Exhibit 10.3

KRAFT FOODS INC.

2006 STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

(Amended May 13, 2008)

Section 1. Purpose; Definitions.

The purposes of the Plan are (i) to assist the Company in promoting a greater
identity of interest between the Company’s Non-Employee Directors and the
Company’s stockholders; and (ii) to assist the Company in attracting and
retaining Non-Employee Directors by affording them an opportunity to share in
the future successes of the Company.

For purposes of the Plan, the following terms are defined as set forth below:

(a) “Award” means the grant under the Plan (or, to the extent relevant, under
any Prior Director Plan) of Common Stock, Restricted Stock, Deferred Stock,
Stock Options, or Other Stock-Based Awards.

(b) “Board” means the Board of Directors of the Company.

(c) “Committee” means the Compensation Committee of the Board or a subcommittee
thereof, any successor thereto or such other committee or subcommittee as may be
designated by the Board to administer the Plan.

(d) “Common Stock” or “Stock” means Class A Common Stock of the Company.

(e) “Company” means Kraft Foods Inc., a corporation organized under the laws of
the Commonwealth of Virginia, or any successor thereto.

(f) “Deferred Stock” means an unfunded obligation of the Company, represented by
an entry on the books and records of the Company, to issue one share of Common
Stock on the date of distribution.

(g) “Deferred Stock Account” means the unfunded deferred compensation account
established by the Company with respect to each participant who elects to
participate in the Deferred Stock Program in accordance with Section 7 of the
Plan.

(h) “Deferred Stock Program” means the provisions of Section 7 of the Plan that
permit participants to defer all or part of any Award of Stock pursuant to
Section 5(a) of the Plan.

(i) “Fair Market Value” means, as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange-Composite Transactions or, if no such sale of Common Stock is
reported on such date, the fair market value of the Stock as determined by the
Committee in good faith; provided, however, that the Committee may in its
discretion designate the actual sales price as Fair Market Value in the case of
dispositions of Common Stock under the Plan. In the case of Stock Options or
similar Other Stock-Based Awards, Fair Market Value means, as of any given date,
the Black-Scholes or similar value determined based on the assumptions used for
purposes of the Company’s most recent financial reporting.

(j) “Non-Employee Director” means each member of the Board who is not a
full-time employee of the Company or of any corporation or other entity in which
the Company owns, directly or indirectly, stock or similar interests possessing
at least 50% of the total combined voting power of all classes of stock or
similar interests entitled to vote in the election of directors in such
corporation or other entity.

 

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(k) “Other Stock-Based Award” means an Award, other than Restricted Stock, a
Stock Option or Deferred Stock, that is denominated in, valued in whole or in
part by reference to, or otherwise based on or related to, Common Stock.

(l) “Restricted Stock” means an Award of Common Stock that is subject to
forfeiture in the event that the Non-Employee Director ceases to serve as a
Director of the Company prior to the end of the stated restriction period.

(m) “Plan” means this 2006 Stock Compensation Plan for Non-Employee Directors,
as amended from time to time.

(n) “Plan Year” means the period commencing at the opening of business on the
day on which the Company’s annual meeting of stockholders is held and ending on
the day immediately preceding the day on which the Company’s next annual meeting
of stockholders is held.

(o) “Prior Director Plan” shall mean the Company’s 2001 Stock Compensation Plan
for Non-Employee Directors, and any subplans thereof.

(p) “Stock Option” means a right granted to a Non-Employee Director to purchase
a share of Stock at a price equal to the Fair Market Value on the date of grant.
Any Stock Options granted pursuant to the Plan shall be nonqualified stock
options.

Section 2. Administration.

The Plan shall be administered by the Committee, which shall have the power to
interpret the Plan and to adopt such rules and guidelines for carrying out the
Plan and appoint such delegates as it may deem appropriate. The Committee shall
have the authority to adopt such modifications, procedures and subplans as may
be necessary or desirable to comply with the laws, regulations, compensation
practices and tax and accounting principles of the countries in which
Non-Employee Directors reside or are citizens of and to meet the objectives of
the Plan.

Any determination made by the Committee in accordance with the provisions of the
Plan with respect to any Award shall be made in the sole discretion of the
Committee, and all decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.

Section 3. Eligibility.

Only Non-Employee Directors shall be granted Awards under the Plan.

Section 4. Common Stock Subject to the Plan.

The total number of shares of Common Stock reserved and available for
distribution pursuant to the Plan shall be 500,000. If any Stock Option or Other
Stock-Based Award is forfeited or expires without the delivery of Common Stock
to a participant, the shares subject to such Award shall again be available for
distribution in connection with Awards under the Plan. Any shares of Common
Stock that are used by a participant as full or partial payment of withholding
or other taxes or as payment for the exercise price of an Award shall not be
made available for future distribution in connection with Awards under the Plan.

In the event of any merger, share exchange, reorganization, consolidation,
recapitalization, reclassification, distribution, stock dividend, stock split,
reverse stock split, split-up, spin-off, issuance of rights or warrants or other
similar transaction or event affecting the Common Stock after adoption of the
Plan by the Board, the Committee is authorized to make such adjustments or
substitutions with respect to the Plan and any Prior Director Plan and to Awards
granted thereunder as it deems appropriate to reflect the occurrence of such
event, including, but not limited to, adjustments (A) to the aggregate number
and kind of securities

 

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reserved for issuance under the Plan, (B) to the Award amounts set forth in
Section 5(a), and (C) to the number and kind of securities subject to
outstanding Awards and, if applicable, to the grant or exercise price of
outstanding Awards. In connection with any such event, the Committee is also
authorized to provide for the payment of any outstanding Awards in cash,
including, but not limited to, payment of cash in lieu of any fractional Awards.

Section 5. Awards.

(a) Annual Awards.

On the first day of the Plan Year beginning in 2006, each Non-Employee Director
serving as such immediately after the annual meeting held on such day shall be
awarded a grant of that number of shares of Restricted Stock or Deferred Stock
having an aggregate Fair Market Value on the date of grant equal to $115,000
(with any fractional share being rounded up to the next whole share). On the
first day of each succeeding Plan Year, each Non-Employee Director serving as
such immediately after the annual meeting held on such day shall receive an
Award having a Fair Market Value equal to $115,000 or such greater amount as the
Committee determines in its discretion. Such Award shall be made in the form of
Common Stock, Restricted Stock, Deferred Stock, Stock Options, Other Stock-Based
Awards, or a combination of the foregoing as the Committee determines in its
discretion.

(b) Terms of Awards.

(i) Awards of Common Stock, Restricted Stock or Deferred Stock pursuant to
Section 5(a) are eligible for participation in the Deferred Stock Program
described in Section 7.

(ii) The term of each Stock Option or similar Other Stock-Based Award shall be
ten years. Each Stock Option or similar Other Stock-Based Award shall vest in
not less than six months (or such longer period set forth in the Award
agreement) and shall be forfeited if the participant does not continue to be a
Non-Employee Director for the duration of the vesting period. Subject to the
applicable Award agreement, Stock Options or similar Other Stock-Based Awards
may be exercised, in whole or in part, by giving written notice of exercise
specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price by certified or bank check
or such other instrument as the Company may accept (including, to the extent the
Committee determines such a procedure to be acceptable, a copy of instructions
to a broker or bank acceptable to the Company to deliver promptly to the Company
an amount of sale or loan proceeds sufficient to pay the purchase price). As
determined by the Committee, payment in full or in part may also be made in the
form of Common Stock already owned by the Non-Employee Director valued at Fair
Market Value; provided, however, that such Common Stock shall not have been
acquired by the optionee within the six months following the exercise of a Stock
Option or similar Other Stock-Based Award, within six months after the lapse of
any restrictions on an Other Stock-Based Award or Restricted Stock, or within
six months after the receipt of Common Stock from the Company, whether in
settlement of any Award or otherwise.

Section 6. Award Agreements.

Each Award of Restricted Stock, Deferred Stock, a Stock Option or Other
Stock-Based Award under the Plan shall be evidenced by a written agreement
(which need not be signed by the Award recipient unless otherwise specified by
the Committee) that sets forth the terms, conditions and limitations for each
such Award.

Section 7. Payments and Payment Deferrals.

(a) The Committee, either at the time of grant or by subsequent amendment, may
require or permit deferral of the payment of Awards under such rules and
procedures as it may establish. It also may provide that deferred settlements
include the payment or crediting of interest or other earnings on the deferred
amounts, or the payment or crediting of dividend equivalents where the deferred
amounts are denominated in stock equivalents.

 

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(b) Each participant may elect to participate in a Deferred Stock Program with
respect to Awards of Common Stock, Restricted Stock or Deferred Stock granted
under Section 5(a). Any election to have the Company establish a Deferred Stock
Account shall be made in terms of integral multiples of 25% of the number of
shares of Common Stock, Restricted Stock or Deferred Stock that the participant
otherwise would have been granted on each date of grant and any such election
(including an existing election to participate in the Deferred Stock Program
under the Prior Director Plan) shall remain in effect for purposes of the Plan
until the participant executes a new election not to participate in the Deferred
Stock Program for any future grants of Common Stock, Restricted Stock or
Deferred Stock.

(c) The Deferred Stock Account of a participant who elects to participate in the
Deferred Stock Program shall be credited with shares of Deferred Stock equal to
the number of shares of Common Stock or Restricted Stock that the participant
elected to receive as Deferred Stock, or in the case of Deferred Stock, equal to
the number of shares subject to the Deferred Stock. The Deferred Stock Account
shall thereafter be credited with amounts equal to the cash dividends that would
have been paid had the participant held a number of shares of Common Stock equal
to the number of shares of Deferred Stock in the participant’s Deferred Stock
Account, and any such amounts shall be treated as invested in additional shares
of Deferred Stock. Effective at the conclusion of the 2006 Annual Meeting of
Shareholders, any amounts held in a participant’s Deferred Stock Account
pursuant to deferrals under the Prior Director Plan shall be treated as invested
in the number of shares of Deferred Stock determined by dividing the value of
the participant’s Deferred Stock Account on such date by the Fair Market Value
of one share of Common Stock on such date. Deferred Stock relating to a
Restricted Stock Award shall be subject to the same vesting provisions
applicable to the Restricted Stock.

(d) The Deferred Stock Program shall be administered under such rules and
procedures as the Committee may from time to time establish, including rules
with respect to elections to defer, beneficiary designations and distributions
under the Deferred Stock Program. Notwithstanding anything in this Plan to the
contrary, all elections to defer, distributions, and other aspects of the
Deferred Stock Program shall be made in accordance with and shall comply with
section 409A of the Internal Revenue Code of 1986, as amended, and any
regulations and other guidance thereunder.

Section 8. Plan Amendment and Termination.

The Board may amend or terminate the Plan at any time without stockholder
approval, including, but not limited to, any amendments necessary to comply with
section 409A of the Internal Revenue Code of 1986, as amended, and any
regulations and other guidance thereunder; provided, however, that no amendment
shall be made without stockholder approval if such approval is required under
applicable law, or if such amendment would: (i) decrease the grant or exercise
price of any Stock Option or a similar Other Stock-Based Award to less than the
Fair Market Value on the date of grant (except as contemplated by Section 4); or
(ii) increase the total number of shares of Common Stock that may be distributed
under the Plan. Except as may be necessary to comply with a change in the laws,
regulations or accounting principles of a foreign country applicable to
participants subject to the laws of such foreign country, the Committee may not,
without stockholder approval, cancel any Stock Option or similar Other
Stock-Based Award and substitute therefor a new Stock Option or Other
Stock-Based Award with a lower exercise price. Except as set forth in any Award
agreement or as necessary to comply with applicable law or avoid adverse tax
consequences to some or all Award recipients, no amendment or termination of the
Plan may materially and adversely affect any outstanding Award under the Plan
without the Award recipient’s consent.

Section 9. Transferability.

Unless otherwise required by law, Awards shall not be transferable or assignable
other than by will or the laws of descent and distribution.

 

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Section 10. Unfunded Status Plan.

It is presently intended that the Plan constitute an “unfunded” plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.

Section 11. General Provisions.

(a) The Committee may require each person acquiring shares of Common Stock
pursuant to an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to the distribution thereof.
The certificates for such shares may include any legend that the Committee deems
appropriate to reflect any restrictions on transfer.

All certificates for shares of Common Stock or other securities delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission (or any successor
agency), any stock exchange upon which the Common Stock is then listed, and any
applicable Federal, state or foreign securities law, and the Committee may cause
a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

(b) Nothing contained in the Plan shall prevent the Company from adopting other
or additional compensation arrangements for Non-Employee Directors.

(c) Nothing in the Plan or in any Award agreement shall confer upon any grantee
the right to continued service as a member of the Board.

(d) No later than the date as of which an amount first becomes includable in the
gross income of the participant for income tax purposes with respect to any
Award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any Federal,
state, local or foreign taxes of any kind that are required by law or applicable
regulation to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations arising from an Award may
be settled with Common Stock, including Common Stock that is part of, or is
received upon exercise of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company, shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the participant. The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for the settling of
withholding obligations with Common Stock.

(e) The terms of this Plan shall be binding upon and shall inure to the benefit
of any successor to Kraft Foods Inc. and any permitted successors or assigns of
a grantee.

(f) The Plan and all Awards made and actions taken thereunder shall be governed
by and construed in accordance with the laws of the Commonwealth of Virginia,
excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan to the substantive law of
another jurisdiction. Unless otherwise provided in an Award, recipients of an
Award under the Plan are deemed to submit to the exclusive jurisdiction and
venue of the federal or state courts of Virginia, to resolve any and all issues
that may arise out of or relate to the Plan or any related Award.

 

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(g) If any provision of the Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of the Plan,
and the Plan shall be enforced and construed as if such provision had not been
included.

(h) If approved by stockholders, the Plan shall be effective at the conclusion
of the 2006 Annual Meeting of Shareholders. Except as otherwise provided by the
Board, no Awards shall be made after the Awards made immediately following the
2011 Annual Meeting of Shareholders, provided that any Awards granted prior to
that date may extend beyond it.

 

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