SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

     Date of report (Date of earliest event reported): January 26, 2005

                                  ASHLAND INC.
           (Exact name of registrant as specified in its charter)

                                  Kentucky
               (State or other jurisdiction of incorporation)


              1-2918                                         61-0122250
       (Commission File Number)                          (I.R.S. Employer
                                                        Identification No.)


   50 E. RiverCenter Boulevard, Covington, Kentucky          41012-0391
           (Address of principal executive offices)          (Zip Code)


       P.O. Box 391, Covington, Kentucky                     41012-0391
                 (Mailing Address)                           (Zip Code)


        Registrant's telephone number, including area code (859) 815-3333

Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17
     CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
     CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))



Item 1.01.  Entry into a Material Definitive Agreement

On January 26, 2005, the Personnel and  Compensation  Committee (the "P & C
Committee") of the Board of Directors of Ashland Inc.  ("Ashland") approved
performance   hurdle,   target  and  maximum   objectives   for   incentive
compensation ("IC") awards for fiscal year 2005, and performance objectives
for the 2005 - 2007 Performance Period for the Long-Term  Incentive Program
("LTIP"),  pursuant to the Amended and Restated Ashland Inc. Incentive Plan
(the "Incentive Plan").

For fiscal 2005,  objectives  for IC payments under the Incentive Plan were
established by the P & C Committee as Ashland  return on  investment,  cash
flow,   division  operating  income  and  division  return  on  investment.
Financial  weightings  of these  objectives  will  vary  depending  upon an
individual employee's role at Ashland.

The  P  &  C  Committee  also  established  the  following  objectives  and
corresponding  weighting for LTIP payments under the Incentive Plan for the
2005 - 2007 Performance Period:

o    Executive Officers:  a target (i) three-year average Ashland return on
     investment  (30%)  and (ii)  three-year  weighted  average  return  on
     investment of the wholly-owned divisions (70%).

o    Ashland employees (not specifically focused on one division): a target
     three-year  weighted  average return on investment of the wholly-owned
     divisions (100%).

o    Ashland  employees  (focused on a specific  division):  a target three-year
     weighted  average  return on  investment  of the  wholly-owned  division of
     between 60% - 80%;  three-year division return on investment of between 20%
     - 40%.






                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                               ASHLAND INC.
                                  -------------------------------------------
                                              (Registrant)



Date:  January 31, 2005                   /s/ David L. Hausrath
                                 --------------------------------------------
                                 Name:     David L. Hausrath
                                 Title:    Senior Vice President, General
                                           Counsel and Secretary