DEF 14A 1 monsanto_def14a.htm DEFINITIVE PROXY STATEMENT
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 (Amendment No.            )
 
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[   ]   Soliciting Material Pursuant to §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)
 

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Notice of
Annual Meeting of
Shareowners and

2015

Proxy Statement

 

December 10, 2015

 

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.    
                 
            Act as Owners to   Create a Great
    Benefits    Respect   Achieve Results   Place to Work
                 
    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.   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.   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.   We will ensure diversity of people and thought; foster innovation, creativity and learning; practice inclusive teamwork; and reward and recognize our people.
 
   
     
    Monsanto Company
    800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Phone (314) 694-1000
www.monsanto.com
   
  December 10, 2015
   
  Dear Fellow Shareowners,
   
  On behalf of your board of directors, we are pleased to invite you to attend Monsanto Company’s 2016 Annual Meeting of Shareowners on Friday, January 29 at our global headquarters in St. Louis, 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 2015 and presents the matters for which we are seeking your vote at the 2016 meeting.
   
  Fiscal year 2015 was a challenging year for the entire agriculture industry but we continued to perform well despite this difficult environment — an achievement that reflects the strength of our core business, cost discipline and ability to deliver innovative solutions for farmers across crops and geographies.
   
  We have taken several key actions this year that highlight our ongoing commitment to strong governance standards. Following thoughtful discussions with shareowners, our board adopted proxy access in 2015, which provides eligible Monsanto shareowners a process for nominating director candidates to be included in the company’s proxy materials. We believe this action, which was carefully structured to serve the best interests of all shareowners, is responsive to the dialogue with our shareowners and supports shareowner value.
   
  Another important step we’ve taken is to add independent director Patricia Verduin, Ph.D., to our board of directors. Her experience will bring valuable insights to our business and support our strong commitments to innovation, transparency and the safety of our products. Our proxy statement includes more information about Dr. Verduin and our continuing directors, each of whom is nominated for election at the 2016 annual meeting, as we’ve transitioned to a non-classified board structure.
   
  We also would like to thank Gwendolyn King for her more than 14 years of outstanding service to our company and board of directors, as she is set to retire following our 2016 annual meeting. Gwen has provided strong leadership and wise counsel throughout her tenure and through significant growth and change in our company. She will leave a lasting imprint on our organization.
   
  On behalf of the entire board of directors and the more than 22,000 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,
   
   
  Hugh Grant
  Chairman of the Board of Directors
and Chief Executive Officer
 

 

 

 

 

 

Monsanto Company

800 North Lindbergh Boulevard
St. Louis, Missouri 63167
Phone (314) 694-1000
www.monsanto.com

 
   
 

Notice of Annual Meeting of Shareowners

       
  Date:   Friday, January 29, 2016
       
  Time:   1:30 p.m. Central Standard Time
       
  Place:   “A” Building
      Creve Coeur Campus
      800 North Lindbergh Boulevard
      St. Louis County, Missouri 63167
       
  Record Date:   December 1, 2015
       
 

Meeting Agenda:

 

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

 

n  Ratify our independent registered public accounting firm for fiscal 2016

 

n  Approve, by non-binding vote, executive compensation

 

n  Approve Code Section 162(m) annual incentive plan

 

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

 

n  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:
               
 

By Telephone

In the U.S. or Canada you can vote your shares by calling 1-800-690-6903.

 

By Internet

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.

 

By Mail

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.

 

In Person

You can vote in person at the annual meeting.

 

  Live Audio Webcast of Annual Meeting:  
  You can access the webcast on our investor website at: www.monsanto.com/investors/.  

 

By Order of the Board of Directors,

 

Monsanto Company  

 

 

David F. Snively  

Secretary

St. Louis, Missouri

December 10, 2015

 

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 10, 2015. This includes instructions on how to access these materials (including our proxy statement and 2015 annual report to shareowners) online.

                 

MONSANTO COMPANY 2015 PROXY STATEMENT
 

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:   1:30 p.m., CST, January 29, 2016
     
Place:   “A” Building
    Creve Coeur Campus
    800 North Lindbergh Boulevard
    St. Louis County, Missouri 63167
     
Record Date:   Shareowners as of the close of business on December 1, 2015
     
Admission/Audio Webcast:   Please follow the instructions contained in “Questions and Answers About the Annual Meeting and Voting” on page 95

 

On December 10, 2015, 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 2015 Annual Report.

 

Shareowner Voting Matters

 

      Board’s Voting   Page
Proposal   Recommendation   Reference
1.  Election of Directors   FOR EACH NOMINEE   12-20
2.  Ratification of Independent Registered Public Accounting Firm   FOR   42-43
3.  Advisory Vote Approving Executive Compensation   FOR   44
4.  Code Section 162(m) Annual Incentive Plan Approval   FOR   84-85
5.  Shareowner Proposal: Glyphosate Report   AGAINST   86-88
6.  Shareowner Proposal: Lobbying Report   AGAINST   89-91
7.  Shareowner Proposal: Independent Board Chairman   AGAINST   92-94

 

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 2015, we have taken the following new governance actions:

 

n adopted a proxy access bylaw amendment;
n added Patricia Verduin, Ph.D., Vice President and Chief Technology Officer of Colgate-Palmolive Company, to our board of directors; and
n enhanced public disclosures regarding political spending and lobbying activities.

 

The Corporate Governance and Ethics section beginning on page 21 describes our governance framework, which includes the following:

 

Board and Governance Information       Board and Governance Information    
Size of Board   14   Board Orientation and Continuing Education Program   Yes
Number of Independent Directors   13   Succession Planning and Implementation Process   Yes
Lead Independent Director   Yes   Board Risk Oversight   Yes
Separate Chair and CEO   No   Comprehensive Sustainability Program Reporting as GRI G4 Core   Yes
Board Meetings Held in Fiscal 2015   6   Codes of Conduct for Directors, Officers and Employees   Yes
Mandatory Retirement Age   75   Stock Ownership Guidelines for Directors and Executive Officers   Yes
Average Age of Directors   61   Anti-Hedging and Pledging Policies   Yes
Majority Voting in Director Elections   Yes   Executive Compensation Pay for Performance Metrics   Yes
Annual Board and Committee Evaluations   Yes   Recoupment Policy   Yes
Independent Directors Meet Without Management Present   Yes   Long-Standing Shareowner Outreach Program   Yes

 

6 MONSANTO COMPANY 2015 PROXY STATEMENT
 

 

Our Director Nominees

 

You are being asked to vote on the election of the 13 directors listed below, out of our total of 14 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.

 

    Nominee Committee Memberships
Name
Current Position
Age Director Since Independent Executive Audit & Finance Nominating &
Corporate
Governance
People &
Compensation
Restricted
Stock Grant
Science & Technology Sustainability
& Corporate
Responsibility
Gregory H. Boyce
Executive Chairman, Peabody Energy Corporation
61 2013 YES          
David L. Chicoine, Ph.D.
President, South Dakota State University
68 2009 YES          
Janice L. Fields
Former President, McDonald’s USA, LLC
60 2008 YES        
Hugh Grant
Chairman of the Board & Chief Executive Officer, Monsanto Company
57 2003 NO            
Arthur H. Harper
Managing Partner, GenNx360 Capital Partners
59 2006 YES          
Laura K. Ipsen
Senior Vice President & General Manager,
Global Industry Solutions Group, Oracle Corporation
51 2010 YES          
Marcos M. Lutz
Chief Executive Officer, Cosan Limited
45 2014 YES          
C. Steven McMillan
Retired Chairman & Chief Executive Officer, Sara Lee Corporation
69 2000 YES      
Jon R. Moeller
Chief Financial Officer, The Procter & Gamble Company
51 2011 YES          
William U. Parfet
Chairman & Chief Executive Officer, MPI Research, Inc.
69 2000 YES        
George H. Poste, Ph.D., D.V.M.
Chief Executive, Health Technology Networks & Chief Scientist,
Adaptive Systems Initiative, Arizona State University
71 2003 YES          
Robert J. Stevens – Lead Director
Retired Chairman & Chief Executive Officer,
Lockheed Martin Corporation
64 2002 YES        
Patricia Verduin, Ph.D.
Chief Technology Officer, Colgate-Palmolive Company
56 2015 YES          

 

= Chair

 

Corporate Governance Highlight

 

Proxy Access

 

In 2015, our board of directors adopted proxy access amendments to our bylaws, enabling 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 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

 

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

 

the individual or group may submit
director nominees

20%

for up to 20% of the board

 

3

 

nominees who satisfy the
requirements specified by the bylaws
are included in the proxy statement

 

 

 

MONSANTO COMPANY 2015 PROXY STATEMENT 7
 

Proxy Summary

Our 2015 Performance & Executive Compensation Highlights

 

Our 2015 Performance Highlights

 

Our company delivered a year of solid performance in fiscal 2015, amidst continuing industry headwinds. Our seeds and genomics business was again the key factor in our results, driven by our core seeds and traits business, licensing agreements and our disciplined approach to managing expenses.

 

$5.73

Ongoing EPS

(increased 10%)

 

$2.09B

Free Cash Flow

(increased 217%)

 

$15.0B

Net Sales

(decreased 5.5%)

 

22.6%

Adjusted ROC

(3-year average 22.8%)

 

Ongoing EPS, free cash flow and adjusted ROC are defined on page 47. 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 five times since the end of fiscal 2011, for a cumulative increase of almost 94 percent since 2011. In third quarter 2015, we completed a $6 billion accelerated share repurchase program.

 

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

 

 

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:

 

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 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;
   
n promote balanced performance and discourage improper risk taking by avoiding reliance on any one metric or short-term performance goal; and
   
n reward for future sustained performance rather than past performance.

 

8 MONSANTO COMPANY 2015 PROXY STATEMENT
 

 

OUR COMPENSATION PAY MIX

 

At risk pay incentives focus our management on achieving Monsanto’s key financial, strategic and business goals. For fiscal 2015, on average more than 81% 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 2015 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”)).

 

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

 
       
AIP Performance Measure & Rationale Financial Goal RSUs  
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 and 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  
   
  
   

 

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 8/31/15)

 

 

MONSANTO COMPANY 2015 PROXY STATEMENT 9
 

 

10 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Table of Contents
to the Proxy Statement

 

PROXY SUMMARY   6
PROXY ITEM NO. 1: ELECTION OF DIRECTORS   12
Director Nominees and Retiring Director   12
CORPORATE GOVERNANCE AND ETHICS   21
Our Corporate Governance Framework   22
Our Board of Directors   23
How We Select Our Director Nominees   23
Board Refreshment   23
Shareowner Nominations of Director Candidates   24
Desirable Characteristics of Directors   24
Director Independence   25
Board Leadership Structure   25
Role of the Lead Director   26
Board Policies and Practices   26
Compensation Committee Interlocks and Insider Participation   27
Board Meetings, Committees and Membership   27
Board Role in Risk Oversight and Assessment   29
Shareowner Communication with our Board of Directors, Lead Independent Director and Monsanto   31
Policies and Practices That Guide and Govern Our Actions   32
Related Person Transactions Policy   33
Sustainability and Corporate Responsibility   34
COMPENSATION OF DIRECTORS   36
Director Compensation Table   38
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS   39
Section 16(a) Beneficial Ownership Reporting Compliance   40
REPORT OF THE AUDIT AND FINANCE COMMITTEE   41
PROXY ITEM NO. 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   42
PROXY ITEM NO. 3: ADVISORY (NON-BINDING) VOTE APPROVING EXECUTIVE COMPENSATION   44
REPORT OF THE PEOPLE AND COMPENSATION COMMITTEE   45
EXECUTIVE COMPENSATION (see detailed table of contents for this section on page 46)   46
Compensation Discussion and Analysis   46
Executive Compensation Tables   69
PROXY ITEM NO. 4: APPROVAL OF PERFORMANCE GOALS UNDER THE MONSANTO COMPANY CODE SECTION 162(m) ANNUAL INCENTIVE PLAN FOR COVERED EXECUTIVES   84
PROXY ITEM NO. 5: SHAREOWNER PROPOSAL: GLYPHOSATE REPORT   86
PROXY ITEM NO. 6: SHAREOWNER PROPOSAL: LOBBYING REPORT   89
PROXY ITEM NO. 7: SHAREOWNER PROPOSAL: INDEPENDENT BOARD CHAIRMAN   92
ANNUAL MEETING INFORMATION   95
Questions and Answers about the Annual Meeting and Voting   95
Shareowner Proposals and Director Nominations for 2017 Annual Meeting   98
Other Matters   99
Map and Directions to Shareowners Meeting   100
APPENDIX A Reconciliation of Non-GAAP Financial Measures   A-1
FOR ADDITIONAL INFORMATION Website Links Inside Back Cover

 

MONSANTO COMPANY 2015 PROXY STATEMENT 11
 

Proxy Item No. 1:
Election of Directors

 

The shareowners are being asked to elect each of Mr. Boyce, Dr. Chicoine, Ms. Fields, Mr. Grant, Mr. Harper, Ms. Ipsen, Mr. Lutz, Mr. McMillan, Mr. Moeller, Mr. Parfet, Dr. Poste, Mr. Stevens and Dr. Verduin to terms ending with the annual meeting to be held in 2017, 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 and Retiring Director

 

The ages, principal occupations, directorships held and other information about our nominees and directors are shown below as of December 1, 2015.

 

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

 

Nominees for Director (Current Terms Expiring at the 2016 Annual Meeting)

 

Principal Occupation:

Executive Chairman, Peabody Energy Corporation (a leading company in coal, clean coal solutions and sustainable mining), since 2015 (retiring effective December 31, 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. Public Company Directorships in the Last Five Years: Peabody Energy Corporation, Marathon Oil Company and Newmont Mining Corporation.

 

Gregory H. Boyce
First Became Director:
April 2013

Age: 61

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, which is valuable to our sustainability and corporate responsibility committee, and knowledge of commodity, energy and other technology matters that are tangential to our business and important to his service 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.

 

 

12 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
   

 

Principal Occupation:

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

 

David L. Chicoine, Ph.D.
First Became Director:
April 2009

Age: 68

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 include executive management, public policy development and research support, including technology commercialization. This experience has 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.

 

 

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: Chicos FAS Inc.

 

Janice L. Fields
First Became Director:
April 2008

Age: 60

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. 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.

 

 

MONSANTO COMPANY 2015 PROXY STATEMENT 13
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
 

 

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: 57

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.

 

 

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).

 

Arthur H. Harper
First Became Director:
October 2006

Age: 59

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.

 

 

14 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
   

 

Principal Occupation:

Senior Vice President & General Manager, Global Industry Solutions Group, Oracle Corporation, a U.S.-based multi-national computer technology corporation, since September 2014; Corporate Vice President, Worldwide Public Sector of Microsoft Corp., 2012-2014; Senior Vice President and General Manager, Connected Energy Networks, Cisco Systems, Inc., 2010-2012; Senior Vice President and General Manager, Smart Grid, Cisco, 2009-2010; Senior Vice President, Global Policy and Government Affairs, Cisco, 2007-2009; Vice President, Global Policy and Government Affairs, Cisco, 2001-2007.

 

Laura K. Ipsen
First Became Director:
December 2010

Age: 51

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.

 

 

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. (CZZ – NYSE).

 

Marcos M. Lutz
First Became Director:
May 2014

Age: 45

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.

 

 

MONSANTO COMPANY 2015 PROXY STATEMENT 15
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
 

 

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: 69

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 audit and finance committee and our nominating and corporate governance committee and as chair of our people and compensation committee and restricted stock grant committee.

 

 

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: 51

Qualifications:

Mr. Moeller has substantial finance and management expertise developed through his 27 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.

 

 

16 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
   

 

Principal Occupation:

Chairman and Chief Executive Officer of MPI Research, Inc., an early stage drug development contract research laboratory, since 1999; President of MPI Research, Inc. 1999 to 2015; Co-Chairman of MPI Research, LLC, 1995-1999. Public Company Directorships in the Last Five Years: Stryker Corporation; Taubman Centers, Inc.

 

William U. Parfet
First Became Director:
June 2000

Age: 69

Qualifications:

Mr. Parfet has served as an executive or director for multiple companies during his career, with broad experience in global business management and finance. As president of a major pharmaceutical company, he gained expertise in the areas of strategic planning, technology, marketing, and global business management, and he is knowledgeable about the chemical, pharmaceutical, food and agricultural industries. In particular, Mr. Parfet’s past roles as CFO, controller, and treasurer of a multi-national corporation, service on the audit committees for other public companies, and past service as a trustee of the Financial Accounting Foundation (which oversees FASB and GASB) and Chairman of Financial Executives International, enable him to utilize his expertise in his role as chair of our audit and finance committee. In addition, his service on the governance and compensation committees of other public companies, including serving as non-executive chairman and lead independent director, enables Mr. Parfet to provide insight and value to our governance and compliance processes.

 

 

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.; Orchid Cellmark, Inc. (former) (a wholly-owned subsidiary of LabCorp since December 2011).

 

George H. Poste,
Ph.D., D.V.M.

First Became Director:
February 2003

Age: 71

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 2015 PROXY STATEMENT 17
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
 

 

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: 64

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.

 

 

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: 56

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.

 

 

18 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
   

 

Retiring Director

 

Principal Occupation:

President, Podium Prose, a speaker’s bureau and speechwriting service founded in 2000; Founding Partner, The Directors’ Council, a corporate board search firm, October 2003-May 2005; Senior Vice President, Corporate and Public Affairs, PECO Energy Company (now Exelon), a diversified utility company, 1992-1998; Commissioner, Social Security Administration, 1989-1992. Public Company Directorships in the Last Five Years: Lockheed Martin Corporation; Marsh & McLennan Companies, Inc. (former).

 

Gwendolyn S. King
First Became Director:
February 2001

Age: 75

Qualifications:

Ms. King is an expert in external communications and has extensive experience related to public policy, government relations and governance and has had significant experience in stakeholder engagement. Ms. King’s senior advisory roles in two previous White House administrations and her service as a senior corporate affairs officer for a public utility have provided her expertise in matters relating to public policy, regulatory oversight and government relations. This experience and knowledge has enabled her to provide valuable perspectives to our management and as chair of our sustainability and corporate responsibility committee. In addition, Ms. King’s service on the board of the National Association of Corporate Directors, an advisory group of nominating and governance committee chairs, and the ethics, governance and executive committees of public companies on whose boards she has served, have provided her with significant corporate governance expertise and compliance experience, which have enhanced her ability to provide valuable contributions as a director of our board.

 

 

Ms. King is retiring from our board of directors at our 2016 Annual Meeting. Monsanto Company extends its sincere appreciation to Ms. King for the valuable contributions she has provided to our company during her fourteen years of service.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 19
 
Proxy Item No. 1: Election of Directors
Director Nominees and Retiring Director
 

 

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.

 

Competency/Attribute Boyce Chicoine Fields Grant Harper Ipsen King Lutz McMillan Moeller Parfet 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 61 68 60 57 59 51 75 45 69 51 69 71 64 56
Tenure 2 6 7 12 9 5 14 1 15 4 15 12 13 <1
Other Public Company Boards 3 0 1 1 0 0 1 1 0 0 2 1 1 0

 

   
Average Age = 61 years   Average Tenure = 8.2 years   Average = < 1 Other Board
Age   Tenure   Other Public Company Boards

 

20 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Corporate Governance and Ethics

 

 

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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 21
 
Corporate Governance and Ethics
Our Corporate Governance Framework
 

 

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 13 out of 14 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 14
    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 seven board committees – executive, audit and finance, nominating and corporate governance, people and compensation, restricted stock grant, 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 Our directors are 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   n We use majority voting in uncontested director elections
Shareowners   n As of our annual meeting, we will 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 matters and social responsibility and engages directly with stakeholders

 

22 MONSANTO COMPANY 2015 PROXY STATEMENT
 
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:
   
n overseeing the conduct of our business, assessing our business and other enterprise risks;
   
n reviewing and approving our key financial objectives, strategic and operating plans, and other significant actions;
   
n overseeing our processes for maintaining the integrity of our financial statements and other public disclosures, and our compliance with law and ethics;
   
n evaluating CEO and senior management performance and determining executive compensation;
   
n planning for CEO succession and monitoring management’s succession planning for other key executive officers; and
   
n 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 Patricia Verduin, Ph.D. 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, continuous 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, in 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 continuously 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.      

 

MONSANTO COMPANY 2015 PROXY STATEMENT 23
 
Corporate Governance and Ethics
Our Board of Directors
 

 

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. Our board adopted the amendments 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 2017 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.

 

24 MONSANTO COMPANY 2015 PROXY STATEMENT
 
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: Gregory H. Boyce, David L. Chicoine, Janice L. Fields, Arthur H. Harper, Laura K. Ipsen, Gwendolyn S. King, Marcos M. Lutz, C. Steven McMillan, Jon R. Moeller, William U. Parfet, George H. Poste, Robert J. Stevens and Patricia Verduin. Accordingly, 13 of our 14 directors are independent, and each of the following committees of the board is composed solely of independent directors:

 

n the audit and finance committee;
   
n the nominating and corporate governance committee;
   
n the people and compensation committee;
   
n the restricted stock grant committee;
   
n the science and technology committee; and
   
n 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.

 

Highly Independent Board

12 of our 13 nominees are Independent.


 

 

Executive Sessions of Independent Directors

 

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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 25
 
Corporate Governance and Ethics
Our Board of Directors
 

 

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.

 

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 31 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 14 members (decreasing to 13 upon Ms. King’s retirement at the annual meeting). As of our 2016 annual meeting, our board will be fully declassified.

 

26 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Corporate Governance and Ethics
Our Board of Directors

 

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.

 

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 and the restricted stock grant 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), Harper and Parfet, Ms. Fields and Ms. King) 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 2015, our board of directors met six times and acted once 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. McMillan.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 27
 
Corporate Governance and Ethics
Our Board of Directors
 

 

Our board of directors has seven committees as outlined below.

 

BOARD COMMITTEE MEMBERSHIP

 

The following chart shows the fiscal 2015 membership and chairpersons of our board committees, committee meetings held and actions by written consent taken, and committee member attendance.

 

    Number of
Meetings Held
Actions by
Written Consent
Boyce Chicoine Fields Grant Harper Ipsen King Lutz McMillan Moeller Parfet Poste Stevens
Executive   1 0           1       1   1
Audit & Finance   11 0         10       11 11   11
Nominating & Corporate Governance   5 0     5       3   5 5    
People & Compensation   6 1     6   5   5     6    
Restricted Stock Grant   0 10                        
Science & Technology   5 0 5 5       5   5        
Sustainability & Corporate Responsibility   5 0 5 5 5     5 5       5  

 

Chairperson

 

BOARD COMMITTEES

 

The following chart shows the membership and chairpersons of our board committees and their roles and responsibilities.

 

Executive Committee

Members:
Messrs. Grant (Chair),
Parfet and Stevens and Ms. King

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. Parfet (Chair),
Harper, McMillan, Moeller 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. Parfet, 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, Ms. Fields and Ms. King

 

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.


 

 

28 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Corporate Governance and Ethics
Our Board of Directors

 

People and Compensation Committee

 

Members:
Messrs. McMillan (Chair),
Harper and Parfet, Ms. Fields and Ms. King

 

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.


 

 

Restricted Stock Grant Committee

 

Members:
Mr. McMillan (Chair)

n Approves special awards of restricted stock units or restricted stock to non-officer employees.


 

 

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. King (Chair),
Messrs. Boyce and Lutz,
Drs. Chicoine, Poste and Verduin,
Ms. Fields 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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 29
 
Corporate Governance and Ethics
Our Board of Directors

 

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.

 

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
Restricted Stock Grant Committee Risk related to restricted stock awards
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. (“Cook & Co.”), and management provide ongoing information regarding compensation factors that could mitigate or encourage excessive risk-taking.

 

30  MONSANTO COMPANY 2015 PROXY STATEMENT
 

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

 

In addition, in August 2015, management provided a risk assessment of compensation programs to the committee for its review and consideration, and the committee again solicited input from Cook & Co. 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 64; 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:

 

     
 

INTERNET

Go to our website at www.monsanto.com/whoweare/pages/contactourdirectors.aspx

 

MAIL

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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 31
 
Corporate Governance and Ethics
Policies and Practices That Guide and Govern Our Actions

 

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 the many 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.

 

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 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.

 

32 MONSANTO COMPANY 2015 PROXY STATEMENT
 
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

 

Our Human Rights Policy was 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.

 

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 48.

 

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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 33
 
Corporate Governance and Ethics
Policies and Practices That Guide and Govern Our Actions

 

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, is a brother-in-law to our executive officer Kerry Preete. Mr. Sherk’s compensation has been established in accordance with our ordinary employment and compensation practices applicable to employees with equivalent qualifications, experience and responsibilities and he is eligible to participate in our employee benefit programs on the same basis as other similarly situated employees. Further, a procedure has been put in place under which Mr. Begemann, our president and COO, has been involved in approving any special pay actions and awards for Mr. Sherk. During fiscal 2015, Mr. Sherk received annual base pay of approximately $114,531. He also received an annual incentive award for fiscal 2015 of approximately $15,983. These amounts are based on a September 1, 2015 exchange rate. In October 2015, Mr. Sherk was granted 280 stock options and 74 restricted stock units under our long-term incentive plan.

 

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.

 

Sustainability and Corporate Responsibility

 

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 May 2015, we published our first full sustainability report that adhered to the Core option of the Global Reporting Initiative (“GRI”) G4 Sustainability Reporting Guidelines, covering primarily fiscal 2014 data and activities. Our 2014 Report is available at http://www.monsanto.com/whoweare/pages/corporate-sustainability-report.aspx. We plan to issue another GRI G4 Core report early in 2016, which will focus mainly on fiscal 2015 data and activities.

 

HIGHLIGHTS OF OUR CURRENT SUSTAINABILITY COMMITMENTS AND 2014 REPORT:
FROM THE INSIDE OUT

 

         

Water

n We pledged to increase irrigation water application efficiency across our global seed production operations by 25% by 2020.

n As the first agriculture company to sign onto the World Business Council for Sustainable Development WASH Pledge, Monsanto reinforced and formalized our longstanding commitment to ensuring safe drinking water and adequate sanitation for employees.

 

Climate

n We pledged to:

reduce our operational greenhouse gas emissions intensity in our crop protection operations by 22% by 2020; and

help farmers use nutrients more efficiently and curb greenhouse gas emissions on 1 million acres in the United States by 2020.

 

Biodiversity

n We committed to help support and fund a broad public-private partnership to expand and improve more than 10 million acres of monarch butterfly/ pollinator habitats on public and private lands in overwintering sites and throughout the monarch breeding range working with the Keystone Policy Center and its Monarch Collaborative and the National Fish and Wildlife Foundation Monarch Butterfly Conservation Fund.


 

34 MONSANTO COMPANY 2015 PROXY STATEMENT
 
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

 

Science and Technology

   

World’s Most Admired Companies

FORTUNE Magazine 2014, 2015

 

Highest Rated CEOs

Glassdoor 2015

 

40 Best Companies for Leaders

Chief Executive Magazine 2012, 2013

 

World’s Most Innovative Companies

 

50 Smartest Companies

MIT Technology Review 2014

 

Top Science Employers

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

 

Top 100 Global Innovators

Thomson Reuters 2012

 

Top 100 Employers in IT

 

Ranked

52

out of 500
U.S. companies in
NEWSWEEK’S
2015 Green Rankings

 

FORBES 2013

 

Computerworld 2009, 2011, 2012, 2013, 2015

   

World’s Best Multinational Workplaces

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

       
   

Diversity

   

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

 

Top 50 Companies for Diversity

Diversity Inc. 2009, 2010, 2011, 2012, 2013, 2014, 2015

 

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

 

Top Diversity Employer

   
   

Black EOE Journal 2015

 

Top 50 Employers (of minority engineers)

Minority Engineer 2012, 2013

   

 

MONSANTO COMPANY 2015 PROXY STATEMENT 35
 

Compensation of Directors

 

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 2015 Compensation Program

 

Before the start of fiscal 2015, our people and compensation committee considered the design of our director compensation program. The committee reviewed information and recommendations from management, using data from Towers Watson & Co. 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 55. The committee also considered input from Cook & Co. After reviewing the information, the committee determined that the plan design continued to align with market trends but that the amount of our directors’ annual base retainer was below the median range of our comparator group. The committee considered and recommended to our board of directors that the annual base retainer be increased from $235,000 to $245,000. Our board of directors approved the recommended increases, effective September 1, 2014. The committee determined to recommend no other changes to the director compensation program.

 

Summary of Directors’ Compensation Plan for Fiscal 2015:

 

    Compensation Type Amount     Form of Payment
Annual
Retainer
(Components) 
  Base retainer $245,000   n 50% – Deferred stock:
Additional retainer amount for service as lead director $ 50,000   n 50% – Director’s election of:
  Additional retainer amount for chair of the audit and finance committee $ 35,000     – deferred stock,
– restricted stock,
– deferred cash, or
– current cash
    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   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 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

 

36 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation of Directors
Our Board of Directors 2015 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 At the same time our board approved non-employee director compensation for fiscal 2015, it reviewed our non-employee director stock ownership requirements and determined it aligned with median market practices of our comparator group. 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 will recalibrate the number of shares required to be held by each non-employee director at the beginning of our fiscal 2017. 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, 2015, all of our directors are in compliance with our stock retention requirements, and all but our newest director satisfied our stock ownership requirements.

 

Changes for fiscal 2016 In June and August 2015, 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 Cook & Co. and Towers Watson & Co. 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 recommended to our board that no changes be made to the director compensation program for fiscal 2016.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 37
 
Compensation of Directors
Director Compensation Table
     

 

Director Compensation Table

 

The following presents compensation to our non-employee directors for their services in fiscal 2015.

 

  Fees Earned or Stock All Other  
Name Paid in Cash ($)1 Awards ($)2 Compensation ($)3 Total ($)
Gregory H. Boyce 122,473 122,473 0 244,946
David L. Chicoine, Ph.D. 122,500 122,473 5,000 249,973
Janice L. Fields 137,508 137,508 0 275,016
Arthur H. Harper 137,508 137,508 5,000 280,016
Laura K. Ipsen 122,553 122,473 0 245,026
Gwendolyn S. King 147,500 147,454 5,000 299,954
Marcos M. Lutz 129,973 122,473 0 252,446
C. Steven McMillan 150,000 149,998 0 299,998
Jon R. Moeller 137,500 137,508 0 275,008
William U. Parfet 147,500 147,454 0 294,954
George H. Poste, Ph.D., D.V.M. 132,500 132,535 5,000 270,035
Robert J. Stevens 167,519 167,519 5,000 340,038
Patricia Verduin, Ph.D.4 0 0 0 0
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 2015, the following directors elected to receive deferred stock: Ms. Fields, 1,189 shares; Ms. Ipsen, 636 shares; and Mr. Stevens, 1,448.5 shares. The following directors elected to receive restricted stock: Mr. Boyce, 1,059 shares; Mr. Harper, 1,189 shares; and Mr. Lutz, 1,059 shares. The following director elected to receive deferred cash: Ms. Ipsen. The following directors elected to receive current cash: Dr. Chicoine, Ms. King, Mr. McMillan, Mr. Moeller, Mr. Parfet and Dr. Poste. Each amount constitutes the aggregate grant date fair value of the equity awards for fiscal 2015 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 2015. 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. The number of deferred shares granted to each director related to the non-elective half of the aggregate annual retainer was: Mr. Boyce, 1,059; Dr. Chicoine, 1,059; Ms. Fields, 1,189; Mr. Harper, 1,189; Ms. Ipsen, 1,059; Ms. King, 1,275; Mr. Lutz, 1,059; Mr. McMillan, 1,297; Mr. Moeller, 1,189; Mr. Parfet, 1,275; Dr. Poste, 1,146; and Mr. Stevens, 1,448.5. Each amount constitutes the aggregate grant date fair value of the equity awards for fiscal 2015 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 2015.
   
  The aggregate number of shares of unvested restricted stock held by directors as of Aug. 31, 2015 was: Mr. Boyce, 2,086 shares; and Mr. Lutz, 1,956 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 Dr. Verduin was elected to our board in fiscal 2016. She did not receive any compensation for services in fiscal 2015.

 

38 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Stock Ownership of Management
and Certain Beneficial Owners

    

 

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

 

n each person who is a director or nominee;
n each proxy officer;
n all current directors and executive officers as a group; and
n 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, 2015, except as otherwise noted.

 

  Shares of Common Shares Underlying    
  Stock Owned Options Exercisable    
  Directly or Within   % of Class
Name Indirectly (#)1,2,3 60 Days (#)4 Total (#)5 Held
Hugh Grant 393,213 1,142,253 1,535,466 *
Gregory H. Boyce 9,900 0 9,900 *
David L. Chicoine, Ph.D. 11,947 0 11,947 *
Janice L. Fields 22,881 0 22,881 *
Arthur H. Harper 41,744 0 41,744 *
Laura K. Ipsen 13,964 0 13,964 *
Gwendolyn S. King 47,157 0 47,157 *
Marcos M. Lutz 6,464 0 6,464 *
C. Steven McMillan 53,573 0 53,573 *
Jon R. Moeller 9,112 0 9,112 *
William U. Parfet 371,749 0 371,749 *
George H. Poste, Ph.D., D.V.M. 34,630 0 34,630 *
Robert J. Stevens 70,219 0 70,219 *
Patricia Verduin, Ph.D. 3,233 0 3,233 *
Pierre C. Courduroux 33,934 138,952 172,886 *
Brett D. Begemann 131,365 271,049 402,414 *
Robert T. Fraley, Ph.D. 96,739 185,000 281,739 *
David F. Snively 51,196 32,413 83,609 *
CURRENT DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (26 PERSONS) 1,673,751 2,190,809 3,864,560  
The Vanguard Group6 30,555,473 0 30,555,473 6.31%
BlackRock, Inc.7 28,032,307 0 28,032,307 5.3%

 

 

* less than 1%

 

Shares of Common Stock Owned Column

 

1 Includes the following shares of deferred stock deliverable within 60 days after Nov. 1, 2015 to each non-employee director as compensation under the Directors’ Plan: Mr. Boyce, 3,204; Dr. Chicoine, 9,556; Ms. Fields, 21,627; Mr. Harper, 13,870; Ms. Ipsen, 8,538; Ms. King, 43,805; Mr. Lutz, 1,849; Mr. McMillan, 53,573; Mr. Moeller, 6,367; Mr. Parfet, 53,600; Dr. Poste, 33,494; Mr. Stevens, 60,219; Dr. Verduin, 401; and directors as a group, 310,103.
   
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, 7,046; Mr. Courduroux, 1,162; Mr. Begemann, 6,783; Dr. Fraley, 3,953; Mr. Snively, 0; and current executive officers as a group, 48,635. Also, includes the indicated number of shares of our common stock underlying fiscal 2013 Financial Goal RSU performance awards, vesting within 60 days of Nov. 1, 2015: Mr. Grant, 55,527; Mr. Courduroux, 13,882; Mr. Begemann, 17,354; Dr. Fraley, 17,354; Mr. Snively, 11,107; and current executive officers as a group, 145,301. Includes restricted stock units vesting within 60 days of Nov. 1, 2015 for current officers as a group, 15,794.
   
  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, 43,667; Mr. Courduroux, 0; Mr. Begemann, 11,475; Dr. Fraley, 6,865; and Mr. Snively, 92; and current executive officers as a group, 94,024; 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; and current executive officers as a group, 11,898.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 39
 
Stock Ownership of Management and Certain Beneficial Owners
Section 16(a) Beneficial Ownership Reporting Compliance
     

 

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, 2015 as the cut-off date, which is 60 days after Nov. 1, 2015. 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, 2015, 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 0.9%.
   
6 Vanguard Information is based on a Schedule 13G/A filed with the SEC on Feb. 9, 2015, filed by The Vanguard Group (“Vanguard”). Vanguard reported beneficial ownership of 30,555,473 shares. Vanguard had sole power to vote 849,987 shares and sole dispositive power for 29,768,048 shares. Vanguard had shared dispositive power over 787,425 shares, and no shared voting power for any of the shares. Vanguard’s business address is 100 Vanguard Blvd., Malvern, PA 19355.
   
7 BlackRock Information is based on a Schedule 13G/A filed with the SEC on Jan. 12, 2015, filed by BlackRock, Inc. (“BlackRock”). BlackRock reported beneficial ownership of 25,976,067 shares of common stock. BlackRock had sole power to vote 21,680,797 shares and sole dispositive power over 25,934,470 shares. Blackrock reported shared voting and dispositive power over 41,597 shares. BlackRock’s business address is 55 East 52nd Street, New York, NY 10022.

 

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 2015, with the exception of Tom Hartley, for whom the company inadvertently neglected to file one Form 4, reporting one transaction late. The company reported one transaction late for each of Messrs. Begemann, Courduroux, Frank, Grant, Mizell, Preete and Snively and Drs. Stern and Fraley, Ms. Holloway and Ms. Ringenberg in fiscal 2016, inadvertently omitting disclosure of Financial Goal RSUs for which the performance determination was made in October 2015.

 

40 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Report of the Audit and
Finance Committee

    

 

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. Parfet, 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, 2015, 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 2015 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: William U. Parfet

Members: Arthur H. Harper, C. Steven McMillan, Jon R. Moeller, Robert J. Stevens

 

MONSANTO COMPANY 2015 PROXY STATEMENT 41
 

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

 

Our audit and finance committee has appointed Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2016, 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 2015, 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 2015, 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 2014.

 

Description of Professional Service   Amount Billed ($)
    2015 Fiscal Year   2014 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     11.6 million       11.8 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     1.0 million       0.5 million  
Tax Fees — 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; 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     2.9 million       3.5 million  
All Other Fees — expatriate assignment services (non-tax related)     0.1 million       0.1 million  

 

42 MONSANTO COMPANY 2015 PROXY STATEMENT
 
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 2015 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 2016 Fiscal Year

 

MONSANTO COMPANY 2015 PROXY STATEMENT 43
 

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

 

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 46, 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 2015,

 

n on average over 81% of our proxy officers’ compensation was tied to company annual and long-term performance;
   
n our company’s fiscal 2015 results exceeded threshold-level but did not meet target-level goals for earnings per share and free cash flow in a challenging environment, leading to payment of below target annual incentive awards for our proxy officers; 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. The next say-on-pay vote will occur at our 2017 annual meeting. At that meeting, we will also ask shareowners to vote on the frequency of our say-on-pay votes.

 

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

 

44 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Report of the People and
Compensation Committee

    

 

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. We believe that the 2015 compensation program succeeded in achieving the objectives of our philosophy.

 

The Compensation Discussion and Analysis that follows covers our decisions regarding company executives’ compensation for fiscal 2015. 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: Janice L. Fields, Arthur H. Harper, Gwendolyn S. King, William U. Parfet

 

MONSANTO COMPANY 2015 PROXY STATEMENT 45
 

Executive Compensation

 

Compensation Discussion and Analysis

 

The Compensation Discussion and Analysis (“CD&A”) describes our overall executive compensation policies and practices, and focuses on fiscal 2015 compensation for the following individuals whom we refer to as our “proxy officers”:

 

Hugh Grant

chairman and chief executive officer

 

Pierre Courduroux

senior vice president and chief financial officer

 

Brett Begemann

president and chief operating officer

 

Robb Fraley

executive vice president and chief technology officer

 

David Snively

executive vice president, secretary and general counsel

 

Messrs. Grant, Courduroux, Begemann and Snively, Dr. Fraley and seven 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 12 members of our executive team as our “executives.”

 

TABLE OF CONTENTS        
Compensation Discussion & Analysis     Executive Compensation Tables  
Executive Summary 47   Summary Compensation 69
Overview of Our Executive Compensation Program 51   Grants of Plan-Based Awards 71
Setting Executive Compensation 54   Outstanding Equity Awards at Fiscal Year-End 72
Our 2015 Executive Compensation Program 56   Option Exercises and Stock Vested 74
Additional Information about Our Compensation Practices 64   Pension Benefits 74
      Non-Qualified Deferred Compensation 77
Summary of Fiscal 2015 Proxy Officer Performance and Compensation 66   Potential Effect on Compensation Upon Termination or Change of Control 80
Caution Regarding Forward-Looking Statements 68   Equity Compensation Plan 83

 

46 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Compensation Discussion
and Analysis

 

 

      Executive Summary
       
     

Monsanto Performance Overview

 

Our global product portfolio, industry-leading innovation and financial discipline enabled a year of solid performance in a challenging environment. Led by our executive team, our business continues to be built on strong fundamentals and focused on executing our long-term strategies. 

           
           
 

$13.9B

 

returned to
shareowners
since 2011

 

 

Financial Results

 

Our business faced significant global and industry-wide challenges in fiscal 2015, including foreign currency headwinds that affected the global economy, and declining corn acres. Despite the downturn in the agriculture cycle, our core seeds and traits business performance, licensing agreements and our disciplined approach to managing expenses enabled us to achieve another year of solid ongoing earnings per share (“EPS”) growth.

  We were also able to generate significant free cash and returned $1.8 billion to our shareowners through share repurchases and dividends, making significant progress in our capital allocation strategy. Our net sales and adjusted return on capital (“ROC”)1 performance declined compared to the prior year, as a result of foreign currency challenges, declining corn acres and glyphosate pricing, but continued to reflect the strength of our core business.
           
 

Solid
Performance
in Fiscal 2015
Driven By:

 

n   Global product
     portfolio

 

n   Industry-leading
     innovation

 

n   Financial discipline

 

 

Following is a summary of our fiscal 2015 results against four key performance metrics used by our investors and our executive compensation program—ongoing EPS, free cash flow, net sales and adjusted ROC. We achieved ten percent growth in our ongoing EPS, while continuing to make investments to support our long-term growth opportunity.

 

Key Performance Metrics

  In order to further strengthen the competitive opportunity of our core business and anticipating that these challenges would continue, in fiscal 2015 we incurred significant restructuring expense to improve our cost structure for the future. This expense is excluded from our ongoing EPS results. The impacts of foreign currency and other industry-wide challenges are not excluded from our results.

 

                                                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
                   
             
                   
     

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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 47
 
Compensation Discussion and Analysis
Executive Summary
    

 

 

Current and
Potential
Products
Position Us
for Long-Term
Opportunity

 

n   Another strong
year for soybeans
  
nHeld or grew
share in corn
  
nNew technologies
and pipeline
advancing

 

Commercial Operations

 

Within our Seeds and Genomics segment, our soybean business had another strong year in fiscal 2015, achieving record-setting adoption of our Intacta RR2 PRO™ soybeans in South America. We recorded positive adoption of our newest genetics in corn and our newest trait for cotton. And despite reduced acres for each crop, we also held or grew share in every major corn market and experienced significant momentum with our corn licensing business. Our digital ag solutions business further established itself as the leading industry platform, with more than 75 million acres enrolled. While competition from low-priced generic glyphosate impacted results in our Ag Productivity segment, the majority of the decline was offset by a new licensing agreement, as we expanded our licensing focus.

 

Long-Range Plan

 

Our R&D pipeline supports our long-term focus on a systems approach to solving agronomic challenges. In fiscal 2015, we increased investments in Climate and biological platforms and advanced research and development projects across each of our six platforms. We made significant progress preparing for our next anticipated major product launch, and made investments in manufacturing complementary crop protection products to support our integrated systems approach.

We also advanced to phase 1 of our pipeline the first hits from our BioAg Alliance with Novozymes, among other achievements.

 

Organizational Effectiveness

 

We invested significant focus on our people in fiscal 2015. We recognized the potential distractions from our challenging business environment, including our efforts undertaken to position our company for long-term success, and focused considerable attention to retain, develop and motivate a talented and diverse workforce as a fundamental driver of long-term growth. Our efforts included broad-based succession planning and development programs and extensive communications. Employee feedback was reflected in our strong employee engagement ratings.

 

Sustainability

 

We recognize that the nature of our business provides us 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 help all farmers get the most out of every acre. We also engage in broad-ranging collaborations, research funding and outreach focused on water conservation and soil health, among other initiatives.


 

Our 2015 Say-on-Pay Vote and Ongoing Shareowner Outreach Program

 

Our Company’s 2015 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 2015 annual meeting, a significant majority of our shareowners, or more than 97% of votes cast, supported the fiscal 2014 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 and beyond. 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.

 

48 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation Discussion and Analysis
Executive Summary
   

 

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 2015

 

For fiscal 2015, our people and compensation committee again tied a significant portion of our executives’ compensation to company annual and long-term performance.

 

nOne or more components of each proxy officer’s total direct compensation was increased to reflect competitive market positioning, experience and increases in base pay across our broad-based population.
  
nThe company’s fiscal year budget and long-range plan were considered when establishing our AIP and financial goal-based RSU (“Financial Goal RSU”) performance measures and goals.
  
nAIP cash awards were based on:

 

  company performance against pre-established fiscal year financial goals related to EPS, free cash flow, and net sales-key measures important to our shareowners; and
  individual performance related to strategic and operational objectives.

 

nAIP cash payments were below target-level, recognizing that we did not meet target goals for EPS or net sales, while free cash flow achievement was over 99% of target.
  
nThe 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.

 

n157% of Financial Goal RSUs awarded as part of proxy officers’ fiscal 2013 compensation were eligible for vesting based on performance over the fiscal 2013-fiscal 2015 performance period.

 

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.

 

à

 

MONSANTO COMPANY 2015 PROXY STATEMENT 49
 
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 2015 compensation practices:

 

What We Do

 

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

 

üGoals reflect budget and long-range plan We provide reasonable opportunities for payout to motivate and retain our employees.

 

üCompetitive Compensation Proxy officers’ annual total direct compensation is targeted to the comparable positions in our comparator group, taking into account executive 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.

 

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

 

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

 

üAnnual Compensation Risk Assessment We regularly analyze risks related to our compensation program and conduct a broad risk assessment annually.

 

üLTI Double Trigger Vesting Long-term incentive awards provide for double-trigger vesting in the event of a change of control.

 

üClawbacks We can recover performance-based cash and equity incentive compensation paid to executives in various circumstances.

 

üStock 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.

 

üIndependent Compensation Consultant Our people and compensation committee retained Frederic W. Cook & Co., Inc. (“Cook & Co.”) to advise it on executive compensation matters.

 

What We Don’t Do

 

ûNo 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.

 

ûNo 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.

 

ûNo 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.

 

ûNo 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.

 

50 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation Discussion and Analysis
Overview of Our Executive Compensation Program
    

 

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:

 

nuse 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;
  
nmotivate 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;
  
nrequire executives and directors to have significant stock ownership — ensuring that their interests are aligned with shareowners;
  
npromote balanced performance and discourage improper risk taking by avoiding reliance on any one metric or short-term performance goal; and
  
nreward for future sustained performance rather than past performance.

 

Financial Performance Measures

 

We use four key financial performance measures to produce results.

 

 

Financial Performance Metrics

 
       
AIP Performance Measure & Rationale Financial Goal RSUs  
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  
   
  
   

 

MONSANTO COMPANY 2015 PROXY STATEMENT 51
 
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 certain items specified in the AIP or terms, 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 2015 AIP and fiscal 2013-fiscal 2015 Financial Goal RSU awards, the committee made adjustments to EPS, free cash flow and ROC results as discussed on pages 59 and 63.

 

Pay For Performance Compensation Mix

 

For fiscal 2015, 88% of our CEO’s total direct compensation and 81% of our other proxy officers’ average 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 2015 total direct compensation for our proxy officers is illustrated in the charts below. At risk 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)    
               
           
               

 

52 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation Discussion and Analysis
Overview of Our Executive Compensation Program
   

 

Summary of Fiscal 2015 Compensation

 

These are the components of fiscal 2015 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

12-19% of TDC

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”)

16-19% of TDC

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 a performance goal under our shareowner-approved Internal Revenue Code Section 162(m) Annual Incentive Plan for Covered Executives (“Code Section 162(m) Plan”)

n  Focus proxy officers and organizations they lead on achieving key annual financial goals and objectives and reward for successful performance  

Long-Term Incentive (“LTI”)

65-69% of TDC

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 in the event of a change of control

 

  Financial Goal RSUs (40%):

•   Shares eligible for vesting based on achievement of Internal Revenue Code (“Code”) Section 162(m) performance goal and company performance against three-year cumulative ongoing EPS and free cash flow and three-year average ROC goals

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

•   Double-trigger vesting in the event of 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 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

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 64

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 2015 PROXY STATEMENT 53
 
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

 

People & Compensation Committee (comprised of five independent directors)

n  Determines program principles and philosophies

 

n  Approves AIP design, performance measures and goals

 

n  Determines the structure for delivering LTI opportunities, terms and conditions of equity grants and Financial Goal RSU performance measures and goals

 

n  Determines all compensation for all of our executives, including our CEO and other proxy officers

n  Reviews other compensation for executives such as perquisites and benefits under broad-based benefit programs

 

n  Approves all other arrangements, policies and practices related to our executive compensation program such as change of control agreements, stock ownership requirements and recoupment policy

 

n  Assesses and balances risk in the context of our compensation program

 

Cook & Co. (independent Committee consultant)

n  Performs work at the direction and under the supervision of our people and compensation committee

 

n  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

n  Reviews and reports on all committee materials, participates in all committee meetings and communicates with the committee chair between meetings

 

n  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 CEO and EVP-HR  

n  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

 

n  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

 

n  Determines no compensation for any proxy officer or other executive

n  Recommend base pay, target AIP opportunities and actual AIP awards to proxy officers (CEO does not recommend own compensation)

 

n  Provide information on performance goals for people and compensation committee consideration in structuring the AIP and Financial Goal RSU programs

n  Recommend retention of specific, critical talent and various retention arrangements for people and compensation committee consideration

 

n  CEO provides the people and compensation committee a performance assessment of each proxy officer and a self-assessment

 

Towers Watson & Co. (consultant retained by EVP-HR and his staff) 

n  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

 

n  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

 

n  Provides consulting, actuarial and other compensation and employee benefits-related services to our company; the people and compensation committee has reviewed Towers Watson & Co.’s work and determined that it raises no conflicts of interest

 

54 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Compensation Discussion and Analysis
Setting Executive Compensation
    

 

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 2015, our comparator group consisted of the same companies as the companies in our fiscal 2014 comparator group, except for H.J. Heinz Co., which we eliminated following its acquisition by another company.

 

Beginning in fiscal 2015, the committee uses data from our full comparator group to evaluate Dr. Fraley’s compensation, discontinuing its practice of using a technology-based subset because of insufficient available data.

 

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 2014, when our people and compensation committee determined our proxy officers’ fiscal 2015 compensation, our revenue, one-year EPS growth and market capitalization each were in the median range of the comparator group.

 

Monsanto Peer Group Rankings

 

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 2015 proxy officer compensation.

 

n 3M Company
   
n Allergan, Inc.
   
n Amgen Inc.
   
n Baxter International Inc.
   
n Becton, Dickinson and Company
   
n Biogen Idec 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, Inc.
   
n The Mosaic Company
   
n Potash Corporation of Saskatchewan Inc.
   
n PPG Industries, Inc.*
   
n St. Jude Medical, Inc.

 

* For fiscal 2016, we determined to remove PPG Industries, Inc. from our comparator group, as our CEO serves as a member of its compensation committee.


 

MONSANTO COMPANY 2015 PROXY STATEMENT 55
 

Compensation Discussion and Analysis
Our 2015 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 2015 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 and significant experience, having served as our CEO for more than 12 years. The committee targets 90%-110% of the median for comparable positions for our other proxy officers. For fiscal 2015, 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 recognize the 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.

 

56 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Compensation Discussion and Analysis
Our 2015 Executive Compensation Program
    

 

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. Mr. Grant’s base pay was increased, effective January 2015, to achieve alignment with the targeted percentile of our comparator group. Our other proxy officers received a base pay increase consistent with the percentage increase for the rest of our organization, while maintaining alignment with comparable positions in our comparator group.

 

The table below includes each proxy officer’s base pay as of August 31, 2015 in comparison to his base pay as of August 31, 2014. 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 2015.

 

Fiscal Year-End Base Pay

  Base Pay ($)  
Name August 31, 2014 August 31, 2015 % Increase
Hugh Grant 1,530,500 1,630,500 6.5
Pierre C. Courduroux 600,000 612,000 2.0
Brett D. Begemann 800,000 816,000 2.0
Robert T. Fraley, Ph.D. 651,333 664,359 2.0
David F. Snively 600,000 612,000 2.0

 

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.

 

We believe the design of our fiscal 2015 AIP focuses the organization on achieving financial and operational performance that drives shareowner value.

   
n Our proxy officers participate in the same AIP in which most of our other employees participate.
   
n Proxy officers and all 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 2015 ANNUAL INCENTIVE PLAN

 

n Our people and compensation committee establishes threshold, target and outstanding-level performance goals for the AIP fiscal 2015 performance period for the financial metrics: EPS (weighted 50%), free cash flow (weighted 40%) and net sales (weighted 10%).
   
n The target AIP award pool is the sum of all AIP participants’ target fiscal 2015 award opportunities. Target awards are communicated as a percentage of base pay.
   
n The committee determines the award pool funding factor after evaluating the company’s fiscal 2015 performance against the AIP financial goals, considering the following parameters:

 

  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.

 

n Before approving payment of proxy officers’ awards, the committee evaluates whether the company achieved the pre-established corporate adjusted net income performance goal for the fiscal 2015 performance period under our Code Section 162(m) Plan.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 57
 

Compensation Discussion and Analysis
Our 2015 Executive Compensation Program

 

HOW WE DETERMINED FISCAL 2015 AIP AWARDS

 

Our people and compensation committee determines each proxy officer’s cash award under the AIP, using the following process.

 

STEP ONE

April–August

2014

 

STEP TWO

June–August

2014

Set Fiscal 2015 AIP Design, Performance Measures and Relative Weightings

 

Committee considerations:

 

n aligning plan structure and performance measures with core business strategies
   
n focusing our leaders and the organizations they lead on achieving key financial results, business objectives and strategies
   
n rewarding for financial and operational performance that drives shareowner value
   
n projecting plan costs at threshold, target and outstanding payouts
   
n communicating plan terms and performance measures consistently, both internally and externally

 

Establish Fiscal 2015 AIP Performance Goals

 

When establishing fiscal 2015 AIP performance goals, the committee engaged in extensive and thoughtful discussions, recognizing its responsibilities to shareowners and the need to retain and motivate executives and other leaders to execute on key financial and strategic longer-term objectives. It was important to the committee that it establish goals to appropriately recognize challenges facing our industry, including corn acre contraction, commodity pricing challenges and currency instability. The committee also considered the stretch objectives of our fiscal 2015 budget.

 

The committee developed the goals over the course of several meetings to fully consider the particular circumstances facing the company in fiscal 2015. 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 August 2014 meeting, the committee set final fiscal 2015 goals based on the following objectives:

 

2015 AIP Performance Goals

EPS n Threshold - set to require significant growth over fiscal 2014 performance for any payout with respect to this goal
(weighted 50%) n Target - set to correspond to our fiscal 2015 budget
  n Outstanding - set to require 17% growth over fiscal 2014 results
Free Cash Flow
(weighted 40%)
n Threshold - set at 94% of our fiscal 2015 Target, to establish the lower end of a reasonable range around the Target-level goal, given the inherent variability in the performance measure
  n Target - set to correspond to our fiscal 2015 budget
  n Outstanding - set at 107% of our fiscal 2015 Target, to establish the upper end of a reasonable range around the Target-level goal, given the inherent variability in the performance measure
Net sales n Threshold - set to require modest improvement over fiscal 2014 performance for any payout with respect to this goal
(weighted 10%) n Target - set to correspond to our fiscal 2015 budget
  n Outstanding - set to require 11% growth over our fiscal 2014 results

 

The committee also set $2,258 million as the minimum corporate adjusted net income performance goal under our Code Section 162(m) Plan for the fiscal 2015 performance period. 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.


 

58 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Compensation Discussion and Analysis
Our 2015 Executive Compensation Program
    

 

STEP THREE

October 2014

 

STEP FOUR

October 2015

Set Proxy Officer Fiscal 2015 AIP Opportunity

 

The committee determined each proxy officer’s fiscal 2015 target AIP opportunity expressed as a percentage of base pay, as set forth in the table entitled Summary of Proxy Officer 2015 AIP Target Opportunities and Cash Payouts on page 60.

 

Evaluate Our Fiscal 2015 Performance against AIP Goals and Determine Funding of Award Pool

 

At its October 2015 meeting, the committee determined funding of the fiscal 2015 AIP award pool after considering a number of factors, including:

 

n Our fiscal 2015 results and company performance measured against the AIP goals set for the AIP Performance Measures, as follows:

 

Fiscal 2015 AIP Goals and Actual Results

 

  Threshold Target Outstanding  
  Level Goals Level Goals Level Goals  
AIP Performance Measure (35% Funding) (100% Funding) (200% Funding) Actual Results
EPS ($) 5.65 5.85 6.10 5.73
Free Cash Flow ($ millions) 1,968 2,091 2,246 2,089
Net Sales ($ millions) 16,351 16,872 17,525 15,001

 

n The fact that we achieved over 99% of the target-level goal set for free cash flow (no adjustments were made).
   
n The fact that we exceeded threshold but did not meet the target-level goal set for ongoing EPS. The committee adjusted EPS to exclude certain extraordinary items related to legacy operations not connected with the company’s fiscal 2015 performance and strategic items for which the company incurred significant fiscal 2015 expense to support the company’s long-term opportunity. Consistent with the ongoing EPS disclosed to shareowners, the following items were excluded, for a $0.92 net increase:

 

  Restructuring charges;
     
  Earnings from a divested business;
     
  Expenses from settlement of legacy environmental liabilities; and
     
  Expenses for a potential SEC settlement.

 

n We did not achieve threshold-level performance with respect to net sales (no adjustments were made).
   
n The combination of solid business and organizational results during a challenging agricultural cycle, as well as actions taken to continue to position the company for future growth opportunities during fiscal 2015 described earlier in the Executive Summary.

 

After careful deliberation, the committee determined to fund the fiscal 2015 AIP award pool at 70% of target-level funding, or $111.8 million, for allocation across the organization, including our proxy officers, plus an additional $2.5 million for non-officer employees who made a significant contribution to our results.

 

 

98% of Target

Performance for EPS

(50% weighting)

 

 

Result: 61% Funding

  +  

100% of Target

Performance for

Free Cash Flow

(40% weighting)

 

 

Result: 99% Funding

  +  

89% of Target

Performance for

Net Sales

(10% weighting)

 

 

Result: 0% Funding

  =

70% Award Pool

Funding Factor

STEP FIVE

October 2015

 

Certify Attainment of Code Section 162(m) Performance Goal

 

The committee reviewed appropriate financial materials and certified attainment of the Code Section 162(m) Plan minimum corporate adjusted net income goal of $2,258 million for the fiscal 2015 period.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 59
 

Compensation Discussion and Analysis
Our 2015 Executive Compensation Program

 

STEP SIX

October 2015

Determine Proxy Officer AIP Awards

 

The committee determined the amount of each proxy officer’s cash award under the AIP using this formula:

 

Target AIP
Opportunity
x Award Pool
Funding Factor
± Individual
Performance
= Cash Award

 

Our CEO discussed fiscal 2015 performance of each of the other proxy officers with the committee, focusing on their individual performance against key business priorities and performance of the business unit each leads as described on pages 66–67, and recommended the amount of their AIP awards for committee consideration.

 

In a private session the committee evaluated our CEO’s fiscal 2015 performance, focusing on his accomplishments described on page 66, and determined the amount of his AIP award.

 

Fiscal 2015 AIP Awards For Proxy Officers

 

Here are our proxy officers’ 2015 AIP target opportunities and cash payouts.

 

Summary of Proxy Officer 2015 AIP Target Opportunities and Cash Payouts

 

  At Target Performance (100% Funding) Actual Cash Award Funding Factor
Name % of Base Pay Dollar Amount ($) Amount ($) % of Target
Hugh Grant 165 2,690,325 1,883,228 70
Pierre C. Courduroux 80 489,600 342,720 70
Brett D. Begemann 100 816,000 571,200 70
Robert T. Fraley, Ph.D. 90 597,923 418,546 70
David F. Snively 80 489,600 342,720 70


 

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 2015, 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
60 MONSANTO COMPANY 2015 PROXY STATEMENT
 

Compensation Discussion and Analysis
Our 2015 Executive Compensation Program
    

 

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

 

The dollar amount of each proxy officer’s fiscal 2015 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 27, 2014 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 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 27, 2024.
     
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 27, 2014 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 2015-2017 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, 2017.
  The award 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 not vest unless the officer satisfies a three-year service period, concurrent with the performance period.

 

Amount of LTI Opportunities

 

At its October 2014 meeting, our people and compensation committee determined the dollar amount of each proxy officer’s fiscal 2015 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 2015 LTI opportunity.

 

Process for Awarding Financial Goal RSUs

 

Here is the process the committee uses for awarding fiscal 2015 Financial Goal RSUs to our proxy officers and determining any payout:

 

 

In October 2017, 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
(⅓ weighting)
+ Free Cash
Flow goal
(⅓ weighting)
+ ROC goal
(⅓ weighting)
= Percentage of Target-
Number of fiscal 2015
Financial Goal RSUs eligible
for vesting on
November 15, 2017

 

MONSANTO COMPANY 2015 PROXY STATEMENT 61
 

Compensation Discussion and Analysis
Our 2015 Executive Compensation Program

 

Financial Goal RSU Performance Goals

 

For the fiscal 2015 grant, the people and compensation committee established a Code Section 162(m) performance goal of positive net income for the September 1, 2014 through August 31, 2017 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 Solutia, Inc. or agreements associated with a Solutia, Inc. plan of reorganization, unbudgeted business sales and divestitures and the cumulative effects of changes in accounting methodology made after August 31, 2014.

 

When structuring the fiscal 2015 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 August 2014, the committee set the three-year cumulative EPS and free cash flow goals and a three-year average ROC goal 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 and 2017 threshold-level performance goals require improvement over prior year target-level goal. 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 fiscal 2015 budget and fiscal 2015-2017 long-range business plan reviewed by our board, anticipating the challenge for us to achieve these levels of performance. 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 significant stretch to achieve, representing company performance exceeding the long-range plan and worthy of outstanding-level awards. If the company achieves outstanding-level performance for each goal, 200% of the units will be eligible for vesting.

 

At the end of fiscal 2015, 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 2015 executive compensation. We expect to disclose the specific goals after the conclusion of the performance period.

 

Summary of Fiscal 2015 LTI Opportunities and Equity Grants

 

The dollar amount of each proxy officer’s fiscal 2015 LTI opportunity is included in his fiscal 2015 total compensation in the Summary Compensation Table on page 69 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 2015 LTI opportunity.

 

Fiscal 2015 Proxy Officer LTI Opportunities, Stock Option Grants, and Target Number of Financial Goal RSUs

 

  2015 Long-Term Opportunities and Awards
    Number of Target Number of
Name LTI Opportunity ($) Stock Options Financial Goal RSUs
Hugh Grant 9,800,000 130,300 34,746
Pierre C. Courduroux 2,350,000 31,250 8,332
Brett D. Begemann 3,000,000 39,890 10,637
Robert T. Fraley, Ph.D. 2,500,000 33,240 8,864
David F. Snively 1,700,000 22,610 6,028

 

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 2013 LTI component of his total direct compensation. The fiscal 2013 Financial Goal RSU performance measures and terms were the same as the performance measures and terms for the fiscal 2015 Financial Goal RSUs, except that our CEO’s fiscal 2013 awards did not provide for continued vesting following termination of employment under certain circumstances.

 

62 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation Discussion and Analysis
Our 2015 Executive Compensation Program
   

 

In October and November 2015, the committee determined the number of fiscal 2013 Financial Goal RSUs eligible for vesting under the terms of those awards after considering a number of factors, including:

 

n Our fiscal 2013-2015 results and company performance measured against the Financial Goal RSU goals, as follows:

 

Fiscal 2013 Financial Goal RSU Grant Summary of Goals and Actual Results

 

  Threshold Performance   Target Performance   Outstanding Performance    
  (50% of Units eligible   (100% of Units eligible   (200% of Units eligible    
Performance Measure for vesting)   for vesting)   for vesting)   Actual Results
Cumulative EPS ($) (1/3 of Units) 11.74   14.11   15.78   15.52
Cumulative Free Cash Flow
($ millions) (1/3 of Units)
5,259   6,383   7,398   6,260
Average ROC (%) (1/3 of Units) 17.1   20.6   23.0   22.8

 

n The fact that we exceeded target-level goals for EPS and ROC. The committee adjusted EPS and ROC results, consistent with determinations for the fiscal 2015, 2014 and 2013 AIP to exclude certain extraordinary items described on page 59 for fiscal 2015; 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; and related to earnings from a divested business and resolution of a legacy tax matter, for a $0.04 decrease to fiscal 2013 EPS results. See Appendix A-2 for a summary of these adjustments to ROC and a reconciliation to GAAP.
   
n The fact that we exceeded threshold and achieved 98% of the target-level goal for free cash flow. The committee adjusted fiscal 2014 free cash flow results to exclude as “extraordinary” the unbudgeted impacts of the acquisition of The Climate Corporation and our collaboration with Novozymes, which transactions occurred after the goals were established. The committee did not make any adjustments to fiscal 2015 or 2013 free cash flow results.

 

After careful deliberations, the committee determined that 157% of the target-number of Financial Goal RSUs awarded to each proxy officer as part of his fiscal 2013 LTI opportunity is eligible for vesting based on the following formula:

 

  110% of Target
Performance for
Ongoing EPS
(⅓ weighting)
  +   98% of Target
Performance for
Free Cash Flow
(⅓ weighting)
  +   111% of Target
Performance for
Average ROC
(⅓ weighting)
  = 157% of Target-Number of
Fiscal 2013 Financial Goal RSUs
Eligible for Vesting Subject
to Employment on
November 15, 2015
  Result: 184%       Result: 95%       Result: 192%      

 

The number of Financial Goal RSUs eligible for vesting and subsequently settled in shares of company stock in November 2015 for each proxy officer was as follows:

 

Proxy Officer Fiscal 2013 Financial Goal RSUs Eligible for Vesting

 

  Target Number of Financial Number of RSUs Vested
Name Goal RSUs Awarded in November 2015
Hugh Grant 35,367 55,527
Pierre C. Courduroux 8,842 13,882
Brett D. Begemann 11,053 17,354
Robert T. Fraley, Ph.D. 11,053 17,354
David F. Snively 7,074 11,107

 

In October 2016, the committee will evaluate performance for the fiscal 2014 Financial Goal RSUs. The number of Financial Goal RSUs eligible for vesting will be settled in shares of company stock in November 2016, provided the proxy officer satisfies the award’s three-year service period.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 63
 
Compensation Discussion and Analysis
Additional Information about Our Compensation Practices

 

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. The proxy officers are eligible for the severance benefit on the same terms as any other eligible employee.

 

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.

 

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.

 

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). While we believe preserving tax deductibility is an important objective, there can be no assurance that compensation arrangements will ultimately be tax deductible, and 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 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

 

64 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation Discussion and Analysis
Additional Information about Our Compensation Practices
   

 

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 are expressed as a fixed number of shares calculated at September 1, 2013 pursuant to an established formula.

 

Shares may be counted toward the policy’s ownership requirements whether held directly or through a spouse, retirement plan or retirement account. However, any shares subject to the following conditions 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 2015, each proxy officer had met his stock ownership requirement.

 

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

 

Proxy Officer Stock Ownership and Requirements (as determined 8/31/15)                                       

 
CEO                                                                    Other Proxy Officers (average) 
 

 

Change of Control Employment Agreements

 

Our company has entered into employment agreements with our proxy officers that become effective upon a change of control of our company. 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. Our people and compensation committee reviews the potential cost and the terms of the agreements at least annually, in addition to the list of executives and key employees eligible for the agreements.

 

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.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 65
 
Compensation Discussion and Analysis
Summary of Fiscal 2015 Proxy Officer Performance and Compensation
 

 

Summary of Fiscal 2015 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.

 

The information below highlights the individual accomplishments of each proxy officer in fiscal 2015.

 

Proxy Officer Performance and Fiscal 2015 Compensation

 

Hugh Grant, Chairman and Chief Executive Officer

 

Fiscal 2015 Compensation
Base Pay $ 1.6M
AIP Award    
Target Opportunity $ 2.7M
Amount Received $ 1.9M
Long-term incentives (LTI)
Value*: $ 9.8M
Stock Options 130,300
Financial Goal RSUs*   34,746

 

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

 

2015 Accomplishments and Performance

 

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

 

n Delivered solid financial results amidst global and industry headwinds, achieving ten percent growth in ongoing EPS and achieving over 99% of the AIP target-level goal for free cash flow
   
n Drove record-setting adoption of our Intacta RR2 PROTM product, while holding or improving share in major corn regions and establishing our digital ag solutions business as a leading platform
   
n Positioned our company for long-term opportunity through advancements in our pipeline, execution of licensing and intellectual property strategies, and engagement with a broad range of stakeholders as we work to meet our sustainability goals
   
n Set the tone for our organization to implement disciplined management of expense, focus on strategies to reduce expense risk and develop methods to increase efficiency longer-term
   
n Achieved continued strong safety results and implemented enhancements to development programs focused on identifying critical talent segments, assessment and succession planning, while continuing to implement multi-year diversity and inclusion plans

 

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

 

Fiscal 2015 Compensation
Base Pay $ 0.6M
AIP Award    
Target Opportunity $ 0.5M
Amount Received $ 0.3M
Long-term incentives (LTI)
Value*: $ 2.4M
Stock Options   31,250
Financial Goal RSUs*   8,332

 

Responsibilities: Leads finance organization

 

2015 Accomplishments and Performance

 

n Developed comprehensive plans covering commodity, currency, cash and tax risks, including plans to effectively mitigate international financial risks, while delivering significant financial benefits to the current year
   
n Implemented plans to deliver on collections, reducing risk and enhancing free cash flow, while making significant progress in our capital allocation strategy
   
n Delivered comprehensive assessment of financing structures, taxation strategies and other financial considerations in support of company strategic planning and initiatives, as well as in support of current year objectives
   
n Enhanced development plans for potential leaders and executed on development plans to support company diversity and inclusion goals

 

66 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Compensation Discussion and Analysis
Summary of Fiscal 2015 Proxy Officer Performance and Compensation
   

 

Brett D. Begemann, President and Chief Operating Officer

 

 
Fiscal 2015 Compensation
Base Pay $ 0.8M
AIP Award    
Target Opportunity $ 0.8M
Amount Received $ 0.6M
Long-term incentives (LTI)
Value*: $ 3.0M
Stock Options 39,890
Financial Goal RSUs* 10,637

 

Responsibilities: Commercial responsibility for our global business and supply chain

 

2015 Accomplishments and Performance

 

n Delivered growth despite significant currency and global corn acre headwinds by delivering an historic soybean product launch exceeding goals, maintaining or growing share in critical global corn markets, managing spending and executing strategic deals covering multiple products
   
n Executed critical milestones across production and distribution to generate savings and implemented significant changes to transform processes at two major production facilities
   
n Led our marketing, communications and engagements teams to strengthen customer relationships and to advance our company’s role as a leader in collaborations related to sustainable food production, and our outreach to consumers
   
n Created significant development opportunities to strengthen leadership pipeline, including increased diversity in sales organization

 

Robert T. Fraley, Ph.D., Executive Vice President and Chief Technology Officer

 

 
Fiscal 2015 Compensation
Base Pay $ 0.7M
AIP Award    
Target Opportunity $ 0.6M
Amount Received $ 0.4M
Long-term incentives (LTI)
Value*: $ 2.5M
Stock Options   33,240
Financial Goal RSUs*   8,864

 

Responsibilities: Oversees our integrated crop and seed agribusiness technology and research with facilities worldwide

 

2015 Accomplishments and Performance

 

n Led the technology and regulatory organizations in advancing 23 projects and across every platform, including our platforms covering breeding, biotechnology and improved agronomics, that are central to the company meeting key sustainability goals
   
n Set the foundation for the pre-launch and launch of new products through regulatory filings and key regulatory approvals, providing opportunity for future sales growth
   
n Delivered record-level germplasm yield advantage compared to competitor seed, supporting sales share, and implemented significant technology upgrades to advance breeding, testing and seed treatment efficiencies and collaboration
   
n Sustained leadership development and opportunities for collaboration and mentoring within technology organization

 

David F. Snively, Executive Vice President, Secretary and General Counsel

 

 
Fiscal 2015 Compensation
Base Pay $ 0.6M
AIP Award    
Target Opportunity $ 0.5M
Amount Received $ 0.3M
Long-term incentives (LTI)
Value*: $ 1.7M
Stock Options   22,610
Financial Goal RSUs*   6,028

 

Responsibilities: Leads our legal and environmental, safety and health teams and serves as secretary to our board

 

2015 Accomplishments and Performance

 

n Led legal support for key commercial licensing and other potential transactions to support our company’s long-term strategy
   
n Advanced and protected the company’s intellectual property through patent filings, defense and licensing to support current products and technologies and new technologies under development for the company’s digital ag solutions platform
   
n Provided legal support and guidance related to the company’s current products and legacy liabilities, including support for regulatory challenges and successful resolution of key legal matters affecting our business
   
n Enhanced development and succession planning in the legal organization, while maintaining high engagement and providing community support

 

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

 

MONSANTO COMPANY 2015 PROXY STATEMENT 67
 
Compensation Discussion and Analysis
Caution Regarding Forward-Looking Statements
 

 

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 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 and the previously announced SEC investigation; 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: 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 and the previously announced SEC investigation; developments related to foreign currencies and economies; pursuit of acquisitions or other transactions; 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 and expected higher levels of indebtedness; 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 and 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, 2015.

 

Our forward-looking statements represent our estimates and expectations and are based on currently available information at the time that we make those statements. However, circumstances change constantly, often unpredictably, and many events beyond our control will determine whether the expectations encompassed in our forward-looking statements 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.

 

68 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Executive Compensation
Executive Compensation Tables
    

 

Executive Compensation Tables

 

Summary Compensation Table

 

This table describes the total compensation paid to proxy officers for fiscal years 2015, 2014 and 2013, 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.

 

                  Change in      
                  Pension Value and      
                  Nonqualified      
               Non-Equity  Deferred      
         Stock  Option  Incentive Plan  Compensation  All Other   
      Salary  Awards  Awards  Compensation  Earnings  Compensation  Total
Name and Principal Position  Year  ($)  ($)1,2  ($)1  ($)3  ($)4  ($)5  ($)
Hugh Grant  2015  1,602,156  3,920,044  3,172,805  1,883,228  747,348  603,255  11,928,836
Chairman of the Board  2014  1,506,269  3,520,012  3,008,440  3,902,775  1,006,203  492,784  13,436,483
and Chief Executive Officer  2013  1,450,585  3,200,006  2,842,261  3,864,483  461,671  755,146  12,574,152
Pierre C. Courduroux  2015  610,200  940,016  760,938  342,720  158,792  106,341  2,919,007
Senior Vice President and  2014  593,077  880,003  752,170  815,000  199,384  89,427  3,329,061
Chief Financial Officer  2013  569,616  800,024  710,619  805,000  125,049  132,731  3,143,039
Brett D. Begemann  2015  813,600  1,200,066  971,322  571,200  303,954  164,754  4,024,896
President  2014  761,404  1,200,062  1,025,775  1,355,000  492,261  131,314  4,965,816
and Chief Operating Officer  2013  683,827  1,000,075  888,274  1,120,000  55,929  147,066  3,895,171
Robert T. Fraley, Ph.D.  2015  662,405  1,000,036  809,394  418,546  419,027  106,198  3,415,606
Executive Vice President and  2014  646,372  1,000,052  854,893  1,000,000  652,184  201,858  4,355,359
Chief Technology Officer  2013  632,583  1,000,075  888,274  1,020,000  198,358  162,392  3,901,682
David F. Snively  2015  610,200  680,079  550,554  342,720  246,325  91,033  2,520,911
Executive Vice President,  2014  593,077  680,099  581,289  815,000  403,409  92,340  3,165,214
Secretary and General Counsel  2013  562,831  640,056  568,538  850,000  127,540  136,350  2,885,315

 

1 Stock Awards and Option Awards. The amounts in these columns reflect grant date fair value at target in accordance with accounting guidance. These amounts do not factor in an estimate of forfeitures related to service-based vesting conditions and may not represent the amounts the proxy officers will actually receive from such awards. The assumptions used in determining the fair value of the awards are in Note 19 to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended Aug. 31, 2015. Additional information regarding the awards can be found below under the Grants of Plan-Based Awards Table and the Outstanding Equity Awards at Fiscal Year-End Table.
   
2 Stock Awards. Stock award values shown reflect grant date fair value assuming achievement of target-level performance. If achievement of outstanding-level performance were assumed, the grant date fair value of stock awards for the proxy officers for fiscal years 2015, 2014 and 2013, respectively, would be: Mr. Grant, $7,840,088, $7,040,023, and $6,400,012; Mr. Courduroux, $1,880,032, $1,760,006, and $1,600,048; Mr. Begemann, $2,400,132, $2,400,124, and $2,000,150; Dr. Fraley, $2,000,072, $2,000,103, and $2,000,150; and Mr. Snively, $1,360,158, $1,360,197, and $1,280,111.
   
  For Financial Goal RSU awards, accounting guidance requires us to evaluate each quarter the likelihood of achieving the different possible levels of performance in terms of the goals specified in the awards and incur expense based on the most probable outcome. Actual amounts that will be received by the proxy officers for Financial Goal RSUs will be determined at the end of the performance period based upon actual performance, which may differ from the amounts reported above.
   
3 Non-Equity Incentive Plan Compensation. This column represents cash awards earned by our proxy officers under that fiscal year’s AIP that were paid in November following the fiscal year. Our AIP is discussed in further detail in the Compensation Discussion and Analysis section beginning on page 57.
   
4 Change in Pension Value and Nonqualified Deferred Compensation Earnings. This column represents the aggregate actuarial increase in the present value of benefits under all of our pension plans during the stated fiscal years for each proxy officer. The amounts were determined by using interest rate and mortality rate assumptions consistent with those used in our financial statements, as in the Pension Benefits Table beginning on page 74. For Messrs. Grant, Courduroux and Snively, the amounts in this column consist solely of the aggregate change in pension value. For Mr. Begemann, and Dr. Fraley, in addition to the aggregate change in pension value, this column includes interest earned under our Deferred Payment Plan. This is set at the average Moody’s Baa Bond Index Rate in effect during the prior calendar year, to the extent that it exceeds 120% of the applicable federal long-term rate, and was as follows in 2015, 2014 and 2013: Mr. Begemann, $1,863, $1,409, and $1,966; and Dr. Fraley, $8,086, $7,322, and $11,859. The Deferred Payment Plan is discussed in further detail under Deferred Payment Plan beginning on page 78.

 

MONSANTO COMPANY 2015 PROXY STATEMENT 69
 
Executive Compensation
Executive Compensation Tables

 

5 All Other Compensation. Here is additional information on the amounts reported in the All Other Compensation column for fiscal 2015.

 

   Company Contributions to SIPA      
      Non-Qualified      
   Qualified Plan  Parity Plan  PerquisitesB  Total
Name  ($)  ($)  ($)  ($)
Hugh Grant  16,960  334,708  251,587  603,255
Pierre C. Courduroux  15,850  75,182  15,309  106,341
Brett D. Begemann  15,143  123,407  26,204  164,754
Robert T. Fraley, Ph.D.  16,960  89,238    106,198
David F. Snively  16,960  74,073    91,033

 

A Company Contributions to our Savings and Investment Plan. These columns represent matching contributions made by the company during fiscal 2015 for compensation deferred by participants under our Savings and Investment Plan, which we refer to as our “SIP,” and our ERISA Parity Savings and Investment Plan, which we refer to as our “Parity SIP Plan.” Our SIP is a tax-qualified defined contribution plan and our Parity SIP Plan is a non-qualified defined contribution plan under the Code. Information regarding the company matching contribution levels is provided under Parity SIP Plan on page 77.
   
B Perquisites. Amounts represent the aggregate incremental cost to the company of perquisites provided to our proxy officers, except for Dr. Fraley and Mr. Snively, for whom such amounts were less than $10,000. The amounts shown for Mr. Grant include personal use of corporate aircraft of $242,760, home security and other security expenses. For Mr. Courduroux, the amounts shown include costs of personal use of corporate aircraft of $11,476 and costs of participation in our executive medical program of $3,833. For Mr. Begemann, the amounts shown include costs of personal use of corporate aircraft of $25,096 and security-related expenses.
   
  We calculate the incremental cost of company aircraft used for a non-business flight by multiplying the aircraft’s hourly variable operating cost by a trip’s flight time, including any flight time of an empty return or deadhead flight. Fixed costs that do not vary based on usage are not included in the calculation of direct operating costs. We incur minimal incremental costs for passengers who travel as the guest of executives traveling on the aircraft for business purposes, but we do consider guest travel to be a perquisite.

 

70 MONSANTO COMPANY 2015 PROXY STATEMENT
 
Executive Compensation
Executive Compensation Tables
    

 

Grants of Plan-Based Awards Table

 

The following table provides additional information about plan-based awards granted to our proxy officers during fiscal 2015. See Compensation Discussion and Analysis for more information about the terms of the awards.

 

         Estimated Possible  Estimated Future Payouts  All Other      
         Payouts Under Non-Equity  Under Equity Incentive  Option  Exercise  Grant Date
      Grant  Incentive Plan Awards1   Plan Awards2  Awards;  or Base  Fair Value
      Date for                    Number of  Price of  of Stock
      Equity-                    Securities  Option  and Option
   Award  Based  Threshold  Target   Maximum  Threshold  Target   Maximum  Underlying  Awards  Awards
Name  Type  Awards  ($)  ($)  ($)1  (#)  (#)  (#)  Awards(#)3  ($/Sh)4  ($)5
Hugh Grant  Annual Incentive    941,614  2,690,325                     
   Stock Options  10/27/14                    130,300  112.82  3,172,805
   Financial Goal RSUs  10/27/14           17,373  34,746  69,492        3,920,044
Pierre C. Courduroux  Annual Incentive    171,360  489,600                     
   Stock Options  10/27/14                    31,250  112.82  760,938
   Financial Goal RSUs  10/27/14           4,166  8,332  16,664        940,016
Brett D. Begemann  Annual Incentive    285,600  816,000                     
   Stock Options  10/27/14                    39,890  112.82