DEF 14A 1 d246380ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under § 240.14a-12

MONSANTO COMPANY

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

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  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

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  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

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Table of Contents

LOGO

 

Notice of Annual Meeting of Shareowners and
2016 Proxy Statement
December 9, 2016


Table of Contents

Our Pledge

The Monsanto Pledge is our commitment to how we do business. It is a declaration that compels us to listen more, to consider our actions and their impact broadly, and to lead responsibly. It helps us to convert our values into actions, and to make clear who we are and what we champion.

 

Integrity

     

Dialogue

     

Transparency

     

Sharing

           

Integrity is the

foundation for all

that we do. Integrity

includes honesty,

decency, consistency,

and courage. Building

on those values, we are

committed to:

   

We will listen carefully

to diverse points of

view and engage in

thoughtful dialogue.

We will broaden our

understanding of

issues in order to better

address the needs and

concerns of society and

each other.

   

We will ensure that

information is available,

accessible, and

understandable.

   

We will share

knowledge and

technology to advance

scientific understanding,

to improve agriculture

and the environment,

to improve crops,

and to help farmers in

developing countries.

     
                 
   

Benefits

 

We will use sound and

innovative science and

thoughtful and effective

stewardship to deliver

high-quality products

that are beneficial to

our customers and to

the environment.

   

Respect

 

We will respect the

religious, cultural, and

ethical concerns of

people throughout

the world. The safety

of our employees, the

communities where we

operate, our customers,

consumers, and the

environment will be our

highest priority.

   

Act as Owners to

Achieve Results

 

We will create clarity

of direction, roles, and

accountability; build

strong relationships

with our customers

and external partners;

make wise decisions;

steward our company

resources; and take

responsibility for

achieving agreed-upon

results.

   

Create a Great

Place to Work

 

We will ensure diversity

of people and thought;

foster innovation,

creativity and learning;

practice inclusive

teamwork; and reward

and recognize our

people.

 
                 


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     LOGO

LOGO

    

Monsanto Company

800 North Lindbergh Boulevard

St. Louis, Missouri 63167

Phone (314) 694-1000

www.monsanto.com

    

December 13, 2016

 

Dear Fellow Shareowners,

 

On behalf of your board of directors, we are pleased to invite you to attend Monsanto Company’s 2017 Annual Meeting of Shareowners on Friday, January 27 at our Chesterfield Village Research Center in Chesterfield, Missouri. Whether or not you are able to attend the meeting in person, we invite you to read this year’s proxy statement that highlights key activities and accomplishments of fiscal year 2016 and presents the matters for which we are seeking your vote at the 2017 meeting.

 

Fiscal year 2016 was complete with challenges and potential. We delivered on the company’s revised EPS guidance, which reflected headwinds on pricing and currency. At the same time, strong penetration of key soybean traits, continued global corn germplasm upgrades and spend discipline created positive momentum for the upcoming year.

 

In early fiscal year 2017, we entered into a definitive merger agreement under which Bayer will acquire Monsanto for USD 128 per share in an all-cash transaction which was unanimously approved by Monsanto’s Board of Directors, Bayer’s Board of Management and Bayer’s Supervisory Board. Based on Monsanto’s closing share price on May 11, 2016, the last trading day prior to the release of press reports regarding a potential offer by Bayer to acquire Monsanto, the offer represents a premium of 42 percent to that price.

 

In March, we appointed independent director Mitch Barns to our board of directors. His experience with a leading data analytic company enables him to bring a valuable perspective as we move forward in leveraging data science to strengthen our business and provide a broad range of solutions to our farmer customers. Our proxy statement includes more information about Mr. Barns and our continuing directors, each of whom is nominated for election at the 2017 annual meeting, as well as refreshment of our committee memberships and activities of our board in fiscal 2016.

 

On behalf of the entire board of directors and the more than 20,000 employees of Monsanto, I want to thank you for your continued support and investment in our business. We value the ongoing dialogue we have with our shareowners and we encourage you to continue to share your suggestions by writing us at the address below or by visiting our website.

 

Board of Directors

Monsanto Company

800 North Lindbergh Boulevard

St. Louis, MO 63167

c/o David F. Snively, Secretary

 

Sincerely,

 

LOGO

Hugh Grant

Chairman of the Board of Directors

and Chief Executive Officer

 

 

 

 


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LOGO

Monsanto Company

800 North Lindbergh Boulevard

St. Louis, Missouri 63167

Phone (314) 694-1000

www.monsanto.com

Notice of Annual Meeting

of Shareowners

 

         Meeting Agenda:
 

 

Date:

 

Time:

 

Place:

 

 

 

 

 

Record Date:

 

 

Friday, January 27, 2017

 

8:00 a.m. Central Standard Time

 

“AA” Building, AA 1825

Chesterfield Village

Research Center,

700 Chesterfield Parkway West

Chesterfield, Missouri 63017

 

December 5, 2016

    

  Elect thirteen director nominees named in the proxy statement for the coming year

 

  Ratify our independent registered public accounting firm for fiscal 2017

 

  Approve, by non-binding vote, executive compensation

 

  Approve, by non-binding vote, frequency of advisory votes on executive compensation

 

  Approve performance goals under, and an amendment to, the long-term incentive plan

 

  Vote on two shareowner proposals set forth in the proxy statement, if properly presented at the meeting

 

  Any other business that properly comes before the meeting

 

 

               
                 

Please vote

your shares

 

We encourage

shareowners to vote

promptly, as this will

save the expense of

additional proxy

solicitation. You may

vote in the following

ways:

 

 

LOGO

 

By Telephone            

   

 

LOGO

 

By Internet                

   

 

LOGO

 

By Mail                         

   

 

LOGO

 

In Person                     

   
 

In the U.S. or

Canada you

can vote your

shares by calling

1-800-690-6903.

   

You can vote your

shares online at

www.proxyvote.

com. You will need

the 12-digit control

number on the Notice

of Internet Availability

or proxy card.

 

   

You can vote by

mail by marking,

dating and signing

your proxy card or

voting instruction

form and returning

it in the postage-paid envelope.

 

   

You can vote in

person at the

annual meeting.

   
                                 

 

 

By Order of the Board of Directors,

 

Monsanto Company

 

 

LOGO

David F. Snively

Secretary

St. Louis, Missouri

December 13, 2016

       

 

Important Notice of Internet
Availability of Proxy Materials

 

This notice of annual meeting of shareowners and related proxy materials are being distributed or made available to shareowners beginning on or about December 13, 2016. This includes instructions on how to access these materials (including our proxy statement and 2016 annual report to shareowners) online.

   

 

MONSANTO COMPANY 2016 PROXY STATEMENT


Table of Contents

 

Proxy Summary      Here we present an overview of information that you will find throughout this proxy statement. This summary does not contain all of the information that you should consider. We encourage you to read the entire proxy statement for more information about these topics prior to voting.

 

   

Annual Meeting of
Shareowners

 

  Time and Date:   8:00 a.m., CST, January 27, 2017
  Place:  

“AA” Building, AA 1825

Chesterfield Village

Research Center,

700 Chesterfield Parkway West

Chesterfield, Missouri 63017

  Record Date:   Shareowners as of the close of business on December 5, 2016
  Admission:   Please follow the instructions contained in “Questions and Answers About the Annual Meeting and Voting” on page 96
 


On December 13, 2016, we posted on our website at www.monsanto.com/investors/pages/annual-report.aspx, and began mailing to shareowners who requested paper copies, this proxy statement and our 2016 Annual Report.

 

Shareowner Voting Matters

 

  Proposal   Board’s Voting
Recommendation
 

Page

Reference    

  1.   Election of Directors

  FOR EACH NOMINEE   10-17

  2.   Ratification of Independent Registered Public Accounting Firm

  FOR   39-40

  3.   Advisory Vote Approving Executive Compensation

  FOR   41

  4.   Advisory Vote on Frequency of Advisory Votes on Executive Compensation

  FOR ONE YEAR   42

  5.   Approval of Performance Goals under, and an Amendment to, the Long-Term Incentive Plan

  FOR   83-90

  6.   Shareowner Proposal: Lobbying Report

  AGAINST   91-92

  7.   Shareowner Proposal: Glyphosate Report

  AGAINST   93-95
 

 

Corporate Governance

At Monsanto, corporate governance is the foundation for sustainable growth. Our governance policies and structures are designed to promote thoughtful consideration of our business actions and appropriate risk taking, with the goal of producing great business results for you — our owners.

Since the beginning of fiscal 2016, we have taken the following governance actions:

 

  revised our bylaws to eliminate certain restrictions and conditions on use of the proxy access provisions by our eligible shareowners; and
  added Dwight M. “Mitch” Barns, Chief Executive Officer of Nielsen Holdings plc, and Patricia Verduin, Chief Technology Officer of Colgate-Palmolive Company, to our board of directors.

The Corporate Governance and Ethics section beginning on page 18 describes our governance framework, which includes the following:

 

  Board and Governance Information       

  Size of Board

    13   

  Number of Independent Directors

    12   

  Lead Independent Director

    Yes   

  Separate Chair and CEO

    No   

  Board Meetings Held in Fiscal 2016

    11   

  Mandatory Retirement Age

    75   

  Average Age of Directors

    60   

  Majority Voting in Director Elections

    Yes   

  Annual Board and Committee Evaluations

    Yes   

  Independent Directors Meet Without Management Present

    Yes   
  Board and Governance Information       

  Board Orientation and Continuing Education Program

    Yes   

  Succession Planning and Implementation Process

    Yes   

  Board Risk Oversight

    Yes   

  Comprehensive Sustainability Program Reporting as GRI G4 Core

    Yes   

  Codes of Conduct for Directors, Officers and Employees

    Yes   

  Stock Ownership Requirements for Directors and Executive Officers

    Yes   

  Anti-Hedging and Pledging Policies

    Yes   

  Executive Compensation Pay for Performance Metrics

    Yes   

  Recoupment Policy

    Yes   

  Long-Standing Shareowner Outreach Program

    Yes   
 

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    5


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Our Director Nominees

You are being asked to vote on the election of the 13 directors listed below, out of our total of 13 directors. Directors are elected by a majority of votes cast. Detailed information about each director’s background, skills and expertise can be found in Proposal 1 – Election of Directors.

 

 

LOGO

Corporate Governance Highlight

Proxy Access

In 2016, our board of directors further amended the proxy access bylaw originally adopted by our board in 2015. Our proxy access bylaw enables eligible Monsanto shareowners to have their own director nominee included in the company’s proxy materials along with candidates nominated by our board. Our board adopted the amendments and further revisions following thoughtful discussions with shareowners regarding the evolving role of proxy access through our long-standing shareowner outreach program, and shareowner approval of a non-binding proposal requesting amendment of our bylaws to adopt proxy access.

 PROXY ACCESS PROCESS

 

 

1

 

LOGO

 

a single shareowner, or

group of up to 20 shareowners

 

3% for 3years

 

owning three percent outstanding

stock for at least three
consecutive years

 

    

 

2

 

LOGO

 

the individual or group may submit

director nominees

 

20%

 

for up to 20% of the board

    

 

3

 

LOGO

 

nominees who satisfy the

requirements specified by the bylaws

are included in the proxy statement

 

LOGO

 

 

 

6    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Proxy Summary

Our 2016 Performance & Executive Compensation Highlights

Our 2016 Performance Highlights

Amidst continuing challenges facing our industry, our company delivered on the drivers that position Monsanto for return to growth. Our seeds and genomics business was again the key factor in our results, driven by our core seeds and traits business, innovative technology and our disciplined approach to managing expenses.

 

 

$4.48

 

   

 

$1.72B

   

 

$13.5B

   

 

18.1%

Ongoing EPS

 

   

Free Cash Flow

   

Net Sales

   

Adjusted ROC

Ongoing EPS, free cash flow and adjusted ROC are defined on page 45. See Appendix A for a reconciliation of these metrics to results reported in accordance with generally accepted accounting principles.

Creating Shareowner Value

In addition to delivering on short-term goals and investing for longer-term growth, we are also committed to using our balance sheet wisely while returning value to our shareowners. We have paid quarterly dividends since 2001 and increased our dividend four times since the end of fiscal 2012, for a cumulative increase of 80 percent since 2012. In second quarter 2016, we completed a $3 billion accelerated share repurchase program.

 

 

Cumulative Capital Returned To Shareowners ($ in billions; calculated on an as declared basis)    

 

LOGO

 

Pending Transaction

As previously announced, on September 14, 2016, we entered into a merger agreement with Bayer Aktiengesellschaft (“Bayer”) under which Bayer will acquire Monsanto for a price of $128.00 per share in cash. The transaction is subject to customary closing conditions, including the approval of the merger agreement by our shareowners and the receipt of required regulatory approvals. Closing is expected by the end of 2017. Until the merger with Bayer closes, we remain a separate and independent company, focused on delivering on our operational plan and key business milestones and continuing to create compelling value for our shareowners.

Executive Compensation Highlights

Our Compensation Philosophy; Linking Pay With Performance

Our executive compensation program is designed to attract, motivate and retain exceptional talent to drive our business objectives and strengthen long-term shareowner value by paying for performance and aligning management’s interests with our shareowners’ interests. We structure our compensation programs with a focus on variable pay, creating both long and short-term incentives for our executives. We seek to provide competitive pay opportunities in line with job scope, required skills and performance. To do this, we:

 

  use a mix of fixed and variable pay components with different time horizons and payouts (cash and equity-based awards) to reward annual and sustained performance over the longer term;

 

  motivate our executives to meet both short-term financial and individual goals and deliver on our long-term business goals the best way we know to build shareowner value;

 

  require executives and directors to have significant stock ownership ensuring that their interests are aligned with shareowners;

 

  promote balanced performance and discourage improper risk taking by avoiding reliance on any one metric or short-term performance goal; and

 

  reward for future sustained performance rather than past performance.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    7


Table of Contents

OUR COMPENSATION PAY MIX

At-risk pay incentives focus our management on achieving Monsanto’s key financial, strategic and business goals. For fiscal 2016, on average 82% or more of our proxy officers’ compensation value was at risk, with the actual amounts realized dependent upon our annual and longer-term performance and our stock price.

 

   CEO                                                                                Other Proxy Officers (Average)                           At-risk pay includes the target fiscal 2016 Annual Incentive Plan (“AIP”) award and long term incentive opportunity (“LTI”) (delivered in the form of stock options and financial goal-based restricted stock units (“Financial Goal RSUs”)).

 

   

 

  

 

 

LOGO  

 

   

 

 

LOGO  

 

  

OUR COMPENSATION PERFORMANCE METRICS

We use four key financial performance measures to motivate and evaluate results. We believe these represent key measures shareowners can use to assess the value of our business and our performance. The following chart explains the weighting of each measure for the AIP and Financial Goal RSUs, and the rationale for using each of these measures.

 

 

 

Financial Performance Metrics                                                                                                                           

 

LOGO

 

 

MANAGEMENT STOCK OWNERSHIP

We believe that stock ownership by our leadership is one way to foster a strong alignment with our shareowners, and we require our executives and key members of management to hold significant value in our stock.

 

 

 

Proxy Officer Stock Ownership and Requirements (as determined 8/31/16)                                    

 
 

 

CEO

 

LOGO

 

 

 

Other Proxy Officers (average)

 

LOGO

 

 

 

 

8    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Table of Contents
to the Proxy Statement

 

LOGO   

LOGO

 

 

 

PROXY SUMMARY

 

  5    

 

PROXY ITEM NO. 1: ELECTION OF DIRECTORS

 

  10    

 

Director Nominees

 

  10    

 

CORPORATE GOVERNANCE AND ETHICS

 

  18    

 

Our Corporate Governance Framework

 

  19    

 

Our Board of Directors

 

  20    

 

How We Select Our Director Nominees

 

  20    

 

Board Refreshment

 

  20    

 

Shareowner Nominations of Director Candidates

 

  21    

 

Director Independence

 

  22    

 

Board Leadership Structure

 

  22    

 

Role of the Lead Director

 

  23    

 

Board Policies and Practices

 

  23    

 

Compensation Committee Interlocks and Insider Participation

 

  24    

 

Board Meetings, Committees and Membership

 

  24    

 

Board Role in Risk Oversight and Assessment

 

  26    

 

Shareowner Communication with our Board of Directors, Lead Independent Director and Monsanto

 

  28    

 

Policies and Practices That Guide and Govern Our Actions

 

  29    

 

Related Person Transactions Policy

 

  30    

 

Sustainability and Corporate Responsibility

 

  31    

 

COMPENSATION OF DIRECTORS

 

  33    

 

Director Compensation Table

 

  35    

 

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

 

  36    

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

  37    

 

REPORT OF THE AUDIT AND FINANCE COMMITTEE

 

  38    

 

PROXY ITEM NO. 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

  39    

 

PROXY ITEM NO. 3: ADVISORY (NON-BINDING) VOTE APPROVING EXECUTIVE COMPENSATION

 

  41    

 

PROXY ITEM NO. 4: ADVISORY (NON-BINDING) VOTE DETERMINING THE FREQUENCY OF
ADVISORY VOTES ON EXECUTIVE COMPENSATION

 

  42    

 

REPORT OF THE PEOPLE AND COMPENSATION COMMITTEE

 

  43    

 

EXECUTIVE COMPENSATION (see detailed table of contents for this section on page 44)

 

  44    

 

Compensation Discussion and Analysis

 

  44    

 

Executive Compensation Tables

 

  68    

 

PROXY ITEM NO. 5: APPROVAL OF PERFORMANCE GOALS UNDER, AND AN AMENDMENT TO,
THE  MONSANTO COMPANY 2005 LONG-TERM INCENTIVE PLAN

 

  83    

 

PROXY ITEM NO. 6: SHAREOWNER PROPOSAL: LOBBYING REPORT

 

  91    

 

PROXY ITEM NO. 7: SHAREOWNER PROPOSAL: GLYPHOSATE REPORT

 

  93    

 

ANNUAL MEETING INFORMATION

 

  96    

 

Questions and Answers about the Annual Meeting and Voting

 

  96    

 

Shareowner Proposals and Director Nominations for 2018 Annual Meeting

 

  99    

 

Other Matters

 

  100    

 

APPENDIX A Reconciliation of Non-GAAP Financial Measures

 

  A-1    

 

APPENDIX B Monsanto Company 2005 Long-Term Incentive Plan (as Amended and Restated as of January 24, 2012)

 

  B-1    

 

FOR ADDITIONAL INFORMATION Website Links

 

  Inside Back Cover    

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    9


Table of Contents

Proxy Item No. 1:
Election of Directors

 

LOGO

 

The shareowners are being asked to elect each of Mr. Barns, Mr. Boyce, Dr. Chicoine, Ms. Fields, Mr. Grant, Mr. Harper, Ms. Ipsen, Mr. Lutz, Mr. McMillan, Mr. Moeller, Dr. Poste, Mr. Stevens and Dr. Verduin to terms ending with the annual meeting to be held in 2018, until a successor is elected and qualified or until his or her earlier death, resignation or removal. Our board has nominated each of these directors upon the recommendation of the nominating and corporate governance committee. Each nominee is currently a director of our company and has agreed to serve if elected.

We believe that the nominees will be able to stand for election, but should any nominee become unable to serve or for good cause will not serve, all proxies (except proxies marked to the contrary) will be voted for the election of a substitute nominee nominated by our board.

Director Nominees

The ages, principal occupations, directorships held and other information about our nominees and directors are shown below as of December 1, 2016.

 

 

  Our Board of Directors Recommends a Vote FOR Each Nominee for Director

 

 

LOGO

 

 

LOGO   

Principal Occupation:

Chief Executive Officer of Nielsen Holdings plc (a global performance management company that provides a comprehensive understanding of what consumers watch and buy) and its predecessor, since 2014; President, Global Client Service, Nielsen, 2013; President, U.S. Watch business, Nielsen, 2011-2013; President, Nielsen Greater China, 2008-2011; President, Consumer Panel Services, Nielsen, 2007-2008; President, BASES and Analytic Consulting Units, Nielsen, 2004-2007. Public Company Directorships in the Last Five Years: Nielsen Holdings plc.

 

Dwight M. “Mitch” Barns

First Became Director:

March 2016

 

Age: 53

  

 

Qualifications:

Mr. Barns has gained extensive global operational expertise in a complex environment as he has lived and worked on three continents and has held a variety of leadership roles with a leading global data analytics company. His service as the chief executive officer and a director of a publicly trading company expands the board’s expertise in risk management, corporate governance and other regulatory matters. Mr. Barns also has deep marketing and brand management experience in a broad range of industries. His experience on matters related to leading and growing a data analytics business, including how we continue to effectively leverage data to deliver a broad range of integrated solutions to help meet the needs of our customers, is uniquely valuable to our board and our people and compensation and sustainability and corporate responsibility committees.

 

 

 

10    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

  

LOGO

 

 

LOGO   

Principal Occupation:

Retired Executive Chairman and CEO, Peabody Energy Corporation (a leading company in coal, clean coal solutions and sustainable mining); Executive Chairman, Peabody Energy, 2015; Chairman and Chief Executive Officer, Peabody Energy, 2007-2015; President and Chief Executive Officer, Peabody Energy, 2006-2007; President and Chief Operating Officer, Peabody Energy, 2003-2005. Chief Executive-Energy, Rio Tinto plc (an international natural resource company), 2000-2003. Peabody Energy filed for Chapter 11 protection in 2016. Public Company Directorships in the Last Five Years: Marathon Oil Company, Newmont Mining Corporation and Peabody Energy Corporation (former).

 

Gregory H. Boyce

First Became Director:

April 2013

 

Age: 62

  

 

Qualifications:

Mr. Boyce has substantial management and financial experience, gained through his leadership roles at two large multi-national corporations. Through his roles as chief executive officer and chairman, and previous responsibilities for operational matters, he has gained expertise with respect to management of complex organizations and risk management. Mr. Boyce also has significant experience related to international business operations, which enables him to provide guidance and oversight for our management as our business grows internationally. In addition, Mr. Boyce has experience managing matters related to regulatory, policy and social responsibility issues, and knowledge of commodity, energy and other technology matters that are tangential to our business and important to his service on our board and on our science and technology committee. His service on the boards of three other public companies has also provided him substantial insight into governance matters which is valuable to our audit and finance committee.

 

 

LOGO   

Principal Occupation:

Professor, Department of Economics, South Dakota State University, a land grant research institution, since 2007; President, South Dakota State University, 2007-2016; Vice President for Technology and Economic Development, University of Illinois, 2001-2006.

 

David L. Chicoine,

Ph.D.

First Became Director:

April 2009

 

Age: 69

  

 

Qualifications:

Dr. Chicoine is an economist and an educator whose career has included key roles at public universities. As an expert in agricultural economics, he has a deep understanding of the economic factors that shape our industry on a national and global basis, which is helpful to our board as it considers our long-range plans and annual budgets, and financial risks facing the industry. As president of a large university, his responsibilities included executive management, public policy development and research support, including technology commercialization. This experience supported his ability to provide financial and strategic planning perspectives in his board service, and enhanced his contributions on our science and technology committee, as it oversees our research pipeline, and our sustainability and corporate responsibility committee, as it oversees public policy matters.

 

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    11


Table of Contents

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

 

LOGO   

Principal Occupation:

Former President of McDonald’s USA, LLC, a subsidiary of McDonald’s Corporation, a leading global foodservice retailer, 2010-2012; Executive Vice President and Chief Operating Officer, McDonald’s USA, LLC, 2006-2010; President of McDonald’s Central Division, 2003-2006. Public Company Directorships in the Last Five Years: Chico’s FAS, Inc.

 

Janice L. Fields

First Became Director:

April 2008

 

Age: 61

  

 

Qualifications:

Ms. Fields has gained broad operational and financial experience in her career in the food industry. She has developed expertise related to marketing, strategic planning, risk management, production, and human resources, which provides her with valuable insights on operational, executive compensation and strategic matters reviewed by our board. As a senior leader at a major public company in the food industry, Ms. Fields also gained experience in public policy matters and governance and financial oversight which is valuable in connection with her role as chair of our sustainability and corporate responsibility committee. In addition, her insights about the food industry are important as we consider strategic goals for the development of products to grow our business and become more involved in conversations about food. Ms. Fields’s experience as chair of the corporate governance and nominating committee and as a member of the compensation and benefits committee of another public company has also provided value in connection with her service on our nominating and corporate governance and people and compensation committees.

 

 

LOGO   

Principal Occupation:

Chairman of the Board and Chief Executive Officer of Monsanto, since August 2012; Chairman of the Board, President and Chief Executive Officer of Monsanto, October 2003-August 2012; President and Chief Executive Officer, Monsanto, May 2003-October 2003; Executive Vice President and Chief Operating Officer, Monsanto, 2000-2003; Co-President, Agricultural Sector, Former Monsanto, 1998-2000. Public Company Directorships in the Last Five Years: PPG Industries, Inc.

 

Hugh Grant

First Became Director:

May 2003

 

Age: 58

  

 

Qualifications:

Mr. Grant is our chairman and CEO. In his long career with our company and Former Monsanto, he has worked broadly in many areas of the business, enabling him to gain an extensive personal knowledge of our operations, which is essential in formulating business strategies. He has extensive experience in strategic planning, sales, financial oversight and planning. His operational experience in leading our multi-national corporation includes governance and risk management responsibilities, which assists our board in understanding our business and fulfilling its oversight role. Mr. Grant’s service on the board of another public company, including service as lead director and as chair of its nominating and corporate governance committee and as a member of its officers-directors compensation committee, provides Mr. Grant additional governance insights that are valuable in his role as our board chairman, leadership of our board, and interaction with our lead independent director.

 

 

 

12    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

  

LOGO

 

 

 

LOGO

 

Arthur H. Harper

First Became Director:

October 2006

 

Age: 60

  

Principal Occupation:

Managing Partner, GenNx360 Capital Partners, a private equity firm focused on business to business companies, since 2006; President and Chief Executive Officer, Equipment Services Division, General Electric Corporation, 2002-2005; Executive Vice President, GE Capital Services, General Electric Corporation, 2001-2002. Public Company Directorships in the Last Five Years: Gannett Co., Inc. (former).

 

  

 

Qualifications:

Mr. Harper has had significant experience in the operation and finance of manufacturing companies during his career. Through his experience as an executive at a complex, multi-national company and managing start-up companies, he has a deep understanding of manufacturing and supply dynamics, risk management, technology development and financing for capital projects. This knowledge enables him to provide key insights on strategic, operational, and financial matters related to our global business, which supports our audit and finance committee. His service on the public responsibility and executive compensation committees of another public company has also provided him governance, business conduct and compensation-related experience, which provides additional perspectives to our board of directors when exercising its oversight role and to our people and compensation committee when formulating compensation policies.

 

 

LOGO

 

Laura K. Ipsen

First Became Director:

December 2010

 

Age: 52

  

Principal Occupation:

General Manager & Senior Vice President, Oracle Marketing Cloud, Oracle Corporation, a U.S.-based multi-national computer technology corporation since July 2016; Senior Vice President & General Manager, Global Industry Solutions Group, Oracle Corporation, 2014-2016; Corporate Vice President, Worldwide Public Sector of Microsoft Corp., 2012-2014; Senior Vice President and General Manager, Connected Energy Networks, Cisco Systems, Inc., 2009-2012; Senior Vice President, Global Policy and Government Affairs, Cisco, 2007-2009; Vice President, Global Policy and Government Affairs, Cisco, 2001-2007.

 

  

 

Qualifications:

Ms. Ipsen has global expertise in energy, environmental issues, public policy, international trade and sales and marketing developed through her career in consulting and the high tech industry. Ms. Ipsen has led multiple strategic business, sustainability, policy and regulatory efforts, and has risk management experience. She has significant experience directing a comprehensive corporate sustainability strategy, including the development of global partnerships. In addition, Ms. Ipsen has significant experience in driving industry growth and optimization through the implementation of technology solutions. In light of the increasing importance information technology plays in our business success, Ms. Ipsen’s experience provides vital insight to our board and our science and technology and sustainability and corporate responsibility committees on a variety of matters including information technology and key legislative and regulatory issues facing our global technology business, and strategic oversight of our management.

 

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    13


Table of Contents

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

 

LOGO   

Principal Occupation:

Chief Executive Officer of Cosan Limited, a producer of bioethanol, sugar, energy and food, since April 2015; Chief Executive Officer of Cosan S.A. Indústria e Comércio, 2009-2015; Chief Commercial Officer, Cosan S.A. Indústria e Comércio, 2007-2009; Companhia Siderurgica Nacional S.A., Vice President, Infrastructure and Energy, 2003-2006; Ultrapar Partcipacoes S.A., Chief Operating Officer, Logistics, 1994-2003. Public Company Directorships in the Last Five Years: Cosan Ltd.

 

Marcos M. Lutz

First Became Director:

May 2014

 

Age: 46

  

 

Qualifications:

Mr. Lutz has attained significant senior management and operational experience through his roles as chief executive and chief commercial officer at large multi-national companies. As CEO of a public company that is a major employer in Brazil, he also has substantial experience operating in regulatory and societal frameworks of that region. This enables him to bring a very valuable perspective to our board and the sustainability and corporate responsibility committee given our company’s current operations in and strategic plans for Brazil and other regions outside the United States. He has also developed particular expertise related to the agricultural, food and chemical industries, which provides substantial insight to our board and our science and technology committee as they consider our company’s strategic plans and provide guidance to management operating our company in those industries.

 

 

LOGO   

Principal Occupation:

Retired Chairman and Chief Executive Officer, Sara Lee Corporation (which split into Hillshire Brands and D.E. Master Blenders 1753 in 2012); Chairman of the Board of Sara Lee Corporation, a global consumer packaged goods company, 2001-2005; Chief Executive Officer, Sara Lee Corporation, 2000-2005; President and Chief Operating Officer, Sara Lee Corporation, 2000-2004; President, Sara Lee Corporation, 1997-2000.

 

C. Steven McMillan

First Became Director:

June 2000

 

Age: 70

  

 

Qualifications:

Mr. McMillan has had significant operational experience leading a major international consumer products company, where he has gained expertise in finance, strategy, regulatory matters, marketing, manufacturing, mergers and acquisitions and human resources, and has had primary responsibility for risk management. These skills assist him in providing oversight of and guidance to our executive team in their management of a complex multi-national company. His understanding of the food industry enables him to provide valuable insights in our strategic planning and evaluation of our products. In addition, his past service on five other public company boards, including as a member of the audit and finance committees, and his current service as a board leadership fellow for the National Association of Corporate Directors, has given him additional expertise related to governance, finance, commodities, regulatory matters and business challenges for research and development-focused companies. This experience is beneficial in his service on our board, our executive, audit and finance and nominating and corporate governance committees and as chair of our people and compensation committee.

 

 

 

14    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

  

LOGO

 

 

LOGO   

Principal Occupation:

Chief Financial Officer, The Procter & Gamble Company, one of the world’s leading consumer products companies, since 2009; Vice President and Treasurer, The Procter & Gamble Company, 2007-2009; Vice President, Finance and Accounting, Global Beauty and Global Health Care, The Procter & Gamble Company, 2005-2007.

 

Jon R. Moeller

First Became Director:

August 2011

 

Age: 52

  

 

Qualifications:

Mr. Moeller has substantial finance and management expertise developed through his 28 years of experience with a large, multi-national corporation. His current responsibilities as chief financial officer, and prior roles as treasurer and division vice president for finance and accounting, have given him a broad understanding of the finance and accounting issues facing a global manufacturing company. In addition to his substantial financial experience, he has expertise related to risk management and compliance matters, which enable him to make valuable contributions to the oversight role of our audit and finance and nominating and corporate governance committees. As the senior financial executive at his company, Mr. Moeller has experience in developing and executing global strategy and serving as a key member of management at a complex, worldwide organization, and has resided outside the United States. This broad international business experience enables him to provide his fellow directors and our senior management a valuable perspective with respect to our global strategy and the management of our domestic and international businesses based on sound financial goals.

 

 

LOGO   

Principal Occupation:

Chief Executive of Health Technology Networks, a consulting group specializing in the application of genomics technologies and computing in healthcare, since 1999; Chief Scientist, Complex Adaptive Systems Initiative, since 2009; Director of the Biodesign Institute, a combination of research groups at Arizona State University, 2003-2009; Chief Science and Technology Officer and Director, SmithKline Beecham, 1992-1999. Public Company Directorships in the Last Five Years: Exelixis, Inc..

 

George H. Poste,

Ph.D., D.V.M.

First Became Director:

February 2003

 

Age: 72

  

 

Qualifications:

Dr. Poste is a scientist who has had extensive experience advising and leading research teams in both corporate and academic settings. He is a leader in synthetic biology and healthcare informatics, linking university research projects and collaborations. His roles as chief scientist leading research at a large university, and formerly as chief technology officer of a multi-national company, provide him valuable insight into the biotechnology industry and enable him to provide expert guidance, as chair of our science and technology committee, to our management and board as we develop and implement our technology strategies and research collaborations. In addition, his former roles on scientific advisory boards to the Federal government have also given him extensive experience related to risk management and regulatory and policy matters. His service as a director of other public companies, and as a member of the governance committee and chair of the research committees of other public companies, also bring valuable perspectives to our board.

 

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    15


Table of Contents

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

 

LOGO   

Principal Occupation:

Retired Chairman and Chief Executive Officer, Lockheed Martin Corporation (“Lockheed”), a high technology aerospace and defense company. Executive Chairman, Lockheed, January 2013-January 2014; Chairman of the Board and Chief Executive Officer of Lockheed, 2010-2013; Chairman of the Board, President and Chief Executive Officer, Lockheed, 2005-2010; President and Chief Executive Officer, Lockheed, 2004-2005; President and Chief Operating Officer, Lockheed, 2000-2004; Chief Financial Officer, Lockheed, 1999-2001; Vice President Strategic Development, Lockheed, 1998-1999. Directorships in the Last Five Years: United States Steel Corporation; Lockheed Martin Corporation (former).

 

Robert J. Stevens

First Became Director:

August 2002

 

Age: 65

  

 

Qualifications:

Mr. Stevens has attained substantial experience in executive and operational roles during his career. He has expertise in areas such as finance, information technology, technology development, manufacturing, marketing, and human resources, and he has broad international business management experience. Mr. Stevens’ roles as CEO, president, COO and vice president of strategic development of a leading company in the defense industry have given him a deep understanding of the complexities of operating a global business, strategic planning, regulatory and legislative and public policy matters, all of which are valuable to us as a technology-driven company subject to significant regulatory and public policy oversight. In addition, his leadership as CEO, executive chairman and chairman has also afforded him the opportunity to develop corporate governance expertise that has enabled him to serve with distinction as our lead director and chair of our nominating and corporate governance committee. Having formerly served as a FORTUNE 50 CFO, he also has significant expertise in financial, risk management and compliance matters, which supports his service on the audit and finance committee.

 

 

LOGO   

Principal Occupation:

Chief Technology Officer, Colgate-Palmolive Company, (“Colgate”), a consumer products manufacturer, since 2011; Vice President Research and Development, Colgate, 2007-2011; Senior Vice President and Chief Science Officer for the Grocery Manufacturers Association, 2006-2007; Senior Vice President of Product Quality and Development at ConAgra Foods, Inc., 2002-2006; Senior Vice President of Research and Development, Grocery Products Development, at ConAgra Foods, Inc., 2000-2002.

 

Patricia Verduin, Ph.D.

First Became Director:

September 2015

 

Age: 57

  

 

Qualifications:

Dr. Verduin is a scientist with significant experience leading large global science, technology and innovation teams in the corporate setting. Her current role as CTO and prior roles as chief science officer and senior vice president of product quality and development and science and regulatory affairs at multi-national companies in the packaged food and consumer goods industries provide her valuable insight into the global food industry and enable her to provide expert guidance, as a member of our science and technology committee, to our management and board as we develop and implement our technology strategies and evaluate risk. Her experience working with the largest food industry trade association also has given her significant exposure to regulatory and government affairs, which is valuable in connection with her service on our sustainability and corporate responsibility committee.

 

 

 

16    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Competency/Attribute
Barns
Boyce
Chicoine
Fields Grant Harper Ipsen Lutz McMillan Moeller Poste Stevens Verduin Operating • • • • • • • • • • • • Financial • • • • • • • • • •
International • • • • • • • • • • • Agriculture or Food Industry • • • • • • • • • Scientific/Technology/Information Technology • • • • • • Risk/Crisis Management • • • • • • • • • • • •
Marketing • • • • • • • • • • Government/Regulatory • • • • • • • • • • • • • Chemical/Commodity Industry • • • • • Governance/Business Conduct/Legal • • • • • • • • • Additional Information Age 53 62 69 61 58 60 52 46 70 52 72 65 57 Tenure <1 3 7 8 13 10 6 2 16 5 13 14 1 Other Public Company Boards 1 2 0 1 1 0 0 2 0 0 1 1 0

 

 

Proxy Item No. 1: Election of Directors

Director Nominees

 

  

LOGO

 

 

Summary of Director Core Competencies

The following chart summarizes the competencies currently represented on our board; the details of each director’s competencies are included in each director’s profile.

 

LOGO

 

 

Age

 

   

 

Tenure

 

   

 

Other Public Company Boards

 

LOGO

   

LOGO

   

LOGO

Average Age = 60 years     Average Tenure = 7.6 years     Average = < 1 Other Board

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    17


Table of Contents

Corporate Governance and Ethics

 

LOGO

 

At Monsanto, we are committed to effective corporate governance and high ethical standards. Corporate governance touches all aspects of our company and is an important part of both who we are and how we conduct ourselves every day.

As a company, our business decisions are guided by the core tenets of the Monsanto Pledge, our corporate governance guidelines and the charters of our board and its committees. The people of Monsanto have always been committed to the principles of a sound corporate governance program, and to fulfilling the commitments outlined in these documents.

We are pleased to share the components of our corporate governance program with you in this section of our proxy statement. In keeping with the spirit of the Monsanto Pledge, we hope this information gives you a sense of how our board members and employees strive to provide transparent and understandable information about Monsanto in an easily accessible way.

 

 

We encourage you to visit the Corporate Governance section of our website at www.monsanto.com/ whoweare/pages/corporate-governance.aspx where you will find detailed information about Monsanto’s corporate governance programs and policies, including:

 

n  Corporate Governance Guidelines

 

n  Code of Ethics for Chief Executive and Senior Financial Officers

 

n  Codes of Conduct for Directors, Executives, Employees and Suppliers

 

n  Charters for our Board and Board Committees

 

n  Certificate of Incorporation and Bylaws

 

Hard copies of these documents may be obtained without charge by any shareowner upon request by contacting the Corporate Secretary, Monsanto Company, 800 North Lindbergh Boulevard, St. Louis, Missouri 63167. Information on our website does not constitute part of this proxy statement.

 

 

 

18    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Corporate Governance and Ethics

Our Corporate Governance Framework

 

  

LOGO

 

 

Our Corporate Governance Framework

Monsanto is committed to the values of effective corporate governance and high ethical standards. Our board believes that these values are conducive to strong business performance and creating long-term shareowner value. Our governance framework gives our highly experienced directors the structure necessary to provide oversight, advice and counsel to Monsanto.

 

Corporate Governance At A Glance

 

 

  Board Independence

 

 

n   12 out of 13 of our directors are independent

 

n   Our CEO is the only management director

 

 

  Board Composition

 

 

n   Currently, the board has fixed the number of directors at 13

 

n   The board regularly assesses its performance through board and committee self-evaluation

 

n   The nominating and corporate governance committee leads the full board in considering board competencies and refreshment in light of company strategy

 

 

  Board Committees

 

 

n   We have six board committees – executive, audit and finance, nominating and corporate governance, people and compensation, science and technology, and sustainability and corporate responsibility

 

n   With the exception of the executive committee (our chairman and CEO serves on this committee), all other committees are composed entirely of independent directors

 

 

  Leadership Structure

 

 

n   Our chairman is CEO of our company. He interacts closely with our independent lead director

 

n   The independent board members elect our lead director annually. Among other duties, our lead director chairs executive sessions of the independent directors to discuss certain matters without management present

 

 

  Risk Oversight

 

 

n   Our full board is responsible for risk oversight, and has designated committees to have particular oversight of certain key risks. Our board oversees management as management fulfills its responsibilities for the assessment and mitigation of risks and for taking appropriate risks

 

 

  Open Communication

 

 

n   We encourage open communication and strong working relationships among the lead director, chairman and other directors

 

n   Our directors have access to management and employees

 

 

  Director Stock

  Ownership

 

 

n   At the end of fiscal 2016, our directors were required to own 5,872 shares of our common stock - more than five times the portion of their annual base retainer payable in cash (or stock at the director’s election)

 

 

  Accountability to

  Shareowners

 

 

n   We use majority voting in uncontested director elections

 

n   We have a fully non-classified board with annual election of directors

 

n   We have enabled our shareowners to nominate directors and have their eligible nominees included in the proxy statement with our nominees

 

n   We actively reach out to our shareowners through our engagement program

 

n   Shareowners can contact our board, lead director or management through our website or by regular mail

 

 

  Management

  Succession Planning

 

 

n   The board actively monitors our succession planning and people development and receives regular updates on employee engagement, diversity and retention matters

 

n   At least twice per year, the board reviews senior management succession and development plans

 

 

  Sustainability and

  Corporate

  Responsibility

 

 

 

n   The board monitors our programs and initiatives on sustainability, environmental and political matters and social responsibility and engages directly with stakeholders

 

n   The sustainability and corporate responsibility committee reviews and approves our Sustainability Report.

 

 

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    19


Table of Contents

 

Corporate Governance and Ethics

Our Board of Directors

 

 

Our Board of Directors

Our board of directors oversees, counsels and directs management in the long-term interest of Monsanto and our shareowners.

 

The board’s major responsibilities include:

 

   overseeing the conduct of our business, assessing our business and other enterprise risks;

 

   reviewing and approving our key financial objectives, strategic and operating plans, and other significant actions;

 

   overseeing our processes for maintaining the integrity of our financial statements and other public disclosures, and our compliance
with law and ethics;

 

   evaluating CEO and senior management performance and determining executive compensation;

 

   planning for CEO succession and monitoring management’s succession planning for other key executive officers; and

 

   establishing our effective governance structure, including appropriate board composition and planning for board succession.

 

How We Select Our Director Nominees

Our board is responsible for nominating members and filling vacancies on the board that may occur between annual meetings of shareowners, based upon the recommendation of the nominating and corporate governance committee. The committee considers the company’s current needs and long-term and strategic plans, in the context of overall board refreshment, to determine the skills, experience and characteristics needed by our board.

The nominating and corporate governance committee has retained a search firm to assist it in identifying and evaluating potential candidates for our board, including most recently Dwight M. “Mitch” Barns. The committee seeks input from other board members and senior management to evaluate nominees for director.

When evaluating potential candidates, the committee takes into consideration the Desirable Characteristics of Directors in our board charter, included on the following page, which includes consideration of diversity. Our board recognizes the value of diversity and considers how a candidate may contribute to the board in a way that can enhance perspective and judgment through diversity in gender, age, ethnic background, geographic origin, and professional experience. The committee also considers whether potential candidates will likely satisfy the independence standards for service on the board and its committees.

The board reviews its effectiveness in balancing these considerations through ongoing consideration of directors and nominees, as well as the board’s annual self-evaluation process.

BOARD REFRESHMENT

Our board maintains a robust process in which the members focus on identifying, considering and evaluating potential board candidates. Our nominating and corporate governance committee leads this process by considering prospective candidates at its meetings. In identifying appropriate candidates, supported by its outside consultants, through a thoughtful evaluation the committee is focused on aligning the skills, experience and characteristics of our board with the strategic development of the company. Among other things, the members aim to strike a balance between the knowledge that comes from longer-term service on the board with the fresh insights that can come from adding new members to the board. The following shows our board refreshment process:

 

                                  
   

Nominating and Corporate Governance Committee Oversight

 

    
   

Committee Chair: Robert J. Stevens, Lead Independent Director

 

    
                    
   

 

Identification of
Candidates

   

Assessment and
Interviews

   

Nomination and
Election

   

Onboarding

    
   

The nominating and corporate governance committee reviews candidates identified by an independent search firm, taking into consideration the Desirable Characteristics of Directors.

 

   

The committee seeks input from other board members and senior management to evaluate nominees for director and interviews appropriate candidates to confirm their qualifications, interest and availability for board service.

 

    Upon a recommendation from the nominating and corporate governance committee, the board of directors determines whether to elect a director candidate and optimal committee placement.     We conduct a comprehensive onboarding process for new directors, including site visits, to provide an understanding of our business, opportunities and challenges.     
                                  

 

 

20    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Corporate Governance and Ethics

Our Board of Directors

 

  

LOGO

 

 

SHAREOWNER NOMINATIONS OF DIRECTOR CANDIDATES

In fiscal 2015, we amended our bylaws to permit a group of up to 20 shareowners who have owned a minimum of 3% of our outstanding capital stock for at least three years to submit director nominees for up to 20% of the board for inclusion in our proxy statement, subject to complying with the requirements identified in our bylaws. We made further revisions to such provisions in fiscal 2016 to eliminate certain restrictions and conditions on use of the proxy access provisions by our eligible shareowners. Our board adopted the amendments and made the revisions following thoughtful discussions with shareowners regarding the evolving role of proxy access through our long-standing shareowner outreach program, as well as shareowner approval of a non-binding proposal requesting amendment of our bylaws to adopt proxy access. During our outreach discussions, our shareowners expressed support for the 20 shareowner group and up to 20% of the board formulation and a general flexibility on other proxy access provisions. Shareowners who wish to nominate directors for inclusion in our proxy statement or directly at an annual meeting in accordance with the procedures in our bylaws should follow the instructions under “Shareowner Proposals and Director Nominations for 2018 Annual Meeting” in this proxy statement.

DESIRABLE CHARACTERISTICS OF DIRECTORS

 

   

Personal Characteristics

Integrity and Accountability: High ethical standards, integrity and strength of character in his or her personal and professional dealings and a willingness to act on and be accountable for his or her decisions.

 

Informed Judgment: Demonstrate intelligence, wisdom and thoughtfulness in decision-making. Demonstrate a willingness to thoroughly discuss issues, ask questions, express reservations and voice dissent.

 

Financial Literacy: An ability to read and understand balance sheets, income and cash flow statements. Understand financial ratios and other indices for evaluating company performance.

 

Mature Confidence: Assertive, responsible and supportive in dealing with others. Respect for others, openness to others’ opinions and the willingness to listen.

 

High Standards: History of achievements that reflect high standards for himself or herself and others.

 

Core Competencies1

Accounting and Finance: Experience in financial accounting and corporate finance, especially with respect to trends in debt and equity markets. Familiarity with internal financial controls.

 

Business Judgment: Record of making good business decisions and evidence that duties as a director will be discharged in good faith and in a manner that is in the best interests of the company.

 

Management: Experience in corporate management. Understand management trends in general and in the areas in which the company conducts its business.

 

Crisis Response: Ability and time to perform during periods of both short-term and prolonged crisis.

 

Industry/Technology: Unique experience and skills in an area in which the company conducts its business, including science, manufacturing and technology relevant to the company.

 

International Markets: Experience in global markets, international issues and foreign business practices.

 

Leadership: Understand and possess skills and have a history of motivating high-performing, talented managers.

 

Strategy and Vision: Skills and capacity to provide strategic insight and direction by encouraging innovations, conceptualizing key trends, evaluating strategic decisions, and challenging the company to sharpen its vision.

 

Commitment to the Company

Time and Effort: Willing to commit the time and energy necessary to satisfy the requirements of board and board committee membership. Expected to attend and participate in all board meetings and board committee meetings in which they are a member. Encouraged to attend all annual meetings of shareowners. A willingness to rigorously prepare prior to each meeting and actively participate in the meeting. Willingness to make himself or herself available to management upon request to provide advice and counsel.

 

Awareness and Ongoing Education: Possess, or be willing to develop, a broad knowledge of both critical issues affecting the company (including industry-, technology- and market-specific information), and director’s roles and responsibilities (including the general legal principles that guide board members).

 

Other Commitments: In light of other existing commitments, ability to perform adequately as a director, including preparation for and attendance at board meetings and annual meetings of the shareowners, and a willingness to do so.

 

Stock Ownership: Complies with the Monsanto Company Executive and Director Stock Ownership Requirements.

 

 

    

 

 

1  The board as a whole needs the core competencies represented by at least several directors.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    21


Table of Contents

 

Corporate Governance and Ethics

Our Board of Directors

 

 

   

Team and Company Considerations

Balancing the Board: Contributes talent, skills and experience that the board needs as a team to supplement existing resources and provide talent for future needs.

 

Diversity: Contributes to the board in a way that can enhance perspective and judgment through diversity in gender, age, ethnic background, geographic origin, and professional experience (public, private, and non-profit sectors). Nomination of a candidate should not be based solely on these factors.

 

    

DIRECTOR INDEPENDENCE

Our board charter provides that no more than two board members may be non-independent under the independence criteria set by the NYSE. Under the NYSE listing standards, for a director to be considered independent, the board must affirmatively determine that the director has no direct or indirect material relationship with Monsanto. The NYSE has also established enhanced independence standards applicable to members of our audit and finance committee and our people and compensation committee. Our board has established independence standards for determining director independence that conform to the NYSE’s independence criteria.

In evaluating director independence, the board considered the independence standards and relevant facts and circumstances. Any transactions, relationships and arrangements between a director and Monsanto that were within the NYSE’s standards and our independence standards, were considered immaterial, and were not considered by the board in evaluating director independence. Based upon this evaluation, the board has determined that the following directors are independent: Dwight M. “Mitch” Barns, Gregory H. Boyce, David L. Chicoine, Janice L. Fields, Arthur H. Harper, Laura K. Ipsen, Marcos M. Lutz, C. Steven McMillan, Jon R. Moeller, George H. Poste, Robert J. Stevens and Patricia Verduin. Accordingly, 12 of our 13 directors are independent, and each of the following committees of the board is composed solely of independent directors:

 

  the audit and finance committee;

 

  the nominating and corporate governance committee;

 

  the people and compensation committee;

 

  the science and technology committee; and

 

  the sustainability and corporate responsibility committee.

 

A complete guide to Monsanto’s Board of Directors’ Independence Standards may be found at http://www.monsanto.com/whoweare/pages/board-of-directors-charter.aspx.

 

Executive Sessions of Independent Directors

     

Highly Independent Board

  12 of our 13 nominees are Independent.

LOGO

 

Executive sessions of the independent members of the board are routinely held each time the board meets in person at a regularly scheduled meeting. This gives the independent directors an opportunity to discuss matters without the presence of management and then provide feedback to the chairman.

Board Leadership Structure

Monsanto is deeply focused on our corporate governance practices. We value independent board oversight as an essential component of strong corporate performance to enhance shareowner value. Our commitment to independent oversight is demonstrated by the fact that all of our directors are independent, except our chairman. In addition, all of the members of our board’s committees, except the executive committee, are independent.

Our board believes that its current leadership structure, in which the roles of chairman and CEO are held by one person, is best for Monsanto and its shareowners at this time. Hugh Grant is our chairman and CEO. In his dual role, Mr. Grant is able to use the in-depth focus and perspective gained in running the company to effectively and efficiently guide our board. He fulfills his responsibilities in chairing the board through close interaction with our lead director, Robert Stevens, who was elected by the independent directors of our board.

The strong working relationships among the lead director, chairman and other directors are supported by a board governance culture that fosters open communications among the members, both during meetings and in the intervals between meetings. Open communication is important to develop an understanding of issues, promote appropriate oversight, and encourage the frank discussion of matters essential to leading a complex and dynamic enterprise.

 

 

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Table of Contents

 

Corporate Governance and Ethics

Our Board of Directors

 

  

LOGO

 

 

ROLE OF THE LEAD DIRECTOR

The board has structured the role of our independent lead director to strike an appropriate balance to the combined chairman and CEO role and to fulfill the important requirements of independent leadership on the board.

 

   

As lead director, Mr. Stevens:

 

n  approves information sent to the board, meeting agendas for the board and meeting schedules to assure that there is sufficient time for discussion of all agenda items;

 

n  has the authority to call meetings of the board or meetings of the independent directors;

 

n  presides at executive sessions of the independent directors;

 

n  serves as the liaison between the chairman and the independent directors;

 

n  presides at all meetings of the board at which the chairman is not present;

 

n  is a member of the board’s executive committee;

 

n  is available to consult with the chairman and CEO about the concerns of the board;

 

n  is available to consult with any of our senior executives as to any concerns that executives might have; and

 

n  upon request, is available for consultation and direct communication with major shareowners.

 

    

See page 28 for information on communication with our lead director. While serving as lead director, Mr. Stevens has overseen the development and implementation of governance practices that support high levels of performance by members of the board. His leadership fosters a board culture of open discussion and deliberation, with a thoughtful evaluation of risk, to support sound decision-making. He encourages communication among the directors, and between management and the board, to facilitate productive working relationships. Working with our chairman and other members of the board, Mr. Stevens also ensures there is an appropriate balance and focus among key board responsibilities such as strategy development, review of operations, risk oversight, and management succession planning.

We will continue to re-examine our corporate governance policies and leadership structures on an ongoing basis to ensure that they continue to meet the company’s needs.

Board Policies and Practices

Our board of directors has adopted corporate governance policies to assist the board and its committees in the exercise of their responsibilities, several of which are described below and on the following page. Each board committee has a written charter that states its purposes, goals and responsibilities, as well as criteria and procedures for committee membership, the appointment and removal of members, committee structure and operations and reporting to the full board. The board and committee charters provide our shareowners key information about how our board functions.

BOARD SIZE

Currently, the board has fixed the number of directors on our board at 13 members.

DIRECTOR ORIENTATION AND CONTINUING EDUCATION

Upon joining the board, directors are provided with an in-depth orientation about our company, including our business operations, strategy and governance and a visit to one of our facilities. New directors without previous experience as a director of a public company are expected to enroll in a director education program on corporate governance and director professionalism offered by a nationally recognized sponsoring organization. New directors with experience as a public company director are expected to participate in a comparable director education program offered at another board on which the director serves, if they have not recently attended such a program. We provide our directors with ongoing education opportunities, both at board meetings and through access to director education programs and other resources to assist them to remain abreast of developments in corporate governance and critical issues relating to the operation of public company boards. The board also conducts periodic visits to Monsanto facilities as part of its regularly scheduled board meetings.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    23


Table of Contents

 

Corporate Governance and Ethics

Our Board of Directors

 

 

BOARD SELF-ASSESSMENTS

The board conducts annual self-evaluations to determine whether it and its committees are functioning effectively and whether its governing documents continue to remain appropriate. Our board’s self-evaluation is facilitated by a wide range of questions related to topics including operations, composition of the board, responsibilities, governing documents and resources. As part of the board self-evaluation process, each director also conducts a self-evaluation, and our chairman conducts individual interviews with each board member. The process is designed and overseen by the nominating and corporate governance committee, which is chaired by our lead independent director, and the results of the evaluations are discussed by the full board.

Each committee, other than the executive committee, annually reviews its own performance and assesses the adequacy of its charter, and reports the results and any recommendations to the board. The nominating and corporate governance committee oversees and reports annually to the board its assessment of each committee’s performance evaluation process.

BOARD OVERSIGHT OF MANAGEMENT SUCCESSION PLANNING

Our board and management consider succession planning and people development to be an integral part of the company’s long-term strategy. The people and compensation committee is responsible for monitoring our management succession and development plans and receives regular updates on employee engagement, diversity and retention matters, which are reported to the full board. At least twice annually, our full board reviews senior management succession and development plans with our CEO. Our CEO then presents to the independent directors his evaluations and recommendation of future candidates for the CEO position and other senior leadership roles and potential succession timing for those positions, including under emergency circumstances. The board also reviews and discusses development plans for individuals identified as high-potential candidates for senior leadership positions, and the board members interact with these candidates in formal and informal settings during the year.

Information about board refreshment can be found in the section titled How We Select Our Director Nominees.

Compensation Committee Interlocks and Insider Participation

No member of our people and compensation committee (Messrs. McMillan (Chair), Barns and Harper, and Ms. Fields) is or has been an officer or employee of our company or any of our subsidiaries. In addition, no member of our people and compensation committee has had any related person transactions that require disclosure under the SEC’s proxy rules and regulations.

Board Meetings, Committees and Membership

During fiscal 2016, our board of directors met 11 times and acted twice by written consent. All directors attended 75% or more of the total meetings of the board and of the board committees on which they served at the time.

Our board charter formally encourages directors to attend the annual meeting of shareowners. Last year all of the directors then in office attended the meeting, with the exception of Mr. Lutz.

 

 

24    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Number of
Meetings Held
Actions by Written Consent
Barns
Boyce
Chicoine
Fields
Grant
Harper
Ipsen
Lutz
McMillan
Moeller
Poste
Stevens
Verduin
  Executive
2
2
2
  Audit & Finance
11
9
11
11
11
  Nominating & Corporate Governance
5
5
5
5
5
  People & Compensation
7
1
7
7
7
  Science & Technology
5
3
3
5
5
5
5
5
  Sustainability & Corporate Responsibility
5
3
3
5
5
5
5
5
5
Chairperson

 

 

Corporate Governance and Ethics

Our Board of Directors

 

  

LOGO

 

 

Our board of directors has six committees as outlined below.

BOARD COMMITTEE MEMBERSHIP

The following chart shows the fiscal 2016 membership and chairpersons of our board committees, committee meetings held and actions by written consent taken, and committee member attendance. During fiscal 2016, our restricted stock grant committee (a board committee that was discontinued during fiscal 2016) took action by written consent nine times.

 

 

LOGO

1 Ms. Fields became a member of the Executive Committee on August 12, 2016.

BOARD COMMITTEES

The following chart shows the membership and chairpersons of our board committees and their roles and responsibilities as of Dec. 1, 2016.

 

   

 

Executive Committee

 

Members:

Messrs. Grant (Chair),

McMillan and Stevens, and Ms. Fields

 

  

 

n  Directs the management of our business and affairs in the intervals between meetings of our board of directors (except for certain matters specifically retained by our board of directors or that are reserved for our entire board of directors by statute, our certificate of incorporation or our bylaws).

 

n  Actions of the executive committee are reported to the board of directors at its next regular meeting.

 

    

 

   

 

Audit and Finance Committee

 

Members:

Messrs. Moeller (Chair),

Boyce, Harper, McMillan and Stevens

 

All members of the audit and finance committee were determined to meet the independence and experience requirements of the NYSE listing standards. We determined that each of the members is financially literate and that Messrs. McMillan, Moeller and Stevens are “audit committee financial experts” for purposes of SEC regulations.

 

  

 

Oversees:

 

n  the integrity of our financial statements;

 

n  the qualifications and independence of our independent registered public accounting firm;

 

n  the performance of our independent registered public accounting firm and internal audit staff;

 

n  our compliance with legal and regulatory requirements; and

 

n  our policies and practices for major financial risk exposures.

    

 

   

 

Nominating and Corporate

Governance Committee

 

Members:

Messrs. Stevens (Chair),

McMillan and Moeller, and Ms. Fields

 

All members of the nominating and corporate governance committee were determined to meet the independence listing standards of the NYSE.

  

 

n  Provides oversight of the corporate governance affairs of our board and company, including consideration of risk oversight responsibilities of our full board and its committees.

 

n  Identifies and recommends individuals to our board for nomination as members of the board and its committees, and recommends director orientation and continuing education.

 

n  Leads our board of directors and our board committees in annual reviews of their performance.

 

n  Reviews and advises on shareowner engagement and proposals received by the company.

 

        

 

 

 

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Corporate Governance and Ethics

Our Board of Directors

 

 

   

People and Compensation Committee

Members:

Messrs. McMillan (Chair),

Barns and Harper, and Ms. Fields

 

All members of the people and compensation committee were determined to meet the enhanced independence listing standards of the NYSE.

  

n  Establishes and reviews our executive compensation program and policies and seeks to ensure that our senior management is compensated in a manner consistent with the program and policies.

 

n  Establishes, reviews and monitors our overall compensation program for all our employees, other than senior management, and monitors our performance as it affects our employees.

 

n  Considers the impact of our compensation policies and practices in relation to our risk management objectives.

 

n  Monitors implementation of our management succession strategies and plans for our CEO and other members of senior management.

 

n  Performs or delegates, reviews and monitors Monsanto’s responsibilities for our retirement and welfare benefit plans.

 

n  Reviews our compensation program for non-employee directors and recommends appropriate changes to our board of directors.

 

 

   

Science and Technology Committee

Members:

Dr. Poste (Chair),

Messrs. Boyce and Lutz, Drs. Chicoine and Verduin

and Ms. Ipsen

  

n  Reviews and monitors our technology portfolio and information technology platforms, including as related to the budget, research and development infrastructure, intellectual property and regulatory matters.

 

n  Provides understanding, clarification and validation of the technical matters of our business to enable the board to make informed strategic business decisions and ensure that world class science is practiced at our company.

 

n  Identifies and investigates significant emerging science and technology issues.

 

n  Oversees the management of risks related to our technology portfolio and information technology platforms.

 

 

   

Sustainability and Corporate

Responsibility Committee

Members:

Ms. Fields (Chair),

Messrs. Barns and Lutz,

Drs. Chicoine, Poste and Verduin,

and Ms. Ipsen

  

n  Reviews and monitors our performance as it affects matters relating to sustainability, the environment, communities, customers and other key stakeholders, including related risks and risks related to reputation.

 

n  Reviews issues affecting company products in the marketplace, including issues of agricultural biotechnology, and identifies and reviews significant emerging issues.

 

n  Receives periodic reports on the company’s business conduct program, progress related to the company’s Human Rights Policy, and the company’s charitable and political contributions and lobbying expenses, including authorizing funding for contributions and appointing senior management to manage political contributions.

 

n  Reports to the full board as to the status of our company’s programs and initiatives on sustainability, environmental matters and social responsibility.

 

Board Role in Risk Oversight and Assessment

As a technology company, taking risk is important to pursuing future growth for Monsanto. We must also manage our assets for the benefit of our company and our shareowners. But how do we ensure that we take the right risks?

Our board oversees management as it balances risk and reward opportunities, and is responsible for motivating and challenging management to properly assess, mitigate and take risks. In fulfilling its oversight responsibilities, our board receives periodic in-depth reports on management’s enterprise risk assessment process and frequent updates on management’s assessment of current and future risks. When requesting approval for a project, management is responsible for fully describing the relevant risks and mitigating factors to the board. The board is then able to fully assess the project within our risk-reward parameters.

Our board oversees many risks at the board level, but allocates certain risks to its committees for a deeper review. The board also assigns some risks to multiple committees. This increases the effectiveness of our board’s oversight by taking into account the different perspectives of the various board committees, including their interactions with management. Each committee reports on its activities to the full board.

 

 

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Corporate Governance and Ethics

Our Board of Directors

 

  

LOGO

 

 

OUR BOARD AND COMMITTEE RISK OVERSIGHT RESPONSIBILITIES

This chart summarizes the key risk oversight responsibilities of our board and its committees.

 

 

Board or Committee

 

  

 

Risk Oversight Responsibilities

 

Board

 

  

 

Business strategy and major resource allocations

 

Risk assessment and policies developed by management

 

Executive succession

 

Business conduct and compliance

 

Crisis management

Audit and Finance Committee

 

  

Business operations

 

Major financial exposures

 

Compliance with regulatory requirements

 

Information technology/cyber-security

 

Business conduct

Executive Committee    Risk related to a specific approval item

Nominating and Corporate Governance

Committee

  

Overall board governance

 

Board refreshment and operations

 

Compliance with regulatory requirements

 

Business conduct

People and Compensation Committee

 

  

Organizational development and engagement

 

Design of compensation programs

 

Compliance with regulatory requirements

Science and Technology Committee

 

  

Scientific risks

 

Technology portfolio and intellectual property

 

Regulatory/product performance

 

Information technology

Sustainability and Corporate Responsibility Committee   

Sustainability and the environment

 

Stewardship/regulatory

 

Community impact and reputation

 

Business conduct

 

Company participation in the political process

Our management has developed an enterprise risk management program to identify and prioritize risks, based on the potential significance of the risk. We have also implemented internal controls to mitigate certain risks and a certification process to check that controls are being followed and remain effective.

COMPENSATION-RELATED RISK

We regularly assess risks related to our compensation programs, including our executive compensation programs, and do not believe that the risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on our company. At the people and compensation committee’s direction, its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”) and management provide ongoing information regarding compensation factors that could mitigate or encourage excessive risk-taking.

 

 

 

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Corporate Governance and Ethics

Shareowner Communication with our Board of Directors, Lead Independent Director and Monsanto

 

 

In addition, in August 2016, management provided a risk assessment of compensation programs to the committee for its review and consideration, and the committee again solicited input from FW Cook. In its review, the committee considered the attributes of our compensation programs, including:

 

n   the balance between annual and longer-term performance opportunities to reduce the incentive to accelerate or delay performance and the fact that Financial Goal RSU awards to the CEO have the potential for continued vesting following employment;

 

n   performance measures tied to key, auditable measures of short-term and long-term performance to motivate sustained performance;

 

n   performance goals set at levels that are sufficiently high to encourage strong performance and support the resulting compensation expense, but within reasonably attainable parameters intended to discourage pursuit of excessively risky business strategies;

 

n   the fact that the committee determines goals for executive compensation awards in connection with the board’s deliberation of the company’s budget and strategic plans, and that the committee’s membership includes several members of the audit and finance committee, providing an appropriate link between financial performance and compensation;

 

n   the committee’s ability to exercise discretion under our compensation plans in certain circumstances when determining pay-outs of performance-based compensation;

 

n   our policy on recoupment of performance-based compensation for financial restatements as discussed on page 63; and

 

n   robust stock ownership requirements for our CEO and other executives intended to align executives’ interests with those of our shareowners.

Shareowner Communication with our Board of

Directors, Lead Independent Director and Monsanto

Monsanto’s board of directors welcomes shareowner communications. Shareowners may contact our board, our lead independent director or other independent directors by email or regular mail:

 

 

LOGO

 

        

LOGO

 

 
 

INTERNET

        

MAIL

 
 

 

Go to our website at www.monsanto.com/

whoweare/pages/contactourdirectors.aspx

        

 

You may also send correspondence to: Monsanto

 

c/o David F. Snively, Corporate Secretary
(for our lead independent director use:
c/o Office of the Lead Director)
800 North Lindbergh Boulevard,
Mail Stop A3NA
St. Louis, Missouri 63167

 

 

We will review shareowner communications to determine whether a response by the board is appropriate. Shareowner emails to the board cannot contain attachments, and any attachments will be automatically removed. If you wish to provide additional materials with your communications, please use regular mail, sent to the address shown above.

Contacting Monsanto. While the board oversees management, it does not participate in day-to-day management functions or business operations. If you wish to submit questions or comments relating to these matters, please use the Contact Us Form on our website, which will help you to direct your message to the appropriate area of our company.

 

 

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Corporate Governance and Ethics

Policies and Practices That Guide and Govern Our Actions

 

  

LOGO

 

 

Policies and Practices That Guide and

Govern Our Actions

Our corporate governance and ethics policies enable us to manage our business in line with high standards of business practices and in the best interest of our shareowners. We re-evaluate our policies periodically to ensure they continue to meet our company’s needs.

In addition to our board of directors’ charters, we have adopted several other policies and practices that guide and govern the manner in which we act. We have listed some of our significant corporate governance practices and policies below.

Our Pledge

The Monsanto Pledge is our commitment to how we do business. It is a declaration that calls us to consider our actions and their impact broadly, and to lead responsibly. It drives us to engage with societal stakeholders in order to better hear and understand their issues of concern and how we can improve our performance and impact. The Pledge also helps us to convert our values into actions, and to make clear who we are and what we champion. Our annual Sustainability Report describes many of the ways in which we have implemented the Pledge.

Code of Business Conduct

At Monsanto, we are committed to building relationships based on integrity. Integrity, in alignment with our Pledge, helps us earn and retain the trust of people with whom we do business. Our board has adopted a Code of Business Conduct that applies to everyone at Monsanto — our directors, officers and employees. In addition, the Monsanto Supplier Code of Conduct applies to actions taken on our behalf by persons representing our company such as consultants, agents, sales representatives, distributors, suppliers and independent contractors, who are expected to act consistently with these commitments when performing services on our behalf.

The employee Code of Business Conduct provides guidance on and expresses our commitment to safety and health, protecting the environment, fair dealing, proper stewardship of our products, use of company resources, and accurate communication about our finances and products. It also addresses many of the legal and ethical facets of integrity in business dealings with customers, suppliers, investors, the public, governments that regulate Monsanto and the communities where we do business. Our Code of Business Conduct has been translated into more than 31 languages and is distributed to our employees, who are required to affirm their commitment to the Code on an annual basis. Our Supplier Code of Conduct extends these commitments to third party providers to clarify Monsanto’s expectations that we will choose to do business only with those who share our values and is available at www.monsanto.com/whoweare/pages/supplier-code-of-conduct.aspx.

 

 

LOGO

 

 

 

Confidential Employee Hotline Through a board chartered global business conduct office, we implement compliance and ethics initiatives through working groups and dedicated facilitators in each of our global business regions. Employees have access to a multi-language capable guidance line and website operated by an independent service provider that is available worldwide for the receipt of complaints regarding accounting, internal controls and auditing matters, and have in place procedures for the anonymous submission of employee concerns regarding accounting or auditing matters and a policy prohibiting retaliation for good-faith reporting. Where allowed by local law, employees may submit a complaint or question, including anonymously, via reporting to our third party service provider that maintains 24/7 availability and language accommodation, an internal toll-free telephone number or a special email mailbox dedicated to business conduct matters.

Financial Governance — Code of Ethics

We have adopted a code of ethics that applies to our chief executive officer and the senior leadership of our finance department, including our chief financial officer and our controller. As a public company, it is important that our filings with the SEC be accurate and timely. Our internal audit function maintains important oversight over the key areas of our business and financial processes and controls, and reports regularly to our audit and finance committee.

 

 

 

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Corporate Governance and Ethics

Policies and Practices That Guide and Govern Our Actions

 

 

Shareowner Rights Policy

We do not have a shareowner rights plan (commonly known as a poison pill) and are not currently considering adopting one. Our board’s policy is that it will only adopt a shareowner rights plan if either (1) the shareowners approve it or (2) the board makes a determination that it is in the best interests of the shareowners to adopt a shareowner rights plan without the delay that would be required in order to seek shareowner approval.

Charitable Contributions

Under our Charitable Contributions Policy adopted by the board, if Monsanto is requested by a director to make a charitable contribution, then it must be reviewed by the chair of the nominating and corporate governance committee (or the full committee, if the committee chair makes such a request). They will determine whether the donation would impair the director’s independence.

Human Rights

In 2016, we celebrated the tenth anniversary of the adoption of our Human Rights Policy (adopted in April 2006). The policy is grounded in international standards and is an important expression of our values as described in the Monsanto Pledge. It provides a framework to hold us accountable to advance, support and respect human rights in the course of our business. We work to identify and do business with partners who conduct their businesses with ethical standards that are consistent with this policy, and we work with those business partners in the spirit of continuous improvement. In the development of our policy there was recognition by both Monsanto business leaders and external stakeholders that the continuous improvement approach would be the most effective and honest model to address these complex and multifaceted issues on a consistent basis. The managements gives annual updates to the sustainability and corporate responsibility committee on the implementation of the policy.

Political Contributions

We are committed to participating constructively in the political process, as we believe participation is essential to our company’s long-term success. Our participation in the political process includes contributions to political candidates in a manner that is compliant with all applicable laws and reporting requirements. We have established effective governance processes including oversight by our sustainability and corporate responsibility committee regarding political contributions made by our company. Please see our website for more information about the ways in which we participate in the political process and contributions we have made.

Stakeholder Engagement

Talking to our stakeholders, whether it’s our farmer customers, employees, or investors, has always been an important part of how we do business.

In 2011, we began a more formalized stakeholder engagement program. The conversations not only included our business activities, but also our mission, values and commitments to sustainability. We brought many internal and external stakeholders to the table with our board of directors, its committee dedicated to sustainability and the leaders of Monsanto — through in-person meetings and surveys — to share, debate and find common ground. During these stakeholder engagement sessions, there was one thing we heard loud and clear: Do a better job at opening up and engaging society.

We consider it vital that our stakeholder engagement is inclusive, flexible and open to all audiences and ideas. We value the views of our shareowners and other stakeholders and make it a practice to solicit input and engage in dialogue throughout the year about various topics, including those relating to environmental, social and governance matters. For additional information regarding our shareowner outreach program, see page 46.

Related Person Transactions Policy

Our board has adopted a written policy regarding the review, approval or ratification of “related person transactions.”

 

 

A “related person” is defined under the applicable SEC rule and includes our directors, executive officers, beneficial owners of 5% or more of our common stock, and each of their immediate family members.

 

 

 

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Corporate Governance and Ethics

Policies and Practices That Guide and Govern Our Actions

 

  

LOGO

 

 

Under the written policy, our nominating and corporate governance committee generally is responsible for reviewing, approving or ratifying any related person transactions covered by SEC rules. It will approve a transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of the company and its shareowners. Here is a description of matters reviewed by the nominating and corporate governance committee under this policy:

 

n   William Sherk, our crop protection business lead in Canada until his departure from our company in fiscal 2016, is a brother-in-law to our executive officer Kerry Preete. Mr. Sherk’s compensation had been established in accordance with our ordinary employment and compensation practices applicable to employees with equivalent qualifications, experience and responsibilities and he was eligible to participate in our employee benefit programs on the same basis as other similarly situated employees. Further, a procedure had been put in place under which Mr. Begemann, our president and COO, had been involved in approving any special pay actions and awards for Mr. Sherk. During fiscal 2016, Mr. Sherk received annual base pay of approximately $100,823. He also received an annual incentive award for fiscal 2016 of approximately $3,771. In connection with his departure effective June 30, 2016, he was entitled to receive a payment in the amount of $206,098, which payment was approved by both Mr. Begemann and our nominating and corporate governance committee. These amounts are based on a September 1, 2016 exchange rate.

 

       
             

 

Sustainability and Corporate Responsibility

 

     
 

 

Our Commitment to Sustainability

is a key component of who we are. Through our Sustainability and Corporate Responsibility Committee, we’re addressing critical issues and engaging with stakeholders about our progress.

 

           
 
 
 
 

 

 
 
 
 
 

Our long-standing commitment to sustainability is embedded in our core business strategy, operations and
products as evidenced by our progress against our broad-ranging standing commitments. We are focused
on how Monsanto can contribute to the 2030 Agenda of the United Nations and advancement of the
Global Goals through improving lives by helping make balanced meals accessible to all while using
resources more efficiently.

 

Sustainability is a core value at Monsanto which warrants our continuous focus and commitment to
improvement across the organization. In March 2016, we published our 2015 sustainability report, again
adhering to the Core option of the Global Reporting Initiative (“GRI”) G4 Sustainability Reporting Guidelines,
covering primarily fiscal 2015 data and activities. We plan to issue our 2016 report early in 2017. Our 2015
report is available at http://www.monsanto.com/sustainability/pages/default.aspx.

        
                  
                  
                      
              HIGHLIGHTS OF OUR 2015 REPORT: GROWING BETTER TOGETHER         
                      
           

 

People

 

 

LOGO  

   

 

Planet

 

 

LOGO  

      Company   LOGO           
                                        
             

n   We strive to make balanced meals more accessible for everyone on the planet and improve lives for farmers, employees, consumers and communities. Our report highlights our work and collaborations to

  Increase crop productivity

  Improve the lives of resource-poor farm families

  Respect and protect human rights and embrace diversity

  Invest in the safety, health and wellbeing of our employees

  Support education for smallholder farmers and in our communities

 

     

n   We work to balance agricultural and societal demands with environmental resources through the pursuit of solutions that help farmers grow crops more efficiently. We’re working to adapt to and mitigate climate change through

  Plans to make our operations carbon neutral by 2021, which we announced in Dec. 2015

  Work to reduce greenhouse gas emissions and increase irrigation water application in our operations and more broadly within agriculture

  Analysis and work to address where and how we intersect biodiversity

 

     

n   We place high ethical standards, effective corporate governance, responsible product stewardship and transparent reporting at the center of the way we operate our business.

  We are dedicated to facing the tough issues head-on. Through our many stakeholder engagements and the monitoring of what’s being said about our company in media, we seek to understand what society and stakeholders want to know about Monsanto and its products and business practices, and to address those questions in our report.

  The Corporate Governance and Ethics section in this proxy statement provides more information about our policies and practices related to corporate governance, ethical conduct, political contributions and other supply chain

 

            
                                

 

 

 

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Corporate Governance and Ethics

Policies and Practices That Guide and Govern Our Actions

 

 

Awards and Recognition

Third parties regularly recognize our employees’ innovation, leadership, and workplace satisfaction. We are pleased to highlight some of these awards here.

Corporate Reputation and Leadership

World’s Most Admired Companies

FORTUNE Magazine 2014, 2015, 2016

 

Highest Rated CEOs

Glassdoor 2015

 

40 Best Companies for Leaders

Chief Executive Magazine 2012, 2013, 2014, 2015

 

World’s Most Innovative Companies

FORBES 2013

 

World’s Best Multinational Workplaces

Great Place to Work® 2012, 2013, 2014, 2015, 2016

 

Corporate Social Responsibility
and Sustainability

Global 100 Most Sustainable Corporations in
the World Index

Corporate Knights 2014

 

100 Best Corporate Citizens

Corporate Responsibility Magazine 2013, 2014, 2015

 

2013 ND-GAIN Corporate Adaptation Award

Notre Dame Global Adaptation Index 2013

Science and Technology

50 Smartest Companies

MIT Technology Review 2014, 2015, 2016

 

Top Science Employers

Science Magazine 2010, 2011, 2012, 2013,
2014, 2015, 2016

 

Top 100 Employers in IT

Computerworld 2009, 2011, 2012, 2013, 2015

 

Diversity

Top 50 Companies for Diversity

DiversityInc 2009, 2010, 2011, 2012, 2013,
2014, 2015, 2016

 

Top 50 Companies for Executive Women

National Association for Female Executives (NAFE) 2013

 

Best Place to Work for LGBT Equality

The Human Rights Campaign Foundation 2010, 2011, 2013, 2014, 2015, 2016

 

Top Diversity Employer

Black EOE Journal 2015, 2016

 

Top 50 Employers (of minority engineers)

Minority Engineer 2012, 2013

 

 

Ranked

12

out of 500

U.S. companies in

NEWSWEEK’S

2016 Green Rankings

 

 

 

 

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Compensation of Directors

 

LOGO   

LOGO

 

 

Our non-employee director compensation program (the “Directors’ Plan”) is designed to attract highly-qualified individuals to serve on our board and to align their interests with those of our shareowners. Mr. Grant is our sole employee director and does not participate in the Directors’ Plan or otherwise receive compensation for his services as a director.

Our people and compensation committee reviews our director compensation program at least annually to determine whether the program remains appropriate and competitive, and recommends any changes to our full board of directors for consideration and approval.

Our Board of Directors 2016 Compensation Program

Before the start of fiscal 2016, our people and compensation committee considered the design of our director compensation program. The committee reviewed information and recommendations from management, using data from Willis Towers Watson for the same comparator group of companies the committee uses for determining compensation for our executives. Our Executive Compensation Comparator Group is described on page 53. The committee also considered input from FW Cook. After reviewing the information, the committee determined that the plan design continued to align with market trends, and that the amount of our directors’ annual base retainer was near but slightly below the 50th percentile of our comparator group. The committee determined to recommend no changes to the director compensation program.

Summary of Directors’ Compensation Plan for Fiscal 2016:

 

    Compensation Type   Amount   Form of Payment            

  Annual

  Retainer

  (Components)

 

Base retainer

 

 

 

$245,000    

  n   50% –  Deferred stock:

n   50% –  Director’s election

     of:

     – deferred stock,

     – restricted stock,

     – deferred cash, or

     – current cash

 

See below for a description
of these forms of payment
and method for determining
the number of shares of
deferred and/or restricted
stock

 

Additional retainer amount for service as lead director

 

 

 

$  50,000    

 
 

Additional retainer amount for chair of the audit and finance committee

 

 

  $  35,000      
 

 

Additional retainer amount for chairs of the people and compensation and nominating and corporate governance committees

 

 

  $  25,000      
 

 

Additional retainer amount for chairs of the science and technology and sustainability and corporate responsibility committees

 

 

  $  20,000      
   

 

Additional retainer amount for members of the audit and finance, people and compensation, and nominating and corporate governance committees (other than the chairs)

 

 

  $  15,000      

  Initial Equity Grant

 

 

One-time equity grant for new directors; value determined by dividing the current base retainer amount by the closing stock price on service commencement date

 

  $245,000       Restricted stock that vests
three years from grant date

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    33


Table of Contents

 

Compensation of Directors

Our Board of Directors 2016 Compensation Program

 

 

 

  Deferred Stock

 

 

n  This is common stock that is delivered at a specified time in the future. Earned shares are credited in the form of hypothetical shares to a stock unit account at the beginning of each plan year and vest in installments as of the last day of each calendar month, but only if a director remains a member of our board of directors on that day. All hypothetical shares in each director’s account are credited with dividend equivalents, also in the form of hypothetical shares. No director has voting or investment power over any deferred shares until distributed in accordance with the terms of the Directors’ Plan, generally upon termination of service.

 

 

  Restricted Stock

 

 

n  This is common stock that vests and is delivered over the course of the year in accordance with specified terms. Restricted stock vests in installments on the last day of each calendar month, but only if the director remains a member of our board of directors on that day. Any restricted stock granted to a non-employee director entitles the director to all rights of a shareowner with respect to common stock for all such shares issued in his or her name. This includes the right to vote the shares and to receive dividends or other distributions paid or made with respect to such shares. Dividends and other distributions are withheld and delivered with the restricted stock as it vests.

 

 

  Cash/Deferred Cash

 

 

n   Any portion of a non-employee director’s aggregate annual retainer not paid in the form of deferred stock or restricted stock will be paid in cash, either in monthly installments on the last day of each calendar month or on a deferred basis, as elected by the director. Any deferred cash is credited to a cash account that accrues interest at the average Moody’s Baa Bond Index Rate, as in effect from time to time.

 

Director expenses and other benefits Our non-employee directors are reimbursed for expenses incurred in attending board, committee and shareowner meetings and for expenses associated with other board activities, such as director education programs, and they are insured under our travel accident policy while traveling on company business. They may use corporate aircraft, when available, for transportation to and from meetings and other business functions. Personal use of our aircraft by directors is limited and considered a perquisite. The board has granted Mr. Lutz $7,500 in annual compensation to offset costs he may incur to manage additional tax reporting and financial obligations related to earning director income in the United States.

Matching gift program We will match donations made to eligible educational, arts, cultural or other charitable institutions. Gifts will be matched in any calendar year up to a maximum of $5,000. While our directors participate in the program on the same basis as our employees, SEC rules require that the amount of a director’s participation in a charitable matching program be disclosed.

Stock ownership requirement Beginning in fiscal 2014, each of our non-employee directors was required to attain ownership of 5,872 shares of Monsanto common stock (equal in value to five times the elective portion (or one-half) of the annual base retainer as of September 1, 2013, or $587,500 in total). We recalibrated the number of shares required to be held by each non-employee director at the beginning of our fiscal 2017 and currently, each of our non-employee directors is required to attain ownership of 6,043 shares of Monsanto common stock. Shares may be counted toward these requirements whether held directly or through a spouse, a retirement plan or a retirement account. However, unvested restricted stock will not be counted. Until a director has met the requirement, he or she must retain 25% of the pre-tax number of shares received upon vesting of restricted stock or settlement of other equity-based award granted under the Directors’ Plan. The people and compensation committee reviews progress toward meeting the requirements at least annually. As of August 31, 2016, all of our directors are in compliance with our stock retention requirements, and all but three of our directors (each of whom only recently joined our board) satisfied our stock ownership requirements.

Changes for fiscal 2017 In June and August 2016, our people and compensation committee again considered the design of our director compensation program and reviewed information and recommendations from management, as well as data and analyses from FW Cook and Willis Towers Watson. After reviewing the information, the committee determined to make amendments to the the plan to align the compensation program with market trends, and to recognize the additional time requirements and responsibilities of the lead director and the chair and members of the audit and finance committee. As a result of the analysis, for fiscal 2017, the committee recommended and the board approved increasing the base retainer of the members of our board and the additional retainer of our lead director by $10,000 and the additional retainer for both the chair and the members of the audit and finance committee by $5,000.

 

 

34    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation of Directors

Director Compensation Table

 

  

LOGO

 

 

Director Compensation Table

The following presents compensation to our non-employee directors for their services in fiscal 2016.

 

  Name

 

  

Fees Earned or
Paid in Cash ($)1

 

      

Stock
Awards ($)2

 

    

All Other
Compensation ($)3

 

      

Total ($)

 

 

 

  Dwight M. “Mitch” Barns4

 

  

 

 

 

 

61,243

 

 

  

 

    

 

 

 

 

306,228

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

367,471

 

 

  

 

 

  Gregory H. Boyce

 

  

 

 

 

 

122,528

 

 

  

 

    

 

 

 

 

122,528

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

    

 

 

 

 

250,056

 

 

  

 

 

  David L. Chicoine, Ph.D.

 

  

 

 

 

 

122,500

 

 

  

 

    

 

 

 

 

122,528

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

    

 

 

 

 

250,028

 

 

  

 

 

  Janice L. Fields

 

  

 

 

 

 

144,180

 

 

  

 

    

 

 

 

 

144,180

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

288,360

 

 

  

 

 

  Arthur H. Harper

 

  

 

 

 

 

137,473

 

 

  

 

    

 

 

 

 

137,473

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

274,946

 

 

  

 

 

  Laura K. Ipsen

 

  

 

 

 

 

122,479

 

 

  

 

    

 

 

 

 

122,528

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

245,007

 

 

  

 

 

  Gwendolyn S. King5

 

  

 

 

 

 

49,167

 

 

  

 

    

 

 

 

 

147,532

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

196,699

 

 

  

 

 

  Marcos M. Lutz

 

  

 

 

 

 

130,028

 

 

  

 

    

 

 

 

 

122,528

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

252,556

 

 

  

 

 

  C. Steven McMillan

 

  

 

 

 

 

150,000

 

 

  

 

    

 

 

 

 

150,023

 

 

  

 

  

 

 

 

 

5,000

 

 

  

 

    

 

 

 

 

305,023

 

 

  

 

 

  Jon R. Moeller

 

  

 

 

 

 

144,167

 

 

  

 

    

 

 

 

 

144,177

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

288,344

 

 

  

 

 

  William U. Parfet6

 

  

 

 

 

 

140,833

 

 

  

 

    

 

 

 

 

147,532

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

288,365

 

 

  

 

 

  George H. Poste, Ph.D., D.V.M.

 

  

 

 

 

 

132,500

 

 

  

 

    

 

 

 

 

132,491

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

264,991

 

 

  

 

 

  Robert J. Stevens

 

  

 

 

 

 

167,506

 

 

  

 

    

 

 

 

 

167,506

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

335,012

 

 

  

 

 

  Patricia Verduin, Ph.D.7

 

  

 

 

 

 

122,500

 

 

  

 

    

 

 

 

 

367,431

 

 

  

 

  

 

 

 

 

0

 

 

  

 

    

 

 

 

 

489,931

 

 

  

 

  1 Fees Earned or Paid in Cash The amounts shown in this column represent the elective half of the aggregate annual retainer payable to each director under the Directors’ Plan. For fiscal 2016, the following directors elected to receive deferred stock: Ms. Fields, 1,509 shares; Ms. Ipsen, 767 shares; and Mr. Stevens, 1,748.5 shares. The following directors elected to receive restricted stock: Mr. Barns, 349; Mr. Boyce, 1,279 shares; Mr. Harper, 1,435 shares; and Mr. Lutz, 1,279 shares. Each amount constitutes the aggregate grant date fair value of the equity awards for fiscal 2016 calculated in accordance with FASB ASC Topic 718, and because the equity awards were granted on the first day of the fiscal year and were fully vested at the end of the fiscal year, there was no unrecognized compensation expense for financial statement reporting purposes for fiscal 2016. The following directors elected to receive deferred cash: Ms. Ipsen and Dr. Verduin. The following directors elected to receive current cash: Mr. Barns, Dr. Chicoine, Ms. King, Mr. McMillan, Mr. Moeller, Mr. Parfet and Dr. Poste. For Mr. Lutz, this amount includes compensation paid to offset increased accounting and tax preparation costs.

 

  2 Stock Awards The amounts shown in this column represent the non-elective half of the aggregate annual retainer and for Dr. Verduin and Mr. Barns, a one-time initial equity grant for new directors of 2,832 and 2,719 shares of restricted stock, respectively. The number of deferred shares granted to each director related to the non-elective half of the aggregate annual retainer was: Mr. Barns, 698; Mr. Boyce, 1,279; Dr. Chicoine, 1,279; Ms. Fields, 1,509; Mr. Harper, 1,435; Ms. Ipsen, 1,279; Ms. King, 1,540; Mr. Lutz, 1,279; Mr. McMillan, 1,566; Mr. Moeller, 1,509; Mr. Parfet, 1,540; Dr. Poste, 1,383; Mr. Stevens, 1,748.5; and Dr. Verduin, 1,435. Each amount constitutes the aggregate grant date fair value of the equity awards for fiscal 2016 calculated in accordance with FASB ASC Topic 718, and because the equity awards were granted on the first day of the fiscal year and were fully vested at the end of the fiscal year, there was no unrecognized compensation expense for financial statement reporting purposes in fiscal 2016. During fiscal 2016, Ms. King forfeited 1,024 shares upon her retirement from our board, and Mr. Parfet forfeited 70 shares upon the end of his service as the chair of our audit and finance committee.

 

     The aggregate number of shares of unvested restricted stock held by directors as of Aug. 31, 2016 was: Mr. Barns, 2,719 shares; Mr. Lutz, 1,956 shares and Dr. Verduin, 2,832 shares.

 

  3 Other Compensation The amounts shown in this column represent a contribution by the company’s charitable fund pursuant to its charitable matching program described above.

 

  4 Mr. Barns was elected to our board in March 2016 and he received compensation for the period following his election.

 

  5 Ms. King retired from our board in January 2016.                                                                                                          

 

  6 Mr. Parfet resigned from our board in August 2016.                                                                                                                          

 

  7 Dr. Verduin was elected to our board in September 2015 and she received compensation for the period following her election.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    35


Table of Contents

Stock Ownership of Management and Certain Beneficial Owners

 

LOGO

 

Information is listed below regarding beneficial ownership of our common stock, to the extent known to us, by:

 

  each person who is a director or nominee;
  each proxy officer;
  all current directors and executive officers as a group; and
  each person known to us to be the beneficial owner of 5% or more of our common stock.

Except as otherwise noted, each person has sole voting and investment power as to his or her shares. All information is provided as of November 1, 2016, except as otherwise noted.

 

  Name   

Shares of Common

Stock Owned

Directly or

Indirectly (#)1,2,3

  

Shares Underlying
Options Exercisable

Within

60 Days (#)4

   Total (#)     % of Class 
Held5 

  Hugh Grant

       394,623                   1,286,296          1,680,919      *

  Dwight M. “Mitch” Barns

       4,827          0          4,827      *

  Gregory H. Boyce

       11,265          0          11,265      *

  David L. Chicoine, Ph.D.

       13,437          0          13,437      *

  Janice L. Fields

       26,435          0          26,435      *

  Arthur H. Harper

       44,845          0          44,845      *

  Laura K. Ipsen

       16,194          0          16,194      *

  Marcos M. Lutz

       8,974          0          8,974      *

  C. Steven McMillan

       63,333          0          63,333      *

  Jon R. Moeller

       10,797          0          10,797      *

  George H. Poste, Ph.D., D.V.M.

       36,755          0          36,755      *

  Robert J. Stevens

       75,086          0          75,086      *

  Patricia Verduin, Ph.D.

       4,714          0          4,714      *

  Pierre C. Courduroux

       35,346          173,429          208,775      *

  Brett D. Begemann

       132,697          297,886          430,583      *

  Michael J. Frank

       13,890          50,209          64,099      *

  Steven C. Mizell

       4,804          36,774          41,578      *

  CURRENT DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (24 PERSONS)

       1,148,162          2,356,095          3,504,257      *

  Capital Research Global Investors6

       30,009,458          0          30,009,458      6.8%

  The Vanguard Group7

       29,253,433          0          29,253,433      6.7%

  BlackRock, Inc.8

                             24,787,296          0          24,787,296      5.6%

 

* less than 1%

Shares of Common Stock Owned Column

 

1 Includes the following shares of deferred stock deliverable within 60 days after Nov. 1, 2016 to each non-employee director as compensation under the Directors’ Plan: Mr. Barns, 1,129; Mr. Boyce, 4,569; Dr. Chicoine, 11,046; Ms. Fields, 25,181; Mr. Harper, 15,615; Ms. Ipsen, 10,768; Mr. Lutz, 3,166; Mr. McMillan, 56,333; Mr. Moeller, 8,052; Dr. Poste, 35,619; Mr. Stevens, 65,086; Dr. Verduin, 1,882; and directors as a group, 238,446.

 

2 Includes 68,640 shares underlying Financial Goal RSUs (34,320 pre-split shares) awarded to Mr. Grant as part of his fiscal 2004 long-term incentive compensation. Mr. Grant elected to defer receipt of the shares until his retirement.

 

3 Includes the indicated number of shares of our common stock beneficially owned by the following individuals under our Savings and Investment Plan: Mr. Grant, 7,200; Mr. Courduroux, 1,188; Mr. Begemann, 6,932; Mr. Frank, 2,417; Mr. Mizell, 1,001; and current executive officers as a group, 50,169. Also, includes the indicated number of shares of our common stock underlying fiscal 2014 Financial Goal RSU performance awards, vesting within 60 days of Nov. 1, 2016: Mr. Grant, 27,882; Mr. Courduroux, 6,971; Mr. Begemann, 9,506; Mr. Frank, 1,902; Mr. Mizell, 3,803; and current executive officers as a group, 72,881.

 

 

36    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Stock Ownership of Management and Certain Beneficial Owners

Section 16(a) Beneficial Ownership Reporting Compliance

 

  

LOGO

 

 

 

   Excludes the indicated number of hypothetical shares of our common stock credited to a bookkeeping account as deferred compensation in the name of the following individuals under our Savings and Investment Parity Plan: Mr. Grant, 44,621; Mr. Begemann, 12,375; Mr. Frank, 417; and Mr. Mizell, 16,090; and current executive officers as a group, 96,906; and hypothetical shares of our common stock credited to a bookkeeping account as deferred compensation in the name of the following individuals under our Deferred Payment Plan: Mr. Begemann, 9,972; Mr. Mizell, 1,926; and current executive officers as a group, 11,898.

 

4 Shares Underlying Options Column The SEC deems a person to have beneficial ownership of all shares that he or she has the right to acquire within 60 days. For purposes of this table, we have used Dec. 31, 2016 as the cut-off date, which is 60 days after Nov. 1, 2016. The shares indicated represent shares underlying stock options granted under our equity incentive plans. The shares underlying options cannot be voted.

 

5 Total % Of Beneficial Ownership Column The percentage of shares of our outstanding common stock, including Financial Goal RSUs, restricted stock units and options deliverable or exercisable within 60 days after Nov. 1, 2016, beneficially owned by any director or executive officer individually does not exceed 1%, and by all current directors and executive officers as a group is approximately 0.8%.

 

6 Capital Research Global Investors Information is based on a Schedule 13G filed with the SEC on Feb. 16, 2016, filed by Capital Research Global Investors (“CRGI”), a division of Capital Research and Management Company. CRGI reported beneficial ownership of 30,009,458 shares. CRGI had sole power to vote 30,009,458 shares and sole dispositive power for 30,009,458 shares. CRGI had no shared voting or dispositive power for any of the shares. CRGI’s business address is 33 South Hope Street, Los Angeles, CA 90071.

 

7 Vanguard Information is based on a Schedule 13G/A filed with the SEC on Feb. 10, 2016, filed by The Vanguard Group (“Vanguard”). Vanguard reported beneficial ownership of 29,253,433 shares. Vanguard had sole power to vote 825,158 shares and sole dispositive power for 28,384,537 shares. Vanguard had shared dispositive power over 868,896 shares, and shared voting power over 47,900 shares. Vanguard’s business address is 100 Vanguard Blvd., Malvern, PA 19355.

 

8 BlackRock Information is based on a Schedule 13G/A filed with the SEC on Jan. 26, 2016, filed by BlackRock, Inc. (“BlackRock”). BlackRock reported beneficial ownership of 24,787,296 shares of common stock. BlackRock had sole power to vote 21,017,265 shares and sole dispositive power over 24,787,296 shares. Blackrock has no shared voting or dispositive power over any of the shares. BlackRock’s business address is 55 East 52nd Street, New York, NY 10055.

Section 16(a) Beneficial Ownership

Reporting Compliance

Section 16(a) of the Exchange Act requires all our executive officers and directors and persons owning more than 10% of any registered class of our capital stock to file reports of ownership and changes in ownership with the SEC. Based solely on the reports received by us or filed with the SEC and on written representations from reporting persons, we believe that all such persons complied with all applicable filing requirements during fiscal 2016, except that one transaction was inadvertently reported late on a Form 4 for each of Mr. McMillan and Mr. Narain.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    37


Table of Contents

Report of the Audit and Finance Committee

 

LOGO

 

The audit and finance committee operates under a charter adopted and amended from time to time by our company’s board of directors. The committee has numerous responsibilities including:

 

n   oversight related to the audited and interim financial statements,

 

n   oversight of financial compliance, risks and disclosure matters,

 

n   appointment and oversight of the company’s independent registered public accounting firm,

 

n   pre-approval and oversight of audit fees and services, and audit and non-audit fees and services provided by the company’s independent registered public accounting firm, and

 

n   oversight of the company’s internal audit function.

Please see the committee’s charter for a description of requirements for its members and its responsibilities at www.monsanto.com/whoweare/pages/audit-and-finance-committee.aspx.

AUDIT AND FINANCE COMMITTEE MEMBERSHIP REQUIREMENTS AND QUALIFICATIONS

One of the requirements contained in the committee charter is that all committee members meet the independence and experience requirements of the listing standards of the NYSE. Our board of directors believes that all members of the committee meet these requirements and are “independent,” as that term is used in relevant SEC rules. In addition, our board has determined that each of the members of the committee is financially literate and that Messrs. McMillan, Moeller and Stevens are “audit committee financial experts” for purposes of the rules of the SEC. Under the committee’s charter, no director may serve as a member of the committee if he or she serves on the audit committee of more than two other public companies unless our board of directors determines that such simultaneous service would not impair his or her ability to serve effectively on the committee.

FINANCIAL STATEMENTS

In reliance on the reviews and discussions referred to below, and exercising our business judgment, the committee has recommended to our board of directors (and our board has approved) that the audited financial statements be included in the company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2016, for filing with the SEC. In fulfilling our responsibilities, the committee, among other things, has reviewed and discussed the audited financial statements contained in the 2016 Form 10-K with the company’s management and Deloitte & Touche LLP.

Management, which is responsible for the financial statements and the reporting process, including the system of internal control over financial reporting, has advised the audit and finance committee that all financial statements were prepared in accordance with accounting principles generally accepted in the United States. Further, Deloitte & Touche LLP, which is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, has opined to the shareowners that the audited financial statements conform with such accounting principles. In addition, the committee discussed with Deloitte & Touche LLP the matters required to be discussed under PCAOB standards, and Deloitte & Touche LLP’s independence from the company and its management, including the matters in the written disclosures and letter received by the committee, as required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the committee concerning independence.

Members of the committee rely, without independent verification, on the information and representations provided to them by management and on the representations made to them by Deloitte & Touche LLP. Accordingly, the oversight provided by the committee should not be considered as providing an independent basis for determining that management has established and maintained appropriate internal control over financial reporting, that the financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or that the audit of the company’s financial statements by Deloitte & Touche LLP has been carried out in accordance with auditing standards generally accepted in the United States.

AUDIT AND FINANCE COMMITTEE

Chair: Jon R. Moeller

Members: Gregory H. Boyce, Arthur H. Harper, C. Steven McMillan, Robert J. Stevens

 

 

38    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Proxy Item No. 2: Ratification of Independent Registered Public Accounting Firm

 

LOGO   

LOGO

 

 

Our audit and finance committee has appointed Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2017, and deems the appointment to be in the best interest of the company and its shareowners. The committee is responsible for the appointment, compensation, retention, termination and oversight of the independent registered public accounting firm.

We are asking our shareowners to ratify this appointment as a matter of policy.

The committee is not required to take any action as a result of the outcome of the vote on this proposal. However, if the shareowners do not ratify the appointment, the committee may investigate the reasons for shareowner rejection and may consider whether to retain Deloitte & Touche LLP or to appoint another independent registered public accounting firm.

Even if the appointment is ratified, the committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our shareowners or our company.

Deloitte & Touche LLP has served as our independent registered public accounting firm since 2000. A formal statement by representatives of Deloitte & Touche LLP is not planned for the annual meeting. However, Deloitte & Touche LLP representatives are expected to be present at the meeting and available to respond to appropriate questions.

SERVICES AND FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

During and in connection with fiscal 2016, we engaged Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (which we collectively refer to as “Deloitte”) as our independent registered public accounting firm and to provide other professional services. The table below shows an estimate of the fees that we expect to be billed for audit services for fiscal 2016, as well as the fees expected to be billed by Deloitte with respect to audit-related, tax and all other services rendered during that period. In addition, the table shows the fees billed by Deloitte for audit, audit-related, tax and all other services during or in connection with fiscal 2015.

 

  Description of Professional Service   

Amount Billed ($)        

 

 

     2016 Fiscal Year    2015 Fiscal Year        

Audit Fees — professional services rendered for the integrated audit of our annual consolidated financial statements and internal control over financial reporting, reviews of the consolidated financial statements included in Form 10-Qs, accounting consultation, consents related to other filings with the SEC, and statutory and regulatory audits required for foreign jurisdictions

 

   11.4 million

 

   11.6 million        

 

Audit-Related Fees — assurance and related services that are reasonably related to the performance of the audit or review of financial statements, including employee benefit plan audits, due diligence services in connection with mergers and acquisitions, and attest or audit services that are not required

 

   1.1 million

 

   1.0 million        

 

Tax Fees1 professional services for U.S. and foreign tax compliance, such as preparation of tax returns and claims for refund and tax payment and assistance with tax audits and appeals; and tax consulting services including tax planning, such as assistance with transfer pricing matters, expatriate tax services, and tax advice, such as advice related to mergers and acquisitions and employee benefit plans and requests for rulings or technical advice from taxing authorities

 

   1.6 million

 

   2.9 million        

 

All Other Fees — expatriate assignment services (non-tax related)

 

   0.0 million

 

   0.1 million        

 

 

1 Tax Fees includes fees for tax compliance services in the amount of $0.6 million in fiscal 2016 and $1.5 million in fiscal 2015, and tax consulting services in the amount of $1.0 million in fiscal 2016 and $1.4 million in fiscal 2015.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    39


Table of Contents

 

Proxy Item No. 2: Ratification of Independent Registered Public Accounting Firm

Services and Fees of the Independent Registered Public Accounting Firm

 

 

The committee reviews, considers and ultimately pre-approves, where appropriate, all audit and non-audit engagement services to be performed by our independent registered public accounting firm. The committee has a policy providing for the pre-approval of certain “audit services,” “audit-related services,” “tax services” and “all other services” to be provided by the independent registered public accounting firm and audit services to be provided by any other firm. Please see the above chart for a description of these types of services.

Each year in connection with the committee’s approval of the audit engagement plan for the following year, management submits to the committee a list of services expected to be provided during that period, as well as related estimated fees. As appropriate, and after obtaining an understanding of the services, the committee then pre-approves under its policy the services, and the related estimated fees, to be provided during the next audit engagement period or other period as is approved by the committee. If, following the annual pre-approval, it becomes necessary to engage our independent registered public accounting firm for additional services or fees not pre-approved with the annual proposal, or if we need to engage another firm to provide audit services, the committee must specifically pre-approve the additional services and related fees. The chair of the committee has the delegated authority to pre-approve any additional services and fees not contemplated by these annual pre-approvals and will communicate any such approvals to the full committee. In connection with any pre-approval, the committee will consider whether such services are consistent with applicable independence rules.

All of the “audit services,” “audit-related services,” “tax services” and “all other services” provided by Deloitte during or in connection with fiscal 2016 were pre-approved by the committee in accordance with its policy.

 

 

 

Our Board of Directors Recommends a Vote FOR the Ratification of the Appointment of Deloitte & Touche LLP as Our Independent Registered Public Accounting Firm for Our 2017 Fiscal Year

 

 

 

 

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40    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Proxy Item No. 3: Advisory (Non-binding) Vote Approving Executive Compensation

 

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We are asking our shareowners to provide advisory approval of the compensation of our proxy officers, as we described in the “Executive Compensation” section of this proxy statement. While this vote is advisory, and not binding on our company, it will provide information to us regarding shareowner sentiment about our core principles and objectives. The people and compensation committee will then be able to consider this information when determining executive compensation in the future.

Shareowners should review the Compensation Discussion and Analysis beginning on page 44, executive compensation tables, and related narratives appearing in this proxy statement for more information regarding the compensation of our proxy officers. As described in those sections, our proxy officers’ compensation is designed and administered by our people and compensation committee to:

 

n   align management’s interests with the interests of shareowners by tying compensation to performance that supports key financial and strategic business outcomes;

 

n   attract and retain top talent, while limiting non-performance-based entitlements; and

 

n   reinforce a culture of integrity to support sustainable business growth while appropriately managing compensation risk in the context of our business strategies.

The committee regularly reviews our officer compensation strategies, policies and programs in an effort to assure the program continues to meet these overall objectives. In fiscal 2016,

 

n   on average at least 82% of our proxy officers’ annual total direct compensation was tied to company annual and long-term performance;

 

n   our company achieved key deliverables in an extremely challenging business environment, but did not achieve the threshold-level EPS or Code Section 162(m) goals applicable to annual incentives, leading to payment of below target annual incentive awards, and with respect to four of our proxy officers who were precluded from receiving annual incentive awards, cash awards recognizing their extraordinary commitment and performance during the year; and

 

n   we required achievement of challenging goals over three fiscal years for long-term performance-based awards.

Our board has adopted a policy of providing annual say-on-pay votes. At this meeting, we will ask shareowners to vote on the frequency of our say-on-pay votes. Our board recommends such votes to be held annually.

Your vote is requested. We believe that the information we have provided in this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our shareowners’ interests to support long-term value creation. Accordingly, the board recommends that shareowners approve the program by approving the following advisory resolution:

RESOLVED, that the shareowners of Monsanto Company approve, on an advisory basis, the compensation of the company’s proxy officers, as disclosed under Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, executive compensation tables and narrative discussion in this proxy statement.

 

 

 

Our Board of Directors Recommends a Vote FOR the Advisory (Non-Binding) Vote Approving Executive Compensation

 

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MONSANTO COMPANY 2016 PROXY STATEMENT    41


Table of Contents

Proxy Item No. 4: Advisory (Non-binding) Vote Determining the Frequency of Advisory Votes on Executive Compensation

 

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In addition to the advisory approval of our executive compensation program, we are also seeking a non-binding determination from our shareowners as to the frequency with which shareowners would have an opportunity to provide an advisory approval of our executive compensation program. We are providing shareowners the option of selecting a frequency of one, two or three years, or abstaining. For the reasons described below, we recommend that our shareowners select a frequency of one year, or an annual vote. Starting with our annual meeting held in 2011, we have held annual votes on executive compensation.

An annual vote on executive compensation will allow our shareowners to provide input as the people and compensation committee reviews our compensation philosophy, policies and practices. Even though our executive compensation program is designed to support long-term value creation, our people and compensation committee reviews the compensation program every year. An annual shareholder vote allows our shareowners to provide us with direct and immediate feedback regarding the compensation program, and enables our people and compensation committee to evaluate any changes in shareowner sentiment as it conducts its regular compensation review.

We will continue to engage with our shareowners regarding our executive compensation program in addition to the annual votes on executive compensation. Engagement with our shareowners is a key component of our corporate governance. We seek and are open to input from our shareowners regarding board and governance matters, as well as our executive compensation program, and believe we have been appropriately responsive to our shareowners. Our experience in the past six years has shown that annual votes on executive compensation will not distract from continued shareowner engagement.

Your vote is requested. We therefore request that our shareowners select “One Year” when voting on the frequency of advisory votes on executive compensation. Although the advisory vote is non-binding, our board will review the results of the vote and, consistent with our record of shareowner engagement, take them into account in making a determination concerning the frequency of advisory votes on executive compensation.

 

   

 

Our Board of Directors Recommends Shareowners Select “One Year” on the Proposal Determining the Frequency of Advisory Votes on Executive Compensation

 

 

 

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42    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Report of the People and Compensation Committee

 

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The people and compensation committee of the board of directors is committed to an executive compensation program that attracts, motivates and retains exceptional talent to drive our business and strengthen long-term shareowner value. We do this by focusing on the following core principles:

 

 

n   aligning management’s interests with the long-term interests of shareowners;

 

n   providing compensation on the basis of performance that supports key financial and strategic business outcomes;

 

n   reinforcing a culture of integrity to support sustainable business growth;

 

n   assessing and appropriately managing compensation risk in the context of our business strategies; and

 

n   limiting non-performance-based entitlements, such as perquisites.

 

   

We believe in a pay for performance approach to executive compensation and design our program so that a significant portion of our executives’ compensation is tied to company annual and long-term performance. Our compensation philosophy and overall program is applied to the company’s entire executive team, aligning all of our executives into one management team, keenly focused on company performance objectives and key strategic initiatives.

The Compensation Discussion and Analysis that follows covers our decisions regarding company executives’ compensation for fiscal 2016. We have reviewed the Compensation Discussion and Analysis and discussed it with management. Based on our review and discussion, we recommended to our board that the Compensation Discussion and Analysis be included in this proxy statement.

PEOPLE AND COMPENSATION COMMITTEE

Chair: C. Steven McMillan

Members: Dwight M. “Mitch” Barns, Janice L. Fields, Arthur H. Harper

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    43


Table of Contents

Executive Compensation

 

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Compensation Discussion and Analysis

The Compensation Discussion and Analysis (“CD&A”) describes our overall executive compensation policies and practices, and focuses on fiscal 2016 compensation for the following individuals whom we refer to as our “proxy officers”:

 

   

Hugh Grant

chairman and chief executive officer

 

Michael J. Frank

senior vice president and chief commercial officer

   

Pierre C. Courduroux

senior vice president and chief financial officer

 

Steven C. Mizell

executive vice president and chief human resources officer

   

Brett D. Begemann

president and chief operating officer

   
 

Messrs. Grant, Courduroux, Begemann, Frank and Mizell and six other officers make up our executive team. Our executive team is responsible for developing and implementing our strategic plans and initiatives and overseeing our day-to-day operations. We refer to the 11 members of our executive team as our “executives.”

 

TABLE OF CONTENTS

 

Compensation Discussion & Analysis

 

     

Executive Compensation Tables

 

Executive Summary

   45    

Summary Compensation Table

   68

Overview of Our Executive Compensation Program

   49    

Grants of Plan-Based Awards Table

   70

Setting Executive Compensation

   52    

Outstanding Equity Awards at Fiscal Year-End Table

   71

Our 2016 Executive Compensation Program

   54    

Option Exercises and Stock Vested Table

   73

Additional Information about Our Compensation
Practices

   63    

Pension Benefits

   73
      

Non-Qualified Deferred Compensation

   76

Summary of Fiscal 2016 Proxy Officer Performance and
Compensation

   65    

Potential Payments Upon Termination or
Change of Control

   78

Caution Regarding Forward-Looking Statements

   67    

Equity Compensation Plan Table

   82

 

 

44    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Compensation Discussion and Analysis

 

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Executive Summary

 

  

     

Monsanto Performance Overview

 

  

      Our industry-leading innovation, global product portfolio, and financial discipline enabled our ability to achieve key deliverables in an extremely challenging agricultural and general business environment. Led by our experienced executive team, our business continues to be built on strong fundamentals and focused on key business milestones to deliver strong growth in 2017.        
      Merger with Bayer         2016 Financial Results  
     

On September 14, 2016, we announced a merger agreement with Bayer AG Aktiengesellschaft pursuant to which Bayer will acquire Monsanto for $128 per share in cash, subject to certain closing conditions. We believe that the transaction will enable our combined companies to create a global agriculture leader based on a shared vision of integrated agricultural offerings, enhanced solutions for growers and innovation for the next generation of farming. For our shareowners, the deal price of $128 per share in cash represents a 42% premium to our closing share price on May 11, 2016, the last trading day prior to the release of press reports regarding a potential offer by Bayer to acquire Monsanto.

 

The smooth and successful negotiation of the merger agreement on behalf of our shareowners required an extraordinary time commitment by, and drew on the significant leadership skills and unique knowledge of, our proxy officers and other executives. We continue to work hard to prepare for a transformative transaction and achieve a successful closing.

   

Strong penetration of our new soybean technology in South America, record corn volume in the U.S. and strong adoption of our Climate FieldView platform helped our company deliver on key drivers to position us for future growth. Our business faced significant global and industry-wide challenges in fiscal 2016, including weakening foreign currencies and pricing declines in our glyphosate-based herbicides, which led to a 22% decline in our ongoing earnings per share (“EPS”). We were able to generate significant free cash flow and returned more than $13 billion to our shareowners through share repurchases and dividends over the last three years concluding our capital allocation strategy. However, as a result of the challenges noted above, our free cash flow, net sales and adjusted return on capital (“ROC”)1 performance declined compared to the prior year. Following is a summary of our fiscal 2016 results against four key performance metrics used by our investors and central to our executive compensation program—EPS, free cash flow, net sales and ROC.

 
           
 

 

More than

$13B

returned to

shareowners

in last

three years

 

         
               
     

Key Performance Metrics

 

     
     

 

  Ongoing EPS          

 

   

 

  Free Cash Flow     

 

   

 

  Net Sales                  

 

   

 

  Adjusted ROC         

 

 
        For years ended Aug 31       For years ended Aug 31       For years ended Aug 31       For years ended Aug 31  
 

Performance

in Fiscal 2016

Driven By:

 

 Industry-leading innovation

 

 Global product portfolio

 

 Financial discipline

 

   

 

 

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      1   See Appendix A for a reconciliation of our ongoing EPS, free cash flow and adjusted ROC to results reported in accordance with generally accepted accounting principles.  
     

Ongoing EPS excludes certain after-tax items that we do not consider part of ongoing operations. Free cash flow is the sum of net cash provided by operating activities and net cash required by investing activities, as reported in our Statement of Consolidated Cash Flows. Adjusted ROC is expressed as a percentage, which represents the result of dividing operating profit after-tax (excluding certain items) by average capital.

 

 

 

 

 

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Table of Contents

 

Compensation Discussion and Analysis

Executive Summary

 

 

 

           
    Commercial Operations     technologies to support our in-seed research,  
   

Despite the challenging agricultural environment, our soybean and corn businesses within our Seeds and Genomics segment, excluding the impact from unfavorable foreign currencies, grew slightly in fiscal 2016. We achieved record-setting adoption of our Intacta RR2 PRO™ soybeans in South America. We also improved customer ratings and achieved record U.S. corn seed volumes, driven by growth in acres planted and positive adoption of our newest genetics in corn. Our digital agricultural solutions business has become the standard for large and small growers, with 95 million acres enrolled. Within our Ag Productivity segment, our profits declined by more than $960 million year-over-year, due primarily to reduced pricing for glyphosate-based herbicides, absence of the Scotts license agreement from the prior year and lower volumes. Price declines were due mostly to pressure from generic products, as we maintained our strategy of pricing our branded glyphosate-based herbicides just over the cost of generics.

 

Long-Range Plan

Our R&D pipeline supports our long-term focus on a systems approach to solving agronomic challenges and continues as the deepest and broadest R&D pipeline in the industry. Fiscal 2016 marked our third consecutive year of advancing more than 20 projects across our six research and development platforms. We made progress in partnerships and collaborations to support our digital agricultural business and licensed new

   

including several new genome editing license agreements. We also continued to invest in manufacturing complementary crop protection products to support our integrated systems approach.

 

Organizational Effectiveness

We recognized the potential distractions from our challenging business environment, including our efforts undertaken to position our company for success, and focused considerable attention to retain, develop and motivate a talented and diverse workforce. Our efforts included broad-based succession planning and development programs and extensive communications. Employee engagement ratings remained strong as reflected in our quarterly surveys.

 

Sustainability

The nature of our business provides us with a unique opportunity to contribute globally to sustainable food, fiber and fuel production. Our current agronomic system and pipeline projects are designed to improve the efficient use of resources by crops and farmers. To that end, in fiscal 2016 we announced our industry-leading plans to make our operations carbon neutral by 2021 through a unique program targeted across our seed and crop protection operations, as well as through collaboration with farmers. We also engage in broad-ranging collaborations, research funding and outreach focused on water conservation and soil health, among other initiatives.

 

 

 

Our Products Reach 400 Million Acres

 

         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
               

 

Our 2016 Say-on-Pay Vote and Ongoing Shareowner Outreach Program

 

Our Company’s 2016 Vote on Executive Compensation. Our people and compensation committee values input from our shareowners on our executive compensation program, core principles and objectives when determining executive compensation. The committee annually considers the results of our recent Say-on-Pay vote and feedback received from our largest shareowners in connection with the vote. At our January 2016 annual meeting, a significant majority of our shareowners, or more than 96% of votes cast, supported the fiscal 2015 compensation for our proxy officers. In addition, as in previous years, our largest shareowners did not express concerns regarding our executive compensation program. The committee interpreted these results as demonstrating strong support for our executive compensation program, including changes made in previous years in response to shareowner feedback.

 

Our Annual Shareowner Outreach Program. We engage in dialogue with our major shareowners throughout the year about various corporate governance topics, in addition to executive compensation, and we provide summaries of these discussions to our board. We also regularly review information on compensation and governance practices and trends, and voting policy and other updates from our largest shareowners, and provide summaries to our board of directors and committees.

 

In connection with our annual meeting and over the course of the last year, we have reached out to a significant portion of our top shareowners. The feedback we have received from our major shareowners has been supportive, and the conversations have provided us an opportunity to further discuss our board qualifications and structure, risk oversight, lobbying, sustainable business practices and other governance and compensation matters.

 

We value the insights gained from these discussions and find them to be helpful, as our people and compensation committee considers and adopts compensation policies affecting our employees, including our proxy officers, and our nominating and corporate governance committee and full board of directors consider other governance practices and policies. We have also used these insights to strengthen our disclosures and address areas of focus for our shareowners. We will continue to seek opportunities for dialogue with our investors on executive compensation and, more broadly, corporate governance.

 

 
 

 

 

46    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Executive Summary

 

  

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Executive Compensation Highlights

EXECUTIVE COMPENSATION PROGRAM DESIGN

Our executive compensation program consists of these three primary components:

 

Base Pay    +    

Cash awards under our broad-based

Annual Incentive Plan

   +    

 

Long-term incentives delivered
through stock options and
Financial Goal RSUs

 

 

 

We use the term “total direct compensation” to refer to an executive’s annual base pay, plus the dollar amount of his target cash award under our Annual Incentive Plan (“AIP”) and the dollar amount of his long-term incentive (“LTI”) opportunity.

 

 

KEY COMPENSATION ACTIONS FOR FISCAL 2016

For fiscal 2016, our people and compensation committee again tied a significant portion of our executives’ compensation to company annual and long-term performance.

 

  One or more components of each proxy officer’s total direct compensation was increased to reflect competitive market positioning, evolving role and increases in base pay across our broad-based population.

 

  The company’s fiscal 2016 budget and strategic objectives were considered when establishing our AIP and financial goal-based RSU (“Financial Goal RSU”) performance measures and goals.

 

  AIP cash payments were forfeited by our proxy officers other than our CFO because the company did not achieve the performance goal set by the committee under our shareowner-approved Code Section 162(m) Annual Incentive Plan for Covered Executives (“162(m) Plan”).

 

  The LTI component of compensation was delivered in two forms of equity grants:

stock options (60%), to align a significant portion of pay to value created for our shareowners; and

three-year Financial Goal RSUs (40%) to link an element of pay to achievement of three-year goals established for key financial performance measures to motivate sustainable performance.

 

  84% of Financial Goal RSUs awarded as part of proxy officers’ fiscal 2014 compensation were eligible for vesting based on performance over the fiscal 2014-fiscal 2016 performance period.

 

  In recognition of the extraordinary commitment and effort of our executives during fiscal 2016 in negotiating the Bayer merger agreement while simultaneously remaining focused on executing our business strategy and driving the company forward in a challenging agriculture environment, the committee provided limited cash recognition awards to our CEO and three other proxy officers.
 

 

We believe that the design of our program provides a direct link to shareowner value by focusing our executives on achieving key financial and strategic business objectives and rewarding them when those objectives are achieved.

 

 

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MONSANTO COMPANY 2016 PROXY STATEMENT    47


Table of Contents

 

Compensation Discussion and Analysis

Executive Summary

 

 

 

OUR COMPENSATION PRACTICES

 

We believe that our executive compensation program supports our business strategies and human resource objectives, reflects leading governance practices and is premised on sound pay for performance design principles. Here are highlights of our fiscal 2016 compensation practices:

 

  
 

What We Do

  
 

 

 

 

Pay for Performance A significant portion of our proxy officers’ compensation is tied to performance with clearly articulated financial goals.

    

 

  Annual Compensation Risk Assessment We regularly analyze risks related to our compensation program and conduct a broad risk assessment annually.   
    Goals Reflect Budget and Long-Range Plan We provide reasonable earning opportunities to motivate and retain our employees.        LTI Double Trigger Vesting LTI awards provide for double-trigger vesting if assumed in connection with a change of control.   
    Competitive Compensation Proxy officers’ annual total direct compensation is targeted to the comparable positions in our comparator group, taking into account the executive’s experience, leadership and other factors. Our CEO’s compensation is targeted to the 75th percentile of the comparator group given his strong leadership contributions and significant experience; other proxy officers’ compensation is targeted to 90%-110% of the median.        Clawbacks We can recover performance-based cash and equity incentive compensation paid to executives in various circumstances.   
        

 

 

 

Stock Ownership Requirements We maintain rigorous stock ownership requirements for our directors, executives and other members of senior management. Our CEO’s requirement is six times annual base pay; our other proxy officers’ requirement is three times annual base pay.

  
    Equity Grants Reward Future Performance Annual stock option and Financial Goal RSUs are granted as incentive to motivate and reward for sustained future performance rather than past behavior.     

 

 

 

Independent Compensation Consultant Our people and compensation committee retained Frederic W. Cook & Co., Inc. (“FW Cook”) for advice on executive compensation matters.

  
    Tally Sheets Tally sheets and wealth accumulation analyses for each proxy officer are reviewed annually, before making compensation decisions.          
 

What We Don’t Do

  
  ×   No Excessive Risk-Taking in Our Compensation Programs The AIP and Financial Goal RSUs use multiple performance measures, capped payouts and other features intended to minimize the incentive to take overly risky actions.      ×   No Backdating or Repricing of Stock Options Stock options are never backdated or issued with below-market exercise prices. Re-pricing of stock options without shareowner approval is expressly prohibited.   
  ×   No Hedging or Pledging Directors, executives and their immediate family members are prohibited from hedging, pledging or engaging in any derivatives trading with respect to company stock.      ×   No Tax Gross-ups There are no tax “gross-ups” for perquisites or excise tax gross-ups in the event of a change of control related termination.   

 

 

 

 

 

 

 

48    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

Performance Measure & Rationale
EPS Earnings Per Share sets the growth expectation for our shareowners; we use EPS as the key accounting measure and evaluation of how our company is performing
Free Cash Flow We believe Free Cash Flow measures the true value of our business. Our ability to translate earnings to cash indicates the health of our business and allows our company to invest for the future as well as return value to shareowners
ROC Return on Capital is another key measure of our ability to return value to our shareowners by ensuring capital investments, acquisitions and other uses of our capital are focused on profitable growth
Net Sales Net Sales measures the growth of the business, both organically and through acquisition, and provides an indication of future success

 

 

Compensation Discussion and Analysis

Overview of Our Executive Compensation Program

 

  

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Overview of Our Executive Compensation Program

We devote substantial time throughout the year to executive compensation matters to ensure that our program aligns with our core principles and company performance.

Our people and compensation committee’s disciplined approach to designing our executive compensation program includes regular reviews, communications and discussions with its independent compensation consultant, detailed consideration of our company’s annual and long-range plans, and careful attention to market data and practices. Our approach enables us to structure a program that supports our business strategies and human resources objectives, and is aligned with the interests of our shareowners.

When setting compensation, the committee focuses on how to effectively drive performance through incentives tied to key financial and strategic business objectives, the right pay mix, and the appropriate balance among the key elements of our compensation program.

Pay For Performance

We believe our practice of tying compensation to achievement of both annual and long-term financial and business goals drives strong performance, and results in increased shareowner value. That is why we structure our compensation programs with a focus on variable pay, creating both long and short-term incentives for our executives. We seek to provide competitive pay opportunities in line with job scope, required skills, market expectations and performance. To do this, we:

 

n   use a mix of fixed and variable pay components with different time horizons and payouts (cash and equity-based awards) to reward annual and sustained performance over the longer term;

 

n   promote balanced performance and discourage improper risk taking by avoiding reliance on any one metric or short-term performance goal;

 

n   motivate our executives to meet both short-term financial and individual goals and deliver on our long-term business goals – the best way we know to build shareowner value;

 

n   require executives and directors to have significant stock ownership — ensuring that their interests are aligned with shareowners; and

 

n   reward for future sustained performance rather than past performance.

Financial Performance Measures

We use four key financial performance measures to produce results.

 

 

Financial Performance Metrics

  
 

 

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Table of Contents

 

Compensation Discussion and Analysis

Overview of Our Executive Compensation Program

 

 

Generate sustainable growth. We believe these performance measures — incorporated into our annual budget and long-term planning — represent the measures that can be used by our shareowners to assess our company’s value. Using these metrics consistently, together with overlapping performance periods for our Financial Goal RSUs, enables us to evaluate our proxy officers’ performance in generating sustainable growth.

Balance short and long-term objectives. We also believe that the overlap of EPS and free cash flow performance measures between the AIP and Financial Goal RSUs focuses our proxy officers on these measures. It highlights the importance of leading the organization to achieve both short-term and long-term financial and strategic goals. It also reduces the risk that actions would be taken to sacrifice long-term growth to meet annual targets or vice versa.

Flexibility to support long-term growth. The standards for determining our performance against goals established for these measures are derived from our financial statements, which follow generally accepted accounting principles. The terms of our AIP and Financial Goal RSUs provide our people and compensation committee the ability to adjust results to exclude items, either positive or negative, that it considers extraordinary when determining performance against pre-established financial goals. We believe that retaining the ability to make adjustments encourages management’s willingness to take actions that may limit short-term company performance, yet support long-term growth. In evaluating our performance against EPS goals, the exclusions we consider generally are the same or similar to the after-tax items excluded for ongoing EPS. When evaluating our performance against goals for our fiscal 2016 AIP and fiscal 2014-fiscal 2016 Financial Goal RSU awards, the committee made adjustments to EPS, free cash flow and ROC results as discussed on pages 56 and 60.

Pay For Performance Compensation Mix

For fiscal 2016, 89% of our CEO’s total direct compensation and 82% of our other proxy officers’ average annual total direct compensation is at risk. Actual amounts realized depend upon our annual and longer-term performance and our stock price. We provide more than half of our proxy officers’ total direct compensation through LTI opportunity — in recognition of their accountability for delivering results and to align their realized compensation with longer-term company operational performance and shareowner interests.

We believe this approach motivates our proxy officers to consider the impact of their decisions on achieving and sustaining key financial results expected to lead to increased shareowner value.

The mix of fiscal 2016 total direct compensation for our proxy officers is illustrated in the charts below. At-risk annual total direct compensation includes the target AIP award and LTI opportunity (delivered in the form of stock options and Financial Goal RSUs).

 

 

CEO

   

 

Other Proxy Officers (Average)

 

   

 

 

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50    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Overview of Our Executive Compensation Program

 

  

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Summary of Fiscal 2016 Compensation

These are the components of fiscal 2016 proxy officer compensation included in the Summary Compensation Table, and benefits under broad-based benefit plans in which proxy officers participate.

 

  Component   Key Features   Objectives

 

  TOTAL DIRECT COMPENSATION

 

   

 

  Base Pay

 

 

 

 

n Fixed annual cash amount, paid at regular payroll intervals

 

 

n Provide a regular source of income at reasonable, competitive levels

 

 

  Annual

  Incentive

  Plan (“AIP”)

 

 

 

 

n Performance-based cash compensation opportunity: committee determines payout based on company performance against annual goals for EPS, free cash flow and net sales performance measures and individual proxy officer contributions

 

n Proxy officers participate in the same AIP with our other executives and most of our other employees

 

n Awards for certain proxy officers are subject to specified limits and contingent on the company satisfying the performance goal set by the committee under our 162(m) Plan

 

 

 

n Focus proxy officers and organizations they lead on achieving key financial results

 

n Reward for financial and operational performance that drives shareowner value

 

  Long-Term

  Incentive

  (“LTI”)

 

 

 

n Equity-based compensation: amount realized, if any, dependent on company achieving long-range financial goals and sustained or increased stock price

 

n LTI opportunity delivered through:

 

  Stock options (60%):

• Exercise price equal to the fair market value of a share of company stock on the grant date

• Vesting over a three-year service period

• Double-trigger vesting if assumed in connection with a change of control

 

  Financial Goal RSUs (40%):

• Shares eligible for vesting based on achievement of company performance against three-year cumulative EPS and free cash flow and three-year average ROC goals

• Vest shortly after the end of three-year performance period

• Double-trigger vesting if assumed in connection with a change of control

• Award settled in shares of company stock

• Dividends accrued and paid only with respect to earned and vested awards

 

n Size of stock option grant and target number of Financial Goal RSUs awarded represent a forward-looking incentive opportunity; not a reward for past performance

 

 

 

n Focus proxy officers on achieving and sustaining longer-term business results and reward performance

 

n Stock options reward for stock price appreciation and provide a direct link to increases in shareowner value

 

n Financial Goal RSUs motivate officers to achieve three-year financial goals that are expected to lead to increased shareowner value; annual grants with overlapping performance periods reward sustained performance of key financial measures

 

  RETENTION AND RECOGNITION AWARDS

 

   

 

  Retention   RSUs

 

 

n Occasionally granted to select executive and non-executive employees

 

n Granted in fiscal 2016 to two proxy officers

 

n Cliff vesting at the end of a four-year vesting period

 

n Realized value determined on stock price on vesting date

 

n Double-trigger vesting if assumed in connection with a change of control

 

 

n Retain key talent critical to successful execution of long-term strategies

 

n Facilitate development of a strong line of succession candidates for key leadership roles to orderly transition to the next generation of company leaders

 

n Tie vesting period to anticipated time frame for execution of key initiatives

 

n Link ultimate value of grant to stock price

 

 

  Recognition

  Awards

 

 

n One-time limited cash recognition awards to our CEO and three other proxy officers

 

n Granted after careful deliberation by the committee

 

 

n Recognize the extraordinary commitment and effort of each officer during fiscal 2016 in negotiating the Bayer merger agreement while simultaneously remaining focused on executing our business strategy and driving the company forward in a challenging agriculture environment

 

 

  OTHER COMPENSATION

 

   

 

  Benefits

 

 

n Standard range of medical, dental, life insurance, disability and retirement plans available to other employees

 

n Cost of health and welfare benefits partially borne by employee, including each proxy officer

 

 

 

n Provide our workforce with a market-competitive level of financial support in the event of injury, illness and retirement

 

  Perquisites

 

 

n Limited perquisites and personal benefits described in Other Compensation beginning on page 62

 

n No tax gross-ups on perquisites

 

n Perquisite values not included when determining any AIP opportunity, retirement or severance benefit or any other benefit payment

 

 

 

n Varies to address significant expectations and challenges for our executives

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    51


Table of Contents

Cook & Co. (independent Committee consultant)
Performs work at the direction and under the supervision of our people and compensation committee
Provides advice, research and analytical services on subjects such as trends in executive compensation, officer compensation program design, officer compensation levels, and non-employee director compensation
Reviews and reports on all committee materials, participates in all committee meetings and communicates with the committee chair between meetings
Provides no services to our company other than those provided directly to or on behalf of the committee; the committee has reviewed the independence of Cook & Co. and has determined that the firm has no conflict of interest
Management
Internal committee of executives appointed by our CEO
Provides input to our people and compensation committee, through our CEO and Executive Vice President of Human Resources (EVP-HR), on the strategy, design and funding of our broad-based AIP, in which our proxy officers also participate
Makes plan design decisions for broad-based benefit programs in which our proxy officers participate, to the extent the annual cost-impact does not exceed $10,000,000
Determines no compensation for any proxy officer or other executive
CEO and EVP-HR
Recommend base pay, target AIP opportunities and actual AIP awards to proxy officers (CEO does not recommend own compensation)
Provide information on performance goals for people and compensation committee consideration in structuring the AIP and Financial Goal RSU programs
Recommend retention of specific, critical talent and various retention arrangements for people and compensation committee consideration
CEO provides the people and compensation committee a performance assessment of each proxy officer and a self-assessment
Willis Towers Watson (consultant retained by EVP-HR and his staff)
Works with our EVP-HR and his staff to provide various calculations, comparator group data and general market data used by our people and compensation committee in its decision-making processes
At the request of the committee, periodically provides input through our EVP-HR and his staff, regarding a specific practice, program or arrangement under committee consideration
Provides consulting, actuarial and other compensation and employee benefits-related services to our company; the people and compensation committee has reviewed Willis Towers Watson’s work and determined that it raises no conflicts of interest

 

 

Compensation Discussion and Analysis

Setting Executive Compensation

 

 

Setting Executive Compensation

We consider a broad range of factors and tools when structuring our executive compensation program and making individual proxy officer pay decisions.

Committee Process

Here is a summary of responsibilities and data sources used by our people and compensation committee to determine our executive compensation program.

Committee and Consultants Responsibilities

 

LOGO

 

 

52    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Setting Executive Compensation

 

  

LOGO

 

 

Competitive Analyses

To make sure we understand the compensation levels, practices and trends in the market in which we compete for talent, we compare our proxy officers’ compensation to executive compensation at a group of similarly-sized companies we call our “comparator group.” The companies in our comparator group have one or more of the following characteristics, which we consider essential to our success:

 

n   science-based, research-focused, organization from the biotechnology, pharmaceutical or related industry;

 

n   specialty or diversified chemical company having a line of business requiring ongoing introduction of new products; or

 

n   brand-focused general industry leader.

We review the composition of our comparator group annually. For fiscal 2016, our comparator group consisted of the same companies as the companies in our fiscal 2015 comparator group, except for PPG Industries, which we eliminated as our CEO became a member of its compensation committee.

For information on levels at which the committee targets each element of a proxy officer’s annual total direct compensation, see Our 2016 Executive Compensation Program below.

Comparator Peer Group

We review compensation data for our comparator group to compare our revenue size and performance to the comparator group using key publicly available financial metrics. As of October 2015, when our people and compensation committee determined our proxy officers’ fiscal 2016 compensation, our revenue and market capitalization each were slightly lower than the median of the comparator group, and one-year EPS growth was above the median of the comparator group.

 

    

 

Monsanto Peer Group Rankings

 

    
   

 

LOGO

 

   

Determining Equity Grants

When determining the total LTI opportunities and equity grants to our proxy officers and other employees, the committee considers the:

 

n   projected impact on our earnings for the anticipated fiscal year grants;

 

n   proportion of our total shares outstanding used for annual employee long-term compensation programs (our “run rate”) in relation to the median proportions of other companies in our comparator group; and

 

n   potential voting power dilution to our shareowners (our “overhang”) in relation to the median practice of companies in our comparator group.

Comparator

Peer Group

The companies listed below constituted our comparator group for fiscal 2016 proxy officer compensation.

 

n   3M Company

 

n   Allergan, plc

 

n   Amgen Inc.

 

n   Baxter International Inc.

 

n   Becton, Dickinson and Company

 

n   Biogen Inc.

 

n   Bristol-Myers Squibb Company

 

n   Colgate-Palmolive Company

 

n   The Dow Chemical Company

 

n   E.I. du Pont de Nemours and Company

 

n   Ecolab Inc.

 

n   Eli Lilly and Company

 

n   General Mills, Inc.

 

n   Gilead Sciences, Inc.

 

n   Kellogg Company

 

n   Medtronic, plc

 

n   The Mosaic Company

 

n   Potash Corporation of Saskatchewan Inc.

 

n   St. Jude Medical, Inc.
 

 

 

 

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Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

 

Our run rate and overhang levels for equity grants are significantly below the median levels of our comparator group.

 

 

We make equity grants to our proxy officers under our shareowner-approved Monsanto Company 2005 Long-Term Incentive Plan (as Amended and Restated as of January 24, 2012) (“2005 LTIP”). Each year, the committee approves the grants at its regularly-scheduled October meeting. The grant date is always the date the committee approves the grant. The grant price is the “fair market value” of a share of our common stock on the grant date, which we define as the closing price on the New York Stock Exchange on the grant date.

 

The committee, with input from its independent consultant, regularly reviews our equity grant practices to assure incorporation of what it believes constitute key best practice guidelines.

Use of Tally Sheets and Wealth Accumulation Analyses

Our people and compensation committee reviews tally sheets and wealth accumulation analyses for each proxy officer annually, before making total direct compensation decisions. The information includes the value of vested and unvested equity grants under various scenarios including: voluntary termination, involuntary termination with and without cause, retirement, death, disability and following a change of control. This enables us to evaluate whether:

 

n   the program or accumulation of wealth reflects company operating performance and a correlation to changes in shareowner value;

 

n   the individual proxy officer’s total compensation and accumulated wealth reflect his contribution to the company; and

 

n   the overall program and its individual elements are working, or whether adjustments to the program or an individual proxy officer’s compensation would be appropriate.

We believe the tally sheets and wealth accumulation analyses help the committee understand the realized and potential value of compensation payable to our proxy officers and ensure that pay aligns with company performance.

Our 2016 Executive Compensation Program

We view compensation as an important tool to motivate our leaders to accomplish our business strategies and financial objectives, without taking overly risky actions. What we pay each of our proxy officers reflects our core principles, and is based on our pay for performance and competitive pay practices.

Our executive compensation program consists of the following three primary components:

 

Base Pay

 

 

+  

 

 

Cash awards under our broad-based

Annual Incentive Plan

 

 

+  

 

 

 

Long-term incentives delivered

through stock options and

Financial Goal RSUs

 

Our people and compensation committee targets each element of a proxy officer’s annual total direct compensation to compensation for comparable positions in our comparator group. For our CEO, the committee targets the 75th percentile of our comparator group to reflect his strong leadership contributions, unique knowledge of our industry, significant experience and creation of significant shareowner value over his 13 year tenure as our CEO. The committee targets 90%-110% of the median for comparable positions for our other proxy officers. For fiscal 2016, the amount of one or more components of each proxy officer’s pay was adjusted to achieve or maintain alignment with our comparator group, reflect the experience and value he brings to the role or adjust the amount of his pay relative to the pay of his peers within our company.

The differences in compensation levels among our proxy officers are primarily due to the differences in the median range of compensation for similar positions in our comparator group data and the committee’s assessment of each position’s internal value.

 

 

54    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

  

LOGO

 

 

Base Pay

We generally implement any base pay increases on a calendar year basis, with occasional mid-year increases to reflect a promotion or additional experience or responsibilities. Messrs. Grant and Courduroux each received a base pay increase, effective January 2016, to reflect the percentage base pay increase provided the rest of our U.S. organization. Messrs. Begemann, Frank and Mizell each received a base pay increase, effective January 2016, to achieve alignment with comparable positions in our comparator group and recognize his evolving leadership roles and internal value to our company. Mr. Frank received an additional base pay increase of 3.1% in August 2016 in recognition of his continued strategic leadership of the organization and increase in responsibilities associated with his promotion to Senior Vice President, Chief Commercial Officer.

The table below includes each proxy officer’s base pay as of August 31, 2016 in comparison to his base pay as of August 31, 2015. This information is different from the base pay information provided in the Summary Compensation Table, which presents base pay received on a fiscal year basis, including increases effective in January 2016.

Fiscal Year-End Base Pay

 

     Base Pay ($)      % Increase  
  Name   

 

            August 31, 2015

    

 

            August 31, 2016  

    

  Hugh Grant

     1,630,500         1,663,110           2.0   

  Pierre C. Courduroux

     612,000         624,240           2.0   

  Brett D. Begemann

     816,000         1,000,000           22.5   

  Michael J. Frank

     450,000         500,000           11.1   

  Steven C. Mizell

     530,400         600,000           13.1   

Annual Incentive Plan (AIP)

We regularly evaluate the design of the AIP component of compensation to assure that the overall structure and cash awards continue to meet our core principles and objectives.

 

 

n  Our proxy officers participate in the same AIP in which most of our other employees participate.

 

n  Proxy officers and other participants are paid cash awards for company achievement of fiscal year performance against the financial goals set each year and the participant’s individual performance.

 

 

OUR FISCAL 2016 AIP

Performance Goals

Our people and compensation committee established threshold, target and outstanding-level performance goals for the AIP fiscal 2016 performance period for the plan’s financial metrics: EPS (weighted 50%), free cash flow (weighted 40%) and net sales (weighted 10%).

 

n   When establishing fiscal 2016 performance goals, the committee engaged in extensive and thoughtful discussions over the course of several meetings, recognizing its responsibilities to shareowners and the need to retain and motivate our global workforce and executives to execute on key financial and strategic objectives.

 

n   It was important to the committee that it establish goals to appropriately recognize that challenges facing our industry and the global economy in fiscal 2015 — including currency instability, corn acre contraction and commodity pricing challenges — would continue into fiscal 2016 and impede our ability to achieve ongoing earnings growth for the year.

 

n   The committee also considered our fiscal 2016 budget, set at levels lower than fiscal 2015 actual results.

 

n   Throughout the process, the committee remained focused on its pay-for-performance philosophy and setting appropriately challenging goals that would not promote the pursuit of excessively risky business strategies.

At its October 2015 meeting, the committee set final fiscal 2016 goals set out below based on the following objectives:

 

n   Performance corresponding to our fiscal 2016 budget would result in 60% of Target-level funding (compared to 100% target-level funding in previous years for budget performance), the 40% reduction in funding opportunity reflecting our fiscal 2016 budget at levels lower than fiscal 2015 actual results.

 

n   Target-level (100% award) funding for the EPS and net sales goals would require performance exceeding fiscal 2015 actual results, consistent with our pay-for-performance philosophy.

 

n   Outstanding-level funding would require a higher level of growth over fiscal 2015 actual results.

 

 

 

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Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

 

The committee also set $2,021 million as the minimum corporate adjusted net income performance goal under our 162(m) Plan for the fiscal 2016 performance period (the “162(m) Compliance Gate”). The plan defines “minimum corporate adjusted net income” as net income determined in accordance with U.S. generally accepted accounting principles calculated without regard to any change in accounting standards (“GAAP”), adjusted to exclude extraordinary items under GAAP.

Award Pool

The target AIP award pool is the sum of all AIP participants’ target fiscal 2016 award opportunities. Target awards are communicated as a percentage of base pay. The table below includes our proxy officers’ fiscal 2016 target award opportunities.

Summary of Proxy Officer 2016 AIP Target Opportunities

 

  Name    % of Base Pay      Target Opportunity ($)  

  Hugh Grant

     170%         2,827,287   

  Pierre C. Courduroux

     80%         499,392   

  Brett D. Begemann

     100%         1,000,000   

  Michael J. Frank

     60%         300,000   

  Steven C. Mizell

     80%         480,000   

 

n   To establish the dollar amount of the award pool, the committee first determines the funding factor by evaluating our fiscal year performance against each of the EPS, free cash flow and net sales goals, considering each goal’s respective weighting and other plan provisions.

 

    Award pool funds at no less than 20% of target-level funding if a dividend is paid all four financial quarters; however, funding may not exceed 20% of the target level if the threshold EPS performance goal is not met.

 

    Award pool funding factor capped at 200% of target-level funding; the committee reserves the ability to exceed this amount for exceptional performance.

The committee then multiplies the funding factor by the dollar amount of the target AIP award pool for the fiscal 2016 performance period.

Funding

In October 2016, the committee determined the size of the fiscal 2016 AIP award pool after considering a number of factors. The committee first evaluated the company’s fiscal 2016 performance against the AIP performance goals considering:

 

n   We did not meet the target-level goal set for EPS taking into account the committee’s determination to exclude the following items as extraordinary, for a $1.49 net increase over EPS results reported to our shareowners: restructuring charges; earnings from a divested business; expenses from settlement of legacy environmental liabilities and other litigation matters; and recognition under U.S. GAAP accounting rules of a deferred tax asset in Argentina.

 

n   We achieved 88% of the target-level goal set for free cash flow (no adjustments were made).

 

n   We did not meet threshold-level performance with respect to net sales (no adjustments were made).

Fiscal 2016 AIP Goals and Actual Results

 

  AIP Performance Measure    Threshold
Level Goals
(35% Funding)
     Target
Level Goals
(100% Funding)
     Outstanding
Level Goals
(200% Funding)
     Actual Results  

  EPS ($)

     5.00         5.77         6.20         4.48   

  Free Cash Flow ($ millions)

     1,530         1,951         2,186         1,724   

  Net Sales ($ millions)

     14,314         15,860         16,538         13,502   

 

n   Although we exceeded threshold-level performance for the free cash flow goal and achieved other key accomplishments during the year, the committee determined to fund the award pool only at 20% of target, or $32 million, because we did not achieve the fiscal 2016 threshold EPS goal. The 20% funding represents the lowest funding required under the express terms of the plan as a result of payment of dividends in all four financial quarters in fiscal 2016.

Proxy Officer Award

Before considering our proxy officers’ fiscal 2016 AIP awards, the committee evaluated that our adjusted net income for the fiscal 2016 performance period was $2,001 million and determined that we did not achieve the 162(m) Compliance Gate of $2,021 million. Therefore, under the terms of our 162(m) Plan, our proxy officers other than our CFO (who is not covered by our 162(m) Plan) were ineligible for a fiscal 2016 AIP award, even though the AIP funded at 20% of target-level funding.

Our CEO discussed our CFO’s individual fiscal 2016 performance with the committee, focusing on his accomplishments described on page 65. The committee determined to calculate his award based on 20% of his target AIP opportunity, or $99,878, reflecting the fiscal 2016 AIP overall funding factor.

 

 

56    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

  

LOGO

 

 

SPECIAL CASH AWARDS

Additional Award Pool for Non-Executive Employees

At its October 2016 meeting, the committee considered that despite our fiscal 2016 overall performance in an extremely challenging global market, the amount of the AIP award pool was capped at 20% of target-level funding because we did not meet the plan’s threshold EPS goal. Committee discussions focused on key accomplishments during the year positioning us for future growth, including:

 

n   Achieving record U.S. corn seed volumes

 

n   Achieving record-setting adoption of our Intacta RR2 PRO soybeans in South America

 

n   Enrolling of our digital agricultural solutions platform on over 92 million acres
n   Advancing the deepest and broadest R&D pipeline in the industry (more than 20 projects across our six R&D platforms)

 

n   Managing costs across the businesses, successfully delivering our restructuring and cost-savings plan targets for fiscal 2016 of $165 million

 

n   Improving customer relationship ratings, along with customer experience and loyalty
 

The committee believed that it was important to recognize these accomplishments, in addition to the extraordinary commitment and efforts put forth by employees throughout the organization in an extremely challenging agricultural and general business environment. After careful deliberation, the committee determined to provide $9 million for allocation to non-executive employees. The committee specifically excluded our proxy officers and other members of our executive team from participating in the additional award pool.

Recognition Awards for Four Proxy Officers

Also at its October 2016 meeting, the committee spent a considerable amount of time discussing the fact that our CEO and three other proxy officers were precluded from receiving a fiscal 2016 AIP award (because the 162(m) Compliance Gate was not satisfied), against the totality of their demonstrated performance during fiscal 2016. In particular, the committee recognized the officers’ roles in leading the organization to achieve the key accomplishments noted above. The committee also considered their and other executives’ extraordinary commitment and efforts during fiscal 2016 in negotiating the Bayer transaction, while simultaneously remaining focused on executing our business strategy and driving the company forward in an extremely challenging agricultural and general business environment. The committee noted that the officers’ fiscal 2016 efforts resulted in a definitive merger agreement that would result in a substantial premium for our shareowners.

Our CEO provided input on the performances of Messrs. Begemann, Frank and Mizell during fiscal 2016, focusing on their individual performance in advancing key business priorities and performance of the business unit each leads as described on pages 65–66. In private sessions, the committee evaluated our CEO’s fiscal 2016 performance, focusing on his accomplishments described on page 65.

Based on the above and drawing on their collective experience and judgment, the committee determined that some form of recognition award for fiscal 2016 performance was appropriate for these executives. Equally, the committee was mindful that the amount of the awards should reflect the reality that pre-established performance metrics for fiscal 2016 were not fully achieved. After careful deliberation, including consideration of input from the committee’s independent compensation consultant, the committee determined that the recognition cash awards would be 20% of each of the proxy officer’s target fiscal AIP award opportunity.

Fiscal 2016 Recognition Awards

 

  Name    Recognition Award ($)  

  Hugh Grant

     565,457   

  Brett D. Begemann

     200,000   

  Michael J. Frank

     60,000   

  Steven C. Mizell

     96,000   

 

 

 

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Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

 

Long-Term Incentives

We regularly evaluate the design of the LTI component of our executive compensation program to assure that the overall structure and equity awards continue to meet our core principles and objectives. In fiscal 2016, we continued to grant equity awards to our proxy officers under the 2005 LTIP, under which we may grant stock options, performance-based RSUs, RSUs, restricted stock, stock appreciation rights, stock or cash.

 

 

n   Our Focus on Variable Pay Mix, by delivering LTI opportunities through stock options and Financial Goal RSUs, aligns our proxy officers with shareowners’ interests, linking an element of their pay to the value of our stock

 

Stock Options closely align a significant portion of proxy officers’ pay to value created for our shareowners

 

Financial Goal RSUs focus our proxy officers on leading the entire organization to achieve sustainable longer-term performance results related to goals for key financial performance measures

 

LTI OPPORTUNITIES CONVERTED TO GRANTS OF STOCK OPTIONS AND FINANCIAL GOAL RSUs

The dollar amount of each proxy officer’s fiscal 2016 LTI opportunity was delivered as follows:

 

 

  Stock Options

 

 

n   60% was converted to a number of stock options by dividing the dollar amount by the estimated Black-Scholes value of our stock on the October 26, 2015 grant date (estimated at 40% of the fair market value of a share of our stock on the grant date consistent with long-standing practice).

 

n   The stock options will generally vest ratably over a three-year period, with a ten-year term.

 

n   The value a proxy officer may eventually realize, if any, is contingent upon his completing the required service period and our stock price at the time he determines to exercise any in-the-money options prior to expiration on October 26, 2025.

 

 

  Financial Goal RSUs

 

 

n   40% was converted to a target number of Financial Goal RSUs by dividing the dollar amount by the fair market value of a share of our stock on the October 26, 2015 grant date.

 

n   The number of Financial Goal RSUs eligible for vesting will range from 0%-200% of the target number awarded, if we attain the Code Section 162(m) performance goal of positive net income for the three-year performance period and based upon our fiscal 2016-2018 performance against three-year cumulative EPS and free cash flow goals and a three-year average ROC goal.

 

n   Dividend equivalents are accrued during the three-year period and paid upon vesting based on the number of units that vest.

 

n  Any Financial Goal RSUs eligible for vesting will be settled in shares of company stock. The value a proxy officer may eventually realize, if any, is contingent upon the number of Financial Goal RSUs eligible for vesting and our stock price on November 15, 2018.

 

  The awards for our CEO will continue to be eligible for vesting following a termination of employment due to retirement, death or disability. The committee included the continued vesting provisions recognizing that his unique leadership abilities have enabled us to build a global business with an industry-leading product portfolio and that his current actions and long-range decisions will impact our performance throughout the performance period.

 

  The awards for our other proxy officers will generally not vest unless the officer satisfies a three-year service period, concurrent with the performance period.

 

Amount of LTI Opportunities

At its October 2015 meeting, our people and compensation committee determined the dollar amount of each proxy officer’s fiscal 2016 LTI opportunity taking into consideration the long-term opportunities for a comparable position in the comparator group and the internal value the company places on his position. The committee did not take into account any proxy officer’s past performance or outstanding equity awards when determining the dollar amount of his fiscal 2016 LTI opportunity.

Process for Awarding Financial Goal RSUs

Here is the process the committee uses for awarding fiscal 2016 Financial Goal RSUs to our proxy officers and determining any payout:

 

LOGO

 

 

58    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

  

LOGO

 

 

In October 2018, the committee will determine if we attain the Code Section 162(m) performance goal and, the number of shares eligible for vesting based on company performance against three-year goals, as follows:

 

EPS goal  

( 13 weighting)  

    

Free Cash    

Flow goal    

( 13 weighting)    

    

ROC goal    

( 13 weighting)    

  =     

Percentage of Target-   

Number of fiscal 2016   

Financial Goal RSUs eligible   

for vesting on   

November 15, 2018   

 

Financial Goal RSU Performance Goals

For the fiscal 2016 grant, the people and compensation committee established a Code Section 162(m) performance goal of positive net income for the September 1, 2015 through August 31, 2018 performance period. If the Code Section 162(m) performance goal is not met, all units are forfeited.

 

 

Net income” is defined as gross profit minus sales, general and administrative expenses, research and development expense, amortization, net interest expense, and income taxes and plus or minus other income and expense, all as reported in the company’s financial statements. It also excludes the positive or negative effects of restructuring charges and reversals, the outcome of lawsuits, the impact of liabilities, expenses or settlements related to the Company’s indemnification obligations to Pharmacia LLC or Solutia, Inc., unbudgeted business sales and divestitures and the cumulative effects of changes in accounting methodology made after August 31, 2015.

 

When structuring the fiscal 2016 Financial Goal RSUs, the committee focused on aligning the length of the performance period with available information for it to consider in setting challenging, yet attainable, forward-looking goals. The committee carefully considered our current and anticipated business environment, our current year budget, the company’s expectations for the later years of its long-range plan and the company’s need to attract, motivate and retain employees to achieve its long-range plan. In October 2015, the committee set the three-year cumulative EPS and free cash flow goals and a three-year average ROC goal following a consideration of threshold, target and outstanding-level goals first for each of fiscal 2016, fiscal 2017 and fiscal 2018 and based on the following:

 

n   Threshold-level performance goals – set at levels the committee believes are reasonably achievable, to motivate performance and support retention objectives. Fiscal 2016 threshold-level EPS and free cash flows goals correspond to goals for the 2016 AIP. Fiscal 2017 and 2018 threshold-level performance goals align with the prior year’s target-level goal and require improvement over prior year performance. If the company achieves threshold but does not achieve target-level performance for a goal, up to 50% of the units will be forfeited.

 

n   Target-level performance goals – set in line with our annual incentive plan goals for fiscal 2016 with respect to EPS and free cash flow, and what the committee believes will require significant stretch to achieve in fiscal 2017 and fiscal 2018 compared to our fiscal 2016-2018 long-range business plan reviewed by our board. If the company achieves target-level performance for each goal, 100% of the units will be eligible for vesting. If the company exceeds target-level performance for one or more goals, up to 200% of the units will be eligible for vesting.

 

n   Outstanding-level performance goals – set at levels the committee believes will require achievement of EPS goals with significant growth and require a cumulative growth over a three-year period beyond the outstanding-level goal for the fiscal 2015 Financial Goal RSUs. Outstanding-level performance goals for free cash flow and ROC are aligned to the plans that will deliver outstanding-level EPS results in each year. If the company achieves outstanding-level performance for each goal, 200% of the units will be eligible for vesting.

At the end of fiscal 2016, the company determined that public disclosure of the specific goals could cause competitive harm to the company, and in addition, was not material to an understanding of our fiscal 2016 executive compensation. We expect to disclose the specific goals after the conclusion of the performance period.

 

 

 

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Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

 

Summary of Fiscal 2016 LTI Opportunities and Equity Grants

The dollar amount of each proxy officer’s fiscal 2016 LTI opportunity is included in his fiscal 2016 total compensation in the Summary Compensation Table on page 68 as the grant value of the stock options and estimated probable value of the Financial Goal RSU awards on the grant date. This table shows the number of stock options and target number of Financial Goal RSUs granted to each proxy officer, which together represented his 2016 LTI opportunity, excluding one-time retention awards to two proxy officers.

Fiscal 2016 Proxy Officer LTI Opportunities, Stock Option Grants, and

Target Number of Financial Goal RSUs

 

    

 

2016 Long-Term Opportunities and Awards

     

  Name

 

  

LTI Opportunity ($)

 

    

 

Number of
Stock Options

 

    

Target Number of
Financial Goal RSUs

 

   

 

  Hugh Grant

 

  

 

 

 

 

10,800,000

 

 

  

 

  

 

 

 

 

177,360

 

 

  

 

  

 

 

 

 

47,296

 

 

  

 

   

 

  Pierre C. Courduroux

 

  

 

 

 

 

2,500,000

 

 

  

 

  

 

 

 

 

41,060

 

 

  

 

  

 

 

 

 

10,949

 

 

  

 

   

 

  Brett D. Begemann

 

  

 

 

 

 

5,000,000

 

 

  

 

  

 

 

 

 

82,120

 

 

  

 

  

 

 

 

 

21,897

 

 

  

 

   

 

  Michael J. Frank

 

  

 

 

 

 

1,000,000

 

 

  

 

  

 

 

 

 

16,430

 

 

  

 

  

 

 

 

 

4,380

 

 

  

 

   

 

  Steven C. Mizell

 

  

 

 

 

 

1,300,000

 

 

  

 

  

 

 

 

 

21,350

 

 

  

 

  

 

 

 

 

5,694

 

 

  

 

   

PRIOR FINANCIAL GOAL RESTRICTED STOCK UNIT GRANTS

Each of our proxy officers was awarded Financial Goal RSUs under the 2005 LTIP as a part of the fiscal 2014 LTI component of his total direct compensation. The fiscal 2014 Financial Goal RSU performance measures and terms were the same as the performance measures and terms for the fiscal 2016 Financial Goal RSUs, except that our CEO’s fiscal 2014 awards did not provide for continued vesting following termination of employment under certain circumstances.

In October and November 2016, the committee determined the number of fiscal 2014 Financial Goal RSUs eligible for vesting under the terms of those awards after considering a number of factors, including:

 

n   Our fiscal 2014-2016 results and company performance measured against the Financial Goal RSU goals, as follows:

Fiscal 2014 Financial Goal RSU Grant Summary of Goals and Actual Results

 

  Performance Measure    Threshold Performance
(50% of Units eligible
for vesting)
     Target Performance
(100% of Units eligible
for vesting)
    

Outstanding Performance
(200% of Units eligible

for vesting)

     Actual Results  

  Cumulative EPS ($) (1/3 of Units)

     14.36         17.27         19.33         15.44   

  Cumulative Free Cash Flow

           

  ($ millions) (1/3 of Units)

     4,314         5,222         5,870         5,072   

  Average ROC (%) (1/3 of Units)

     18.2         21.8         24.4         21.2   

 

n   The fact that we achieved 89% of the target-level goal for EPS and 97% of the target-level goal for ROC. The committee adjusted EPS and ROC results, consistent with determinations for the fiscal 2016, 2015 and 2014 AIP, to exclude certain extraordinary items described on page 56 for fiscal 2016; related to restructuring charges, earnings from a divested business, expenses from settlement of legacy environmental liabilities and expenses for a potential SEC settlement, for a $0.92 increase to fiscal 2015 EPS results; and related to earnings from a divested business and expenses from settlement of legacy environmental liabilities, for a $0.01 increase to fiscal 2014 EPS results. See Appendix A for a summary of these adjustments to ROC and a reconciliation to GAAP.

 

n   The fact that we exceeded threshold and achieved 97% of the target-level goal for free cash flow. The committee adjusted fiscal 2014 free cash flow results to exclude as “extraordinary” the unbudgeted impact of our collaboration with Novozymes, this transaction occurred after the goals were established. The committee did not make any adjustments to fiscal 2016 or 2015 free cash flow results.

 

 

60    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

  

LOGO

 

 

After careful deliberation, the committee determined that 84% of the target-number of Financial Goal RSUs awarded to each proxy officer as part of his fiscal 2014 LTI opportunity is eligible for vesting based on the following formula:

 

 

89% of Target

Performance for

Ongoing EPS

(1/3 weighting)

                             

 

Result: 69%

 

  +      

 

97% of Target

Performance for

Free Cash Flow

(1/3 weighting)

                             

 

Result: 92%

 

  +      

 

97% of Target

Performance for

Average ROC

(1/3 weighting)

                             

 

Result: 91%

 

  =      

84% of Target-Number of Fiscal 2014 Financial Goal RSUs Eligible for Vesting Subject

to Employment on

November 15, 2016

The number of Financial Goal RSUs eligible for vesting and subsequently settled in shares of company stock in November 2016 for each proxy officer was as follows:

Proxy Officer Fiscal 2014 Financial Goal RSUs Eligible for Vesting

 

  Name    Target Number of Financial
Goal RSUs Awarded
     Number of RSUs Vested
in November 2016
 

  Hugh Grant

     33,192         27,882   

  Pierre C. Courduroux

     8,298         6,971   

  Brett D. Begemann

     11,316         9,506   

  Michael J. Frank

     2,264         1,902   

  Steven C. Mizell

     4,527         3,803   

In October 2017, the committee will evaluate performance for the fiscal 2015 Financial Goal RSUs. The number of Financial Goal RSUs eligible for vesting will be settled in shares of company stock in November 2017.

Retention Awards in Fiscal 2016

From time to time the committee may award a special equity grant to one or more of our proxy officers and other key leaders in our organization to encourage retention. These awards generally are provided in the form of restricted stock units that vest after a period of continued service.

During fiscal 2016, the committee granted 25,730 units to Mr. Frank and 37,340 units to Mr. Mizell that vest after four years. The committee believes that it is important to retain Messrs. Frank and Mizell and encourage each of them to remain fully committed and engaged: Mr. Frank plays a critical role in leading our company through short-term and long-term global commercial strategies and Mr. Mizell’s unique leadership skills and insights are critical in attracting, retaining and engaging our global employee population through our business transformation and achievement of our long-range plan. While the primary goal of the grants is retentive, the ultimate value of the grants will depend on our stock price, and the vesting of awards is subject to attainment of the Code Section 162(m) goal of positive net income over a three-year performance period.

The committee continues to focus on pay for performance and supporting long-term shareowner value. The committee believes that in these circumstances, a time-vesting award rather than a performance-based award would better serve the retention purpose of the award by providing each officer certainty of realized award value (subject to fluctuations in our stock price), if his employment continues until the vesting date and the Code 162(m) performance goal is attained.

Consequences of the Bayer Transaction on Equity Awards

Granted During or Prior to Fiscal 2016

If the Bayer transaction closes, at such time, all outstanding LTI and retention awards granted during or prior to fiscal 2016, will fully vest and convert into the right to receive the merger consideration of $128 per share (in the case of options, less the applicable exercise price). Any such awards that are stock option would settle as soon as reasonably practicable following the closing of the Bayer transaction, while restricted stock unit awards would settle at the time specified in the applicable award agreement. Any performance goals applicable to a restricted stock unit award would be fixed, in accordance with the award agreement, based on actual performance for each completed fiscal year of a performance period in progress as of the closing of the Bayer transaction and based on target performance for any fiscal year that has not been completed as of such time.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    61


Table of Contents

 

Compensation Discussion and Analysis

Our 2016 Executive Compensation Program

 

 

Other Compensation

RETIREMENT AND WELFARE BENEFITS

We provide our proxy officers with the same employee benefits as all our U.S. regular employees under our broad-based plans. These benefits include tax-qualified pension and savings plans, as well as non-qualified “parity” pension and savings plans providing benefits to all employees whose benefits under the tax-qualified plans are limited by the Code. Base salary and AIP cash awards (but not LTI opportunities or the value of perquisites) are included in retirement plan calculations. No service credit is provided for years not worked. These benefits also include health benefits, life insurance and other welfare benefits.

Proxy officers are provided the same retirement or welfare plan benefits as other employees, other than increased coverage under our travel accident insurance plan and coverage under our executive medical program, which we consider to be perquisites. The people and compensation committee adopted the executive medical program, providing comprehensive annual physical exams and associated diagnostic/laboratory testing, to encourage our proxy officers and other executives to facilitate early intervention and health risk modification, thereby decreasing the likelihood of sudden illness and possible negative impact on company performance.

In the U.S., we also maintain a separation pay plan covering our full-time U.S. employees that provides transition income in the form of a single lump sum payment in the event of an involuntary termination without cause. Each proxy officer is eligible for the severance benefit on the same terms as other eligible employees; provided, however, if he terminates employment under circumstances qualifying him for severance benefits under a change of control employment security agreement, he will not be entitled to benefits under the separation pay plan. See Potential Payments Upon Termination or Change of Control – Other Arrangements for additional information.

Mr. Grant is eligible for a disability benefit under the terms of our Third Country National (“TCN”) plan, which from January 1, 1983 to October 31, 2002 was Former Monsanto’s and then our regular, non-qualified pension plan designed to protect certain benefits for employees who were transferred from their home country to another country at the company’s request. In addition, certain of our proxy officers are also eligible for retirement benefits under various plans relating to their past employment with our company or Former Monsanto outside the U.S. These benefits are the same as those benefits offered for other similarly situated eligible employees outside the U.S.

CHANGE OF CONTROL EMPLOYMENT SECURITY AGREEMENTS

Our company has entered into employment security agreements with our proxy officers that become effective upon a change of control of our company. These agreements provide for severance benefits upon a qualifying termination of employment within two years following a change of control of our company. See Potential Payments Upon Termination or Change of Control – Change of Control Employment Security Agreements for additional information. We believe that the agreements serve the interests of our company and our shareowners by ensuring that if a hostile or friendly change of control is under consideration, our proxy officers will be able to advise our board about the potential transaction in the best interests of shareowners, without being unduly influenced by personal considerations of losing their jobs. The committee reviews the potential cost and the terms of the agreements at least annually, in addition to the list of executives and other key employees eligible for the agreements. The Bayer transaction would constitute a change of control of our company.

PERQUISITES

We provide our proxy officers with limited perquisites, the most significant of which is access to the company’s aircraft for personal flights. Our board recognizes the personal risks our CEO faces due to strong opinions regarding our business and requires him to travel on the company’s aircraft for security reasons. Personal use of the company’s aircraft by other proxy officers is allowed on a limited basis with the prior approval of our controller or CEO. Additional perquisites include increased coverage under our travel insurance plan pursuant to an industry standard policy that requires no incremental cost to the company, participation in the executive medical program described above, and limited security expenses for our CEO. Our proxy officers may occasionally request a car and driver from our security team, which results in minimal costs beyond any overtime expense but is considered a perquisite.

 

 

We provide no tax gross-ups on any perquisites. Perquisite values are not considered for purposes of determining any AIP award, retirement or severance benefit or any other benefit payment.

 

 

 

62    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Additional Information about Our Compensation Practices

 

  

LOGO

 

 

Additional Information about Our

Compensation Practices

Deductibility of Performance-Based Compensation

We believe that tax deductibility of compensation is important to providing compensation that is in the best interest of the company and its shareowners. For example, our performance-based compensation, including our AIP awards and Financial Goal RSUs, typically is structured in a manner intended to preserve tax deductibility including under Code Section 162(m). The fiscal 2016 recognition award will not be deductible for Messrs. Grant and Begemann. While we believe preserving tax deductibility is an important objective, the people and compensation committee reserves the flexibility to approve compensation arrangements that are not fully tax deductible, taking into account the primary objective of the specific program.

Recoupment (Clawback) Policy

To further align management’s interests with the interests of shareowners and support good governance practices, our board has a recoupment policy applicable to AIP awards, Financial Goal RSUs and other performance-based compensation to our proxy officers and other executives. If we are required to prepare an accounting restatement due to material noncompliance with a financial reporting requirement under the securities laws as a result of misconduct or an error, then our independent directors may take action to recoup the amount by which the award exceeded the payment that would have been made based on the restated financial results. Our right of recoupment expires unless demand is made within three years following payment of the award, and does not apply to stock options, restricted stock or other securities that do not have specific performance-vesting criteria.

Stock Ownership Requirements

We have rigorous stock ownership requirements for our key management employees, including our proxy officers, to align their interests with those of our shareowners. Requirements applicable during fiscal 2016 were expressed as a fixed number of shares calculated at September 1, 2013 pursuant to an established formula. The number of shares required to be held by management employees was recalibrated at the beginning of fiscal 2017.

Shares may be counted toward the policy’s ownership requirements whether held directly or through a spouse, retirement plan or retirement account. However, the following forms of shares will not be counted toward the policy’s ownership requirements:

 

n   stock options,

 

n   unvested restricted stock and restricted stock units, and

 

n   performance-RSUs for which performance has not yet been determined.

Until the individual meets the stock ownership requirement, he or she must retain 25% of the pre-tax number of shares received upon exercise of a stock option, vesting of restricted stock or settlement of RSUs or other equity-based award. By the end of fiscal 2016, each proxy officer had met his stock ownership requirement.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    63


Table of Contents

 

Compensation Discussion and Analysis

Additional Information about Our Compensation Practices

 

 

The information in the chart below includes stock ownership information with respect to our proxy officers:

 

 

 

Proxy Officer Stock Ownership and Requirements (as determined 8/31/16)

  
 

 

CEO

  

 

Other Proxy Officers (average)

  
 

LOGO

 

  

LOGO

 

  

Prohibition on Hedging, Pledging and Derivative Trading

We prohibit hedging and other derivative transactions in our company stock by officers, directors and their immediate family members. Specifically, they may not:

 

n   trade in any puts, calls, covered calls or other derivative products involving company securities;

 

n   engage in any hedging or monetization transactions of company securities; or

 

n   hold company securities in a margin account or pledge company securities as collateral for a loan; however, we do permit our officers to effect a cashless exercise of stock options granted by our company provided that they make their own arrangements.

 

 

64    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Summary of Fiscal 2016 Proxy Officer Performance and Compensation

 

  

LOGO

 

 

Summary of Fiscal 2016 Proxy Officer Performance and Compensation

Each year, our people and compensation committee conducts a thorough review of our CEO’s performance in private session. Our CEO provides the committee with an assessment of performance for each of the proxy officers. The assessment of individual performance takes into account a number of quantitative and qualitative factors such as attainment of key strategic goals and objectives, specific revenue and earnings goals for each business, successful acquisitions/divestitures and integration efforts, as well as the financial performance and overall company performance as described in the Executive Summary. After assessing performance, the committee determines the proxy officer’s fiscal year AIP award or, for fiscal 2016, recognition award.

 

For fiscal 2016, the committee took note of the extraordinary efforts on the part of our proxy officers and other executives in negotiating the merger agreement with Bayer while simultaneously remaining focused on executing our business strategy and driving the company forward in a challenging agricultural and general business environment.

The information below highlights the additional individual accomplishments of each proxy officer in fiscal 2016.

Proxy Officer Performance and Fiscal 2016 Compensation

Hugh Grant, Chairman and Chief Executive Officer

 

 

 

 

LOGO

     

Responsibilities: Accountable to the board of directors, general and active management and supervision of the company’s business

 

2016 Accomplishments and Performance

     

Mr. Grant’s strong focused leadership of our executives and the entire organization:

 

n  Led our company through significant global and industry-wide challenges, including weakening foreign currencies and pricing declines in our glyphosate-based herbicides, which resulted in lower performance on key financial metrics compared to prior year, while generating significant free cash flow and returning $13 billion to our shareowners through share repurchases and dividends over the last three years

 

n  Maintained a long-term focus for our company by advancing more than 20 projects in our R&D pipeline, enhancing partnerships and collaborations, executing licensing and intellectual property strategies and investing in complementary crop protection products positioning us for future growth

 

n  Led our business leads to achieve record-setting adoption of our Intacta RR2 PRO soybean product in South America and corn volume in the U.S., an increase in global branded corn volume, strong adoption of our FieldView platform, and establishment of our digital agriculture solutions as a standard for growers, positioning us for future growth

 

n  Drove the announcement of our industry-leading plans to make our operations carbon neutral by 2021, and engaged with a broad range of stakeholders as part of our work to meet our sustainability goals

 

n  Drove enhancement of our programs to retain, develop and motivate a talented and diverse workforce to address potential distractions from our challenging business environment, achieving strong employee engagement ratings

       

Fiscal 2016 Compensation

         

Base Pay                           

 

 

$     1.7M

 

     
AIP Award        
Target Opportunity                  $     2.8M      

Amount Received                

 

 

$           0

 

     
Long-term incentives (LTI)        
Value*:                               $   10.8M      
Stock Options   177,360      

Financial Goal RSUs*

  47,296      

Recognition Award

  $     0.6M      
       
       
       
       
       

Pierre C. Courduroux, Senior Vice President and Chief Financial Officer

 

 

 

LOGO

     

Responsibilities: Leads finance organization

 

2016 Accomplishments and Performance

 
     

 

n  Delivered significant financial benefits by controlling expenditures and efficiently managing corporate transactions, tax risks, receivables programs, share repurchases and investments

 

n  Executed a comprehensive reassessment of marketing programs and pricing models, and developed tools and metrics to improve market funding programs and pricing decisions

 

 

n  Accelerated changes in corporate structure and integration, and defined and implemented plans for our overseas organizations to improve the quality and cost of corporate services

 

n  Implemented transition plans for the senior leadership of the finance organization to contribute to improved diversity

       
       
       

 

Fiscal 2016 Compensation

 

         

Base Pay                          

 

 

$   0.6M

 

     
AIP Award        
Target Opportunity                  $   0.5M      

Amount Received                

 

 

$   0.1M

 

     
Long-term incentives (LTI)        
Value*:                               $   2.5M      
Stock Options   41,060      

Financial Goal RSUs*

 

  10,949      

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    65


Table of Contents

 

Compensation Discussion and Analysis

Summary of Fiscal 2016 Proxy Officer Performance and Compensation

 

 

Brett D. Begemann, President and Chief Operating Officer

 

 

 

 

LOGO

     

Responsibilities: Commercial responsibility for our global business and supply chain

 

2016 Accomplishments and Performance

 

     

  Achieved above-budget increase in penetration of Intacta RR2 PRO soybean product and delivered record U.S. corn seed volume despite industry challenges and competitive pressure

 

  Implemented critical cost-saving plans resulting in reduced general and administrative expenditures from prior year, including the effect of inflation

 

  Led efforts to successfully accelerate our digital agriculture solutions business, with a significant increase in the adoption of FieldView platform, with 95 million acres enrolled

 

  Designed and staffed new organizations across our organization to support transformation efforts, providing development opportunities for key leaders and retaining key talent, and created greater inclusion awareness and behavior among leadership

       
       

Fiscal 2016 Compensation

     

Base Pay

  $   0.9M      

AIP Award

       

Target Opportunity

 

$   1.0M

     

Amount Received

 

$         0

     

Long-term incentives (LTI)

     

Value*:

 

$   5.0M

     

Stock Options

 

82,120

     

Financial Goal RSUs*

 

21,897

     

Recognition Award

 

  $   0.2M      

Michael J. Frank, Senior Vice President and Chief Commercial Officer

 

 

 

 

LOGO

     

Responsibilities: Leads the advancement of the company’s global commercial row crop, crop protection and vegetable business

 

2016 Accomplishments and Performance

 

     

  Increased global corn seed volume, and achieved record corn seed volume in the U.S., despite industry challenges and competitive pressure

 

  Implemented key product launches and market penetration by achieving above-budget penetration of Intacta RR2 PRO soybean product and substantial trial use of a key soy product despite unexpected delays in obtaining regulatory approvals

 

  Delivered significant growth and increased profitability in our vegetables business by driving disciplined expenditure control and obsolescence management, exceeding both internal expectations and previous year’s performance

 

  Established centers of excellence for key areas within the global commercial organization to improve customer experience, loyalty and ratings, and created significant development opportunities for female employees within the organization by revising leadership succession plans

       

Fiscal 2016 Compensation

     

Base Pay

  $   0.5M      

AIP Award

       

Target Opportunity

 

$   0.3M

     

Amount Received

 

$         0

     

Long-term incentives (LTI)

     

Value*:

 

$   1.0M

     

Stock Options

 

16,430

     

Financial Goal RSUs*

 

4,380

     

Retention RSUs

     

Value*:

 

$   2.2M

     

Retention RSUs

 

25,730

     

Recognition Award

 

  $   0.1M      

Steven C. Mizell, Executive Vice President and Chief Human Resources Officer

 

 

 

 

LOGO

     

Responsibilities: Global lead for the company’s human resources functions

 

2016 Accomplishments and Performance

 

     

  Maintained high levels of company-wide employee engagement despite significant industry challenge, organizational change and ambiguity, as evidenced by strong employee engagement ratings

 

  Developed the human resources organization by providing significant development opportunities, focusing on competency development, and enhanced talent pipeline with critical new hires

 

  Enhanced our culture by creating a global inclusion strategy with focus on unconscious bias, hiring and administrative practices, inclusion in our leadership programs and launch of an inclusion index to enhance transparency

 

  Redefined leadership competencies and built functional competency models to ensure critical talent to execute on long-range plans

       
       

Fiscal 2016 Compensation

     

Base Pay

  $   0.6M      

AIP Award

       

Target Opportunity

 

$   0.5M

     

Amount Received

 

$         0

     

Long-term incentives (LTI)

     

Value*:

 

$   1.3M

     

Stock Options

 

21,350

     

Financial Goal RSUs*

 

5,694

     

Retention RSUs

     

Value*:

 

$   3.2M

     

Retention RSUs

 

37,340

     

Recognition Award

 

  $   0.1M      

 

* Amounts reflect target awards. Actual amounts received will depend upon performance and company stock price.

 

 

66    MONSANTO COMPANY 2016 PROXY STATEMENT

 


Table of Contents

 

Compensation Discussion and Analysis

Caution Regarding Forward-Looking Statements

 

  

LOGO

 

 

Caution Regarding Forward-Looking Statements

 

In this proxy statement, and from time to time throughout the year, we share expectations for our company’s future performance. These forward-looking statements include statements about our business plans; the proposed transaction with Bayer Aktiengesellschaft (“Bayer”); the potential development, regulatory approval and public acceptance of our products; our expected financial performance, including sales performance, and the anticipated effect of our strategic actions; the anticipated benefits of recent acquisitions; the outcome of contingencies, such as litigation; domestic or international economic, political and market conditions; and other factors that could affect our future results of operations or financial position, including, without limitation, statements under the caption “Executive Compensation — Compensation Discussion and Analysis.” Any statements we make that are not matters of current reportage or historical fact should be considered forward-looking. Such statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” and similar expressions. By their nature, these types of statements are uncertain and are not guarantees of our future performance.

Since these statements are based on factors that involve risks and uncertainties, our company’s actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: risks related to the proposed transaction between the company and Bayer, including the risk that the company’s shareowners do not approve the transaction, the risk that the regulatory approvals required for the transaction may not be obtained on the anticipated terms or time frame or at all, the risk that the other conditions to the completion of the transaction may not be satisfied, the risk that disruptions or uncertainties related to the proposed transaction could adversely affect the company’s business, financial performance and/or relationships with third parties, and the risk that certain contractual restrictions during the pendency of the transaction could adversely affect the company’s ability to pursue business opportunities or strategic transactions; continued competition in seeds, traits and agricultural chemicals; the company’s exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public understanding and acceptance of our biotechnology and other agricultural products; the success of the company’s research and development activities; the outcomes of major lawsuits, including potential litigation related to the proposed transaction with Bayer; developments related to foreign currencies and economies; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company’s estimates related to distribution inventory levels; the recent increases in levels of indebtedness; continued availability of capital and financing and rating agency actions; the company’s ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters, accidents, and security breaches, including cybersecurity incidents, on the agriculture business or the company’s facilities; and other risks and factors described or referenced in Part I — Item 1A of our Report on Form 10-K for the fiscal year ended August 31, 2016.

Our forward-looking statements represent our estimates and expectations at the time that we make them. However, circumstances change constantly, often unpredictably, and many events beyond our control will determine whether our expectations will be realized. As a result, investors should not place undue reliance on these forward-looking statements. We disclaim any current intention or obligation to revise or update any forward-looking statements, or the factors that may affect their realization, whether in light of new information, future events or otherwise, and investors should not rely on us to do so.

 

 

 

MONSANTO COMPANY 2016 PROXY STATEMENT    67


Table of Contents

 

Executive Compensation

Executive Compensation Tables

 

 

Executive Compensation Tables

Summary Compensation Table

This table describes the total compensation paid to proxy officers for fiscal years 2016, 2015 and 2014, as required. The components of the total compensation are described in the footnotes below and in more detail in the tables and narratives that follow. For information on the role of each component within the total direct compensation package, see the description under Compensation Discussion and Analysis.

 

  Name and Principal Position

 

  

Year

 

    

Salary

($)

 

    

Bonus

($)1

 

    

Stock
Awards
($)2,3

 

    

Option
Awards
($)2

 

    

Non-Equity
Incentive Plan
Compensation
($)4

 

    

 

Change in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings

($)5

 

    

All Other
Compensation
($)6

 

    

Total

($)

 

 

  Hugh Grant

     2016         1,664,741         565,457         4,320,017         3,657,163                 1,135,360         498,246         11,840,984   

  Chairman of the Board

     2015         1,602,156                 3,920,044         3,172,805         1,883,228         747,348         603,255         11,928,836   

  and Chief Executive Officer

 

    

 

2014

 

  

 

    

 

1,506,269

 

  

 

    

 

 

  

 

    

 

3,520,012

 

  

 

    

 

3,008,440

 

  

 

    

 

3,902,775

 

  

 

    

 

1,006,203

 

  

 

    

 

492,784

 

  

 

    

 

13,436,483

 

  

 

  Pierre C. Courduroux

     2016         624,852                 1,000,082         846,657         99,878         268,292         61,584         2,901,346   

  Senior Vice President and

     2015         610,200                 940,016         760,938         342,720         158,792         106,341         2,919,007   

  Chief Financial Officer

 

    

 

2014

 

  

 

    

 

593,077

 

  

 

    

 

 

  

 

    

 

880,003

 

  

 

    

 

752,170

 

  

 

    

 

815,000

 

  

 

    

 

199,384

 

  

 

    

 

89,427

 

  

 

    

 

3,329,061

 

  

 

  Brett D. Begemann

     2016         944,708         200,000         2,000,072         1,693,314                 619,074         200,717         5,657,886   

  President

     2015         813,600                 1,200,066         971,322         571,200         303,954         164,754         4,024,896   

  and Chief Operating Officer

 

    

 

2014

 

  

 

    

 

761,404

 

  

 

    

 

 

  

 

    

 

1,200,062

 

  

 

    

 

1,025,775

 

  

 

    

 

1,355,000

 

  

 

    

 

492,261

 

  

 

    

 

131,314