to attract and retain able
employees by rewarding employees of General Mills, Inc., its subsidiaries and
affiliates (defined as entities in which General Mills, Inc. has a significant
equity or other interest) (collectively, the “Company”) who are responsible for
the growth and sound development of the business of the Company, and to align
the interests of employees with those of the stockholders of the Company.   2.  
EFFECTIVE DATE AND DURATION OF PLAN       This Plan shall become effective as of
September 28, 1998, subject to the approval of the stockholders of the Company
at the Annual Meeting on September 28, 1998. No Awards were made under the Plan
after September 22, 2003.   3.   ELIGIBLE PERSONS       Only persons who are
employees of the Company shall be eligible to receive grants of Stock Options
(defined below) under the Plan. The Compensation Committee of the Company’s
Board of Directors (the “Committee”) shall administer the Plan, in accordance
with Section 12, and shall exercise the power to determine and designate, from
time to time, from among the employees, those who will be granted Stock Options
under the Plan and become “Participants” in the Plan.   4.   AWARD TYPE      
Under this Plan, the Committee may award Participants options (“Stock Options”)
to purchase common stock of the Company ($.10 par value) (“Common Stock”). The
grant of a Stock Option entitles the Participant to purchase a fixed number of
shares of Common Stock at an “Exercise Price” established by the Committee. The
Exercise Price for each share of Common Stock issuable under a Stock Option
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date of grant. “Fair Market Value” shall equal the closing price of the Common
Stock on the New York Stock Exchange on the date of grant.   5.   STOCK OPTION
TERM AND TYPE       Stock Options granted under the Plan may be either
Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code
of 1986, as amended (the “Code”) or Incentive Stock Options described in
Section 422(b)

 

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    of the Code. The term of any Stock Option granted under the Plan shall be
determined by the Committee, provided that the term of a Non-Qualified Stock
Option shall not exceed 10 years and one month and the term of an Incentive
Stock Option shall not exceed 10 years. The maximum number of shares that may be
issued by Incentive Stock Options granted under the Plan is 15,000,000.

6.   COMMON STOCK SUBJECT TO THE PLAN

  a)   Maximum Shares Available for Delivery. Subject to Section 6(c), the
maximum number of shares of Common Stock available for issuance to Participants
under the Plan shall be equal to the sum of:

  (i)   12,600,000;     (ii)   2,400,000, being the number of shares of Common
Stock still available for grants under the Company’s 1993 Stock Option and
Long-Term Incentive Plan as of the effective date of this Plan; and     (iii)  
any shares of Common Stock subject to Stock Options granted under any prior
stockholder — approved plan of the Company adopted prior to the effective date
of this Plan which are forfeited, expire or are cancelled without the delivery
of Common Stock.

      In addition, any Common Stock covered by a Stock Option granted under the
Plan, which is forfeited, cancelled or expires in whole or in part shall be
deemed not to be delivered for purposes of determining the maximum number of
shares of Common Stock available for grants under the Plan.         Further, if
any Stock Option is exercised by tendering Common Stock, either actually or by
attestation, to the Company as full or partial payment in connection with the
exercise of the Stock Option under the Plan, only the number of shares of Common
Stock issued net of the Common Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares available for grants under
the Plan.

  b)   Other Share Limits. The number of shares of Common Stock subject to Stock
Options granted under the Plan to any one Participant shall not exceed
5,000,000.     c)   Adjustments for Corporate Transactions. If a corporate
transaction has occurred affecting the Common Stock such that an adjustment to
outstanding awards is required to preserve (or prevent enlargement of) the
benefits or potential benefits intended at the time of grant, then in such
manner as the Committee deems equitable, an appropriate adjustment shall be made
to (i) the number and kind of shares which may be awarded under the Plan;
(ii) the number and kind of shares subject to outstanding awards; (iii) the
number of shares credited to an account; and, if applicable, (iv) the exercise
price of outstanding Options; provided that the number of shares of Common Stock
subject to any Option denominated in Common Stock shall always be a whole
number. For this purpose a corporate transaction includes, but is not limited
to, any dividend or other distribution (whether in the form of cash, Common
Stock, securities of a subsidiary of the Company, other securities or other
property),

 

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      recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of Common Stock or other securities of the Company, issuance of warrants or
other rights to purchase Common Stock or other securities of the Company, or
other similar corporate transactions. Notwithstanding anything in this paragraph
to the contrary, an adjustment to an Option under this paragraph shall be made
in a manner that will not result in a new grant of an Option under Code
Section 409A.

  d)   Limits on Distribution. Distribution of shares of Common Stock or other
amounts under the Plan shall be subject to the following:

  (i)   Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Common Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.     (ii)   To the
extent that the Plan provides for issuance of stock certificates to reflect the
issuance of shares of Common Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

  e)   The Committee, in its discretion, may require as a condition to the grant
of Stock Options, the deposit of Common Stock owned by the Participant receiving
such grant, and the forfeiture of such grants, if such deposit is not made or
maintained during the required holding period. Such shares of deposited Common
Stock may not be otherwise sold, pledged or disposed of during the applicable
holding period or restricted period. The Committee may also determine whether
any shares issued upon exercise of a Stock Option shall be restricted in any
manner.

7.   EXERCISE OF STOCK OPTIONS

  a)   Exercise. Except as provided in Sections 10 and 11 (Change of Control and
Termination of Employment), each Stock Option may be exercised only in
accordance with the terms and conditions of the Stock Option grant and during
the periods as may be established by the Committee, and only after three years
of the Participant’s continued employment with the Company following the date of
the Stock Option grant.         A Participant exercising a Stock Option shall
give notice to the Company of such exercise and of the number of shares elected
to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be
a business day at the executive offices of the Company.     b)   Payment. The
Exercise Price shall be paid to the Company at the time of such exercise,
subject to any applicable rule or regulation adopted by the Committee:

  (i)   in cash (including check, draft, money order or wire transfer made
payable to the order of the Company);

 

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  (ii)   through the tender of shares of Common Stock owned by the Participant
(by either actual delivery or attestation); or     (iii)   by a combination of
(i) and (ii) above.

      For determining the amount of the payment, Common Stock delivered pursuant
to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common
Stock on the date of exercise.

  c)   Deferrals. Prior to January 1, 2005, the Committee may permit or require
Participants to defer receipt of any Common Stock issuable upon exercise of a
Stock Option, subject to such rules and procedures as it may establish, which
may include provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred Common Stock
equivalents. Stock option gains may not be deferred after December 31, 2004.

8.   TRANSFERABILITY OF STOCK OPTIONS       Except as otherwise provided by
rules of the Committee, no Stock Options shall be transferable by a Participant
otherwise than (i) by the Participant’s last will and testament or (ii) by the
applicable laws of descent and distribution, and such Stock Options shall be
exercised during the Participant’s lifetime only by the Participant or his or
her guardian or legal representative.   9.   TAXES       Whenever the Company
issues Common Stock under the Plan, the Company may require the recipient to
remit to the Company an amount sufficient to satisfy any Federal, state or local
tax withholding requirements prior to the delivery of such Common Stock, or, in
the discretion of the Committee, upon the election of the Participant, the
Company may withhold from the shares to be delivered shares sufficient to
satisfy all or a portion of such tax withholding requirements.

10.   CHANGE OF CONTROL       Each outstanding Stock Option shall become
immediately and fully exercisable for a period of one (1) year following the
date of the following occurrences, each constituting a “Change of Control”:

  a)   The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
voting securities of the Company where such acquisition causes such Person to
own 20% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not be deemed
to result in a Change of Control: (i) any

 

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      acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to a transaction
that complies with clauses (i), (ii) and (iii) of subsection (c) below; and
provided, further, that if any Person’s beneficial ownership of the Outstanding
Voting Securities reaches or exceeds 20% as a result of a transaction described
in clause (i) or (ii) above, and such Person subsequently acquires beneficial
ownership of additional voting securities of the Company, such subsequent
acquisition shall be treated as an acquisition that causes such Person to own
20% or more of the Outstanding Voting Securities; or

  b)   Individuals who, as of the date hereof, constitute the Board of Directors
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least of a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or     c)   The
approval by the shareholders of the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (“Business Combination”) or, if consummation of such
Business Combination is subject, at the time of such approval by stockholders,
to the consent of any government or governmental agency, the obtaining of such
consent (either explicitly or implicitly by consummation); excluding, however,
such a Business Combination pursuant to which (i) all or substantially all of
the individuals and entities who were the beneficial owners of the Outstanding
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a result of
such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Voting Securities, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the

 

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      execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

  d)   approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

    After such one (1) year period the normal Stock Option exercise provisions
of the Plan shall govern. Notwithstanding any other provision of the Plan, but
subject to Section 5, in the event a Participant’s employment with the Company
is terminated within two (2) years of any of the events specified in (a), (b),
(c) or (d), all outstanding Stock Options of such Participant at that date of
termination shall be exercisable for a period of six (6) months beginning on the
date of termination.       With respect to Stock Option grants outstanding as of
the date of any such Change of Control which require the deposit of owned Common
Stock as a condition to obtaining rights, the deposit requirement shall be
terminated as of the date of the Change of Control and any such deposited stock
shall be promptly returned to the Participant.

11.   TERMINATION OF EMPLOYMENT

  a)   Resignation or Termination for Cause. If the Participant’s employment by
the Company is terminated by either

  (i)   the voluntary resignation of the Participant, or     (ii)   a Company
discharge due to Participant’s illegal activities, poor work performance,
misconduct or violation of the Company’s policies or practices,

      then Participant’s Stock Options shall terminate three months after such
termination (but in no event beyond the original full term of the Stock Options)
and no Stock Options shall become exercisable after such termination.

  b)   Other Termination. If the Participant’s employment by the Company
terminates for any reason other than specified in Sections 10, 11 (a), (c),
(d) or (e), the following rules shall apply:

  (i)   In the event that, at the time of such termination, the sum of the
Participant’s age and service with the Company equals or exceeds 70, the
Participant’s outstanding Stock Options shall continue to become exercisable in
accordance with the schedules established at the time of grant. Stock Options
shall remain exercisable for the remaining full term of such Stock Options.    
(ii)   In the event that, at the time of such termination, the sum of
Participant’s age and service with the Company is less than 70, Participant’s
outstanding unexercisable Stock Options shall become exercisable as of the date
of termination, in a pro-rata amount based

 

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      on the full months of employment completed during the full vesting period
from the date of grant to the date of termination with such newly-vested Stock
Options and Stock Options exercisable on the date of termination remaining
exercisable for the lesser of one year from the date of termination and the
original full term of the Stock Option. All other Stock Options shall be
forfeited as of the date of termination. Provided, however, that if the
Participant is an executive officer of the Company, the Participant’s
outstanding Stock Options which, as of the date of termination are not yet
exercisable, shall become exercisable effective as of the date of such
termination and, with all outstanding Stock Options already exercisable on the
date of termination, shall remain exercisable for the lesser of one year
following the date of termination and the original full term of the Stock
Option.

  c)   Death. If a Participant dies while employed by the Company, any Stock
Option previously granted under this Plan may be exercised by the person
designated in such Participant’s last will and testament or, in the absence of
such designation, by the Participant’s estate, to the full extent that such
Stock Option could have been exercised by such Participant immediately prior to
death. Any outstanding Stock Options granted on or after June 1, 2002, which, as
of the date of death, are not yet exercisable, shall fully vest and become
exercisable upon a Participant’s death. Any outstanding Stock Option granted
prior to June 1, 2002 shall vest and become exercisable in a pro-rata amount,
based on the full months of employment completed during the full vesting period
of the Stock Option from the date of grant to the date of death.         With
respect to Stock Options which require the deposit of owned Common Stock as a
condition to obtaining exercise rights, in the event a Participant dies while
employed by the Company, such Stock Options may be exercised as provided in the
first paragraph of this Section 11(c) and any owned Common Stock deposited by
the Participant pursuant to such grant shall be promptly returned to the person
designated in such Participant’s last will and testament or, in the absence of
such designation, to the Participant’s estate, and all requirements regarding
deposit by the Participant shall be terminated.     d)   Retirement. The
Committee shall determine, at the time of grant, the treatment of the Stock
Option upon the retirement of the Participant. Unless other terms are specified
in the original Stock Option grant, if the termination of employment is due to a
Participant’s retirement on or after age 55, the Participant may exercise a
Stock Option, subject to the original terms and conditions of the Stock Option.
    e)   Spin-offs. If the termination of employment is due to the cessation,
transfer, or spin-off of a complete line of business of the Company, the
Committee, in its sole discretion, shall determine the treatment of all
outstanding Stock Options under the Plan.

 

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12.   ADMINISTRATION OF THE PLAN

  a)   Administration. The authority to control and manage the operations and
administration of the Plan shall be vested in Committee in accordance with this
Section 12.     b)   Selection of Committee. The Committee shall be selected by
the Board, and shall consist of two or more members of the Board.     c)  
Powers of Committee. The authority to manage and control the operations and
administration of the Plan shall be vested in the Committee, subject to the
following:

  (i)   Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the eligible Company employees
those persons who shall receive Stock Options, to determine the time or times of
receipt, to determine the types of grants (including status as Non-Qualified or
Incentive Stock Options) and the number of shares covered by the grants, to
establish the terms, conditions, performance criteria, restrictions, and other
provisions of such grants, and (subject to the restrictions imposed by
Section 13) to cancel or suspend grants. In making such determinations, the
Committee may take into account the nature of services rendered by the
individual, the individual’s present and potential contribution to the Company’s
success and such other factors as the Committee deems relevant.     (ii)   The
Committee will have the authority and discretion to establish terms and
conditions of awards as the Committee determines to be necessary or appropriate
to conform to applicable requirements or practices of jurisdictions outside of
the United States.     (iii)   The Committee will have the authority and
discretion to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make all other determinations that
may be necessary or advisable for the administration of the Plan.     (iv)   Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding.

  d)   Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.

13.   AMENDMENTS OF THE PLAN       The Committee may from time to time
prescribe, amend and rescind rules and regulations relating to the Plan. Subject
to the approval of the Board of Directors, where required, the Committee may at
any time terminate, amend,

 

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    or suspend the operation of the Plan, provided that no action shall be taken
by the Board of Directors or the Committee without the approval of the
stockholders of the Company which would:

  (i)   materially increase the number of shares which may be issued under the
Plan;     (ii)   permit granting of Stock Options at less than Fair Market
Value;     (iii)   except as provided in Section 6, permit the repricing of
outstanding Stock Options; and     (iv)   amend the maximum shares set forth in
Section 6(b) which may be annually granted as Stock Options to any single
Participant.

    No termination, modification, suspension, or amendment of the Plan shall
alter or impair the rights of any Participant pursuant to an outstanding Stock
Option without the consent of the Participant. There is no obligation for
uniformity of treatment of Participants under the Plan.   14.   FOREIGN
JURISDICTIONS       The Committee may adopt, amend, and terminate such
arrangements, not inconsistent with the intent of the Plan, as it may deem
necessary or desirable to make available tax or other benefits of the laws of
any foreign jurisdiction, to employees of the Company who are subject to such
laws and who receive Stock Options under the Plan.   15.   NOTICE       All
notices to the Company regarding the Plan shall be in writing, effective as of
actual receipt by the Company, and shall be sent to:

General Mills, Inc.
Number One General Mills Boulevard
Minneapolis, Minnesota 55426
Attention: Corporate Compensation