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                        SOLUTIA INC.

          NON-EMPLOYEE DIRECTOR COMPENSATION PLAN


1.   NAME OF PLAN.  This plan shall be known as the "Solutia Inc. Non-
Employee Director Compensation Plan" and is hereinafter referred to as
the "Plan."

2.   PURPOSES OF PLAN. The purposes of the Plan are to increase the
ownership interest in Solutia Inc., a Delaware corporation (the
"Company"), by Non-Employee Directors whose services are considered
essential to the Company's continued progress and to provide a further
incentive to serve as directors of the Company.

3.   EFFECTIVE DATE AND TERM. The Plan is effective as of September 3,
1997 (the "Effective Date"). The Plan shall remain in effect until
terminated by action of the Board, or until no shares of Common Stock
remain available under the Plan, if earlier.

4.   DEFINITIONS. The following terms shall have the meanings set forth
below:

     "Administrator" has the meaning set forth in Section 20(a).

     "Annual Meeting" means an annual meeting of the shareholders of
     the Company.

     "Annual Retainer" means the amount a Non-Employee Director will be
     entitled to receive for serving as a director in a Plan Year, on
     an annualized basis, as determined by and set forth in resolutions
     of the Board, but shall not include reimbursement for expenses,
     fees associated with service on any committee of the Board, the
     retainer payable for serving as the chairman of any committee of
     the Board, or fees with respect to any other services to be
     provided to the Company.

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

     "Business Combination" has the meaning set forth in subparagraph
     (c) of the definition of "Change of Control."

     "Change of Control" means any of the following events:

     (a)  The acquisition by any person, entity or "group", within the
          meaning of Section 13(d)(3) or 14(d)(2) of the Securities
          Exchange Act of 1934 (the "Exchange Act") (a "Person"), of
          beneficial ownership (within the meaning of Rule 13d-3
          promulgated under the Exchange Act) of 20% or more of either
          (i) the then

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 1
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          outstanding shares of Common Stock of the Company (the
          "Outstanding Company Common Stock") or (ii) the combined
          voting power of the then outstanding voting securities of
          the Company entitled to vote generally in the election of
          directors (the "Outstanding Company Voting Securities");
          provided, however, that, for purposes of this subsection
          (a), the following acquisitions shall not constitute a
          Change of Control: (i) any 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 which complies with
          clauses (i), (ii) and (iii) of subsection (c) of this
          definition; or

     (b)  Individuals who, as of the date hereof, constitute the Board
          (as of the date hereof 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 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)  Approval by the stockholders of the Company of a
          reorganization, merger, consolidation, or sale or other
          disposition of all or substantially all of the assets of the
          Company or the acquisition of  assets or stock of another
          corporation (a "Business Combination"), in each case unless,
          following such Business Combination, (i) all or
          substantially all of the individuals and entities who were
          the beneficial owners, respectively, of the Outstanding
          Company Common Stock and Outstanding Company 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 which 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 Company Common Stock and Outstanding Company
          Voting Securities, as the case may be; (ii) no Person

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 2
                                                As amended 2/24/99

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          (excluding any corporation resulting from such Business
          Combination or 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
          execution of the initial agreement, or of the action of the
          Board, providing for such Business Combination; or

     (d)  Approval by the shareholders of the Company of a complete
          liquidation or dissolution of the Company.

     "Change of Control Consideration" means, for purposes of this
     Plan, (i) the amount of any cash, plus the value of any securities
     and other noncash consideration, constituting the most valuable
     consideration per share of Common Stock paid to any shareholder in
     the transaction or series of transactions that results in a Change
     of Control or (ii) if no consideration per share of Common Stock
     is paid to any shareholder in the transaction or series of
     transactions that results in a Change of Control, the highest
     reported sale price of a share of Common Stock on the New York
     Stock Exchange composite tape (or if the Common Stock is not
     listed on such exchange, on any other national securities exchange
     on which the Common Stock is listed or the NASDAQ Stock Market)
     during the 60-day period prior to and including the date of a
     Change of Control. To the extent that such consideration consists
     all or in part of securities or other noncash consideration, the
     value of such securities or other noncash consideration shall be
     determined by the Committee in good faith.

     "Change of Control Date" has the meaning set forth in Section
     19(b).

     "Code" has the meaning set forth in Section 9.

     "Committee" means the committee that supervises the Plan, as more
     fully defined in Section 20(a).

     "Common Stock" means the Company's common stock, par value $.01
     per share.

     "Company" has the meaning set forth in Section 2.

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 3
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     "Deferred Cash Account" means a bookkeeping account maintained by
     the Company for a Non-Employee Director representing the Elective
     Cash Amount, if any, credited to such account pursuant to Section
     6.

     "Deferred Stock Account" means a bookkeeping account maintained by
     the Company for a Non-Employee Director representing the Non-
     Employee Director's interest in the Stock Amount and the Elective
     Stock Amount, if any, credited to such account pursuant to Section
     6.

     "Delivery Date" has the meaning set forth in Section 7.

     "Discretionary Amount" means with respect to each Plan Year, the
     dollar amount equal to 50% of the Annual Retainer for such Plan
     Year, all or any portion (in percentage increments determined by
     the Administration) of which the Non-Employee Director may, but is
     not required to, elect to have credited to his or her Deferred
     Stock Account in the form of an Elective Stock Amount and/or his
     or her Deferred Cash Account in the form of an Elective Cash
     Amount.

     "Dividend Equivalent" for a given dividend or distribution means a
     number of shares of Common Stock having a Value, as of the date
     such Dividend Equivalent is credited to a Deferred Stock Account,
     equal to the amount of cash, plus the fair market value on the
     date of distribution of any property, that is distributed with
     respect to one share of Common Stock pursuant to such dividend or
     distribution; such fair market value to be determined by the
     Committee in good faith.

     "Effective Date" has the meaning set forth in Section 3.

     "Election Amount" for each Non-Employee Director who has made a
     Plan Year Deferral Election pursuant to Section 5 shall be, with
     respect to each Plan Year, (i) the percentage that is set forth in
     the Non-Employee Director's Plan Year Deferral Election Notice
     multiplied by (ii) the Discretionary Amount.

     "Elective Cash Amount" means that portion of the Election Amount
     which the Non-Employee Director designated in his or her Plan Year
     Deferral Election Notice to be credited to his or her Deferred
     Cash Account.

     "Elective Stock Amount" means that portion of the Election Amount
     which the Non-Employee Director designated in his or her Plan Year
     Deferral Election Notice to be credited to his or her Deferred
     Stock Account in the form of Common Stock.

     "Exchange Act" has the meaning set forth in subparagraph (a) of
     the definition of "Change of Control."

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 4
                                                As amended 2/24/99

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     "Fraction," with respect to a person who is a Non-Employee
     Director during part, but not all, of a Plan Quarter, means the
     amount obtained by dividing (i) the number of calendar months
     during such Plan Quarter that such person was a Non-Employee
     Director by (ii) 3; provided, that for purposes of the foregoing,
     a partial calendar month shall be treated as a whole month.

     "Incumbent Board" has the meaning set forth in subparagraph (b) of
     the definition of "Change of Control."

     The "Interest Rate" means Moody's Baa Bond Index Rate, as in
     effect from time to time.

     "Non-Employee Director" means any director of the Company who is
     not an employee of the Company or any subsidiary thereof on the
     date of any award made or granted to such person hereunder.

     "Option" means an award to purchase Common Stock granted to a Non-
     Employee Director pursuant to the terms of Section 8.

     "Outstanding Company Common Stock" has the meaning set forth in
     subparagraph (a) of the definition of "Change of Control."

     "Outstanding Company Voting Securities" has the meaning set forth
     in subparagraph (a) of the definition of "Change of Control."

     "Partial Quarter Notice Period" has the meaning set forth in
     Section 5.

     "Partial Year Fraction," with respect to a person who is a Non-
     Employee Director during part, but not all of a Plan Year, means
     the amount obtained by dividing (i) the number of calendar months
     during such Plan Year that such person was a Non-Employee Director
     by (ii) 12; provided, that for the purposes of the foregoing, a
     partial calendar month shall be treated as a whole month.

     "Person" has the meaning set forth in subparagraph (a) of the
     definition of "Change of Control."

     "Plan" has the meaning set forth in Section 1.

     "Plan Quarter" means the 3 month period commencing on the first
     Trading Day in May, August, November or February, as applicable,
     during a Plan Year.

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 5
                                                As amended 2/24/99

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     "Plan Year" means the year commencing on the date of an Annual
     Meeting and ending on the day before the next succeeding Annual
     Meeting; provided, that the first Plan Year shall begin on the
     Effective Date and end on the day before the first Annual Meeting
     and provided further, that the last Plan Year with respect to a
     Non-Employee Director who ceases to be a Non-Employee Director
     during a Plan Year, shall begin on the first day of such Plan Year
     and end on the day such Non-Employee Director ceases to be a Non-
     Employee Director.

     "Plan Year Deferral Election" means the irrevocable election to
     defer, for any Plan Year, all or any part (in percentage
     increments determined by the Administrator) of the Discretionary
     Amount for the next Plan Year such that the deferred portion
     becomes the Election Amount.  Any Plan Year Deferral Election
     Notice shall remain in effect for that Plan Year and for all
     subsequent Plan Years unless and until such Non-Employee Director
     delivers to the Administrator, no later than the last business day
     prior to the commencement of the next succeeding Plan Year, a new
     Plan Year Deferral Election Notice setting forth a different Plan
     Year Deferral Election.

     "Plan Year Deferral Election Notice" means the notice of the Plan
     Year Deferral Election delivered to the Administrator.

     "Rule 16b-3" has the meaning set forth in Section 20(a).

     "Stock Amount" means with respect to each Plan Year, the dollar
     amount equal to 50% of the Annual Retainer for such Plan Year
     which will be automatically and mandatorily credited to the Non-
     Employee Director's Deferred Stock Account in the form of Common
     Stock determined in the manner set forth in Section 6(b).

     "Trading Day" means any day on which there are sales of Common
     Stock reported on the New York Stock Exchange composite tape, or
     if the Common Stock is not listed on such exchange, on any other
     national securities exchange on which the Common Stock is listed
     or the Nasdaq Stock Market.

     The "Value" of a share of Common Stock as of any given date
     (including the date a Deferred Stock Account is credited, or, in
     the case of Options, the date the Option is granted) means the
     average of the highest and lowest sales prices of a share of
     Common Stock reported on the New York Stock Exchange Composite
     Transactions for such day, or, if shares of Common Stock were not
     traded on the New York Stock Exchange on such date, then on the
     next preceding date on which such shares were traded, all as
     reported by The Wall Street Journal under the heading "New York
     Stock Exchange - Composite Transactions" or by such other source
     as the Committee may select.

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 6
                                                As amended 2/24/99

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5.   ELECTION TO RECEIVE SHARES OR DEFER CASH IN LIEU OF CASH
COMPENSATION.  (a) In order to make a Plan Year Deferral Election
pursuant to this Section 5, a Non-Employee Director who is a Non-
Employee Director prior to the Effective Date must deliver to the
Administrator, no later than September 30, 1997, his or her Plan Year
Deferral Election Notice.

     (b)  Except for the Plan Year Deferral Election due by September
30, 1997 as set forth in Section 5(a) and except for persons who first
become Non-Employee Directors on a date other than an Annual Meeting
Date (to which Section 5(c) applies), each Non-Employee Director (and
each nominee for a position on the Board who would, if elected by the
Company's shareholders at the next succeeding Annual Meeting, be a Non-
Employee Director) may make a Plan Year Deferral Election for the next
succeeding Plan Year by delivering to the Administrator, no later than
the last business day prior to the commencement of the next succeeding
Plan Year, a Plan Year Deferral Election Notice.

     (c)  Except for the Plan Year Deferral Election due by September
30, 1997 as set forth in Section 5(a), each person who becomes a Non-
Employee Director on a date other than the date of an Annual Meeting
must deliver his or her Plan Year Deferral Election Notice within thirty
days of the date he or she first becomes a Non-Employee Director (the
"Partial Quarter Notice Period").

6.   ACCOUNTS; CREDIT OF SHARES AND CASH. (a) The Company shall
maintain a Deferred Stock Account and a Deferred Cash Account for each
Non-Employee Director.  As part of the compensation payable to each Non-
Employee Director for service on the Board, the Deferred Stock Account
of each Non-Employee Director shall be credited with shares of Common
Stock as set forth in this Section 6 and the Deferred Cash Account of
each Non-Employee Director may, at the Non-Employee Director's election,
be credited with cash as set forth in this Section 6.  The shares
credited to the Deferred Stock Account pursuant to this Section 6 may
represent fractional as well as whole shares of Common Stock.

     (b)  Except as set forth in Section 6(e), as of the first day of
each Plan Quarter (or in the case of a Non-Employee Director who becomes
a Non-Employee Director on a date other than on the date of an Annual
Meeting, the first Trading Day in a Plan Quarter on which he or she
becomes a Non-Employee Director), the Deferred Stock Account of each
Non-Employee Director shall be credited with a number of shares of
Common Stock having a Value equal to 25% of the Stock Amount, multiplied
by the Fraction, if applicable.

     (c)  Except as set forth in Section 6(e), as of the first day of
each Plan Quarter (or in the case of a Non-Employee Director who first
becomes a Non-Employee Director on a date other than on the date of an
Annual Meeting, on the first Trading Day following the conclusion of the
Partial Quarter Notice Period), the Deferred Stock Account of each Non-
Employee

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 7
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Director who has a Plan Year Deferral Election for Common Stock in
effect on such date shall be credited with (i) a number of shares of
Common Stock having a Value equal to 25% of the Elective Stock Amount,
multiplied by the Fraction, if applicable.

     (d)  Except as set forth in Section 6(f), as of the first day of
each Plan Quarter (or in the case of a Non-Employee Director who first
becomes a Non-Employee Director on a date other than on the date of an
Annual Meeting, on the first Trading Day following the conclusion of the
Partial Quarter Notice Period), the Deferred Cash Account of each Non-
Employee Director who has a Plan Year Deferral Election for cash in
effect on such date shall be credited with (i) an amount equal to 25% of
the Elective Cash Amount, multiplied by the Fraction, if applicable.

     (e)  On September 4, 1997, the Deferred Stock Account of each
Non-Employee Director who becomes a Non-Employee Director prior to the
Effective Date shall be credited with a number of shares of Common Stock
having a Value equal to 25% of the Stock Amount, multiplied by the
Fraction.  In addition, the Deferred Stock Account of each Non-Employee
Director who becomes a Non-Employee Director prior to the Effective Date
and who has a Plan Year Deferral Election for Common Stock in effect on
October 1, 1997, shall be credited with  a number of shares of Common
Stock having a Value equal to 25% of the Elective Stock Amount,
multiplied by the Fraction.

     (f)  On October 1, 1997, the Deferred Cash Account of each Non-
Employee Director who becomes a Non-Employee Director prior to the
Effective Date and who has a Plan Year Deferral Election for cash in
effect on October 1, 1997, shall be credited with an amount equal to 25%
of the Elective Cash Amount, multiplied by the Fraction.

     (g)  Whenever a dividend is paid or other distribution made with
respect to the Common Stock, each Deferred Stock Account shall be
credited with a number of shares equal to (i) the number of shares of
Common Stock in such Deferred Stock Account as of the record date for
such dividend or other distribution, multiplied by (ii) the Dividend
Equivalent for such dividend paid or other distribution made.

     (h)  Each Deferred Cash Account shall accrue interest on the
balance therein at the Interest Rate, such interest to be credited at
least monthly.

7.   DELIVERY OF SHARES AND DEFERRED CASH. The shares of Common Stock
in a Non-Employee Director's Deferred Stock Account and the cash balance
in a Non-Employee Director's Deferred Cash Account as of the date the
Non-Employee Director ceases to be a Non-Employee Director for any
reason (the "Delivery Date") shall begin to be delivered in accordance
with this Section 7 as soon as practicable after the Delivery Date. The
shares and cash balance shall be delivered in two equal installments
with the first installment being delivered as soon as practicable after
the Delivery Date and the second installment on the first anniversary of
the

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 8
                                                As amended 2/24/99
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Delivery Date.  If the number of shares to be delivered at one time
includes a fractional share, such number shall be rounded to the nearest
whole number of shares. If any such shares or cash are to be delivered
after the Non-Employee Director has died or become legally incompetent,
they shall be delivered to the Non-Employee Director's estate, legal
guardian or beneficiary designated pursuant to Section 21(a), as the
case may be, as soon as practicable. References to a Non-Employee
Director in this Plan shall be deemed to refer to the Non-Employee
Director's estate, legal guardian or beneficiary designated pursuant to
Section 21(a), where appropriate. The Non-Employee Director shall become
the holder of record of the shares of Common Stock upon delivery.

8.   GRANT OF OPTIONS. (a) Except as set forth in Section 8(d), each
Non-Employee Director shall receive, on the date such person becomes a
Non-Employee Director, an initial Option to purchase 8,000 shares of
Common Stock.

     (b)  Each person who becomes a Non-Employee Director on the date
of, or who remains a Non-Employee Director on the date of and
immediately following each Annual Meeting held after the Effective Date
hereof, shall receive, as of such date, an annual Option to purchase
2,000 shares of Common Stock.

     (c)  Except as set forth in Section 8(d), each person who becomes
a Non-Employee Director on a date other than on an Annual Meeting date,
shall receive, as of such date, an Option to purchase that number of
shares of Common Stock equal to 2,000 multiplied by the Partial Year
Fraction.

     (d)  Persons who become Non-Employee Directors prior to the
Effective Date shall receive, on the same date as the Committee makes
the first option grants to management personnel of the Company, an
Option to purchase 9,334 shares of Common Stock, 8,000 of which
constitute the initial grant that would have otherwise been granted
pursuant to Section 8(a) but for this Section 8(d), and 1,334 of which
constitute the prorated annual Option grant for the first Plan Year
calculated in accordance with Section 8(c).

9.   TYPE OF OPTIONS. All Options granted under the Plan shall be
"nonqualified" stock options subject to the provisions of Section 83 of
the Internal Revenue Code of 1986, as amended (the "Code").  All Options
granted under the Plan prior to February 24, 1999, shall be subject to
the terms and conditions set forth in the certificate attached as
Exhibit A hereto.  All Options granted under the Plan on or after
February 24, 1999, shall be subject to the terms and conditions set
forth in the certificate attached as Exhibit B hereto.

10.  EXERCISE PRICE.  The exercise price per share of Common Stock
purchasable under all Options granted pursuant to the Plan shall be the
Value of a share of Common Stock on the Option Grant Date.

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 9
                                                As amended 2/24/99

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11.  EXERCISE RIGHTS. Each Option granted hereunder prior to February
24, 1999, shall become exercisable, during the Option term set forth in
Section 12, in three equal installments commencing on the first
anniversary of the Option Grant Date, and annually thereafter, provided
that the Non-Employee Director continues in the service of the Company
as a director through such anniversaries.  Each Option granted on or
after February 24, 1999, shall become exercisable during the Option term
set forth in Section 12, in three equal installments, on the dates of
the first three Annual Meetings of Stockholders of the Company following
the Option Grant Date, provided that the Non-Employee Director continues
in the service of the Company as a director until such dates; provided,
however, that the Option, if not already fully exercisable, shall become
fully exercisable upon the Non-Employee Director's retirement from the
Board at the mandatory retirement age set forth in the Charter for the
Company's Board, or other applicable document.  Each Option may be
exercised in full share lots only.  Notwithstanding the foregoing, the
Committee shall have the authority to determine any vesting acceleration
or forfeiture waiver regarding any Option granted under the Plan.

12.  OPTION TERM.  The Option term will expire at the end of the day
next preceding ten years from the Option Grant Date, or at the end of
the day next preceding two years from the date the Non-Employee Director
ceases to be a director of the Company for any reason, whichever occurs
first.

13.  METHOD OF EXERCISE. The Option shall be exercised by (a) written
notice or notice in such other form as may be prescribed from time to
time, given to the Company or its designee (at the address specified by
the Company from time to time) specifying the date the Option was
granted and the number of shares of Common Stock as to which the Option
is being exercised, plus (b) payment to the Company in full for the
Shares so specified.  Within a reasonable time after exercise of the
Option, the Company shall deliver shares of Common Stock to the Non-
Employee Director in respect of which the Option shall have been
exercised and shall pay all stamp taxes in respect thereof, provided
that upon or prior to the delivery of such shares, provision (as
specified by the Company from time to time) shall be made by the Non-
Employee Director for the payment to the Company of any and all taxes
which it shall be required to withhold in connection with the exercise
of the Option by any law or regulation of any government, whether
federal, state or local, and whether domestic or foreign.  The Non-
Employee Director shall have the right to pay the Option exercise price
by delivery of shares of Common Stock (or other evidence of ownership of
shares satisfactory to the Company) already owned by the Non-Employee
Director with a Value equal to the Option exercise price as payment,
provided that such shares have been held by the Non-Employee Director
for at least six months on the date of exercise.

14.  DELIVERY OF SHARES, VOTING AND OTHER RIGHTS.  The Non-Employee
Director shall have no rights as a stockholder with respect to any
Option shares or the shares of

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 10
                                                As amended 2/24/99
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Common Stock credited to his or her Deferred Stock Account unless and
until the Non-Employee Director becomes the holder of record of such
shares and, subject to the provisions of Sections 6 and 19 hereof, no
adjustment shall be made for dividends, ordinary or extraordinary
(whether in cash or securities or property), or other distributions, or
other rights in respect of such shares as to which the record date is
prior to the date upon which the Non-Employee Director shall have become
the holder of record thereof. Shares delivered under the Plan shall be
in book entry form unless the Non-Employee Director has requested in the
written notice specified in Section 13 that they be issued in
certificate form.

15.  TAX WITHHOLDING.  The Company shall have the right to require,
prior to the delivery of any shares of Common Stock pursuant to the
Plan, that a Non-Employee Director make arrangements satisfactory to the
Company for the withholding of any taxes required by law to be withheld
with respect to the delivery of such shares, including without
limitation by the withholding of shares that would otherwise be so
delivered, by withholding from any other payment due to the Non-Employee
Director, or by a cash payment to the Company by the Non-Employee
Director.

16.  NO TRUST OR FUND CREATED. The Plan shall not create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any of its subsidiaries and a Non-
Employee Director or any other person or entity. To the extent that any
person acquires a right to receive payments from the Company or any of
its affiliates pursuant to the Plan, such right shall be no greater than
the right of any unsecured general creditor of the Company or any of its
subsidiaries.

17.  GENERAL RESTRICTIONS. (a) Notwithstanding any other provision of
the Plan, the Company shall not be required to deliver any shares of
Common Stock under the Plan prior to fulfillment of all of the following
conditions:

          (i)  Any registration or other qualification of such shares
          under any state, federal, or foreign law or regulation, or
          the maintaining in effect of any such registration or other
          qualification which the Administrator shall, in its absolute
          discretion upon the advice of counsel, deem necessary or
          advisable; and

          (ii) Obtaining any other consent, approval, or permit from
          any state or federal governmental agency which the
          Administrator shall, in its absolute discretion after
          receiving the advice of counsel, determine to be necessary
          or advisable.

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

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 11
                                                As amended 2/24/99

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18.  SHARES AVAILABLE. Subject to Section 19 below, 400,000 shares of
Common Stock may be delivered under the Plan.  Shares of Common Stock
deliverable under the Plan may be taken from treasury shares of the
Company or purchased on the open market.

19.  CHANGE IN CAPITAL STRUCTURE; CHANGE OF CONTROL. (a)  In the event
of any change in corporate capitalization, such as a stock split or a
corporate transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or property
(without regard to the payment of any cash dividends by the Company in
the ordinary course) of the Company, any reorganization (whether or not
such reorganization comes within the definition of such term in Section
368 of the Code) or any partial or complete liquidation of the Company,
the Committee or Board may make such substitution or adjustments in the
aggregate number and kind of shares to be delivered under the Plan, in
the number, kind and Option exercise price of shares subject to
outstanding Options, in the number and kind of shares held in the
Deferred Stock Accounts or subject to Options and/or such other
equitable substitution or adjustments as it may determine to be
appropriate in its sole discretion; provided, however, that the number
of shares held in the Deferred Stock Accounts or subject to Options
shall always be a whole number.

     (b)  Without limiting the generality of the foregoing, and
notwithstanding any other provision of this Plan, in the event of a
Change of Control, the following shall occur on the date of the Change
of Control (the "Change of Control Date"): (i) the last day of the then
current Plan Year shall be deemed to occur on the Change of Control
Date; (ii) the Company shall immediately pay to each Non-Employee
Director in a lump sum the Change of Control Consideration multiplied
by the number of shares of Common Stock held in each Non-Employee
Director's Deferred Stock Account immediately before such Change of
Control; (iii) the Company shall immediately pay to each Non-Employee
Director in a lump sum the balance in his or her Deferred Cash Account;
(iv) the Options shall become fully exercisable by the Non-Employee
Director without regard to Section 11; and (v) the Plan shall be
terminated. Notwithstanding the foregoing, if the payment of cash with
respect to Deferred Stock Accounts pursuant to the preceding sentence
would make a Change in Control transaction ineligible for pooling-of-
interests accounting under APB No. 16 that but for the nature of such
grant would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute for such cash Common
Stock or other equity securities with a Value equal to the amount of
such cash.

     (c)  If the shares of Common Stock credited to the Deferred Stock
Accounts and subject to Options are converted pursuant to this Section
19 into another form of property, references in the Plan to the Common
Stock shall be deemed, where appropriate, to refer to such other form of
property, with such other modifications as may be required for the Plan
to operate in accordance with its purposes. Without limiting the
generality of the foregoing, references to the delivery of shares of
Common Stock shall be deemed to refer to delivery of cash and the
incidents of ownership of any other property held in the Deferred Stock
Accounts and subject to Options.

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 12
                                                As amended 2/24/99

<PAGE>
<PAGE>

20.  ADMINISTRATION; AMENDMENT. (a)  The Board shall have the power to
amend or terminate the Plan. The Executive Compensation and Development
Committee or any other committee of the Board (the "Committee")
designated by the Board that will satisfy Rule 16b-3 of the Exchange
Act, including any successor rule ("Rule 16b-3"), shall supervise the
Plan.  The Plan shall be administered by the Vice President - Human
Resources, or such other person or persons designated by the Committee
(the "Administrator"). The Committee shall consist solely of two or more
"non-employee directors" of the Company who shall be appointed by the
Board.  A member of the Board shall be deemed to be a "non-employee
director" for the purposes of this Section 20 only if he satisfies such
requirements as the Securities and Exchange Commission may establish for
"non-employee directors" under Rule 16b-3. Members of the Board receive
no additional compensation for their services in connection with the
administration of the Plan.

     (b)  Any act that the Committee is authorized to perform hereunder
may instead be performed by the Board at its discretion, and to the
extent the Board so acts, references in the Plan to the Committee shall
refer to the Board as so applicable.  Anything to the contrary herein
notwithstanding, to the extent that any permitted action taken by the
Board conflicts with action taken by the Committee, the Board action
shall control.

     (c)  The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan.  All questions of interpretation of
the Plan or of any shares delivered under it shall be determined by the
Committee and such determination shall be final and binding upon all
persons having an interest in the Plan.

     (d)  Notwithstanding any other provision of the Plan, no amendment
or termination of the Plan shall adversely affect the interest of any
Non-Employee Director in Options granted to him or her, in shares
previously credited to such Non-Employee Director's Deferred Stock
Account, or in cash previously credited to such Non-Employee Director's
Deferred Cash Account without that Non-Employee Director's express
written consent.

21.  TRANSFERABILITY.  (a) In the event of a Non-Employee Director's
death, all of such person's rights with respect to his or her Deferred
Stock Account and Deferred Cash Account will transfer to the maximum
extent permitted by law to such person's beneficiary.  Each Non-Employee
Director may name, from time to time, any beneficiary or beneficiaries
(which may be named contingently or successively) as his or her
beneficiary for receiving delivery of the shares of Common Stock from
the Deferred Stock Account and the cash from the Deferred Cash Account
under this Plan.  Each designation shall be on a form prescribed by the
Administrator, will be effective only when delivered to the Company and
when effective will revoke all prior designations by the Non-Employee
Director.  If a Non-Employee Director dies with no such beneficiary
designation in effect, such person's beneficiary shall be his or her
estate and such

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 13
                                                As amended 2/24/99
<PAGE>
<PAGE>

person's payments will be transferable by will or pursuant to laws of
descent and distribution applicable to such person.

     (b)  Each Option granted under the Plan by its terms shall not be
transferable by the Non-Employee Director otherwise than by will, or by
the laws of descent and distribution, and shall be exercised during the
lifetime of the Non-Employee Director only by him or her.  No Option or
interest therein may be transferred, assigned, pledged or hypothecated
by the Non-Employee Director during his or her lifetime, whether by
operation of law or otherwise, or be made subject to execution,
attachment or similar process.

22.  MISCELLANEOUS.  Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Non-Employee
Director for reelection by the Company's shareholders or to limit the
rights of the shareholders to remove any director.

23.  GOVERNING LAW.  The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Delaware.

          SOLUTIA INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN, PAGE 14
                                                As amended 2/24/99
<PAGE>
<PAGE>

                                  EXHIBIT A


                                   FORM OF

                                 SOLUTIA INC.

                                     1997
                          NON-QUALIFIED STOCK OPTION
                              (NOT TRANSFERABLE)
                                 CERTIFICATE




                                   Grant to


                          [insert Name of Optionee]
                               (The "Optionee")


                to purchase from Solutia Inc. (the "Company")



                          [insert Number of shares]
                            shares of its common stock
               par value $0.01 per share (the "Optioned Shares")
                               at the price of


                            [insert Option Price]
                                  per share




               pursuant to and subject to the provisions of the
      Solutia Inc. Non-Employee Director Compensation Plan (the "Plan")
       and to the Terms and Conditions set forth on the reverse hereof


                    Option Grant Date: [insert grant date]

<PAGE>
<PAGE>
              TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION


DEFINITIONS.

        The terms "Administrator", "Value", and "Common Stock" when used
herein, shall have the meanings set forth in the Plan.

EXERCISE RIGHTS.

        The Option shall become exercisable, during the Option term set forth
in the third paragraph hereof and subject to the other terms and conditions
hereof, as to one-third of the Optioned Shares on the first anniversary of the
Option Grant Date, as to an additional one-third of the Optioned shares on the
second anniversary of the Option Grant Date, and as to any or all of the
Optioned Shares on the third anniversary of the Option Grant Date, provided
that the Optionee continues in the service of the Company as a director through
such anniversaries.  Notwithstanding the foregoing, but subject to the third
paragraph hereof, an Option shall become fully and immediately exercisable upon
the occurrence of a Change in Control as set forth in Section 19 of the Plan.
The Option may be exercised in full share lots only.

OPTION TERM.

        The Option term will expire at the end of the day next preceding ten
years from the date the Option was granted, or at the end of the day next
preceding two years from the date the Optionee ceases to be a director of the
Company for any reason, whichever first occurs.

METHOD OF EXERCISE.

        The Option shall be exercised by (a) written notice, or notice in such
other form as may be prescribed from time to time, given to the Company or its
designee (at the address specified by the Company from time to time) specifying
the date the Option was granted and the number of shares of Common Stock as to
which the Option is being exercised, plus (b) payment to the Company in full
for the shares so specified.  Within a reasonable time after exercise of the
Option, the Company shall deliver shares of Common Stock to the Optionee in
respect of which the Option shall have been exercised and shall pay all stamp
taxes in respect thereof, provided that upon or prior to the delivery of such
shares of Common Stock, provision (as specified by the Company from time to
time) shall be made by the Optionee for the payment to the Company of any and
all taxes which it shall be required to withhold in connection with exercise of
the Option, by any law or regulation of any government, whether federal, state
or local and whether domestic or foreign.  Payment may be made by delivery of
shares of Common Stock (or other evidence of ownership of shares of Common
Stock satisfactory to the Company) with a Value equal to the Option exercise
price, provided that such shares have been held by the Optionee for at least
six months at the time of exercise.













<PAGE>
<PAGE>
STOCKHOLDER STATUS.

        The Optionee shall have no rights as a stockholder with respect to any
shares of Common Stock subject to an Option unless and until the Optionee shall
have become the holder of record of such underlying shares of Common Stock and,
subject to the provisions of the sixth paragraph hereof, no adjustment shall be
made for dividends, ordinary or extraordinary (whether in cash or securities or
other property), or other distributions, or other rights in respect of such
shares of Common Stock as to which the record date is prior to the date upon
which the Optionee shall have become the holder of record thereof.

SHARE AND PRICE ADJUSTMENT.

        In the event of any adjustments in the outstanding shares of Common
Stock, as provided for in Section 19 of the Plan, the Executive Compensation
and Development Committee of the Board of Directors of the Company may make
such substitution or adjustments in the aggregate number and kind of shares to
be delivered under the Plan, in the number, kind and Option exercise price of
shares subject to outstanding Options and/or such other equitable substitution
or adjustments as it may determine to be appropriate in its sole discretion.
The Optionee shall be notified of any such adjustment and any adjustment, or
failure to adjust, shall be final and binding upon the Company and the
Optionee.

SERVICE AS A DIRECTOR.

        The grant of this Option is a separate inducement in connection with
the Optionee's service as a director of the Company.  Neither the Option nor any
provision hereof shall be deemed to create any obligation on the part of the
Board of Directors of the Company to nominate any Optionee for reelection to
the Company's Board of Directors by the Company's shareholders or to limit the
rights of the shareholders to remove any director.

OPTION SUBJECT TO LAWS AND REGULATION.

        Each exercise of the Option shall be subject to all requirements as to
(a) any registration or other qualifications of such shares under any state,
federal, or foreign law or regulation, or the maintaining in effect of any such
registration or other qualification which the Administrator shall, in his or
her absolute discretion upon the advice of counsel, deem necessary or
advisable, and (b) obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Administrator shall, in his or
her absolute discretion after receiving advice of counsel, determine to be
necessary or advisable.  Anything herein to the contrary notwithstanding, the
Option may not be exercised, in whole or in part, unless and until the Company
shall have been able to comply with all such requirements and regulations free
of any conditions not acceptable to the Company.  As a condition to the
exercise of the Option, either in whole or in part, the Optionee shall execute
such documents and take such action as the Company in its sole discretion deems
necessary or advisable to assist the Company in compliance


<PAGE>
<PAGE>
with any such requirements, and Optionee shall comply with all requirements of
any regulatory authority having control or supervision.

GENERAL PROVISIONS.

        The Option is not transferable by the Optionee otherwise than by will
or by the laws of descent and distribution, and during the lifetime of the
Optionee shall be exercisable only by the Optionee.

        The validity, interpretation, performance and enforcement of this
Option shall be governed by the laws of the State of Delaware.

        Each and every provision of the Option shall be administered, construed
and interpreted so that the Option shall in all respects conform to the
provisions of the Plan, a copy of which has been delivered to the Optionee, and
any provision that cannot be so administered shall be deemed appropriately
modified, or, if necessary, disregarded.  In no event shall this Option be
deemed to be an Incentive Stock Option under Section 422 of the Internal
Revenue Code of 1986, as amended.

<PAGE>
<PAGE>
                           EXHIBIT B


                            FORM OF
                          SOLUTIA INC.

                             [Year]
                   NON-QUALIFIED STOCK OPTION
                       (NOT TRANSFERABLE)
                          CERTIFICATE



                            Grant to

                   [insert Name of Optionee]
                        (The "Optionee")

         to purchase from Solutia Inc. (the "Company")


                   [insert Number of shares]
                   shares of its common stock
       par value $0.01 per share (the "Optioned Shares")
                        at the price of

                     [insert Option Price]
                           per share


        pursuant to and subject to the provisions of the
Solutia Inc. Non-Employee Director Compensation Plan (the "Plan")
and to the Terms and Conditions set forth on the following pages

            Option Grant Date:  [insert grant date]


<PAGE>
<PAGE>

     TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION

DEFINITIONS.
-----------

     The terms "Administrator", "Value", and "Common Stock" when used
herein, shall have the meanings set forth in the Plan.

EXERCISE RIGHTS.
---------------

     The Option shall become exercisable, during the Option term set
forth in the third paragraph hereof and subject to the other terms and
conditions hereof, as to one-third of the Optioned Shares on the date of
the first Annual Meeting of Stockholders of the Company following the
Option Grant Date, as to an additional one-third of the Optioned shares
on the date of the second Annual Meeting of Stockholders of the Company
following the Option Grant Date, and as to any or all of the Optioned
Shares on the date of the third Annual Meeting of Stockholders of the
Company following the Option Grant Date, provided that the Optionee
continues in the service of the Company as a director until the date of
the applicable Annual Meetings of Stockholders.  Notwithstanding the
foregoing, but subject to the third paragraph hereof, an Option shall
become fully and immediately exercisable upon the occurrence of a Change
in Control as set forth in Section 19 of the Plan or upon the Optionee's
retirement from the Board of Directors at the mandatory retirement age
set forth in the Charter for the Company's Board of Directors, or other
applicable document.  The Option may be exercised in full share lots
only.

OPTION TERM.
-----------

     The Option term will expire at the end of the day next preceding
ten years from the date the Option was granted, or at the end of the day
next preceding two years from the date the Optionee ceases to be a
director of the Company for any reason, whichever first occurs.

METHOD OF EXERCISE.
------------------

     The Option shall be exercised by (a) written notice, or notice in
such other form as may be prescribed from time to time, given to the
Company or its designee (at the address specified by the Company from
time to time) specifying the date the Option was granted and the number
of shares of Common Stock as to which the Option is being exercised,
plus (b) payment to the Company in full for the shares so specified.
Within a reasonable time after exercise of the Option, the Company shall
deliver shares of Common Stock to the Optionee in respect of which the
Option shall have been exercised and shall pay all stamp taxes in
respect thereof, provided that upon or prior to the delivery of such
shares of Common Stock, provision (as specified by the Company from time
to time) shall be made by the Optionee for the payment to the Company of
any and all taxes which it shall be required to withhold in connection
with exercise of the Option, by any law or regulation of any government,
whether federal, state or local and whether domestic
<PAGE>
<PAGE>

                               2


or foreign.  Payment may be made by delivery of shares of Common Stock
(or other evidence of ownership of shares of Common Stock satisfactory
to the Company) with a Value equal to the Option exercise price,
provided that such shares have been held by the Optionee for at least
six months at the time of exercise.

STOCKHOLDER STATUS.
------------------

     The Optionee shall have no rights as a stockholder with respect to
any shares of Common Stock subject to an Option unless and until the
Optionee shall have become the holder of record of such underlying
shares of Common Stock and, subject to the provisions of the sixth
paragraph hereof, no adjustment shall be made for dividends, ordinary or
extraordinary (whether in cash or securities or other property), or
other distributions, or other rights in respect of such shares of Common
Stock as to which the record date is prior to the date upon which the
Optionee shall have become the holder of record thereof.

SHARE AND PRICE ADJUSTMENT.
--------------------------

     In the event of any adjustments in the outstanding shares of
Common Stock, as provided for in Section 19 of the Plan, the Executive
Compensation and Development Committee of the Board of Directors of the
Company may make such substitution or adjustments in the aggregate
number and kind of shares to be delivered under the Plan, in the number,
kind and Option exercise price of shares subject to outstanding Options
and/or such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion.  The Optionee shall
be notified of any such adjustment and any adjustment, or failure to
adjust, shall be final and binding upon the Company and the Optionee.

SERVICE AS A DIRECTOR.
---------------------

     The grant of this Option is a separate inducement in connection
with the Optionee's service as a director of the Company.  Neither the
Option nor any provision hereof shall be deemed to create any obligation
on the part of the Board of Directors of the Company to nominate any
Optionee for reelection to the Company's Board of Directors by the
Company's shareholders or to limit the rights of the shareholders to
remove any director.

OPTION SUBJECT TO LAWS AND REGULATION.
-------------------------------------

     Each exercise of the Option shall be subject to all requirements
as to (a) any registration or other qualifications of such shares under
any state, federal, or foreign law or regulation, or the maintaining in
effect of any such registration or other qualification which the
Administrator shall, in his or her absolute discretion upon the advice
of counsel, deem necessary or advisable, and (b) obtaining any other
consent, approval, or permit from any state or federal governmental
agency


<PAGE>
<PAGE>

                               3


which the Administrator shall, in his or her absolute discretion after
receiving advice of counsel, determine to be necessary or advisable.
Anything herein to the contrary notwithstanding, the Option may not be
exercised, in whole or in part, unless and until the Company shall have
been able to comply with all such requirements and regulations free of
any conditions not acceptable to the Company.  As a condition to the
exercise of the Option, either in whole or in part, the Optionee shall
execute such documents and take such action as the Company in its sole
discretion deems necessary or advisable to assist the Company in
compliance with any such requirements, and Optionee shall comply with
all requirements of any regulatory authority having control or
supervision.

GENERAL PROVISIONS.
------------------

     The Option is not transferable by the Optionee otherwise than by
will or by the laws of descent and distribution, and during the lifetime
of the Optionee shall be exercisable only by the Optionee.

     The validity, interpretation, performance and enforcement of this
Option shall be governed by the laws of the State of Delaware.

     Each and every provision of the Option shall be administered,
construed and interpreted so that the Option shall in all respects
conform to the provisions of the Plan, a copy of which has been
delivered to the Optionee, and any provision that cannot be so
administered shall be deemed appropriately modified, or, if necessary,
disregarded.  In no event shall this Option be deemed to be an Incentive
Stock Option under Section 422 of the Internal Revenue Code of 1986, as
amended.