Exhibit 10(e)
                                       
                                       
                THE QUAKER OATS COMPANY STOCK COMPENSATION PLAN
                             FOR OUTSIDE DIRECTORS
          (As Amended and Restated Effective as of November 1, 1996)
                                       
      1.    Purpose.  The Quaker Oats Company (the "Company") has  amended  and
restated this Stock Compensation Plan (the "Plan"), effective as of November 1,
1996, to promote the interests of the Company and its shareholders by causing a
portion  of  the  total  compensation payable to its outside  directors  to  be
deferred  and  paid  in  the  form  of Company stock,  thereby  increasing  the
director's beneficial ownership of Company stock and their proprietary interest
in the Company.

      2.    Common Stock Units.  In addition to the cash compensation otherwise
payable  to  its outside directors, the Company shall establish and maintain  a
Deferred  Stock Account in the name of each outside director.  Subject  to  the
provisions  of Section 10, as of the first day of each fiscal year  or  period,
the  Company shall credit 800 Common Stock Units to the Deferred Stock  Account
of  each person who was an outside director of the Company on the last  day  of
the  immediately preceding fiscal year or period or who ceased to be a director
during  such  preceding  fiscal year or period by  reason  of  his  retirement,
disability or death.  In the event such immediately preceding fiscal period  is
less  than  twelve months, the number of Common Stock Units to be  credited  as
stated  above shall be pro rated based upon the number of months in such fiscal
period.

     3.   Dividend Equivalents.  As of each dividend payment date declared with
respect  to  the Company's common stock, the Company shall credit the  Deferred
Stock  Account of each director with an additional number of Common Stock Units
equal to:

     a) the product of (I) the dividend per share of the Company's common stock
        which is payable as of the dividend payment date, multiplied by (II) the
        number  of Common Stock Units credited to the director's Deferred Stock
        Account as of the applicable dividend record date;
                                       
                                   DIVIDED BY
     
     b) the closing price of a share of the Company's common stock on the 
        dividend payment date (or if such stock was not traded on that date, on
        the  next preceding date on  which  it  was traded), as reported by the
        New York Stock Exchange - Composite Transactions Reporting System;
     
provided, however, that in lieu of crediting fractional Common Stock Units, the
value  thereof  shall be carried forward, without interest, and treated  as  an
additional dividend on the next following dividend payment date.
      
      4.    Transfer of Shares of Common Stock.  Each director, or in the event
of  his  death his beneficiary, shall be entitled to receive one share  of  the
Company's  common  stock for each Common Stock Unit credited  to  his  Deferred
Stock  Account.   Unless otherwise elected by the director  or  beneficiary  in
accordance  with  the following provisions of this Section 4, all  such  shares
shall  be transferred to the director or beneficiary as of the January  1  next
following  the  date  on which the director ceases to be  a  director  for  any
reason.   At any time prior to the first day of the first fiscal year that  the
Company  is  to  credit  Common Stock Units to the  Director's  Deferred  Stock
Account,  the  director shall irrevocably elect to have such shares  of  common
stock  transferred  to him (or in the event of his death  his  beneficiary)  in
fifteen  or  fewer  annual installments commencing as of  the  January  1  next
following  such  cessation.   The  number of  shares  of  common  stock  to  be
distributed  with each installment shall be equal to the whole number  obtained
by  dividing  the number of Common Stock Units then credited to the  director's
Deferred  Stock  Account  by the number of unpaid installments.   Common  Stock
Units  with  respect  to  which no transfer of stock  has  yet  occurred  shall
continue to be credited with dividend equivalents in accordance with Section 3.
As  of the date on which the last transfer of shares of common stock is made to
any director or his beneficiary under this Section 4, the Company shall pay the
director or beneficiary (a) the net amount of any dividend equivalents  carried
over  to the year in accordance with Section 3; and (b) the amount which  would
be  determined  in accordance with Section 3, paragraph (a), for  any  dividend
payment  date following the actual last transfer date, if such transfer follows
the record date relating to such dividend payment date.

      5.   Beneficiary.  Each director may, from time to time, in writing filed
with  the  Secretary of the Company, designate any legal or natural  person  or
persons (who may be designated contingently or successively) to whom shares  of
the  Company's common stock attributable to his Common Stock Units  are  to  be
transferred  if the director dies prior to his receipt of all such  shares.   A
beneficiary designation will be effective only if the signed form is filed with
the  Secretary of the Company while the director is alive and will  cancel  all
beneficiary designation forms filed earlier.  If a director fails to  designate
a  beneficiary as provided above, or if all designated beneficiaries die before
the  director or before transfer of all shares of common stock attributable  to
the  director's Common Stock Units, all remaining shares attributable  to  such
Common Stock Units shall be transferred to the estate of the last to die of the
director  and  his designated beneficiaries as soon as practicable  after  such
death.

      6.   Acceleration.  The Compensation Committee of the Company's Board  of
Directors  (the  "Compensation Committee" and the "Board") may  accelerate  the
transfer  of shares of common stock with respect to Common Stock Units credited
to  the  Deferred  Stock Account of any director or directors  for  reasons  of
individual hardship, death, changes in tax laws or accounting principles or any
other  reason  which negates or diminishes the continued value of the  Deferred
Stock  Account to the Company or its directors; provided however that following
a  Change in Control, as defined in Section 7 hereof, such acceleration may  be
carried out for any reason deemed appropriate by the Compensation Committee.

      7.    Change in Control.  A "Change in Control" shall be deemed  to  have
occurred if:

     (a)  any  "Person," which shall mean a "person" as such term  is  used  in
          Sections  13(d) and 14(d) of the Securities Exchange Act of 1934,  as
          amended (the "Exchange Act") (other than the Company, any trustee  or
          other fiduciary holding securities under  an employee benefit plan of
          the  Company,  or any company  owned,  directly or indirectly, by the
          stockholders  of  the  Company  in substantially the same proportions
          as their ownership  of   stock  of  the  Company),  is or becomes the
          "beneficial   owner"   (as   defined   in   Rule   13d-3  under   the
          Exchange Act), directly   or indirectly, of securities of the Company
          representing 30% or more of the combined voting power of the Company's
          then outstanding  voting   securities;  provided,  however, that this
          paragraph  (a)  shall  not  apply  to  any  Person who becomes such a
          beneficial  owner of such Company securities pursuant to an agreement
          with the Company approved   by  the  Board,  entered into before such
          Person has  become  such  a  beneficial  owner  of Company securities
          representing 5% or more of the combined voting power of the Company's
          then  outstanding  voting securities;

     (b)  during  any period of 24 consecutive months (not including any period
          prior to November 13, 1996), individuals who at the beginning of such
          period  constitute  the  Board and any new  director  (other  than  a
          director  designated by a Person who has entered  into  an  agreement
          with the Company to effect a transaction described in paragraph  (a),
          (c)(2) or (d) of this Section) whose election by the Board, or  whose
          nomination  for election by the Company's stockholders, was  approved
          by  a  vote of at least two-thirds (2/3) of the directors before  the
          beginning of the period cease for any reason to constitute at least a
          majority thereof;

     (c)  the  stockholders  of  the Company approve (1)  a  plan  of  complete
          liquidation  of  the  Company or (2) the sale or disposition  by  the
          Company  of  all or substantially all of the Company's assets  unless
          the acquirer of the assets or its directors shall meet the conditions
          for a merger or consolidation in subparagraphs (d)(1) or (d)(2); or

     (d)  the stockholders of the Company approve a merger or consolidation  of
          the Company with any other company other than:

               (1)   such a merger or consolidation which would result  in  the
               voting  securities of the Company outstanding immediately  prior
               thereto continuing to represent (either by remaining outstanding
               or  by  being converted into voting securities of the  surviving
               entity)  more  than  70% of the combined  voting  power  of  the
               Company's   or   such  surviving  entity's  outstanding   voting
               securities immediately after such merger or consolidation; or
               
               (2)   such a merger or consolidation which would result  in  the
               directors  of  the Company who were directors immediately  prior
               thereto  continuing to constitute at least 50% of the  directors
               of  the  surviving  entity  immediately  after  such  merger  or
               consolidation.
          
          In  this paragraph (d), "surviving entity" shall mean only an  entity
          in  which  all of the Company's stockholders immediately before  such
          merger  or  consolidation become stockholders by the  terms  of  such
          merger or consolidation, and the phrase "director of the Company  who
          were      directors     immediately     prior     thereto"      shall
          include  only  individuals who were directors of the Company  at  the
          beginning  of the 24 consecutive month period preceding the  date  of
          such  merger on consolidation, or who were new directors (other  than
          any director designated by a Person who has entered into an agreement
          with  the Company to effect a transaction described in paragraph (a),
          (c)(2),  (d)(1)  or  (d)(2) of this Section) whose  election  by  the
          Board,   or   whose   nomination  for  election  by   the   Company's
          stockholders, was approved by a vote of at least two-thirds (2/3)  of
          the directors before the beginning of such period.
     
            8.     Nontransferability.   The  interests  of  any  director   of
     beneficiary under the Plan are not subject to the claims of his  creditors
     and  may not otherwise be voluntarily or involuntarily assigned, alienated
     or encumbered.
     
           9.   Shareholder Status.  As of the date of transfer, a director  or
     beneficiary  shall  have  all rights of the shareholder  with  respect  to
     shares of common stock transferred in accordance with Section 4.  Prior to
     such  date,  the  Company's obligation under this  Plan  is  an  unsecured
     promise  to  deliver  shares of the Company's common stock.   The  Company
     shall not hold any such shares in trust or as a segregated fund.
     
          10.  Changes in Stock.  In the event of any change in the outstanding
     shares  of  the  Company's common stock by reason of any  stock  dividend,
     split  up, recapitalization, merger, consolidation, exchange of shares  or
     other  similar corporate change, the number of Common Stock  Units  to  be
     credited in accordance with Section 2 and the shares of common stock to be
     transferred   in   accordance   with   Section   4   shall   be   adjusted
     proportionately.
     
           11.   Successors.  This Plan shall be binding upon any  assignee  or
     successor  in interest to the Company whether by merger, consolidation  or
     sale of all or substantially all of the Company's assets.
     
           12.   Amendment and Termination.  The Board may, from time to  time,
     amend or terminate the Plan; provided, however, that no such amendment  or
     termination  shall  adversely  affect  the  rights  of  any  director   or
     beneficiary  without  his  consent with  respect  to  Common  Stock  Units
     credited prior to such amendment or termination.
     
                IN  WITNESS WHEREOF, this Plan, as stated, is effective  as  of
     November  1,  1996  and is executed by a duly authorized  officer  of  the
     Company.
     
     
                                   THE QUAKER OATS COMPANY
     
     
     March 5, 1997                 By:  /s/Douglas J. Ralston
                                  Its: Senior Vice President