<PAGE>   1
                                                                    EXHIBIT 10.7

                    1998 KEY EMPLOYEE STOCK PERFORMANCE PLAN

                                       OF

                                   CONOCO INC.

                  (AS AMENDED EFFECTIVE AS OF OCTOBER 28, 1999)


         1. Plan. This 1998 Key Employee Stock Performance Plan of Conoco Inc.
(the "Plan") was adopted by Conoco Inc. (the "Company") to reward certain
employees of the Company by enabling them to acquire shares of common stock of
the Company or receive payments determined by reference to such common stock,
and the Plan has been amended effective May 12, 1999.

         2. Objectives. The purpose of this 1998 Stock Performance Plan of
Conoco Inc. is to further the interests of the Company, its Subsidiaries and its
shareholders by providing incentives in the form of awards to employees and to
provide for issuance of awards in connection with the "Option Program" under
which certain existing DuPont awards will be canceled at the election of the
holder. Such awards will give Participants in the Plan an interest in the
Company parallel to that of the shareholders, thus enhancing the proprietary and
personal interest of such Participants in the Company's continued success and
progress.

         3. Definitions. As used herein, the terms set forth below shall have
the following respective meanings:

                  "Authorized Officer" means the Chairman of the Board or the
Chief Executive Officer of the Company (or any other senior officer of the
Company to whom either of them shall delegate the authority to execute any Award
Agreement, where applicable).

                  "Award" means any Option or SAR granted to a Participant
pursuant to such applicable terms, conditions and limitations as the Committee
may establish in order to fulfill the objectives of the Plan

                  "Award Agreement" means a written agreement setting forth the
terms, conditions and limitations applicable to an Award.

                  "Board" means the Board of Directors of the Company.

                  "Class A Common Stock" means the Class A Common Stock, par
value $.01 per share, of the Company.

                  "Class B Common Stock" means the Class B Common Stock, par
value $.01 per share, of the Company.

                  "Code" means the Internal Revenue Code of 1986, as amended
from time to time.



                                     - 1 -
<PAGE>   2

                  "Committee" means the Compensation Committee of the Board or
such other committee of the Board as is designated by the Board to administer
the Plan; provided, however, that prior to the IPO Closing Date, Committee shall
mean the Compensation Committee of the Board of Directors of DuPont, except for
purposes of any action to be taken by the Committee under the Option Program or
with respect to Option Program Awards.

                  "Common Stock" means the Class A Common Stock or Class B
Common Stock, except where the context requires that the reference is to one of
such classes.

                  "Company" means Conoco Inc., a Delaware corporation.

                  "Director" means an individual serving as a member of the
Board.

                  "DuPont" means E. I. du Pont de Nemours and Company, a
Delaware corporation.

                  "DuPont Award" means an option or stock appreciation right
granted by DuPont pursuant to the DuPont Stock Performance Plan, the DuPont
Variable Compensation Plan, the DuPont Corporate Sharing Plan or the Conoco Unit
Option Plan.

                  "Employee" means an employee of the Company or any of its
Subsidiaries and an individual who has agreed to become an employee of the
Company or any of its Subsidiaries and is expected to become such an employee
within the following six months.

                  "Fair Market Value" of a share of Class A Common Stock or
Class B Common Stock means, as of a particular date, (i) if shares of that class
of Common Stock are listed on a national securities exchange, the mean between
the highest and lowest sales price per share of such Common Stock on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of such Common Stock are listed on that date, or, if
there shall have been no such sale so reported on that date, on the next
succeeding date on which such a sale was so reported, or, at the discretion of
the Committee, the price prevailing on the exchange at the time of exercise,
(ii) if shares of that class of Common Stock are not so listed but are quoted on
the Nasdaq National Market, the mean between the highest and lowest sales price
per share of such class of Common Stock reported by the Nasdaq National Market
on that date, or, if there shall have been no such sale so reported on that
date, on the next succeeding date on which such a sale was so reported, or, at
the discretion of the Committee, the price prevailing on the Nasdaq National
Market at the time of exercise, (iii) if that class of Common Stock is not so
listed or quoted, the mean between the closing bid and asked price on that date,
or, if there are no quotations available for such date, on the next succeeding
date on which such quotations shall be available, as reported by the Nasdaq
Stock Market, or, if not reported by the Nasdaq Stock Market, by the National
Quotation Bureau Incorporated or (iv) if shares of that class of Common Stock
are not publicly traded, the most recent value determined by an independent
appraiser appointed by the Company for such purpose; provided that,
notwithstanding the foregoing, "Fair Market Value" in the case of any Award
granted in connection with the IPO means the price per share of Common Stock set
on the IPO Pricing Date, as set forth in the final prospectus relating to the
IPO.



                                     - 2 -
<PAGE>   3

                  "Grant Date" means the date an Award is granted to a
Participant pursuant to the Plan.

                  "Grant Price" means the price at which a Participant may
exercise his or her right to receive cash or Common Stock, as applicable, under
the terms of an Award.

                  "Incentive Stock Option" means an Option that is intended to
comply with the requirements set forth in Section 422 of the Code.

                  "IPO" means the first time a registration statement filed
under the Securities Act of 1933 and respecting an underwritten primary offering
by the Company of shares of Common Stock is declared effective under that Act
and the shares registered by that registration statement are issued and sold by
the Company (otherwise than pursuant to the exercise of any overallotment
option).

                  "IPO Closing Date" means the date on which the Company first
receives payment for the shares of Common Stock it sells in the IPO.

                  "IPO Pricing Date" means the date of the execution and
delivery of an underwriting or other purchase agreement among the Company and
the underwriters relating to the IPO setting forth the price at which shares of
Common Stock will be issued and sold by the Company to the underwriters and the
terms and conditions thereof.

                  "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option.

                  "Option" means a right to purchase a specified number of
shares of Common Stock at a specified Grant Price, which may be an Incentive
Stock Option or a Nonqualified Stock Option.

                  "Option Program" means a program involving the cancellation of
certain existing DuPont Awards, and the issuance upon such cancellation of
comparable awards with respect to Class A Common Stock, in which certain
employees will be given the option to participate in connection with the IPO.

                  "Option Program Award" means an Option or SAR granted pursuant
to Section 8(c) in connection with the Option Program.

                  "Participant" means an Employee to whom an Award has been
granted under this Plan.

                  "Stock Appreciation Right" or "SAR" means a right to receive a
payment, in cash or in Common Stock, equal to the excess of the Fair Market
Value or other specified valuation of a specified number of shares of Common
Stock on the date the right is exercised over a specified Grant Price, in each
case, as determined by the Committee.



                                     - 3 -
<PAGE>   4

                  "Subsidiary" means (i) in the case of a corporation, any
corporation of which the Company directly or indirectly owns shares representing
50% or more of the combined voting power of the shares of all classes or series
of capital stock of such corporation which have the right to vote generally on
matters submitted to a vote of the stockholders of such corporation and (ii) in
the case of a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly or
indirectly owns 50% or more of the voting, capital or profits interests (whether
in the form of partnership interests, membership interests or otherwise).

         4. Eligibility. All Employees are eligible for the grant of Awards
under this Plan.

         5. Common Stock Available for Awards.

                  (a) Subject to the provisions of paragraph 14 hereof, no Award
         shall be granted if it shall result in the aggregate number of shares
         of Common Stock issued under the Plan plus the number of shares of
         Common Stock covered by or subject to Awards then outstanding (after
         giving effect to the grant of the Award in question) to exceed the
         greater of (a) 18,000,000 shares or (b) 3.0% of the number of shares of
         Common Stock (including both Class A and Class B) outstanding at the
         time of granting such Award. No more than 6,000,000 shares of Class A
         Common Stock and Class B Common Stock (in the aggregate) shall be
         available for Incentive Stock Options. The number of shares of Common
         Stock that are the subject of Awards under this Plan that are forfeited
         or terminated, expire unexercised, are settled in cash in lieu of
         Common Stock or in a manner such that all or some of the shares covered
         by an Award are not issued to a Participant, shall again immediately
         become available for Awards hereunder. The Committee may from time to
         time adopt and observe such procedures concerning the counting of
         shares against the Plan maximum as it may deem appropriate. The Board
         and the appropriate officers of the Company shall from time to time
         take whatever actions are necessary to file any required documents with
         governmental authorities, stock exchanges and transaction reporting
         systems to ensure that shares of Common Stock are available for
         issuance pursuant to Awards.

                  (b) Option Program Awards shall not be subject to the
         limitations in paragraph 8(b), nor shall such Awards count against the
         limitations on Common Stock available for Awards set forth in paragraph
         5(a). Option Program Awards shall be subject to such terms and
         conditions as the Committee may establish in accordance with Section
         8(c), but shall in all events comply with the applicable provisions of
         that certain Restructuring, Transfer, and Separation Agreement to which
         the Company and DuPont are parties and shall in all respects comply
         with the provisions of Exhibit 10.3 thereto (the Employee Matters
         Agreement).

         6. Administration.

                  (a) The Plan shall be administered by the Committee.

                  (b) The Committee shall have full and exclusive power and
         authority to administer this Plan and to take all actions that are
         specifically contemplated hereby or



                                     - 4 -
<PAGE>   5

         are necessary or appropriate in connection with the administration
         hereof. The Committee shall also have full and exclusive power to
         interpret this Plan and to adopt such rules, regulations and guidelines
         for carrying out this Plan as it may deem necessary or proper, all of
         which powers shall be exercised in the best interests of the Company
         and in keeping with the objectives of this Plan. The Committee may, in
         its discretion, provide for the extension of the exercisability of an
         Award, accelerate the vesting or exercisability of an Award, eliminate
         or make less restrictive any restrictions applicable to an Award, waive
         any restriction or other provision of this Plan or otherwise amend or
         modify an Award in any manner that is either (i) not adverse to the
         Participant to whom such Award was granted or (ii) consented to by such
         Participant. The Committee may grant an Award to an Employee who it
         expects to become an employee of the Company or any of its Subsidiaries
         within the following six months, with such Award being subject to the
         individual's actually becoming an employee within such time period, and
         subject to such other terms and conditions as may be established by the
         Committee. The Committee may correct any defect or supply any omission
         or reconcile any inconsistency in this Plan or in any Award in the
         manner and to the extent the Committee deems necessary or desirable to
         further the Plan purposes. Any decision of the Committee in the
         interpretation and administration of this Plan shall lie within its
         sole and absolute discretion and shall be final, conclusive and binding
         on all parties concerned.

                  (c) No member of the Committee or officer of the Company to
         whom the Committee has delegated authority in accordance with the
         provisions of paragraph 7 of this Plan shall be liable for anything
         done or omitted to be done by him or her, by any member of the
         Committee or by any officer of the Company in connection with the
         performance of any duties under this Plan, except for his or her own
         willful misconduct or as expressly provided by statute.

         7. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish. The Committee may engage or authorize the engagement of a third party
administrator to carry out administrative functions under the Plan.

         8. Awards.

                  (a) The Committee shall determine the type or types of Awards
         to be made under this Plan and shall designate from time to time the
         Employees who are to be the recipients of Awards. Each Award shall be
         embodied in an Award Agreement, which shall contain such terms,
         conditions and limitations as shall be determined by the Committee in
         its sole discretion and, if required by the Committee, shall be signed
         by the Participant to whom the Award is granted and by an Authorized
         Officer for and on behalf of the Company. Awards may consist of those
         listed in this paragraph 8(a) and may be granted singly, in combination
         or in tandem. Awards may also be granted in combination or in tandem
         with, in replacement of, or as alternatives to, grants or rights under
         this Plan or any other employee plan of the Company or any of its
         Subsidiaries, including the plan of any acquired entity. An Award may
         provide for the grant or issuance of additional, replacement or
         alternative Awards upon the occurrence of specified events, including
         the



                                     - 5 -
<PAGE>   6

         exercise of the original Award granted to a Participant. All or part of
         an Award may be subject to conditions established by the Committee,
         which may include, but are not limited to, continuous service with the
         Company and its Subsidiaries, achievement of specific business
         objectives, increases in specified indices, attainment of specified
         growth rates and other comparable measurements of performance. Upon the
         termination of employment by a Participant, any unexercised, deferred,
         unvested or unpaid Awards shall be treated as set forth in the
         applicable Award Agreement.

                           (i) Options. An Award may be in the form of an
                  Option, which may be an Incentive Stock Option or a
                  Nonqualified Stock Option. The Grant Price of an Incentive
                  Stock Option shall be not less than the Fair Market Value of
                  the Common Stock subject to such Option on the Grant Date.
                  Subject to the foregoing provisions, the terms, conditions and
                  limitations applicable to any Options awarded to Employees
                  pursuant to this Plan, including the Grant Price, the term of
                  the Options and the date or dates upon which they become
                  exercisable, shall be determined by the Committee.

                           (ii) Stock Appreciation Rights. An Award may be in
                  the form of an SAR. The terms, conditions and limitations
                  applicable to any SARs awarded to Employees pursuant to this
                  Plan, including the Grant Price, the term of any SARs and the
                  date or dates upon which they become exercisable, shall be
                  determined by the Committee.

                  (b) Notwithstanding anything to the contrary contained in this
         Plan excluding paragraph 5(b), no Participant may be granted, during
         any calendar year, Awards that are exercisable for more than 200,000
         shares of Common Stock (whether Class A Common Stock, Class B Common
         Stock, or a combination of such classes).

                  (c) Holders of DuPont Awards who elect to participate in the
         Option Program may be granted Option Program Awards under this Plan. An
         Option Program Award shall generally be subject to the same terms and
         conditions as the canceled DuPont Award, with appropriate adjustments
         to exercise price and the number of shares subject to the Option
         Program Award, subject to such other terms as are determined by the
         Committee.

         9. Payment of Awards.

                  (a) General. Payment made to a Participant pursuant to an
         Award may be made in the form of cash or the appropriate class of
         Common Stock, or a combination thereof, and may include such
         restrictions as the Committee shall determine, including, in the case
         of Common Stock, restrictions on transfer and forfeiture provisions.

                  (b) Deferral. With the approval of the Committee, amounts
         payable in respect of Awards may be deferred and paid either in the
         form of installments or as a lump-sum payment. The Committee may permit
         selected Participants to elect to defer payments of some or all types
         of Awards or any other compensation otherwise payable by the Company in
         accordance with procedures established by the Committee and may provide



                                     - 6 -
<PAGE>   7

         that such deferred compensation may be payable in shares of Common
         Stock. Any deferred payment pursuant to an Award, whether elected by
         the Participant or specified by the Award Agreement or by the
         Committee, may be forfeited if and to the extent that the Award
         Agreement so provides.

                  (c) Substitution of Awards. At the discretion of the
         Committee, a Participant may be offered an election to substitute an
         Award for another Award or Awards of the same or different type.

                  (d) Cash-out of Awards. At the discretion of the Committee, an
         Award may be settled by a cash payment equal to the difference between
         the Fair Market Value per share of the applicable class of Common Stock
         on the date of exercise and the Grant Price of the Award, multiplied by
         the number of shares with respect to which the Award is exercised.

         10. Option Exercise. The Grant Price shall be paid in full at the time
of exercise in cash or, if permitted by the Committee and elected by the
optionee, the optionee may purchase such shares by means of tendering Common
Stock or surrendering another Award valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee shall determine acceptable
methods for Participants to tender Common Stock or other Awards. The Committee
may provide for procedures to permit the exercise or purchase of such Awards by
use of the proceeds to be received from the sale of Common Stock issuable
pursuant to an Award. The Committee may adopt additional rules and procedures
regarding the exercise of Options from time to time, provided that such rules
and procedures are not inconsistent with the provisions of this paragraph. An
optionee desiring to pay the Grant Price of an Option by tendering Common Stock
using the method of attestation may, subject to any such conditions and in
compliance with any such procedures as the Committee may adopt, do so by
attesting to the ownership of either Class A Common Stock or Class B Common
Stock of the requisite value, regardless of whether the Option being exercised
covers Class A Common Stock or Class B Common Stock, in which case the Company
shall issue or otherwise deliver to the optionee upon such exercise a number of
shares of the class of Common Stock subject to the Option equal to the result
obtained by dividing (a) the excess of the aggregate Fair Market Value of the
shares of the applicable class of Common Stock subject to the Option for which
the Option (or portion thereof) is being exercised over the Grant Price payable
in respect of such exercise by (b) the Fair Market Value per share of the class
of Common Stock subject to the Option, and the optionee may retain the shares of
Common Stock the ownership of which is attested.


         11. Taxes. The Company or its designated third party administrator
shall have the right to deduct applicable taxes from any payment hereunder and
withhold, at the time of delivery of cash or shares of Common Stock under this
Plan, an appropriate amount of cash or number of shares of Common Stock or a
combination thereof for payment of taxes or other amounts required by law or to
take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for withholding of such taxes. The Committee may also
permit withholding to be satisfied by the transfer to the Company of shares of
Common Stock theretofore owned by the holder of the Award with respect to which
withholding is required. If shares of Common Stock are used to satisfy tax
withholding, such shares shall be valued based



                                     - 7 -
<PAGE>   8

on the Fair Market Value when the tax withholding is required to be made. The
Committee may provide for loans, on either a short term or demand basis, from
the Company to a Participant to permit the payment of taxes required by law.

         12. Amendment, Modification, Suspension or Termination of the Plan. The
Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except that (i) no amendment or alteration that would
adversely affect the rights of any Participant under any Award previously
granted to such Participant shall be made without the consent of such
Participant and (ii) no amendment or alteration shall be effective prior to its
approval by the stockholders of the Company to the extent such approval is
required by applicable legal requirements.

         13. Assignability. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
shall be assignable or otherwise transferable except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. The Committee may prescribe and include in applicable
Award Agreements other restrictions on transfer. Any attempted assignment of an
Award or any other benefit under this Plan in violation of this paragraph 13
shall be null and void.

         14. Adjustments.

                  (a) The existence of outstanding Awards shall not affect in
         any manner the right or power of the Company or its stockholders to
         make or authorize any or all adjustments, recapitalizations,
         reorganizations or other changes in the capital stock of the Company or
         its business or any merger or consolidation of the Company, or any
         issue of bonds, debentures, preferred or prior preference stock
         (whether or not such issue is prior to, on a parity with or junior to
         the existing Common Stock) or the dissolution or liquidation of the
         Company, or any sale or transfer of all or any part of its assets or
         business, or any other corporate act or proceeding of any kind, whether
         or not of a character similar to that of the acts or proceedings
         enumerated above.

                  (b) In the event of any subdivision or consolidation of
         outstanding shares of either class of Common Stock, declaration of a
         dividend payable in shares of either class of Common Stock or other
         stock split, then (i) the number of shares of such class of Common
         Stock reserved under this Plan, (ii) the number of shares of such class
         of Common Stock covered by outstanding Awards, (iii) the Grant Price in
         respect of such Awards, (iv) the appropriate Fair Market Value and
         other price determinations for such Awards, and (v) the Award
         limitations shall each be proportionately adjusted by the Board as
         appropriate to reflect such transaction. In the event of any other
         recapitalization or capital reorganization of the Company, any
         consolidation or merger of the Company with another corporation or
         entity, the adoption by the Company of any plan of exchange affecting
         any class of Common Stock or any distribution to holders of any class
         of Common Stock of securities or property (other than normal cash
         dividends or dividends payable in Common Stock), the Board shall make
         appropriate adjustments to (i) the



                                     - 8 -
<PAGE>   9

         number of shares of such class of Common Stock covered by Awards, (ii)
         the Grant Price in respect of such Awards, (iii) the appropriate Fair
         Market Value and other price determinations for such Awards, and (iv)
         the Award limitations to reflect such transaction; provided that such
         adjustments shall only be such as are necessary to maintain the
         proportionate interest of the holders of the Awards and preserve,
         without increasing, the value of such Awards. In the event of a
         corporate merger, consolidation, acquisition of property or stock,
         separation, reorganization or liquidation, the Board shall be
         authorized (x) to issue or assume Awards by means of substitution of
         new Awards, as appropriate, for previously issued Awards or to assume
         previously issued Awards as part of such adjustment or (y) to cancel
         Awards that are Options or SARs and give the Participants who are the
         holders of such Awards notice and opportunity to exercise for 30 days
         prior to such cancellation.

         15. Restrictions. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. Certificates evidencing shares of
Common Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such restrictions.

         16. Unfunded Plan. This Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants under this Plan, any
such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets for purposes of this Plan or
Awards hereunder, nor shall the Company, the Board or the Committee be deemed to
be a trustee of any benefit to be granted under this Plan. Any liability or
obligation of the Company to any Participant with respect to an Award under this
Plan shall be based solely upon any contractual obligations that may be created
by this Plan and any Award Agreement, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.

         17. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Delaware.

         18. Effectiveness. The Plan, as approved by the Board, was effective as
of October 16, 1998. This Plan was approved by the stockholder of the Company on
October 19, 1998. The amendments to the Plan to permit the grant of Awards
denominated in Class B Common Stock shall be effective on May 12, 1999 and are
conditioned upon the approval of the stockholders of the Company prior to
December 31, 1999.



                                     - 9 -