ASHLAND INC.
               INCENTIVE COMPENSATION PLAN FOR KEY EXECUTIVES
                       (As amended November 5, 1997)



1.       PURPOSE

         The principal purposes of the Ashland Inc. Incentive  Compensation
Plan for Key  Executives  (the "Plan") are to provide to Eligible  Officers
incentives to earn annual incentive compensation through the achievement of
performance  goals and to assist the Company in attracting,  motivating and
retaining key employees on a competitive basis.

2.       DEFINITIONS

         Terms  not  otherwise  defined  herein  shall  have the  following
meanings:

         (a) "Board"  means the Board of  Directors  of Ashland Inc. or its
designee.

         (b)  "Change  in  Control"  shall be  deemed to occur (1) upon the
approval of the  shareholders  of the  Company (or if such  approval is not
required,  upon the  approval  of the  Board) of (A) any  consolidation  or
merger  of the  Company  in which  the  Company  is not the  continuing  or
surviving  corporation or pursuant to which shares of Common Stock would be
converted  into cash,  securities or other  property other than a merger in
which the holders of Common Stock immediately prior to the merger will have
the  same  proportionate   ownership  of  Common  Stock  of  the  surviving
corporation immediately after the merger, (B) any sale, lease, exchange, or
other transfer (in one transaction or a series of related  transactions) of
all or  substantially  all the assets of the Company or (C) adoption of any
plan or proposal for the  liquidation or  dissolution  of the Company,  (2)
when any "person"  (as defined in Section  3(a)(9) or 13(d) of the Exchange
Act),  other than the Company or any subsidiary or employee benefit plan or
trust  maintained by the Company or any of its  subsidiaries,  shall become
the  "beneficial  owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 15% of the Common Stock outstanding at
the time, without the approval of the Board, or (3) if at any time during a
period of two consecutive  years,  individuals who at the beginning of such
period  constituted  the Board shall cease for any reason to  constitute at
least a  majority  thereof,  unless  the  election  or the  nomination  for
election by the  Company's  shareholders  of each new director  during such
two-year  period  was  approved  by a vote of at  least  two-thirds  of the
directors  then still in office who were directors at the beginning of such
two-year period.

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

         (d) "Committee" means the Personnel and Compensation  Committee of
the Board or its designee.

         (e) "Common  Stock" means the common  stock,  $1.00 par value,  of
Ashland Inc.

         (f) "Company" means Ashland Inc., its divisions and subsidiaries.

         (g) "Eligible  Officer"  means an executive  officer  described in
Section 4.

         (h) "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended.

         (i) "Executive  Officer" means an executive  officer as defined in
Rule 3b-7 under the Exchange Act.

         (j) "Fair Market Value" means,  as of any specified date (or, if a
weekend or holiday,  the next preceding business day), the closing price of
a share of Common  Stock,  as reported on the  Composite  Tape for New York
Stock Exchange issues.

         (k) "Hurdle"  means the minimum  Performance  Goal(s) that must be
reached in order for the Eligible Officer to receive any Incentive Award.

         (l) "Incentive Award" means the amount determined by the Committee
to be payable to a  Participant  upon the  achievement  of the  Performance
Goals for the particular Performance Period.

         (m)  "Participant"  means any  Eligible  Officer  who  receives an
Incentive Award under the Plan for a Performance Period.

         (n)  "Performance   Goals"  mean  performance   goals  as  may  be
established  in writing by the  Committee  which may be based on  earnings,
stock  price,  return on  equity,  return on  investment,  total  return to
shareholders,  economic value added, debt rating or achievement of business
or operational goals, such as drilling or exploration targets or profit per
barrel. Such goals may be absolute in their terms or measured against or in
relationship  to other  companies  comparably or otherwise  situated.  Such
performance goals may be particular to an Eligible Officer or the division,
department, branch, line of business, subsidiary or other unit in which the
Eligible  Officer  works  and/or  may be  based on the  performance  of the
Company generally.

         (o)  "Performance  Period"  means an annual  period based upon the
Company's  fiscal  year,  except to the  extent  the  Committee  determines
otherwise.

         (p) "Target" means the Performance Goal(s) that must be reached in
order for the Eligible Officer to receive the maximum  Incentive Award. The
maximum Incentive Award is a fixed percentage of the midpoint of the salary
range for the position  held by the Eligible  Officer and is based upon the
Eligible  Officer's level of employment.  No Eligible Officer may receive a
maximum Incentive Award more than 150% of their salary range midpoint.

3.       SHARES; ADJUSTMENTS IN THE EVENT OF CHANGES IN CAPITALIZATION

         (a) SHARES  AUTHORIZED  FOR ISSUANCE.  There shall be reserved for
issuance  under  the Plan  150,000  shares  of  Common  Stock,  subject  to
adjustment   pursuant  to  subsection  (b)  below.  Such  shares  shall  be
authorized but unissued shares of Common Stock.

         (b) ADJUSTMENTS IN CERTAIN  EVENTS.  In the event of any change in
the outstanding  Common Stock by reason of any stock split, share dividend,
recapitalization,  merger, consolidation,  reorganization,  combination, or
exchange or  reclassification  of shares,  split-up,  split-off,  spin-off,
liquidation or other similar change in capitalization,  or any distribution
to common  shareholders  other than cash  dividends,  the number or kind of
shares that may be issued under the Plan shall be automatically adjusted so
that  the  proportionate   interest  of  the  Eligible  Officers  shall  be
maintained as before the occurrence of such event.

4.       ELIGIBILITY

         The Chief Executive Officer and the Chief Operating Officer of the
Company,  plus any other Executive Officers chosen by the Committee,  shall
be eligible to participate in the Plan. An individual who becomes  eligible
to  participate  in the Plan  during the Plan Year may be  approved  by the
Committee for a partial year of participation.

5.       ADMINISTRATION

         Full power and authority to construe, interpret and administer the
Plan shall be vested in the Committee.  Decisions of the Committee shall be
final, conclusive and binding upon all parties.

6.       AWARDS; PAYMENT

         (a)  No  later  than  90  days  after  the  commencement  of  each
Performance  Period,  the Committee  shall establish in writing one or more
Performance Goals, including the Hurdle and Target, that must be reached by
an  Eligible  Officer  in order to  receive  an  Incentive  Award  for such
Performance Period. The Committee shall have the discretion to later revise
the Performance  Goals and the amount to be paid out upon the attainment of
these goals solely for the purpose of reducing or eliminating the amount of
compensation  otherwise  payable upon attainment of the Performance  Goals;
provided that the Performance Goals and the amounts payable upon attainment
of the Performance  Goals may be adjusted during any Performance  Period to
reflect   promotions,   transfers  or  other  changes  in  a  Participant's
employment  so long as such  changes are  consistent  with the  Performance
Goals established for other Participants in the same or similar positions.

         (b) The amount  payable to a  Participant  shall be based upon the
achievement  of the  Performance  Goals and the  Participant  achieving the
highest possible individual  performance rating for the Performance Period.
To the extent that a  Participant  does not  achieve  the highest  possible
individual  performance  rating for the Performance  Period,  the Committee
shall have the discretion to reduce the amount payable to such Participant;
provided, however, that no payment for individual performance shall be made
unless the Performance Goals are achieved.

         (c) Payment of  Incentive  Awards shall be made on a date or dates
fixed by the Committee. Payment may be made in one or more installments and
may be made  wholly  in  cash,  wholly  in  shares  of  Common  Stock  or a
combination thereof as determined by the Committee.

                  In addition,  Participants may be offered the opportunity
to defer the receipt of payment of an Incentive Award.  Common Stock may be
granted (i) as a bonus for deferral or (ii) as a bonus for retaining, for a
specified period of time,  Common Stock received in payment of an Incentive
Award,  all under such terms as may be  established  by the Committee  from
time to time.  Notwithstanding,  in no event  shall the value of the Common
Stock granted as a bonus for deferral or retention  exceed 20% of the value
of the Incentive  Award so deferred or retained.  Any and all payments made
under the Plan shall be subject to applicable federal, state or local taxes
required by law to be withheld.

                  If payment  of an  Incentive  Award  shall be made all or
partially in shares of Common  Stock,  the number of shares of Common Stock
to be delivered to a Participant on any payment date shall be determined by
dividing (x) the original  dollar amount to be paid on the payment date (or
the part thereof  determined  by the Committee to be delivered in shares of
such  Incentive  Award) by (y) the Fair Market  Value on the date the Board
approves the Committee's decision to pay an Incentive Award.

         (d) An  Incentive  Award shall  terminate  for all purposes if the
Participant does not remain continuously employed and in good standing with
the  Company  until  the date of  payment  of such  award.  In the event an
Eligible Officer's employment is terminated because of death, disability or
retirement,  the Eligible  Officer (or his or her  beneficiaries or estate)
shall  receive a pro rata portion of the payment of an Incentive  Award for
which the Eligible  Officer would have  otherwise  been eligible based upon
the  portion  of the  Performance  Period  during  which  he or she  was so
employed so long as the Performance Goals are subsequently achieved.

7.       INALIENABILITY OF BENEFITS

         Incentive Awards may not be assigned or transferred in whole or in
part,  either directly or by operation of law or otherwise  (except by will
or pursuant to the laws of descent and distribution)  including, but not by
way  of  limitation,  execution,  levy,  garnishment,  attachment,  pledge,
bankruptcy or any other manner.

8.       GOVERNING LAW

         The provisions of this Plan shall be interpreted  and construed in
accordance with laws of the Commonwealth of Kentucky.

9.       AMENDMENTS

         The Committee may amend,  alter or terminate this Plan at any time
without  the prior  approval  of the  Board;  provided,  however,  that the
Committee may not,  without  approval by the Board and the  shareholders of
the Company:

         (a) increase the amount of securities that may be issued under the
Plan (except as provided in Section 3(b));

         (b)  materially  modify the  requirements  as to  eligibility  for
participation in the Plan; or

         (c)  otherwise   materially  increase  the  benefits  accruing  to
participants under the Plan.

10.      CHANGE IN CONTROL

         Upon a  Change  in  Control,  in  order to  maintain  an  Eligible
Officer's  rights  under the Plan,  there shall be an  acceleration  of any
Performance  Period  relating to any  Incentive  Award,  and payment of any
Incentive  Award  shall be made in cash as soon as  practicable  after such
Change  in  Control  based  upon  achievement  of  the  Performance   Goals
applicable to such award up to the date of the Change in Control.  Further,
the  Company's  obligation  with respect to such  Incentive  Award shall be
assumed,  or new  obligations  substituted  therefor,  by the  acquiring or
surviving  corporation after such Change in Control. In addition,  prior to
the date of such Change in Control,  the  Committee,  in its sole judgment,
may make adjustment to any Incentive Award as may be appropriate to reflect
such Change in Control.

11.      EFFECTIVE DATE; TERM OF THE PLAN

         This Plan shall be  submitted to the  shareholders  of the Company
for their  approval  and  adoption  on January  26, 1995 or such other date
fixed  for  the  next  meeting  of   shareholders  or  any  adjournment  or
postponement thereof. If approved and adopted by the shareholders, the Plan
will become effective as of September 14, 1994. Unless terminated sooner by
the  Committee,  to the extent  necessary  to ensure that  Incentive  Award
payments be deductible  under the Code, the Plan shall terminate on, and no
Incentive  Awards shall be granted after, the first meeting of shareholders
occurring in calendar year 2000.