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                                                                  Exhibit 10.1

                      2007 Solutia Annual Incentive Program

This document sets forth the terms of the Solutia Annual Incentive Program (the
"Program" or the "AIP") for the year beginning January 1, 2007 and ending
December 31, 2007 (the "Performance Year").

                                     Purpose

The purpose of the Solutia Annual Incentive Program is to provide employees with
annual cash bonus opportunities to incent strong operational and financial
performance, promote the creation of enterprise value, and encourage a quick and
successful emergence from bankruptcy. The incentive award is comprised of a
performance metric and a bankruptcy emergence metric.

                       I. Calculation of Incentive Awards

Solutia Inc. (the "Company"), for purposes of the Program, is organized along
business lines (Integrated Nylon, Saflex, CPFilms, and Other Performance
Products Divisions [Other PPD], each a "Business") in order to place emphasis on
key performance parameters of each individual Business.

The size of the incentive pool available for awards pursuant to the performance
metric to those employees assigned to a specific Business will be based on the
achievement of specific objective performance parameters (each incentive pool
shall be referred to herein as a "Business Unit Incentive Pool").

For employees assigned to enterprise-wide functions ("Core Functions"), overall
enterprise performance shall determine the incentive pool available for awards
(such pool to be referred to as the "Core Function Incentive Pool").

The funding of each Business Unit Incentive Pool and the Core Function Incentive
Pool shall be 90% of all aggregate target bonuses for individuals assigned to
such pool multiplied by the weighted average of pre-established funding factor
for achievement of specific objective performance parameters relative to a
targeted performance. The target performance for each performance parameter, the
related funding factors, and the weighting of each such parameter have been
determined by the Executive Compensation and Development Committee of the
Company's Board of Directors (the "ECDC") based upon the recommendation of the
Chief Executive Officer of the Company (the "CEO").

The entirety of each Business Unit Incentive Pool or the Core Function Incentive
Pool will be allocated to awards for individuals assigned to such pools. Each
pool will be divided equally into an objective award pool and a discretionary
award pool as described below.

In addition to the Business Unit Incentive Pools and the Core Function Incentive
Pool, an overall corporate discretionary bonus pool (the "Enterprise
Discretionary Incentive Bonus Pool") shall be funded by the enterprise-level
EBITDAR performance relative to a pre-established target performance. The
funding of the Enterprise Discretionary Incentive Pool shall be 10 percent (10%)
of all aggregate target bonuses multiplied by a pre-established funding factor.
All


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participating employees will be eligible for discretionary awards from this pool
at the discretion of the CEO and the ECDC.

All bonuses based upon the performance metric will have an objective and a
discretionary portion.

      o     The objective portion of bonuses will be based strictly upon the
            objective business-unit performance for the employee's respective
            business unit relative to the pre-established target, or enterprise
            performance for Core personnel. The objective portion of bonuses
            will be equal to 45% of such individual's target bonus multiplied by
            the relevant funding factor. The objective portion of bonuses will
            come from the portion of the Business Unit Incentive Pool or the
            Core Function Incentive Pool allocated to objective awards.

      o     The discretionary portion of bonuses shall be determined by a review
            of a participant's individual performance versus set goals,
            performance in relation to peers, and according to the process
            described below. The discretionary portion of an individual
            participant's bonus may range from zero upward. The discretionary
            portion of bonuses will come from, and the aggregate of all such
            amount shall be limited by, the portion of the relevant Business
            Unit Incentive Pool or Core Function Incentive Pool allocated to
            discretionary awards or the Enterprise Discretionary Incentive Pool.

The fundamental process for determination of bonuses under the performance
metric component of the Program is as follows:

1)    The Business Unit and Core Function Incentive Pools are determined and
      funded based on Business Unit/Core performance relative to the
      pre-established targets, funding factors, and weighting. The Business Unit
      and Core Function Incentive Pools are then allocated equally to objective
      awards and discretionary awards as described above.

2)    The Enterprise Discretionary Incentive Pool is determined and funded based
      on the enterprise EBITDAR performance relative to the pre-established
      target.

3)    The objective portion of bonuses are determined and approved by the ECDC.

4)    The portion of each Business Unit Incentive Pool or Core Function
      Incentive Pool allocated to discretionary awards will be further allocated
      pro-rata and re-allocated (as appropriate) to managers within such
      Business or Core function. These managers will make individual award
      recommendations based upon individual performance compared to goals.
      Individual discretionary awards will be approved by the Business
      President, the CEO, and the ECDC.

5)    Discretionary bonuses out of the Enterprise Discretionary Bonus Pool will
      be determined at the discretion of the CEO with the advice of the
      Enterprise Leadership Team, as he deems appropriate, and approved by the
      ECDC.

6)    The ECDC shall determine the discretionary bonus for the CEO. Any
      discretionary bonus paid to the CEO in excess of 50% of the CEO's target
      bonus multiplied by the relevant funding factor shall not, at the
      discretion of the ECDC, diminish awards available under the Core Function
      Incentive Pool, the Business Unit Incentive Pool or the Enterprise
      Discretionary Bonus Pool.


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In cases where an individual is assigned to a specific Business or Core, but
supports more than one Unit, the performance metric component of the funding
will be based on the following rules:

o     Employees who support a Unit more than 50 percent of the time will receive
      that Unit's incentive factor.

o     Employees who support two Units equally will receive an average of the two
      Units' incentive factors.

o     Employees who support multiple Units (and aren't covered by the above)
      will receive the Core incentive factor.

o     Funding sources for an employee's award will be determined based on the
      number of full months spent in each function or Unit.

Each employee's actual award will also depend on individual performance in
serving all relevant functions and Units and will include input from each
respective manager.

Actual awards based on the performance metric will vary as described above based
upon achievement of Business or Core performance measures and individual
performance. Management, the CEO and the ECDC reserve the right to make no award
to individuals who exhibit below standard performance, incidents of misconduct,
etc. Employees who retire, resign, take an extended leave of absence in excess
of six months, or are terminated shall not be eligible for awards based on the
performance metric if they are not employed by Solutia on the date of payment.
Employee on a short term leave of absence (less than six months absence during
2007) may be considered for a prorated award reflecting the employee's actual
service rounded to the nearest whole month. In the event of an employee's death,
the ECDC may grant to the employee's legal representative an award reflecting
the employee's actual service to the nearest whole month.

Employees promoted, transferred, or hired into a participating position before
December 15, 2007, may be considered for an award that may be prorated
reflecting the employee's actual participation rounded to the nearest whole
month. Employees who change jobs (and incentive targets) during the year may be
considered for an award that may be prorated reflecting the employee's actual
participation in both positions to the nearest whole month.

Certain executives and other key employees shall also have a component of their
AIP comprised of an Emergence Metric related to Solutia's emergence from
bankruptcy. This metric has been included at the direction of the bankruptcy
court, in its approval of the 2006 Solutia Annual Incentive Plan. Specifically,
pursuant to the Court's order, Solutia agreed to include in the 2007 AIP "for
the Chief Executive Officer and certain of his direct reports, a metric related
to the Debtors' emergence from chapter 11 cases." Accordingly, the Emergence
Metric described herein shall be extended to Jeffry N. Quinn, Kent J. Davies,
Luc De Temmerman, James R. Voss, Jonathon P. Wright, Robert T. DeBolt, Rosemary
L. Klein, James M. Sullivan, Timothy J. Spihlman and D. John Srivisal (the
"Emergence Metric Employees").


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The incentive to be awarded hereunder to Emergence Metric Employees shall be
calculated by multiplying the eligible employee's actual bonus awarded under the
AIP (in accordance historical practices of the Company and which shall not be
less than the employee's target bonus multiplied by the relevant funding factor)
by a factor based on the Emergence Date. The multiplier factors are set forth
below as the Emergence Metric. The Emergence Metric for each Emergence Metric
Employee is based solely on objective factors, and is not discretionary.

The metrics for 2007 are set forth as follows:

                          Core Pool and Business Pools

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Unit                       Measure       Weight       Measure      Weight
-----------------------------------------------------------------------------
                                                     Enterprise
                                                      Average
                          Enterprise                  Working
Core Pool                  EBITDAR         75%        Capital %      25%
-----------------------------------------------------------------------------
                                                      Average
                                                      Working
Integrated Nylon Pool      EBITDAR         75%        Capital %      25%
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                           EBITDAR         50%
                                                      Average
                            Gross                     Working
Saflex Pool                Margin %        25%        Capital %      25%
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                                                      Average
                            Gross                     Working
CPFilms Pool                Profit         75%        Capital %      25%
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                                                      Average
                                                      Working
Other PPD Pool             EBITDAR         75%        Capital %      25%
-----------------------------------------------------------------------------

                       Enterprise Discretionary Bonus Pool

                --------------------------------------------------

                    Unit              Measure           Weight
                --------------------------------------------------
                     All        Enterprise EBITDAR       100%
                --------------------------------------------------

Targeted performance levels and funding factors have been established by the
ECDC. Performance metrics may be adjusted, as appropriate, based on asset sales
and dispositions.


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                                Emergence Metric

             ---------------------------------------------------------
                                           Sullivan
                                            Klein         Wright
                Emergence        Quinn      DeBolt        Davies
                   Date                    Srivisal    De Temmerman
                                           Spihlman        Voss
             ---------------------------------------------------------
                  Q2 '07          1.5x      1.5x           1.3x
             ---------------------------------------------------------
                  Q3 '07          1.3x      1.3x           1.2x
             ---------------------------------------------------------
                  Q4 '07          1.1x      1.1x           1.1x
             ---------------------------------------------------------
               No emergence       0.8x      0.9x           1.0x
             ---------------------------------------------------------

Awards will be paid out no later than two and a half months following the
close of the calendar year 2007. An employee who has a component of their AIP
award comprised of the Emergence Metric shall be entitled to his or her award
even if his or her employment is terminated (voluntarily or involuntarily) on
or after the Emergence Date, or if the Emergence Metric Employee is terminated
without cause (as defined in his or her employment agreement) prior to the
Emergence Date. For purposes of clarification only, if an Emergence Metric
Employee is terminated (voluntarily or involuntarily) in 2007 after the
Emergence Date, the factor to be applied to his or her AIP award shall be
based on the quarter in which the Emergence Date occurred. If an Emergence
Metric Employee is terminated in 2007 without cause (as defined in his or her
employment agreement) prior to the Emergence Date, the factor to be applied to
his or her AIP award shall be based on the quarter in which employment was
terminated.

                                 II. Definitions

For the purposes of the Program the performance measures have the following
meaning:

 "Average Working Capital %" means, with respect to any specified entity, a 12
month average of customer receivables plus LIFO inventory less accounts payable,
divided by revenue, of such specified entity and its subsidiaries for the entire
12 month period, determined on a consolidated basis, in accordance with GAAP and
subject to historical internal reporting standards. Calculation of Average
Working Capital % shall exclude the impacts of fresh start accounting.

"EBITDA" means, with respect to any specified entity for any period,
consolidated net income (loss) of such specified entity and its subsidiaries for
such period, determined on a consolidated basis, in accordance with GAAP and
subject to historical internal reporting standards, excluding (without
duplication), to the extent deducted in determining consolidated net income
(loss) (a) any extraordinary, non-recurring, non-operational or non-cash gains
or losses, (b) restructuring charges, and (c) effects of discontinued
operations, plus (without duplication), in accordance with GAAP and to the
extent deducted in determining consolidated net income (loss), (i) interest
expense, and (ii) income tax expense plus, (x) depreciation expense, and (y)
amortization expense excluding amortization of deferred credits. Calculation of
EBITDA shall exclude the impacts of fresh start accounting.

"EBITDAR" means EBITDA plus, in accordance with GAAP and subject to historical
internal reporting standards, reorganization items. Calculation of EBITDAR shall
exclude the impacts of fresh start accounting.

"Emergence Date" means such date on which the Bankruptcy Court, if ever, shall
have confirmed a plan of reorganization of the Company under Chapter 11 of the
United States Bankruptcy Code (the "Chapter 11 Case") and such plan shall have
become effective; provided, however, that (a) if a confirmation hearing for the
reorganization plan is scheduled to occur in


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2007, but is adjourned until 2008, the Emergence Date shall be deemed to be the
date on which the hearing was originally scheduled; or (b) if the plan of
reorganization is confirmed in 2007, but becomes effective in 2008, the
Emergence Date shall be deemed to be the date the plan of reorganization was
confirmed.

 "Gross Margin %" means, with respect to any specified entity for any period,
gross margin divided by revenue of such specified entity and its subsidiaries
for such period, determined on a consolidated basis, in accordance with GAAP and
subject to historical internal reporting standards, excluding (without
duplication), to the extent deducted in determining gross margin or revenue (a)
any extraordinary, non-recurring, non-operational or non-cash gains or losses or
gains or losses from dispositions, (b) restructuring charges, and (c) effects of
discontinued operations.

"Gross Profit" means, with respect to any specified entity for any period, gross
profit determined on a consolidated basis, in accordance with GAAP and subject
to historical internal reporting standards, excluding (without duplication), to
the extent deducted in determining gross profit or revenue (a) any
extraordinary, non-recurring, non-operational or non-cash gains or losses or
gains or losses from dispositions, (b) restructuring charges, and (c) effects of
discontinued operations.

         III. Additional Information about the Annual Incentive Program

Pension and Savings and Investment Plan (SIP) Implications

For participants in the United States, the entire amount of any annual award
made for a year will become part of the earnings used to calculate your Savings
and Investment Plan (SIP) contributions, subject to IRS and SIP limits. For
participants outside the United States, the process established in your country,
pension plan or retirement program will apply.

Taxes

For U.S. participants, any award you receive under the Program is taxable as
ordinary income in the year of payment and is subject to all applicable
withholding taxes in the year paid. For participants outside the United States,
the laws of the tax jurisdiction(s) to which you are subject will apply.


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Legal Information

In all events, whether any cash award is made under the Program to a participant
will depend on management's recommendation and the decision of the ECDC (or its
delegate). With the exception of the Emergence Metric, all awards are subject to
the sole discretion of the ECDC or its delegate.

Nothing in this document or any other document describing or referring to the
Program shall confer any right whatsoever on any person to be considered for any
incentive commitments or awards.

This document does not purport to be complete and is subject to and governed by
actions, rules and regulations of the ECDC (or its delegate) and may be changed
or discontinued at any time without notice or liability with the exception of
the Emergence Metric. Incentive commitments and awards shall be subject to and
governed by the specific terms and conditions of this Program and the applicable
award.

Nothing in this document or any other document describing or referring to the
Program shall confer on any employee or participant the right to continue in the
employ of the Company or affect the right of the Company to terminate the
employment of any such person with or without cause.

Nothing contained herein shall require the Company to segregate any monies from
its general fund or to create any trusts, or to make any special deposits for
amounts payable to any participant.

No bonus commitment or unpaid bonus award shall be pledged or transferred except
as specifically provided for herein (such as in the case of death). If any
participant attempts to pledge, assign, transfer or otherwise alienate any
award, any obligation of the Company hereunder shall terminate.

The Company will withhold any federal, state or local, domestic or foreign taxes
as required by law or regulation or as the Company deems appropriate from any
payments that it makes to participants hereunder.

The Program is subject to the laws of the State of Delaware.

Nothing in this Program shall be deemed to modify any terms and conditions of a
participant's employment agreement.

With the exception of the emergence metric, the Program may be amended, modified
or terminated without notice by the Company at any time, including (but not
limited to) any such amendment, modification or termination that reduces or
eliminates any benefit otherwise to be paid or payable hereunder.

Administration

The program is administered by the ECDC.


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