Document:

Management Compensation Arrangement

Exhibit
10.1

ARCHER-DANIELS-MIDLAND
COMPANY

Management
Compensation Arrangements

Base
Salary and Cash Bonuses

During
the fiscal year ended June 30, 2004, the executive officers of
Archer-Daniels-Midland Company (the “Company”) who were named in the Summary
Compensation Table included in the Company’s most recent proxy statement
received the base salaries included in that table. These officers and the
Company’s other officers are eligible for annual increases in their base
salaries which have typically not exceeded 5% in any given year. No officer of
the Company receives a cash bonus under the Company’s current compensation
policies.

Long-Term
Incentive Compensation Program

Under the
Company’s long-term incentive compensation program, officers and certain other
employees of the Company have the opportunity to receive annual incentive
compensation awards in the form of stock options and restricted stock under the
Company’s 2002 Incentive Compensation Plan. The stock option awards are based
upon each participant reaching annual individual performance objectives as
determined by the person’s supervisor(s) or, in the case of the Chief Executive,
by the Board of Directors. The restricted stock awards are based on the Company
achieving target levels of total business return, based on change in equity
value calculated as a multiple of EBITDA (earnings before interest, taxes,
depreciation and amortization) less debt, plus dividends, measured on a
three-year rolling average. The amount of these awards are based on a
combination of the participant’s position within the Company and base salary.Stock Option Agreement

Exhibit
10.2

Archer-Daniels-Midland
Company

2002
Incentive Compensation Plan

Stock
Option Agreement

Stock
Option Agreement (the “Agreement”), dated as of _______ (the “Date of Grant”),
between Archer-Daniels-Midland Company, a Delaware corporation (the “Company”),
and ____________________
(the
“Optionee”), an Employee of the Company. This Agreement is pursuant to the terms
of the Company’s 2002 Incentive Compensation Plan (the “Plan”). The applicable
terms of the Plan are incorporated herein by reference, including the definition
of capitalized terms contained in the Plan.

Section
1.
Stock
Option Award. The
Company grants to the Optionee, on the terms and conditions hereinafter set
forth, an Option with respect to _______ shares of the Company’s common stock
(the “Option Shares”) under the Plan.

Section
2.
Exercise
Price. The
exercise price per share of the Option Shares shall be $ _______ per share
(“Option Price”).

Section
3.
Vesting.

(a) Vesting
Schedule. Subject
to the forfeiture provisions of Sections 6 and 10 hereof, this Option shall
become vested and exercisable as to the Option Shares in installments in
accordance with the following vesting schedule:

	
       

      Vesting
      Date

       
	
       

      Number
      of Option Shares

	 	
       

	 	
       

	 	
       

	 	
       

	 	 

At times
in this Agreement, when the vesting, exercise or cancellation of this Option (or
portion thereof) and the corresponding right to acquire Option Shares thereunder
is discussed, for ease of reference the document will refer to the vesting,
exercise or cancellation, as applicable, of “Option Shares.” 

(b) Accelerated
Vesting.
Notwithstanding the foregoing provisions of this Section 3, but subject to
Section 10 hereof, all Option Shares shall become fully and immediately vested
and exercisable upon the occurrence of a Change of Control of the Company (as
defined in Appendix A hereto) or the death of Optionee.

Section
4.
Nonqualified
Stock Option. This
Option shall be treated as a Nonqualified Stock Option under the
Plan.

Section
5.
Option
Term. Option
Shares that become exercisable pursuant to Section 3 hereof may be purchased at
any time following vesting and prior to the expiration of the Option Term. For
purposes hereof, the “Option Term” shall commence on the Date of Grant and shall
expire on the day prior to the tenth anniversary thereof, unless earlier
terminated as provided in Sections 6 or 10 hereof. Upon the expiration of the
Option Term, any unexercised Option Shares shall be cancelled and shall be of no
further force or effect.

Section
6.
Effect
of Termination of Service. Except
as set forth below in this Section 6, if Optionee’s service as an Employee is
terminated for any reason prior to the occurrence of any otherwise applicable
vesting date or event provided in Section 3 hereof, the Optionee shall (i)
forfeit any interest in the Option Shares that have not yet become vested, which
shall be cancelled and be of no further force or effect, and (ii) subject to
Section 10 hereof, retain the right to exercise any Option Shares that have
previously become vested until the expiration of three months after the
effective date of such termination of service. Notwithstanding the foregoing, in
the event that Optionee’s employment terminates as a result of Optionee’s
Retirement or Disability then Optionee shall, subject to Section 10 hereof, (i)
continue to vest in the Option Shares in accordance with the provisions of
Section 3 hereof, and (ii) retain the right to exercise all vested Option Shares
until the expiration of the full Option Term. In addition, in the event that
Optionee’s employment terminates as a result of Optionee’s death then Optionee
shall receive the accelerated vesting described in Section 3(b) and shall retain
the right to exercise all vested Option Shares until the expiration of the full
Option Term.

Section
7.
Procedure
for Exercise. The
Option may be exercised, in whole or part (for the purchase of whole shares
only), by delivery of a written notice in the form specified by the Company (the
“Notice”), along with payment in full of the Option Price, from the Optionee to
the Secretary of the Company at the Company’s principal office, which Notice
shall: (i) state the number of Option Shares being exercised; (ii) state the
method of payment for the Option Shares and tax withholding pursuant to Section
8 hereof; (iii) include any representation of the Optionee required pursuant to
Section 9 hereof; (iv) in the event that the Option shall be exercised by any
person other than the Optionee pursuant to Section 13 hereof include appropriate
proof of the right of such person to exercise the Option; and (v) comply
with such further requirements consistent with the Plan as the Committee may
from time to time prescribe.

Section
8.
Payment
of Exercise Price. Payment
of the Option Price shall be made (i) in cash or by cash equivalent, (ii) by
tendering, either
by actual delivery of Shares or by attestation,
previously acquired Shares that have been held by the Optionee for at least 6
months, valued at the Fair Market Value of such Shares on the trading date
immediately preceding the date of exercise, (iii) by irrevocably authorizing a
third party with which the Optionee has a brokerage or similar relationship to
sell the Shares (or a sufficient portion of such Shares) acquired upon the
exercise of the Option and remit to the Company a portion of the sale proceeds
sufficient to pay the entire Option Price to the Company, or (iv) by a
combination of the methods described above. Delivery of Shares upon such
exercise shall be subject to payment by the Optionee to the Company of any
required withholding taxes. Optionee
may elect to satisfy the withholding requirement, in whole or in part, by having
the Company withhold Shares having a Fair Market Value on the date the tax is to
be determined equal to the minimum statutory total tax which could be imposed on
the transaction. Any such
election shall be irrevocable, made in writing, signed by the Participant, and
submitted to the Secretary of the Company.

Section
9.
Securities
Law Compliance. No
Option Shares shall be purchased upon the exercise of the Option unless and
until the Company and/or the Optionee shall have complied with all applicable
federal or state registration, listing and/or qualification requirements and all
other requirements of law or of any regulatory agencies having jurisdiction,
unless the Committee has received evidence satisfactory to it that a prospective
Optionee may acquire such shares pursuant to an exemption from registration
under the applicable securities laws. Any determination in this connection by
the Committee shall be final, binding, and conclusive. The Company reserves the
right to legend any certificate for shares of Common Stock, conditioning sales
of such shares upon compliance with applicable federal and state securities laws
and regulations.

Section
10.
Forfeiture
Conditions.
Notwithstanding any provision herein to the contrary, in the event of
termination of the Optionee’s employment for “cause” (as defined below), the
breach of any non-competition or confidentiality restrictions applicable to the
Optionee, or the Optionee’s participation in an activity that is deemed by the
Committee to be detrimental to the Company (including, without limitation,
criminal activity or accepting employment with a competitor of the Company), (i)
the Optionee’s right to exercise any unexercised portion of the Option shall
immediately terminate and all rights thereunder shall cease, (ii) the Optionee’s
right to receive an issuance of Option Shares upon settlement of the Option
shall immediately terminate, and, (iii) if the Option has been exercised, in
whole or in part, then either (A) the Option Shares issued upon exercise of the
Option shall be forfeited and returned to the Company and the Optionee shall be
repaid the lesser of (x) the then-current Fair Market Value per Share or (y) the
Option Price paid for such Option Shares, or (B) the Optionee will be required
to pay to the Company in cash an amount equal to the gain realized by the
Optionee from the exercise of such Option (measured by the difference between
the Fair Market Value of the Option Shares on the date of exercise and the
Option Price paid by the Optionee).

For
purposes hereof, “cause” shall have the meaning specified in such Optionee’s
employment agreement with the Company, or, in the case of an Optionee who is not
employed pursuant to an employment agreement, “cause” shall mean any of the
following acts by the Optionee: (i) embezzlement or misappropriation of
corporate funds, (ii) any acts resulting in a conviction for, or plea of guilty
or nolo contendere, a
charge of commission of a felony, (iii) misconduct resulting in injury to the
Company or any subsidiary, (iv) activities harmful to the reputation of the
Company or any subsidiary, (v) a violation of Company or subsidiary operating
guidelines or policies, (vi) willful refusal to perform, or substantial
disregard of, the duties properly assigned to the Optionee, or (vi) a
significant violation of any contractual, statutory or common law duty of
loyalty to the Company or any subsidiary.

 

Section
11.
No
Rights as Stockholder or Employee.

(a) The
Optionee shall not have any privileges of a stockholder of the Company with
respect to any Option Shares subject to (but not acquired upon valid exercise
of) the Option, nor shall the Company have any obligation to issue any dividends
or otherwise afford any rights to which Shares are entitled with respect to any
such Option Shares, until the date of the issuance to the Optionee of a stock
certificate evidencing such Shares.

(b) Nothing
in this Agreement or the Option shall confer upon the Optionee any right to
continue as an Employee of the Company or any Subsidiary or Affiliate or to
interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the Optionee’s employment at any time.

Section
12.
Adjustments. If at
any time while the Option is outstanding, the number of outstanding Shares is
changed by reason of a reorganization, recapitalization, stock split or any of
the other events described in Section 4.2 of the Plan, the number and kind of
Option Shares and/or the Option Price of such Option Shares shall be adjusted in
accordance with the provisions of the Plan. In the event of certain corporate
events specified in Article 19 of the Plan, any outstanding Options granted
hereunder may be replaced by substituted options or canceled in exchange for
payment of cash in accordance with the procedures and provisions of Article 19
of the Plan.

Section
13.
Restriction
on Transfer of Option. The
Option may not be transferred, pledged, assigned, hypothecated or otherwise
disposed of in any way by the Optionee, except by will or by the laws of descent
and distribution. Except as provided below, this Option may be exercisable
during the Optionee’s lifetime only by the Optionee. In the event an Optionee
becomes legally incapacitated, the Option shall be exercisable by the Optionee’s
legal guardian, committee or legal representative. If the Optionee dies, the
Option shall thereafter be exercisable by the Optionee’s executors or
administrators. The Option shall not be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option contrary to the provisions hereof, and the levy
of any execution, attachment or similar process upon the Option, shall be null
and void and without effect.

Section
14.
Notices. Any
notice hereunder by the Optionee shall be given to the Company in writing and
such notice shall be deemed duly given only upon receipt thereof at the
following address: Corporate Secretary, Archer-Daniels-Midland Company, 4666
Faries Parkway, Decatur, Illinois 62526, or at such other address as the Company
may designate by notice to the Optionee. Any notice hereunder by the Company
shall be given to the Optionee in writing and such notice shall be deemed duly
given only upon receipt thereof at such address as the Optionee may have on file
with the Company.

Section
15.
Construction. The
construction of this Agreement is vested in the Committee, and the Committee’s
construction shall be final and conclusive.

Section
16.
Governing
Law. This
Agreement shall be construed and enforced in accordance with the laws of the
State of Illinois, without giving effect to the choice of law principles
thereof.

Archer-Daniels-Midland
Company

By:_____________________________________

        Paul B.
Mulhollem

 
President & Chief Operating Officer

OPTIONEE

By:_____________________________________

 

APPENDIX
A

 

Definition
of Change in Control

 

 

For
purposes of this Agreement, a "Change in Control" of the Company shall mean:

 

(i) an
acquisition subsequent to the Date of Grant by any individual, entity or group
(within the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of thirty percent (30%) or more of either (A) the then outstanding shares of
Common Stock or (B) 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"); excluding, however, the
following: (1) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company, (2)
any acquisition by the Company and (3) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Company or any
Subsidiary;

 

(ii) during
any period of two (2) consecutive years (not including any period prior to the
Date of Grant), individuals who at the beginning of such period constitute the
Board (and any new directors whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
so approved) cease for any reason (except for death, disability or voluntary
retirement) to constitute a majority thereof;

 

(iii) the
consummation of a merger, consolidation, reorganization or similar corporate
transaction which has been approved by the stockholders of the Company, whether
or not the Company is the surviving company in such transaction, other than a
merger, consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the combined
voting power of the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization;

 

(iv) the
approval by the stockholders of the Company of (A) the sale or other disposition
of all or substantially all of the assets of the Company or (B) a complete
liquidation or dissolution of the Company; or

 

(v) adoption
by the Board of a resolution to the effect that any person has acquired
effective control of the business and affairs of the Company.

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