Document:

<PAGE>

                                                                    EXHIBIT 10.1

                     MONSANTO 2000 MANAGEMENT INCENTIVE PLAN

1. PURPOSES

The Monsanto 2000 Management Incentive Plan is designed to:

     o    focus management on business performance that creates stockholder
          value;

     o    encourage innovative approaches to the business of the Company;

     o    reward for results;

     o    encourage ownership of Monsanto common stock by management; and

     o    encourage taking higher risks with an opportunity for higher reward.

2.  DEFINITIONS

2.1.  "1933 Act" shall have the meaning set forth in Section 12.14(a).

2.2.  "Adjustment Notice" shall have the meaning set forth in Section 6.2.

2.3.  "Affiliate" means (i) any entity that is an Associated Company of the
Company or a Subsidiary of the Company, and (ii) at a time when Pharmacia
beneficially owns a majority of the then-outstanding Shares, Pharmacia and any
entity that is an Associated Company of Pharmacia or a Subsidiary of Pharmacia.

2.4.  "Associated Company" of the Company or Pharmacia means any corporation,
partnership, joint venture, limited liability company, or other entity or
enterprise, of which the Company or Pharmacia, as applicable, owns or controls,
directly or indirectly, 10% or more of the outstanding shares of stock normally
entitled to vote for the election of directors, or of comparable equity
participation and voting power, other than a Subsidiary of the Company or
Pharmacia, as applicable.

2.5.  "Award" means any Option, Stock Appreciation Right, Restricted Share,
unrestricted Share, dividend equivalent unit or other award granted under this
Incentive Plan.

2.6.  "Award Certificate" means a written document, in such form as the
Committee may from time to time prescribe, setting forth the terms and
conditions of an Award.

2.7.  "Board" means the board of directors of the Company.

2.8.  "Board People Committee" means the People Committee of the Board or such
other committee consisting of two or more members of the Board as may be
appointed by the Board to administer this Incentive Plan pursuant to Section
4.1.

2.9.  "Change of Control" means a Monsanto Change of Control or a Pharmacia
Change of Control.

2.10.  "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
<PAGE>

2.11.  "Committee" means the Board People Committee, or its permitted delegate.

2.12.  "Company" means Monsanto Company, a Delaware corporation incorporated
February 9, 2000 (originally under the name Monsanto Ag Company), and any
successors thereto.

2.13.  "Covered Employee" means a Participant designated prior to or at the time
of the grant of an Award by the Committee as an individual who is or may be a
"covered employee" of the Company within the meaning of Section 162(m)(3) of the
Code, in the year in which the Company is expected to be entitled to a federal
income tax deduction with respect to the Award.

2.14.  "Director Plan" means the Monsanto Company Non-Employee Director Equity
Incentive Compensation Plan.

2.15.  "Disability" means a physical or mental disability that causes a
Participant to be considered disabled under the terms of the disability income
plan applicable to such Participant, whether or not such Participant actually
receives such disability benefits, or, in the event that there is no disability
income plan applicable to such Participant, as determined by the Committee.

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

2.17.  "Eligible Participant" means any member of the Board and any employee of
the Company or an Affiliate.

2.18.  "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.

2.19.  "Exercise Price" means the price at which a Participant may purchase a
Share covered by an Option, or the price with respect to which the Stock
Appreciation Right Fair Market Value of a Stock Appreciation Right is
determined, as applicable.

2.20.  "Fair Market Value" means, with respect to any given date on or before
the date of the initial public offering of the Shares, the fair market value of
a Share as determined by the Committee, and with respect to any given date after
the date of the initial public offering of the Shares, the average of the
highest and lowest per-share sales prices for the Shares during normal business
hours on the New York Stock Exchange for the immediately preceding date, or if
the Shares were not traded on the New York Stock Exchange on such date, then on
the next preceding date on which the Shares were traded, all as reported by such
source as the Committee may select.

2.21.  "Grant Date" means the date as of which the Committee determines that a
grant of an Award shall be effective.

2.22.  "Incentive Option" means an Option that is designated as an Incentive
Option and that meets the requirements of Section 422 of the Code for "incentive
stock options."

2.23.  "Incentive Plan" means the Monsanto 2000 Management Incentive Plan set
forth herein.

2.24.  "Monsanto Change of Control" means the happening of any of the events
described in subsections (a) through (d) below, if immediately following such
event, Pharmacia does not beneficially own a majority of the then-outstanding
Shares:

                                      -2-
<PAGE>

(a)  the acquisition by any Person of beneficial ownership (within the meaning
     of Rule 13d-3 promulgated under the Exchange Act) of either (i) the
     Requisite Common Percentage (as defined herein) of the then-outstanding
     shares of common stock of the Company (the "Outstanding Company Common
     Stock") or (ii) the Requisite Voting Percentage (as defined herein) of 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, that for purposes of
     this subsection (a), the following acquisitions shall not constitute a
     Change of Control:  (A) any acquisition directly from the Company; (B) any
     acquisition by the Company or a Subsidiary of the Company; (C) any
     acquisition by any employee benefit plan (or related trust) sponsored or
     maintained by the Company or a Subsidiary of the Company; or (D) any
     acquisition by any corporation pursuant to a transaction that complies with
     clauses (i), (ii) and (iii) of subsection (c) of this definition;

(b)  individuals who, as of the date of the initial public offering of the
     common stock of the Company, constitute the Board (the "Incumbent Board"),
     cease for any reason to constitute at least a majority of the Board;
     provided, that any individual becoming a director subsequent to the date
     hereof whose election, or nomination for election by the Company's
     stockholders, 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;

(c)  consummation by the Company of a reorganization, merger or 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 that 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 (excluding the
     Company, a Subsidiary of the Company, any corporation resulting from a
     Business Combination or any employee benefit plan (or related trust)
     thereof) beneficially owns, directly or indirectly, the Requisite Common
     Percentage of the then-outstanding shares of common stock of the
     corporation resulting from such Business Combination or the Requisite
     Voting Percentage of the combined voting power of the then-outstanding
     voting securities entitled to vote generally in the election of directors
     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

                                      -3-
<PAGE>

(d)  approval by the stockholders of the Company of a complete liquidation or
     dissolution of the Company.

2.25.  "Monsanto Leadership Team" means those individuals who are, immediately
before a Pharmacia Change of Control, members of the Monsanto Leadership Team or
any successor group thereto.

2.26.  "Non-Qualified Option" means an Option that is not intended to be treated
as an Incentive Option or an Option that does not meet the requirements of
Section 422 of the Code for "incentive stock options."

2.27.  "Option" means a right granted under this Incentive Plan to a Participant
to purchase a Share at a specified price for a specified period of time.

2.28.  "Participant" means an Eligible Participant to whom an Award has been
granted pursuant to this Incentive Plan; provided, that in the case of the death
or legal incapacity of a Participant, the term "Participant" shall refer to a
beneficiary designated pursuant to Section 10.4 or Section 12.1 or the guardian
or legal representative of the Participant acting in a fiduciary capacity on
behalf of such Participant under state law and court supervision or comparable
office and supervision under applicable foreign law.

2.29.  "Performance Objective" means a performance objective adopted by the
Committee pursuant to this Incentive Plan for Participants who have received
Awards.  If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which
it conducts its business, or other events or circumstances render the
Performance Objectives to be unsuitable, the Committee may modify such
Performance Objectives or the related minimum acceptable level of achievement,
in whole or in part, as the Committee deems appropriate.

2.30.  "Pharmacia" means Pharmacia Corporation, a Delaware corporation, and any
successor thereto.

2.31.  "Pharmacia Change of Control" means the happening of any of the events
described in subsections (a) through (d) below, if immediately following such
event, Pharmacia beneficially owns a majority of the then-outstanding Shares:

(a)  the acquisition by any individual, entity or group (within the meaning of
     Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
     beneficial ownership (within the meaning of Rule 13d-3 promulgated under
     the Exchange Act) of 20 percent or more of either (i) the then-outstanding
     shares of common stock of Pharmacia (the "Outstanding Pharmacia Common
     Stock") or (ii) the combined voting power of the then-outstanding voting
     securities of Pharmacia entitled to vote generally in the election of
     directors (the "Outstanding Pharmacia Voting Securities"); provided, that
     for purposes of this subsection (a), the following acquisitions shall not
     constitute a Change of Control:  (A) any acquisition directly from
     Pharmacia; (B) any acquisition by the Company, Pharmacia, or a Subsidiary
     of either of them; (C) any acquisition by any employee benefit plan (or
     related trust) sponsored or maintained by the Company, Pharmacia, or a
     Subsidiary of either of them; or (D) any acquisition by any corporation
     pursuant to a transaction that complies with clauses (i), (ii) and (iii) of
     subsection (c) of this definition;

                                      -4-
<PAGE>

(b)  individuals who, as of the date of the initial public offering of the
     Shares, constitute the Board of Directors of Pharmacia (the "Incumbent
     Pharmacia Board"), cease for any reason to constitute at least a majority
     of the Pharmacia Board; provided, that any individual becoming a director
     subsequent to the date hereof whose election, or nomination for election by
     Pharmacia's stockholders, was approved by a vote of at least a majority of
     the directors then comprising the Incumbent Pharmacia Board shall be
     considered as though such individual were a member of the Incumbent
     Pharmacia 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 of Directors of Pharmacia;

(c)  consummation of a reorganization, merger or consolidation or sale or other
     disposition of all or substantially all of the assets of Pharmacia or the
     acquisition of assets or stock of another corporation (a "Pharmacia
     Business Combination"), in each case, unless, following such Pharmacia
     Business Combination, (i) all or substantially all of the individuals and
     entities who were the beneficial owners, respectively, of the Outstanding
     Pharmacia Common Stock and Outstanding Pharmacia Voting Securities
     immediately prior to such Pharmacia 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 Pharmacia Business Combination (including without limitation a
     corporation that as a result of such transaction owns Pharmacia or all or
     substantially all of Pharmacia's assets either directly or through one or
     more subsidiaries) in substantially the same proportions as their
     ownership, immediately prior to such Pharmacia Business Combination of the
     Outstanding Pharmacia Common Stock and Outstanding Pharmacia Voting
     Securities, as the case may be, (ii) no Person (excluding the Company,
     Pharmacia, a Subsidiary of either of them, any corporation resulting from
     such Pharmacia Business Combination or any employee benefit plan (or
     related trust) thereof) beneficially owns, directly or indirectly, 20% or
     more of, respectively, the then-outstanding shares of common stock of the
     corporation resulting from such Pharmacia 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
     Pharmacia Business Combination and (iii) at least a majority of the members
     of the board of directors of the corporation resulting from such Pharmacia
     Business Combination were members of the Incumbent Pharmacia Board at the
     time of the execution of the initial agreement, or of the action of the
     Board of Directors of Pharmacia, providing for such Pharmacia Business
     Combination; or

(d)  approval by the stockholders of Pharmacia of a complete liquidation or
     dissolution of Pharmacia.

2.32.  "Qualified Performance-Based Award" means an Award designated as such by
the Committee at the time of grant, based upon a determination that (i) the
recipient is a Covered Employee and (ii) the Committee wishes such Award to
qualify for the Section 162(m) Exemption, and made subject to performance goals
satisfying the requirements for the Section 162(m) Exemption.

2.33.  "Reporting Person" means a person subject to the reporting requirements
of Section 16(a) of the Exchange Act with respect to Shares.

                                      -5-
<PAGE>

2.34.  "Requisite Common Percentage" means, as of any given time, a percentage
equal to or greater than the higher of (i) 20 percent and (ii) the percentage of
the then-outstanding Shares then beneficially owned by Pharmacia.

2.35.  "Requisite Voting Percentage" means, as of any given time, a percentage
equal to or greater than the higher of (i) 20 percent and (ii) the percentage of
the voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors then beneficially owned
by Pharmacia.

2.36.  "Restricted Shares" means Shares that are granted or delivered subject to
restrictions in accordance with Section 10.3.

2.37.  "Retirement" means a Participant's Termination of Service on or after the
date on which the Participant attains age 50.

2.38.  "Second Trigger" shall be considered to have occurred (i) with respect to
all Participants if, during the one-year period immediately following a
Pharmacia Change of Control, one of the following occurs:  (A) more than half of
the members of the Monsanto Leadership Team experience a Termination without
Cause or a Termination for Good Reason; (B) the headquarters of the Company is
relocated by more than 35 miles from its location immediately before the
Pharmacia Change of Control, or a plan to effect such a relocation is publicly
announced; (C) it is publicly announced that Pharmacia intends to take steps
that will result in its ceasing to beneficially own a majority of the then-
outstanding Shares or that would otherwise result in a Monsanto Change of
Control, and such steps have not previously been approved by a majority of the
members of the Monsanto Leadership Team; and (ii) with respect to a given
Participant if, during the period of one year immediately following a Pharmacia
Change of Control, or the Participant experiences a Termination without Cause,
or a Termination for Good Reason.

2.39.  "Section."  Unless otherwise indicated, all "Section" references are to
sections of this Incentive Plan.

2.40.  "Section 162(m) Exemption" means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C) of the Code.

2.41.  "Shares" means shares of Company common stock.  If there has been an
adjustment or substitution pursuant to Section 6, the term "Shares" shall also
include any shares of stock or other securities that are substituted for Shares
or into which the Shares are adjusted pursuant thereto.

2.42.  "Stock Appreciation Right" means a right described in Section 9.

2.43.  "Stock Appreciation Right Fair Market Value" means the excess of (i) the
Fair Market Value of a Share on the date of exercise of a Stock Appreciation
Right, over (ii) the Exercise Price of the Stock Appreciation Right.

2.44.  "Subsidiary" of the Company or Pharmacia means any corporation,
partnership, joint venture, limited liability company, or other entity or
enterprise of which the Company or Pharmacia, as applicable, owns or controls,
directly or indirectly, 50% or more of the outstanding shares of stock normally
entitled to vote for the election of directors, or of comparable equity
participation and voting power.

                                      -6-
<PAGE>

2.45.  "Termination for Cause" of a Participant or any other individual means a
Termination of Service for "cause," "just cause," "misbehavior," or any similar
term, as defined in any unexpired employment agreement between the Participant
or other individual and the Company or an Affiliate, as the case may be
(including without limitation any employment agreement the effectiveness of
which has been triggered by a change of control as defined therein), or, in the
absence of such an agreement, or if such agreement exists but does not define
any such term, an involuntary Termination of Service of the Participant or other
individual on account of the Participant's or other individual's engaging in (i)
any willful or intentional neglect in performing his duties, including, but not
limited to, fraud, misappropriation or embezzlement involving property of the
Company or an Affiliate, or (ii) any other intentional wrongful act that may
impair the goodwill or business of the Company or an Affiliate, or that may
cause damage to any of their businesses.

2.46.  "Termination without Cause" of a Participant or any other individual
means a Termination of Service that is involuntary on the part of the
Participant or other individual, other than a Termination for Cause or as a
result of the Participant's death or Disability.

2.47.  "Termination for Good Reason" with respect to a Participant means the
Participant's Termination of Service for "good reason," "just cause," "material
breach by the employer" or any similar term, as defined in any unexpired
employment agreement between the Participant and the Company or an Affiliate, as
the case may be (including without limitation any employment agreement the
effectiveness of which has been triggered by a change of control as defined
therein), or, in the absence of such an agreement, or if such agreement exists
but does not define any such term, the Participant's Termination of Service by
action of the Participant following:  (i) any change affecting the position of
the Participant (whether resulting from a transfer of the Participant to another
position, a change in the Company's business, or any other event) such that the
Participant no longer has a position substantially equivalent to the
Participant's position immediately before the Pharmacia Change of Control for
which the Participant is qualified by education, training and experience; (ii) a
decrease in the Participant's salary; (iii) a material decrease in the
Participant's opportunity to earn annual and long-term incentive compensation as
compared to the opportunities provided to the Participant before the Pharmacia
Change of Control; (iv) a material decrease in the aggregate value of the
Participant's employee benefits and fringe benefits as compared to those
provided to the Participant before the Pharmacia Change of Control; or (v) a
requirement that the Participant relocate his or her place of employment by more
than 35 miles.

2.48.  "Termination of Service" of a Participant or any other individual occurs
when the Participant or other individual is no longer either an employee of the
Company or any of the Affiliates (including without limitation because the
entity that employs the Participant or other individual has ceased to be an
Affiliate), or a member of the Board.

3.  EFFECTIVE DATE OF THIS INCENTIVE PLAN

The effective date (the "Effective Date") of this Incentive Plan is ___________,
2000, the first date as of which this Incentive Plan had been both adopted by
the Board and approved by Pharmacia as the Company's sole stockholder.

4.  ADMINISTRATION

4.1.  Delegation.  This Incentive Plan shall be administered by the Board People
Committee except to the extent the Board People Committee delegates
administration pursuant to this

                                      -7-
<PAGE>

paragraph. The Board People Committee may delegate all or a portion of the
administration of this Incentive Plan to one or more committees, and may
authorize further delegation by the committees to senior managers of the
Company, its Subsidiaries, or Pharmacia; provided, that determinations regarding
the timing, pricing, amount and terms of any Award to a Reporting Person shall
be made only by the Board People Committee; and provided, further, that no such
delegation may be made that would cause Awards or other transactions under this
Incentive Plan to cease to be exempt from Section 16(b) of the Exchange Act or
cause an Award designated as a Qualified Performance-Based Award not to qualify
for, or to cease to qualify for, the Section 162(m) Exemption; and provided,
finally, that no delegation may be made of the powers granted to the Board
People Committee under Section 12.16. Any such delegation may be revoked by the
Committee at any time.

4.2.  Scope of Authority.  The Committee shall have full power and authority to
administer and interpret this Incentive Plan and to adopt such rules,
regulations, agreements, guidelines and instruments for the administration of
this Incentive Plan as the Committee deems necessary or advisable.  The
Committee's powers include, but are not limited to (subject to the specific
limitations described herein), the authority to determine the employees to be
granted Awards under this Incentive Plan; to determine the size and applicable
terms and conditions of grants to be made to such employees; to determine the
time when Awards will be granted; to determine the terms and conditions of any
grant, including, without limitation, the Exercise Price, any vesting condition,
restriction or limitation (which may contain Performance Objectives relating to
the performance of the Participant, the Company or an Affiliate) and any
acceleration of vesting or waiver of forfeiture regarding any grant and the
Shares relating thereto; to determine whether a resignation was voluntary and
whether a Termination of Service was a Termination for Cause; and to modify,
amend or adjust the terms and conditions of any grant made to a Participant, at
any time, provided, that the Committee may not reduce the Exercise Price of, or
cancel and regrant, any outstanding Option or Stock Appreciation Right.

4.3.  Actions and Interpretations.  The Committee's interpretations of this
Incentive Plan and of Award Certificates, and all actions taken and
determinations made by the Committee concerning any matter arising under or with
respect to this Incentive Plan or any Awards granted hereunder, shall be in its
sole discretion and final, binding and conclusive on all interested parties,
including the Company, an Affiliate, stockholders of any of those entities, and
all former, present and future employees thereof.  The Committee may, with
respect to all questions of accounting, rely conclusively upon any determination
made by the internal accountants of the Company.

4.4.  Board Authority.  Any authority granted to the Committee may also be
exercised by the Board, except to the extent that the grant or exercise of such
authority would cause any Qualified Performance-Based Award to cease to qualify
for the Section 162(m) Exemption.  To the extent that any permitted action taken
by the Board conflicts with action taken by the Committee, the Board action
shall control.

4.5.  Award Certificates.  Each Award shall be evidenced by an Award
Certificate.

5.  SHARES AUTHORIZED

5.1.  Total Number.  The total number of Shares that may be delivered pursuant
to Awards under this Incentive Plan shall not exceed the number of Shares that
equals 8.85% of the outstanding Shares immediately after the initial public
offering of the Shares.  Awards of Options, Restricted Stock and Deferred Stock
under the Director Plan shall automatically be granted under this Incentive Plan
as and when provided for in the Director Plan.

                                      -8-
<PAGE>

5.2.  Individual Limit.  The total number of Shares for which Awards may be
granted under this Incentive Plan to any one Eligible Participant shall not
exceed, in any three-year period, 15% of the total number of Shares for which
Awards may be made under this Incentive Plan.

5.3.  Source of Shares.  The Shares that may be delivered pursuant to Awards
granted under this Incentive Plan may be authorized but unissued Shares not
reserved for any other purposes or Shares held in or acquired for the treasury
of the Company, or both.

5.4.  Forfeitures, Etc.  If any Award is forfeited, any Option (and the related
Stock Appreciation Right, if any) or any Stock Appreciation Right not related to
an Option terminates, expires or lapses without being exercised, or any Stock
Appreciation Right is exercised for cash, the Shares subject to such Awards that
are, as a result, not delivered to the Participant shall again be available for
delivery in connection with Awards.  If the Exercise Price of any Option is
satisfied by delivering Shares to the Company (by either actual delivery or by
attestation), only the number of Shares issued net of the Shares delivered or
attested to shall be deemed delivered for purposes of determining the maximum
number of Shares available for delivery pursuant to Awards other than Incentive
Options under this Incentive Plan.  To the extent any Shares subject to an Award
are not delivered to a Participant because such Shares are used to satisfy an
applicable tax withholding obligation, such Shares shall not be deemed to have
been delivered for purposes of determining the maximum number of Shares
available for delivery under this Incentive Plan.

6.  SHARE ADJUSTMENTS

6.1.  Adjustments.  In the event of any change in corporate capitalization such
as a stock split, any corporate transaction such as a merger, consolidation,
separation, spin-off, or other distribution of stock or property of the Company,
any reorganization (whether or not such reorganization comes within the
definition of reorganization in Section 368 of the Code), or any partial or
complete liquidation of the Company, then notwithstanding any other provision of
this Incentive Plan, the Committee or Board may make such substitution or
adjustments in the aggregate number and kind of shares reserved for delivery
pursuant to Awards under this Incentive Plan, in the limitations set forth in
Section 5, in the number and kind of shares subject to outstanding Awards, in
the Exercise Price of outstanding Options and Stock Appreciation Rights, and/or
such other equitable substitution or adjustments as it may determine to be
appropriate; provided, that the number of shares subject to any Award shall
always be a whole number and that no adjustment will be permissible hereunder to
the extent it would cause any Qualified Performance-Based Award to fail to
qualify for the Section 162(m) Exemption.

6.2.  Adjustment Notices.  Notice of any adjustment or substitution pursuant to
this Section 6 (the "Adjustment Notice") shall be given by the Company to each
Participant holding an affected Award; provided, that such adjustment or
substitution shall be effective and binding for all purposes of this Incentive
Plan whether or not an Adjustment Notice is given.  An Adjustment Notice may be
given by making it generally available to Participants via a newsletter or other
written employee communication, whether such communication is made available on
paper or electronically.  Adjustment Notices, when given, shall be considered to
be part of the Award Certificate for each affected Award.

7.  AWARDS OF OPTIONS AND STOCK APPRECIATION RIGHTS

7.1.  Grants.  Options and Stock Appreciation Rights may be granted at such time
or times determined by the Committee following the Effective Date to any
Eligible Participant, except that Incentive Options may not be granted to
Eligible Participants who are not employees of a parent or

                                      -9-
<PAGE>

subsidiary corporation, as defined in Sections 424(e) and (f), respectively, of
the Code, with respect to the Company. Each Option and each Stock Appreciation
Right shall be granted subject to such terms and conditions, if any, not
inconsistent with this Incentive Plan, as shall be determined by the Committee
and set forth in the applicable Award Certificate, including any provisions as
to continued employment or continued service as consideration for the grant or
exercise of such Option or Stock Appreciation Right, provisions as to
performance conditions, and any provisions that may be advisable to comply with
applicable laws, regulations or the rulings of any governmental authority.

7.2.  Consideration.  The Committee may offer Eligible Participants the
opportunity to elect to receive an Option or Stock Appreciation Right in lieu of
a salary increase or a bonus, or may offer Eligible Participants the opportunity
to purchase Options or Stock Appreciation Rights for cash or such other
consideration as the Committee determines.

7.3.  Exercise of Options or Stock Appreciation Rights.  An Option or Stock
Appreciation Right, or portion thereof, may be exercised during the period
beginning on the date when it first becomes exercisable in accordance with its
terms, and ending upon the expiration of its term or, if sooner, when it is
forfeited as a result of a Termination of Service or otherwise in accordance
with the terms and conditions of the Option or Stock Appreciation Right.  The
term of an Option or Stock Appreciation Right shall expire on such date, not
later than the tenth anniversary of the Grant Date, as set forth in the
applicable Award Certificate.  The exercise of all or a portion of a Stock
Appreciation Right granted with a related Option shall result in the forfeiture
of all or a corresponding portion of the related Option and vice versa.  To
exercise an Option or Stock Appreciation Right, a Participant shall give notice
to the Company or its agent, specifying the number of Shares with respect to
which the Option or Stock Appreciation Right is being exercised, and otherwise
complying with such procedures as the Committee may from time to time establish.

7.4.  Effect of Termination of Service.  Unless otherwise set forth in the
applicable Award Certificate, the effect of a Participant's Termination of
Service on any Option or Stock Appreciation Right then held by the Participant,
to the extent it has not previously expired or been exercised, shall be as
follows:

(a)  Before Vesting has Commenced.  If such Termination of Service occurs before
     any portion of the Option or Stock Appreciation Right has become
     exercisable, the Participant shall forfeit such Option or Stock
     Appreciation Right;

(b)  After Vesting has Commenced.  If such Termination of Service occurs after
     the Option or Stock Appreciation Right has become exercisable in whole or
     in part:

     (i)  Voluntary Resignation. As a result of the Participant's voluntary
          resignation, such Option or Stock Appreciation Right shall be
          exercisable for a period of 90 days following such Termination of
          Service, to the extent it is exercisable immediately before such
          Termination of Service, and shall then be forfeited to the extent not
          exercised;

     (ii) Termination for Cause. In a Termination for Cause, the Participant
          shall forfeit such Option or Stock Appreciation Right;

     (iii) Retirement. By reason of the Participant's Retirement, such Option or
          Stock Appreciation Right shall be exercisable for a period of five
          years following such

                                      -10-
<PAGE>

          Termination of Service, to the extent it is exercisable immediately
          before such Termination of Service, and shall then be forfeited to the
          extent not exercised; and

     (iv) Other Involuntary Termination. In the case of any other Termination of
          Service (including by reason of death or Disability), such Option or
          Stock Appreciation Right shall be exercisable for a period of one year
          following such Termination of Service, to the extent it is exercisable
          immediately before such Termination of Service, and shall then be
          forfeited to the extent not exercised.

(c)  Limitation.  Notwithstanding the foregoing, in no event shall an Option or
     Stock Appreciation Right be exercisable after the expiration of its term.

7.5.  No Obligation to Exercise Option or Stock Appreciation Right.  The
granting of an Option or Stock Appreciation Right shall impose no obligation
upon the Participant or upon a beneficiary of a Participant to exercise such
Option or Stock Appreciation Right.

8.  OPTIONS

8.1.  Exercise Price.  The per-Share Exercise Price of an Option shall be
established by the Committee in connection with the grant thereof, but shall not
be less than 100% of the Fair Market Value of a Share on the Grant Date.  No
exercise of an Option shall be effective before payment of the Exercise Price
therefor.

8.2.  Method of Payment.  The Exercise Price for Shares purchased upon exercise
of an Option shall be paid upon such terms as shall be set forth in the
applicable Award Certificate.  Without limiting the foregoing, the Committee may
establish payment terms for the exercise of Options that permit the Participant
to deliver Shares (or other evidence of ownership of Shares satisfactory to the
Company), including, at the Committee's option, Restricted Shares, with a Fair
Market Value equal to the Exercise Price as payment; provided, that any such
Shares have been owned by the Participant for at least six months free of any
restrictions and without being subject to forfeiture.  The payment terms for an
Incentive Option must be established in connection with the grant thereof.

9.  STOCK APPRECIATION RIGHTS

9.1.  Nature of Right.  A Stock Appreciation Right shall entitle its holder to
receive, upon exercise, a payment in cash or Shares having an aggregate value
equal to the Stock Appreciation Right Fair Market Value.  A Stock Appreciation
Right may be granted either (i) with a related Option at the time the Option is
originally granted or, in the case of a Non-Qualified Option, thereafter, or
(ii) without a related Option.

9.2.  Exercise Price.  The Exercise Price per Share of a Stock Appreciation
Right that has a related Option shall equal the Exercise Price per Share of the
related Option.  The Exercise Price per Share of a Stock Appreciation Right that
does not have a related Option shall be established in connection with the grant
thereof, but shall not be less than 100% of the Fair Market Value of a Share on
the Grant Date.

9.3.  Terms and Conditions.  Except as expressly provided herein, each Stock
Appreciation Right that is granted hereunder shall be subject to the terms and
conditions specified in the applicable Award Certificate.  A Stock Appreciation
Right that is granted with a related Option shall be subject to the same terms
and conditions as the Option, shall be exercisable only to the extent its

                                      -11-
<PAGE>

related Option is exercisable, and shall terminate or be forfeited and cease to
be exercisable when the term of the related Option expires or the related Option
is forfeited.

9.4.  Form of Payment.  The Committee shall determine, in each case, whether the
payment to a Participant upon exercise of a Stock Appreciation Right will be in
the form of all cash, all Shares (which may be Restricted Shares) or any
combination thereof.  If payment is to be made in Shares, the number of Shares
shall be equal to the value of the Stock Appreciation Right, divided by the
Stock Appreciation Right Fair Market Value of Shares on the date of exercise.

9.5.  Proceeds.  The Committee shall determine the timing of any payment made in
cash, Shares or a combination thereof upon exercise of a Stock Appreciation
Right hereunder, whether in a lump sum, in annual installments or otherwise
deferred, and the Committee shall determine whether such payments may bear
interest or dividend equivalents pursuant to Section 11.

10.  BONUS SHARES AND RESTRICTED SHARES

10.1.  Awards.  An Award of Shares or Restricted Shares may be made at such time
or times determined by the Committee following the Effective Date to any person
who is an Eligible Participant.  The terms and conditions of payment of any
Award, including, without limitation, what part of such Award shall be paid in
unrestricted Shares or Restricted Shares, the time or times of payment of any
Award, and the time or times of the lapse of the restrictions on Restricted
Shares shall be set forth in the applicable Award Certificate.

10.2.  Shares.  For the purpose of determining the number of Shares to be used
in payment of an Award denominated in cash but payable in whole or in part in
Shares or Restricted Shares, the cash value of the Award to be so paid shall be
divided by the Fair Market Value of a Share on the date of the determination of
the amount of the Award by the Committee, or, if the Committee so directs, the
date immediately preceding the date the Award is paid.

10.3.  Restricted Shares.  An Award of Restricted Shares shall be delivered to
the Participant at the time of grant either by book-entry registration or by
delivering to the Participant, or a custodian or escrow agent (including without
limitation the Company or one or more of its employees) designated by the
Committee, a certificate or certificates for such Restricted Shares, registered
in the name of such Participant.  Except to the extent otherwise provided in the
applicable Award Certificate, the Participant shall have all of the rights of a
stockholder with respect to such Restricted Shares.

10.4.  Terms and Conditions.  Restricted Shares shall be subject to such terms
and conditions, and to such restrictions against sale, transfer or other
disposition, as may be set forth in the applicable Award Certificate.  Unless
otherwise set forth in the applicable Award Certificate, new, additional or
different Shares or other securities resulting from any adjustment to or
substitution for Restricted Shares pursuant to Section 6 shall be subject to the
same terms, conditions, and restrictions as the Restricted Shares prior to such
adjustment or substitution.  The Committee may remove, modify or accelerate the
removal of forfeiture conditions and other restrictions on any Restricted Shares
in the event of hardship or Disability of the Participant while employed (or
while providing services as a director), in connection with the Participant's
Termination of Service or relocation to another country, or for such other
reasons as the Committee may deem appropriate, except to the extent that such
action would cause a Qualified Performance-Based Award to cease to qualify for
the Section 162(m) Exemption.  In the event of the death of a Participant
following the transfer of Restricted Shares to him or her, the legal
representative of the Participant, the beneficiary designated in writing by the
Participant during his or her lifetime, or the person

                                      -12-
<PAGE>

receiving such Shares under the Participant's will or under the laws of descent
and distribution shall take such Shares subject to the same restrictions,
conditions and provisions in effect at the time of the Participant's death, to
the extent applicable, unless otherwise set forth in the applicable Award
Certificate.

11.  DIVIDENDS, DIVIDEND EQUIVALENTS AND INTEREST EQUIVALENTS

11.1.  No Cash Dividends.  No cash dividends shall be paid on Shares that have
been awarded but not registered or delivered.  The applicable Award Certificate
may provide for the payment of dividend equivalents with respect to any Option,
Stock Appreciation Right or other Award pursuant to which Shares are or may
become deliverable in the future, equal in value to the cash dividends that
would have been paid with respect to each Share subject to such Award, if it had
been outstanding during the period between the date of the Award and the time
each such Share is delivered or the Award is forfeited as to such Share.
"Dividend equivalents" may be:

(a)  paid in cash or Shares, either from time to time prior to or at the time of
     the delivery of such Shares, or upon expiration of the Option or Stock
     Appreciation Right, if it shall not have been fully exercised (except that
     payment of the dividend equivalents on Incentive Options may not be made
     prior to exercise); or

(b)  converted into contingently credited Shares (with respect to which dividend
     equivalents shall accrue) in such manner, at such value, and deliverable at
     such time or times as may be set forth in the applicable Award Certificate.

11.2.  Interest Equivalents.  The applicable Award Certificate may provide for
payment of interest equivalents (i) on any portion of any Award payable at a
future time in cash, and (ii) on dividend equivalents that are payable at a
future time in cash.

11.3.  Restricted Shares.  The applicable Award Certificate may provide that
dividends paid on Restricted Shares shall, during the applicable restricted
period, be held by the Company to be paid upon the lapse of restrictions or to
be forfeited upon forfeiture of the Shares.

12.  MISCELLANEOUS PROVISIONS

12.1.  Non-Transferability.  During a Participant's lifetime, his or her Options
and Stock Appreciation Rights shall be exercisable only by the Participant.  No
Awards shall be transferable other than by will or the laws of descent and
distribution; no Awards shall be subject, in whole or in part, to attachment,
execution or levy of any kind; and any purported transfer in violation hereof
shall be null and void.  Without limiting the generality of the foregoing, no
domestic relations order purporting to authorize a transfer of an Award shall be
recognized as valid.  The Committee may establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable or Shares deliverable in the event of, or following, the Participant's
death, may be provided.

12.2.  No Right to Continued Employment or Service.  Nothing contained in this
Incentive Plan, any Award Certificate or any booklet or document describing or
referring to this Incentive Plan shall be deemed to confer on any Eligible
Participant the right to continue as an employee or director of the Company or
an Affiliate, whether for the duration of a Participant's Award vesting schedule
or otherwise, or affect the right of the Company or an Affiliate to terminate
the employment or service of any such person for any reason.

                                      -13-
<PAGE>

12.3.  Governing Law; Construction.  This Incentive Plan and any actions taken
hereunder shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to the application of the conflicts of
laws provisions thereof.  Titles and headings to Sections are for purposes of
reference only, and shall in no way limit, define or otherwise affect the
meaning or interpretation of this Incentive Plan.

12.4.  Certain Tax Matters.  Notwithstanding any other provision of this
Incentive Plan, the Committee may make such provisions and take such steps as it
may deem necessary or appropriate for the withholding of any taxes that the
Company is required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with the grant or exercise of any Option or otherwise in connection with any
Option, any Stock Appreciation Right or the exercise thereof, or otherwise in
connection with any Award, including without limitation the withholding of cash
or Shares that would be paid or delivered pursuant to such exercise or Award or
any other exercise or Award under this Incentive Plan until the Participant
reimburses the Company for the amount the Company is required to withhold with
respect to such taxes, or cancelling any portion of such Award or any other
Award under this Incentive Plan in an amount sufficient to reimburse the Company
for the minimum amount it is required to so withhold, or selling any property
contingently credited by the Company for the purpose of paying such Award or any
other Award under this Incentive Plan, in order to withhold or reimburse the
Company for the minimum amount it is required to so withhold.  In addition, the
Committee may establish appropriate procedures to ensure that it receives prompt
notice of any event that may make available to the Company or any Affiliate any
tax deduction in connection with an Award.

12.5.  Foreign Participants.  In order to facilitate the granting of Awards to
Eligible Participants who are foreign nationals or who are employed outside of
the United States of America, the Committee may provide for such special terms
and conditions, including without limitation substitutes for Awards, as the
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom.  The Committee may approve any supplements to,
or amendments, restatements or alternative versions of this Incentive Plan as it
may consider necessary or appropriate for the purposes of this Section 12.5
without thereby affecting the terms of this Incentive Plan as in effect for any
other purpose, and the Secretary or other appropriate officer of the Company may
certify any such documents as having been approved and adopted pursuant to
properly delegated authority; provided, that no such supplements, amendments,
restatements or alternative versions shall include any provisions that are
inconsistent with the terms of this Incentive Plan, as then in effect.
Participants subject to the laws of a foreign jurisdiction may request copies
of, or the right to view, any materials that are required to be provided by the
Company pursuant to the laws of such jurisdiction.

12.6.  No Rights as a Stockholder.  No Participant shall have any rights as a
stockholder with respect to any Shares to be delivered pursuant to an Award
prior to the date that the Participant is recorded as the holder of such Shares
on the records of the Company and such Shares are delivered to such Participant
by book-entry registration or delivery of a certificate or certificates therefor
to the Participant, or to a custodian or escrow agent designated by the
Committee (which may include, without limitation, the Company or one or more of
its employees).

12.7.  No Right to Award.  No employee or other person shall have any claim or
right to be granted an Award under this Incentive Plan.  Having received an
Award under this Incentive Plan shall not give a Participant or other person any
right to receive any other Award under this Incentive Plan.  A Participant shall
have no rights or interests in any Award, except as set forth herein and in the
applicable Award Certificate.

                                      -14-
<PAGE>

12.8.  Unfunded Plan.  It is presently intended that this Incentive Plan shall
be unfunded.  Except for reserving a sufficient number of authorized Shares, to
the extent required by law to meet the requirements of this Incentive Plan, the
Company shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the delivery of Shares relating
to Awards granted pursuant to this Incentive Plan.

12.9.  Exclusion from Pension and other Benefit Plan Computation.  Except to the
extent otherwise required by applicable law, by exercise of an Option or Stock
Appreciation Right or receipt of another type of Award, (i) each Participant
shall be deemed to have agreed that such Award is special incentive compensation
that will not be taken into account, in any manner, as salary, compensation or
bonus in determining the amount of any payment under any pension, retirement or
other employee benefit plan of the Company or an Affiliate, and (ii) each
beneficiary of a deceased Participant shall be deemed to have agreed that such
Award will not affect the amount of any life insurance coverage, if any,
provided by the Company or an Affiliate on the life of the Participant that is
payable to the beneficiary under any life insurance plan covering employees or
directors of the Company or an Affiliate.

12.10.  Notice.  Except as otherwise provided in this Incentive Plan, all
notices or other communications required or permitted to be given under this
Incentive Plan to the Company shall be in writing and shall be deemed to have
been duly given if delivered personally or mailed, postage pre-paid, as follows:
(i) if to the Company, at its principal business address to the attention of the
Secretary; and (ii) if to any Participant, at the last address of the
Participant known to the sender at the time the notice or other communication is
sent.

12.11.  Inurement of Rights and Obligations.  The rights and obligations under
this Incentive Plan and any related documents shall inure to the benefit of, and
shall be binding upon, the Company, its successors and assigns, and the
Participants and their beneficiaries.

12.12.  Costs and Expenses of This Incentive Plan.  Except as otherwise provided
herein, the costs and expenses of administering this Incentive Plan shall be
borne by the Company, and shall not be charged to any Award nor to any
Participant receiving an Award.  Costs and expenses associated with the
redemption or exercise of any Award under this Incentive Plan, including, but
not limited to, commissions charged by any agent of the Company, may be charged
to the Participant.

12.13.  No Limitation on Rights of the Company

(a)  The grant of any Award shall not in any way affect the right or power of
     the Company to make adjustments, reclassifications, or changes in its
     capital or business structure or to merge, consolidate, dissolve,
     liquidate, sell or transfer all or any part of its business or assets.
     Further, this Incentive Plan shall not restrict the authority of the
     Company, for proper corporate purposes, to grant or assume Awards, other
     than under this Incentive Plan, to or with respect to any other person.

(b)  If the Committee so directs, the Company may issue or transfer Shares to an
     Affiliate, for such lawful consideration as the Committee may specify, upon
     the condition or understanding that the Affiliate will transfer such Shares
     to a Participant in accordance with the terms of an Award granted to such
     Participant and specified by the Committee pursuant to the provisions of
     this Incentive Plan.  All Shares issued pursuant to Awards that are
     forfeited shall revert to the Company upon such forfeiture.

                                      -15-
<PAGE>

12.14.  Legal Requirements

(a)  Restrictions on Resale.  Notwithstanding any other provision of this
     Incentive Plan, no Participant who acquires Shares pursuant to this
     Incentive Plan may, during any period of time that such Participant is an
     affiliate of the Company (within the meaning of the rules and regulations
     of the Securities and Exchange Commission under the Securities Act of 1933,
     as amended (the "1933 Act")), sell such Shares, unless such offer and sale
     is made (i) pursuant to an effective registration statement under the 1933
     Act, which is current and includes the Shares to be sold, or (ii) pursuant
     to an appropriate exemption from the registration requirement of the 1933
     Act, such as that set forth in Rule 144 promulgated under the 1933 Act.

(b)  Registration, Listing and Qualification of Shares.  Notwithstanding any
     other provision of this Incentive Plan, if at any time the Committee shall
     determine that the registration, listing or qualification of the Shares
     covered by an Award upon any securities exchange or under any foreign,
     federal, state or local law or practice, or the consent or approval of any
     governmental regulatory body, is necessary or desirable as a condition of,
     or in connection with, the granting of such Award or the purchase or
     receipt of Shares thereunder, no Shares may be purchased, delivered or
     received pursuant to such Award unless and until such registration,
     listing, qualification, consent or approval shall have been effected or
     obtained free of any condition not acceptable to the Committee.  Any
     Participant receiving or purchasing Shares pursuant to an Award shall make
     such representations and agreements and furnish such information as the
     Committee may request to assure compliance with the foregoing or any other
     applicable legal requirements.  The Company shall not be required to issue
     or deliver any certificate or certificates for Shares under this Incentive
     Plan prior to the Committee's determination that all related requirements
     have been fulfilled.  The Company shall in no event be obligated to
     register any securities pursuant to the 1933 Act or applicable state or
     foreign law or to take any other action in order to cause the issuance and
     delivery of such certificates to comply with any such law, regulation or
     requirement.

12.15.  Fractional Shares.  The Company shall not be required to issue any
fractional Shares pursuant to this Incentive Plan.  The Committee may provide
for the elimination of fractions or for the settlement thereof in cash.

12.16.  Amendment or Termination

(a)  The Board People Committee may, from time to time, amend or modify this
     Incentive Plan or any outstanding Awards, including, without limitation, to
     authorize the Committee to make Awards payable in other securities or other
     forms of property of a kind to be determined by the Committee, and such
     other amendments as may be necessary or desirable to implement such Awards,
     or terminate this Incentive Plan or any provision thereof; provided, that
     no amendments or modifications to this Incentive Plan shall, without the
     prior approval of the stockholders normally entitled to vote for the
     election of directors of the Company, permit the Company to decrease the
     Exercise Price of any outstanding Option or Stock Appreciation Right; and
     provided, further, that amendments to Section 5.1 shall require the
     approval of the Board.

(b)  No amendment to or termination of this Incentive Plan or any provision
     hereof, and no amendment to or cancellation of any outstanding Award shall,
     without the written consent of the affected Participant, adversely affect
     any outstanding Award.

                                      -16-
<PAGE>

(c)  Notwithstanding the above provisions, the Board People Committee shall have
     authority to amend outstanding Awards and this Incentive Plan to take into
     account changes in law and tax and accounting rules as well as other
     developments, and to grant Awards that qualify for beneficial treatment
     under such rules, without stockholder approval and without the consent of
     affected Participants.

12.17.  Change of Control

(a)  The provisions of this Section 12.17(a) shall apply notwithstanding any
     provision of this Incentive Plan other than Sections 12.4, 12.14, and
     12.17(b), unless the Committee determines otherwise at the time of grant.
     Upon the occurrence of a Monsanto Change of Control, (i) any Awards
     outstanding as of the date of such Change of Control, and that are not then
     vested, shall become fully vested, (ii) all then-outstanding Options and
     Stock Appreciation Rights shall be exercisable, and (iii) any restrictions
     or other conditions applicable to any outstanding Awards shall lapse, and
     such Awards shall become free of all restrictions and conditions.  In
     addition, upon the occurrence of a Second Trigger after a Pharmacia Change
     of Control with respect to a Participant, (i) any Awards held by such
     Participant that are outstanding as of the date of such Second Trigger, and
     that are not then vested, shall become fully vested, (ii) all then-
     outstanding Options and Stock Appreciation Rights held by such Participant
     shall be exercisable, and (iii) any restrictions or other conditions
     applicable to any outstanding Awards held by such Participant shall lapse,
     and such Awards shall become free of all restrictions and conditions.

(b)  With respect to Awards held by a Participant who is also a Participant in
     the Monsanto Company Excess Parachute Tax Indemnity Plan (the "Indemnity
     Plan") or any comparable or successor plan at the time of a Change of
     Control, the vesting and lapse of restrictions and conditions provided for
     in Section 12.17(a) shall not occur as a result of that Change of Control,
     to the extent that the provisions of Section 4(b) of the Indemnity Plan (or
     any comparable provision of such comparable or successor plan) require that
     such vesting and lapse not occur.

                                      -17-<PAGE>

                                                                    Exhibit 10.2

                              THE MONSANTO COMPANY
            NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE COMPENSATION PLAN

     1. NAME OF PLAN. This plan shall be known as the "The Monsanto Company
Non-Employee Director Equity Incentive Compensation Plan" and is hereinafter
referred to as the "Plan."

     2. PURPOSES OF PLAN. The purposes of the Plan are to enable Monsanto
Company, a Delaware corporation (the "Company"), to retain qualified individuals
to serve as Directors by providing for their compensation and permitting them to
elect to defer a portion thereof, and to further align the interests of
Directors with the interests of shareholders of the Company by providing them
with equity-based compensation.

     3. EFFECTIVE DATE AND TERM. The Plan shall be effective as of September 20,
2000 (the "Effective Date"). The Plan shall remain in effect until terminated by
action of the Board, or until all Participants have received all amounts to
which they are entitled hereunder, if earlier.

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

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

     "Annual Retainer Amount" has the meaning set forth in Section 6(a).

     "Beneficiaries" has the meaning set forth in Section 7(b)(iii).

     "Beneficiary Designation" has the meaning set forth in Section 7(b)(iii).

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

     "Cash Account" has the meaning set forth in Section 7(a).

     "Chairman" means the Chairman of the Board.

     "Committee" means the committee that administers the Plan, as more fully
set forth in Section 12.

     "Common Stock" means the common stock, par value $2.00 per share, of the
Company.

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

     "Current Cash" has the meaning set forth in Section 6(a).

     "Deferral Account" means a bookkeeping account maintained by the Company
for a Director representing the Director's interest in the stock units or cash
credited to such account pursuant to Sections 6 and 7.
<PAGE>

     "Deferred Cash" has the meaning set forth in Section 6(a).

     "Deferred Stock" means shares of Common Stock credited to a Stock Unit
Account pursuant to Section 6(d)(ii) and Section 7 and later delivered pursuant
to Section 7.

     "Delivery Election" has the meaning set forth in Section 7(b)(i).

     "Designated Administrator" means Merrill Lynch & Co. or such other person
or entity most recently specified by the Company as such for purposes of the
Plan.

     "Director" means an individual who is a non-employee member of the Board.

     "Dividend Equivalent" for a given dividend or distribution means a number
of shares (or fractions of a share) of Common Stock having a Value, as of the
date such Dividend Equivalent is credited to a Stock Unit 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.

     "Elective Amount" has the meaning set forth in Section 6(a).

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

     "Grant Date" has the meaning set forth in Section 6(b).

     "Interest Rate" for a calendar year means the average Moody's Baa Bond
Index Rate, as in effect from time to time.

     "IPO Date" means the date on which the initial public offering of shares of
Common Stock occurs.

     "IPO Price" means the price at which shares of Common Stock are offered in
the initial public offering of shares of Common Stock.

     "Management Plan" means the Monsanto 2000 Management Incentive Plan.

     "Month" means a period during a Plan Year that ends on a Month End Date and
that starts on either (a) the first day of the Plan Year, or (b) the day
following the last preceding Month End Date.

     "Month End Date" means the date of a calendar month that has the same
numerical value as the date on which a Plan Year ends (i.e., if a Plan Year ends
on April 12th, the Month End Date with respect to any calendar month is the 12th
of such month.)

                                      -2-
<PAGE>

     "Options" has the meaning set forth in Section 6(a).

     "Participant" has the meaning set forth in Section 5.

     "Periodic Election" has the meaning set forth in Section 6(a).

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

     "Plan Year" means the period from the Effective Date through the day before
the date of the Company's 2001 Annual Meeting and each subsequent period
beginning on the date of an Annual Meeting and ending on the day before the date
of the next Annual Meeting.

     "Required Deferred Stock Amount" has the meaning set forth in Section 6(a).

     "Restricted Stock" means shares of Common Stock granted in accordance with
Section 6(d)(i).

     "Section" means a section of the Plan except where otherwise specifically
indicated.

     "Starting Date" has the meaning set forth in Section 7(b)(i).

     "Stock Unit Account" has the meaning set forth in Section 7(a).

     "Term" means the term of years for which a Participant has been elected a
Director.

     "Termination Date" for a Participant means the date such Participant's
service as a Director terminates for any reason.

     "2000 Term" means the Term that commenced in May of 2000.

     "Value" of a share of Common Stock, as of the IPO Date, means the IPO
Price, and as of any other date, means the average of the highest and lowest
per-share sales prices for the shares of Common Stock during normal business
hours on the New York Stock Exchange, Inc. for the immediately preceding date,
or if the shares of Common Stock were not traded on the New York Stock Exchange,
Inc. on such date, then on the next preceding date on which the shares were
traded, all as reported by such source as the Committee may select.

     5. ELIGIBLE PARTICIPANTS. Each individual who is a Director on the
Effective Date or becomes a Director thereafter while the Plan is in effect
shall be a participant (a "Participant") in the Plan.

     6. DIRECTOR COMPENSATION. (a) GENERAL. In consideration for his or her
services as a Director, each Participant shall receive compensation having a
total annual value (the "Annual Retainer Amount") equal to $120,000 in the case
of a Participant who serves as the chair of a committee of the Board and
$110,000 for all other Participants (which amount shall be pro-rated for partial
years, as applicable);

                                      -3-
<PAGE>

provided, that the Chairman shall receive additional compensation having an
annual value of $40,000 for serving as Chairman (which amount shall be pro-rated
for partial years, as applicable); and provided, further, that the Board may
specify different Annual Retainer Amounts from time to time. Such compensation
for each Term shall be provided as follows: (i) half of such compensation (the
"Required Deferred Stock Amount") shall take the form of Deferred Stock, as more
fully set forth in Section 6(d); and (ii) the other half of the Annual Retainer
Amount (the "Elective Amount") shall take the form of (A) options to purchase
shares of Common Stock ("Options"), as more fully set forth in Section 6(b), (B)
cash paid currently ("Current Cash") or deferred cash ("Deferred Cash"), as more
fully set forth in Section 6(c), or (C) Restricted Stock or additional Deferred
Stock, as more fully set forth in Section 6(d), or a combination thereof. Each
Participant shall be provided with the opportunity, in accordance with
procedures established by the Committee from time to time, to make an election
with respect to each Term during which he or she is a Participant (a "Periodic
Election") specifying what percentages, in increments of one percentage point,
of the Elective Amount for such Term will be provided to the Participant in the
form of Options, Current Cash, Deferred Cash, Restricted Stock and Deferred
Stock. Each Periodic Election for a particular Term shall be filed with the
Committee at least 30 days before the beginning of the Term; provided, that the
Periodic Elections for Terms beginning before the Effective Date shall be made
on or before September 15, 2000; and provided, further, that, with respect to an
individual who becomes a Participant after the Effective Date, the Periodic
Election for such Participant's first Term shall be filed with the Committee no
later than 30 days after the first day of such Term. If a Participant fails to
make a timely Periodic Election with respect to any Term, he or she shall be
deemed to have elected to receive the entire Elective Amount in the form of
Current Cash.

     (b) OPTIONS. (i) Each Participant who elects to receive a portion of the
Elective Amount in the form of Options shall be granted, for each of his or her
Terms ending after the Effective Date, Options having a value on the applicable
Grant Date equal to such portion, determined by the Committee in accordance with
the Black-Scholes option valuation method. The effective date of each such grant
(the "Grant Date") shall be the first day of the applicable Term; provided, that
in the case of any options granted with respect to the 2000 Term, the Grant Date
shall be the IPO Date. Each Option shall be evidenced by a certificate, shall
have a per-share exercise price equal to the Value of a share of Common Stock on
the Grant Date and shall have the other terms and conditions set forth below in
this Section 6(b).

     (ii) The Options, if any, granted to a Participant on a particular Grant
Date shall vest in installments on the last day of each Plan Year ending during
the Term for which they were granted, pro rata based upon the percentage of the
Term that is included in such Plan Year, but, in each case, only if the
Participant remains a Director on the last day of such Plan Year; provided, that
if a Participant's Termination Date occurs other than on the last day of a Plan
Year, a pro rata portion of the installment of the Participant's then-unvested
Options that would otherwise have vested as of the last day of the Plan Year
during which such Termination Date occurs, based on the number of full Months
that have elapsed in the Plan Year on or before such Termination Date, shall
instead vest on the Termination Date; and provided, further, that the number of
shares with respect to which Options vest on a particular

                                      -4-
<PAGE>

day shall be rounded to the nearest whole number of shares, if necessary, to
avoid vesting with respect to a fractional share.

     (iii) Each Option that vests in accordance with the foregoing shall be
exercisable from and after the date of such vesting through the earlier of (A)
the tenth anniversary of the Grant Date and (B) in the case of the Participant's
death during or after his or her service as a Director, the first anniversary of
the date of death; in the case of the Participant's removal from the Board
before the end of any Term, the Termination Date; and in all other cases, the
fifth anniversary of the Participant's Termination Date. Any Options held by a
Participant that have not become vested as of the Participant's Termination Date
shall terminate on the Termination Date.

     (iv) Subject to the limitations of this Section 6(b), Options may be
exercised, in whole or in part, by giving written notice of exercise to the
Designated Administrator specifying the number of shares of Common Stock subject
to the Option to be purchased. Such notice shall be accompanied by payment in
full of the purchase price by certified or bank check or such other instrument
as the Company may accept. Payment, in full or in part, may also be made in the
form of unrestricted Common Stock already owned by the Participant, based on the
Value of the Common Stock on the date the Option is exercised; provided, that
such already owned shares have been held by the Participant for at least six
months at the time of exercise. Payment for any shares subject to an Option also
may be made by delivering a properly executed exercise notice to the Designated
Administrator, together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds necessary to
pay the purchase price. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms. No
shares of Common Stock shall be issued pursuant to the exercise of Options until
full payment therefor has been made.

     (v) No Option shall be transferable by the Participant other than by will
or by the laws of descent and distribution. All Options shall be exercisable,
subject to the terms of this Section 6(b), only by the Participant, the guardian
or legal representative of the Participant, or any person to whom such Option is
transferred pursuant to the preceding sentence, it being understood that
references to the Participant shall be deemed, where appropriate, to refer to
such guardian, legal representative or other transferee.

     (c) CASH. The portion, if any, of the Elective Amount for a particular Term
that the Participant elects to have paid in Current Cash shall be paid, and the
portion, if any, of the Elective Amount for a particular Term that the
Participant elects to have paid in Deferred Cash shall be credited to a Cash
Account maintained by the Company pursuant to Section 7, in each case, in
installments on each Month End Date that occurs during the Term for which it is
paid or credited (as applicable), pro rata based upon the percentage of the Term
that is included in the Month that ends on such Month End Date, but, in each
case, only if the Participant remains a Director on that day. If a Participant's
Termination Date occurs other than on a Month End Date, the Participant shall
forfeit any Current Cash and any Deferred Cash attributable to periods following
the preceding Month End Date.

                                      -5-
<PAGE>

     (d) STOCK. (i) The portion, if any, of the Elective Amount for a particular
Term that the Participant elects to have provided in Restricted Stock shall be
issued as of the IPO Date, in the case of Restricted Stock granted with respect
to the 2000 Term, and as of the first day of such Term in all other cases, in
the name of the Participant in the form of a number of shares of Common Stock
having a Value, as of the date it is issued, equal to the amount of such
portion. Such shares shall be forfeitable and nontransferable, until they vest
in accordance with the provisions of Section 6(d)(iii). Dividends and other
distributions with respect to Restricted Stock that has not yet vested as of the
record date therefor shall vest together with the related Restricted Stock. The
Restricted Stock shall be issued to Participants in accordance with procedures
established by the Committee, and shall become transferable by Participants when
and as it vests.

     (ii) The Required Deferred Stock Amount for a particular Term and the
portion, if any, of the Elective Amount for that Term that a Participant elects
to have provided in Deferred Stock shall be provided to the Participant by
crediting, as of the IPO Date in the case of the 2000 Term, and as of the first
day of the Term in all other cases, to a Stock Unit Account maintained by the
Company pursuant to Section 7, a number of stock units representing hypothetical
shares of Common Stock having a Value, as of the date of such credit, equal to
the Required Deferred Stock Amount to which the Participant is entitled and the
portion, if any, that the Participant has elected to have provided in Deferred
Stock. Such Deferred Stock shall vest as set forth in Section 6(d)(iii).

     (iii) Deferred Stock and any Restricted Stock provided to a Participant for
a particular Term shall vest in installments on each Month End Date that occurs
during the Term for which they were granted, pro rata based upon the percentage
of the Term that is included in the Month that ends on such Month End Date, but
only if the Participant remains a Director on such day; provided, that if a
Participant's Termination Date occurs other than on a Month End Date, the
Participant shall forfeit any Restricted Stock or Deferred Stock that is
attributable to periods following the last preceding Month End Date; and
provided, further, that the number of shares with respect to which Restricted
Stock and/or Deferred Stock vests on a particular day shall be rounded to the
nearest whole number of shares, if necessary to avoid vesting with respect to a
fractional share.

     7. (a) DEFERRAL ACCOUNTS. The Company shall maintain a "Stock Unit Account"
for each Participant with respect to that Participant's Deferred Stock and, for
a Participant who makes a Periodic Election to receive Deferred Cash, a "Cash
Account," and shall make credits to these Deferral Accounts as provided in
Section 6 and this Section 7. Whenever a dividend is paid or other distribution
made with respect to the Common Stock, each Stock Unit Account shall be credited
with a number of shares of Common Stock having a Value, as of the date such
dividend is paid or such distribution is made, equal to (i) the number of stock
units in such Stock Unit Account as of the record date for such dividend or
distribution multiplied by (ii) the Dividend Equivalent for such dividend or
other distribution. The shares so credited with respect to Deferred Stock that
has not vested as of the record date for the dividend or distribution shall vest
as and when such Deferred Stock vests. Each Cash Account shall accrue interest
on the balance therein at the Interest Rate, to be credited and compounded
monthly.

                                      -6-
<PAGE>

     (b) DELIVERY OF ACCOUNT BALANCES. (i) Each Participant shall be provided
the opportunity to elect, in accordance with procedures established by the
Committee, the manner in which his or her Deferral Account balances will be
distributed on or after his or her Termination Date (each such election, a
"Delivery Election"). A separate Delivery Election may be made with respect to
each amount of cash credited to a Cash Account pursuant to a single Periodic
Election and each amount of stock units credited to a Stock Unit Account
pursuant to a single Periodic Election. Each such Delivery Election may call for
deferred delivery (A) in annual installments over a period of up to ten years,
provided that such payments begin on the later of the Termination Date and the
date that is six months after the Delivery Election is made, or (B) in a single
sum on a specified date that is at least six months after the Delivery Election
is made but not more than ten years after the Termination Date (in either case,
the date on which delivery is to be made or is to begin is referred to as the
"Starting Date").

     (ii) The stock units in a Participant's Stock Unit Account and/or the cash
in a Participant's Cash Account, as applicable, shall be delivered on or
beginning on the Starting Date in accordance with the Participant's applicable
Delivery Elections. In the case of deliveries from a Stock Unit Account, such
delivery shall be made in the form of stock representing a number of shares of
Common Stock equal to the number of stock units as and when they are to be
delivered; provided, that if the number of shares to be delivered on any
particular date includes a fractional share, such number of shares shall be
rounded down to the nearest whole number, and if such delivery is the last to be
made to the Participant, the Company shall pay the Participant cash in an amount
equal to the Value of such fractional share on the date of delivery. If any such
stock units or cash are to be delivered after the Participant has died or become
legally incompetent, they shall be delivered to the Participant's Beneficiary or
legal guardian, as the case may be, in accordance with the foregoing.

     (iii) Participants shall be provided with the opportunity to designate, in
accordance with procedures to be established by the Committee, the person or
persons ("Beneficiaries") who will receive distributions of his or her interests
in the Plan upon the death of the Participant (a "Beneficiary Designation").
Once made, a Beneficiary Designation or Delivery Election may be superseded by
another Beneficiary Designation or Delivery Election (as applicable) or revoked
in writing by the Participant. However, in order for any initial or superseding
Delivery Election or revocation thereof to be valid, it must be received by the
Committee before the Participant's Termination Date, and it shall in any event
be subject to the approval of the Board or of a committee of the Board if the
Committee determines that such approval is required in order for such Delivery
Election and/or transactions resulting therefrom to be exempt under Rule 16b-3
under Section 16 of the Exchange Act. In the case of multiple Beneficiary
Designations, Delivery Elections and/or revocations by any Participant, the most
recent valid Beneficiary Designation, Delivery Election or revocation (as
applicable) in effect as of the date of death or Termination Date, as
applicable, shall be controlling. If a Participant does not have a valid
Beneficiary Designation in effect as of the date of his or her death, his or her
Beneficiary shall be his or her estate. If a Participant does not have a valid
Delivery Election in effect as of his or her Termination Date with respect to
any portion of his or her Cash Account or

                                      -7-
<PAGE>

Stock Unit Account, he or she shall be deemed to have made an election to
receive such portion in a single lump sum as of his or her Termination Date.

     8.  DELIVERY OF SHARES; VOTING AND OTHER RIGHTS. The shares delivered to a
Participant pursuant to Section 6 or 7 shall be issued in the name of the
Participant, and the Participant shall be entitled to all rights of a
shareholder with respect to Common Stock for all such shares issued in his or
her name, including the right to vote the shares, and the Participant shall
receive all dividends and other distributions paid or made with respect thereto
from and after the date of such issuance, except as specifically provided in
Section 6(d)(i).

     9.  GENERAL RESTRICTIONS. (a) Notwithstanding any other provision of the
Plan or agreements or certificates created pursuant thereto, the Company shall
not be required to issue or deliver any shares of Common Stock under the Plan
prior to fulfillment of all of the following conditions:

         (i) Listing or approval for listing upon official notice of issuance of
such shares on the New York Stock Exchange, Inc., or such other securities
exchange as may at the time be a market for the Common Stock;

         (ii) Any registration or other qualification of such shares under any
U.S. federal or state law or regulation, or the maintaining in effect of any
such registration or other qualification that the Committee shall, in its
absolute discretion upon the advice of counsel, deem necessary or advisable; and

         (iii) Obtaining any other consent, approval, or permit from any U.S.
federal or state governmental agency that the Committee 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 the Participants.

         (c) Except as specifically provided in the Plan with respect to
Beneficiary Designations, no Participant or Beneficiary shall have the right to
assign, pledge or otherwise dispose of his or her interest in any Deferral
Account, nor shall the interest of a Participant or Beneficiary therein be
subject to garnishment, attachment, transfer by operation of law, or any legal
process.

         (d) The Plan is intended to constitute an unfunded plan for incentive
and deferred compensation of Directors, and the rights of Directors with respect
to Deferral Accounts under the Plan shall be those of general creditors of the
Company. The Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or make payments, so long as the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

     10. NUMBER AND SOURCE OF SHARES AVAILABLE. All Options, Deferred Stock and
Restricted Stock provided for under the Plan shall automatically be granted
under the Management Plan, and shall reduce the number of shares

                                      -8-
<PAGE>

available for awards under the Management Plan. Sections 5.1, 5.3, and 5.4 of
the Management Plan shall apply with respect to awards made under the Plan.

     11. CHANGE IN CAPITAL STRUCTURE. (a) In the event that there is, at any
time after the Board adopts the Plan, any change in the Common Stock by reason
of any stock dividend, stock split, combination of shares, exchange of shares,
warrants or rights offering to purchase Common Stock at a price below its fair
market value, reclassification, recapitalization, merger, consolidation, spin-
off or other change in capitalization of the Company, appropriate adjustment
shall be made in the number and kind of shares or other property held in the
Stock Unit Accounts (taking into account whether any Dividend Equivalent is
credited to the Stock Unit Accounts in connection therewith) and any other
relevant provisions of the Plan by the Committee, whose determination shall be
binding and conclusive on all persons. Options and Restricted Stock granted
pursuant to the Plan and the Management Plan shall be subject to adjustment
pursuant to Section 6 of the Management Plan.

         (b) If the shares of Common Stock credited to the Stock Unit Accounts
are converted pursuant to this Section 11 into cash or another form of property,
references in the Plan to the Common Stock shall be deemed, where appropriate,
to refer to such cash or 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 delivery of
certificates for 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 Stock Unit
Accounts.

     12. ADMINISTRATION; AMENDMENT. (a) The Plan shall be administered by a
committee consisting of the Chief Financial Officer, the General Counsel and the
Corporate Vice President -- Human Resources of the Company (or the holder of any
successor officer position thereto) (the "Committee"), which shall have full
authority to construe and interpret the Plan, to establish, amend and rescind
rules and regulations relating to the Plan, and to take all such actions and
make all such determinations in connection with the Plan as it may deem
necessary or desirable, including, without limitation, the determination of life
expectancies and other assumptions and information to be used in determining the
effect of Delivery Elections.

         (b) The Board may from time to time make such amendments to the Plan as
it may deem proper and in the best interest of the Company, and it may terminate
the Plan at any time.

     13. MISCELLANEOUS. (a) Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for reelection by
the Company's shareholders or to limit the rights of the shareholders to remove
any Director.

         (b) The Company shall have the right to require, prior to the issuance
or delivery of any cash or shares of Common Stock pursuant to the Plan, that a
Director make arrangements satisfactory to the Committee for the withholding of
any taxes required by law to be withheld with respect to the issuance or
delivery of such cash or shares, including, without limitation, by the
withholding of shares that

                                      -9-
<PAGE>

would otherwise be so issued or delivered, by withholding from any other payment
due to the Director, or by a cash payment to the Company by the Director.

     14. 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.

                                      -10-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]