Notice of Annual Meeting | |
of Shareowners and | |
2012 Proxy Statement | |
December 10, 2012 | |
Monsanto Company |
800 North Lindbergh Boulevard |
St. Louis, Missouri 63167 |
Phone (314) 694-1000 |
http://www.monsanto.com |
December 10, 2012
You are cordially invited to attend our annual meeting of shareowners on January 31, 2013. We will hold the meeting at 1:30 p.m. Central Standard Time in A Building at our Creve Coeur Campus, 800 North Lindbergh Boulevard, St. Louis County, Missouri. A map with directions to our Creve Coeur Campus can be found near the end of the proxy statement on page E-1.
In connection with the meeting, we have prepared a notice of the meeting, a proxy statement, and our 2012 annual report to shareowners, which provides detailed information relating to our activities and operating performance. On or about December 10, 2012, we mailed to our shareowners a Notice containing instructions on how to access these materials online. We believe electronic delivery will expedite the receipt of materials, while lowering costs and reducing the environmental impact of our annual meeting by reducing printing and mailing of full sets of materials.
If you receive a Notice by mail, you will not receive a printed copy of the materials unless you specifically request one. However, the Notice contains instructions on how to receive a paper copy of the materials. If you have received paper copies of these materials, a proxy card will also be enclosed.
Whether or not you plan to attend the annual meeting of shareowners, we encourage you to vote your shares.
You may vote:
If you plan to attend the annual meeting in person, you must provide proof of share ownership, such as an account statement, and a form of personal identification in order to be admitted to the meeting.
We will make available an alphabetical list of shareowners entitled to vote at the meeting for examination by any shareowner of record as of the close of business on December 3, 2012 during our ordinary business hours at our Shareowner Services Department, located in E Building at our Creve Coeur Campus, from January 21, 2013 until the meeting.
On behalf of the entire board of directors, we look forward to seeing you at the meeting.
Sincerely,
Hugh Grant
Chairman of the Board of Directors
and Chief Executive
Officer
2012 PROXY STATEMENT | MONSANTO COMPANY | i |
Monsanto Company |
800 North Lindbergh Boulevard |
St. Louis, Missouri 63167 |
Phone (314) 694-1000 |
http://www.monsanto.com |
NOTICE OF
ANNUAL MEETING OF SHAREOWNERS
JANUARY 31, 2013
The annual meeting of shareowners of Monsanto Company will be held in A Building at our Creve Coeur Campus, 800 North Lindbergh Boulevard, St. Louis County, Missouri, on Thursday, January 31, 2013, at 1:30 p.m. Central Standard Time for the following purposes:
1. | To elect the four directors named in the proxy statement to serve until our 2016 annual meeting; | ||
2. | To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2013; | ||
3. | To approve, by non-binding vote, executive compensation; | ||
4. | To approve an amendment to the Amended and Restated Certificate of Incorporation of the Company to declassify the Board; | ||
5. | To vote on a shareowner proposal described in the attached proxy statement, if properly presented at the meeting; and | ||
6. | To transact such other business as may properly come before the meeting. |
By Order of the Board of Directors,
MONSANTO COMPANY
David F. Snively
Secretary
St.
Louis, Missouri
December 10, 2012
IMPORTANT NOTICE |
ii | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Table of Contents to the Proxy Statement |
General Information | 1 | ||
Questions and Answers about the Annual Meeting and Voting | 1 | ||
Caution Regarding Forward-Looking Statements | 5 | ||
Corporate Governance and Ethics | 6 | ||
Board of Directors Charter and Committee Charters | 6 | ||
Director Independence | 8 | ||
Board Leadership Structure | 9 | ||
Board Role in Risk Oversight and Assessment | 9 | ||
Related Person Transactions Policy | 10 | ||
Other Policies and Practices That Guide and Govern Our Actions | 11 | ||
Shareowner Communication with our Board of Directors | 12 | ||
Information Regarding Board of Directors | 13 | ||
Nominees for Director Whose Terms Would Expire at the 2016 Annual Meeting | 13 | ||
Directors Whose Terms Expire at the 2014 Annual Meeting | 15 | ||
Directors Whose Terms Expire at the 2015 Annual Meeting | 16 | ||
Board Meetings and Committees | 18 | ||
Board Committee Membership | 19 | ||
Executive Committee | 19 | ||
Audit and Finance Committee | 19 | ||
Nominating and Corporate Governance Committee | 20 | ||
People and Compensation Committee | 20 | ||
Compensation Committee Interlocks and Insider Participation | 21 | ||
Science and Technology Committee | 21 | ||
Sustainability and Corporate Responsibility Committee | 21 | ||
Compensation of Directors | 21 | ||
Director Compensation Table | 24 | ||
Stock Ownership of Management and Certain Beneficial Owners | 25 | ||
Section 16(a) Beneficial Ownership Reporting Compliance | 26 | ||
Proxy Item No. 1: Election of Directors | 26 | ||
Report of the Audit and Finance Committee | 26 | ||
Proxy Item No. 2: Ratification of Independent Registered Public Accounting Firm | 28 | ||
Report of the People and Compensation Committee | 29 | ||
Executive Compensation | 30 | ||
Compensation Discussion and Analysis | 30 | ||
Executive Summary | 30 | ||
Overview of Our Executive Compensation Program | 34 | ||
Detailed Information About Our Executive Compensation Program | 37 | ||
Our Fiscal 2013 Executive Compensation Program | 44 | ||
Setting Executive Compensation | 44 | ||
Other Arrangements and Policies Related to Our Executive Compensation Program | 47 |
2012 PROXY STATEMENT | MONSANTO COMPANY | iii |
Summary Compensation Table | 49 | ||
Grants of Plan-Based Awards Table | 51 | ||
Additional
Information Explaining Summary Compensation and Grants of Plan-Based
Awards Tables |
52 | ||
Outstanding Equity Awards at Fiscal Year-End Table | 57 | ||
Option Exercises and Stock Vested Table | 59 | ||
Pension Benefits | 59 | ||
Non-Qualified Deferred Compensation | 63 | ||
Potential Payments Upon Termination or Change of Control | 65 | ||
Equity Compensation Plan Table | 70 | ||
Proxy Item No. 3: Advisory (Non-binding) Vote Approving Executive Compensation | 71 | ||
Proxy Item No. 4: Proposal to Amend the Amended and Restated Certificate of Incorporation of the Company | |||
to Declassify the Board | 72 | ||
Proxy Item No. 5: Shareowner Proposal | 74 | ||
Other Matters | 77 | ||
Shareowner Proposals for 2014 Annual Meeting | 77 | ||
Other Information | 78 | ||
Appendices | |||
APPENDIX A | Board of Directors Independence Standards | A-1 | |
APPENDIX B | Desirable Characteristics of Directors | B-1 | |
APPENDIX C | Reconciliation of Non-GAAP Financial Measures | C-1 | |
APPENDIX D | Proposed Amendment to Certificate of Incorporation | D-1 | |
APPENDIX E | Map | E-1 |
iv | MONSANTO COMPANY | 2012 PROXY STATEMENT |
PROXY STATEMENT |
General Information |
Our board of directors is soliciting proxies from our shareowners in connection with our annual meeting of shareowners to be held on Thursday, January 31, 2013, and at any and all adjournments or postponements thereof. No business can be conducted at the annual meeting unless a majority of all outstanding shares entitled to vote are either present in person or represented by proxy at the meeting. As far as we know, the only matters to be brought before the annual meeting are those referred to in this proxy statement. If any additional matters are presented at the annual meeting, the persons named as proxies may vote your shares in their discretion.
This proxy statement and our 2012 Annual Report are first being mailed to shareowners who requested paper copies, or made available on our website at http://www.monsanto.com/investors/Pages/annual-report.aspx, on December 10, 2012. Information on our website does not constitute part of this proxy statement.
Unless otherwise noted, the information in this proxy statement covers our 2012 fiscal year (or fiscal 2012), which ran from September 1, 2011 through August 31, 2012, and in some cases our 2011 fiscal year (or fiscal 2011), which ran from September 1, 2010 through August 31, 2011, and our 2010 fiscal year (or fiscal 2010), which ran from September 1, 2009 through August 31, 2010. The term Former Monsanto in this proxy statement refers to a corporation that was then known as Monsanto Company that operated, among other businesses, an agricultural products division. Former Monsanto is now known as Pharmacia Corporation and is a wholly owned subsidiary of Pfizer Inc. Former Monsanto transferred its agricultural products division to us in September 2000.
Questions and Answers about the Annual Meeting and
Voting |
When: | Thursday, January 31, 2013, at 1:30 p.m. Central Standard Time | |
Where: | A Building at our Creve Coeur Campus, 800 North Lindbergh Boulevard, St. Louis, Missouri 63167. A map with directions to the meeting can be found near the back of the proxy statement on page E-1. |
Who is
entitled to vote at the meeting?
You are entitled to vote at the meeting if you owned Monsanto shares
(directly or in street name, as defined below) as of the close of business on
December 3, 2012, the record date for the meeting. On that date,
________________ shares of our common stock were outstanding and entitled to
vote and no shares of our preferred stock were outstanding. Each share of our
common stock is entitled to one vote with respect to each matter on which it is
entitled to vote; there is no cumulative voting with respect to any
proposal.
What do I need
to do if I plan to attend the meeting in person?
If you plan to attend the annual meeting in person, you
must provide proof of your ownership of our common stock as of the record date,
such as an account statement, and a form of personal identification for
admission to the meeting.
If you hold your shares in street name, and you also wish to be able to vote at the meeting, you must obtain a proxy, executed in your favor, from your bank or broker.
2012 PROXY STATEMENT | MONSANTO COMPANY | 1 |
|
Shareowner of Record. If your shares are registered directly in your name with our transfer agent, you are considered the shareowner of record with respect to those shares, and a Notice containing instructions on how to access our proxy statement and annual report online was sent directly to you. As the shareowner of record, you have the right to vote your shares as described herein.
Street Name Shareowner. If your shares are held by a bank or broker as your nominee, you are considered the beneficial owner of shares held in street name, and the Notice containing instructions on how to access our proxy statement and annual report online was forwarded to you by your bank or broker who is considered the shareowner of record with respect to those shares. Your bank or broker will send you, as the beneficial owner, a separate package describing the procedure for voting your shares. You should follow the instructions provided by your bank or broker to vote your shares. You are also invited to attend the annual meeting.
What matters
am I being asked to vote on at the meeting and what vote is required to approve
each matter?
You are being asked to vote on five
proposals. Proposal 1 requests election of directors. Because this election is
not a contested election, each director will be elected by the vote of the
majority of the votes cast when a quorum is present. A majority of the votes
cast means that the number of votes cast for a director exceeds the number of
votes cast against that director. Votes cast excludes abstentions and any
votes withheld by brokers in the absence of instructions from street-name
holders (broker non-votes).
The affirmative vote of a majority of the votes cast is required to: ratify the appointment of our independent registered public accounting firm (Proposal 2); approve, by non-binding vote, executive compensation (Proposal 3); and to approve the shareowner proposal (Proposal 5). Abstentions and broker non-votes will therefore have no effect on Proposals 2, 3, and 5 under our companys bylaws.
Under the Certificate of Incorporation and the Bylaws, approval of the proposed amendment to the Certificate of Incorporation to declassify the board (Proposal 4) must be approved by the affirmative vote of the holders of at least 70% of the voting power of the outstanding shares of common stock of the company entitled to vote generally in the election of directors, voting together as a single class. Accordingly, Proposal 4 will be approved upon the affirmative vote of the holders of 70% of our outstanding common stock. Abstentions and broker non-votes will therefore have the same effect as an against vote with respect to Proposal 4.
Although the advisory vote on Proposal 3 is non-binding, as provided by law, our board will review the results of the vote and, consistent with our record of shareowner engagement, will take it into account in making a determination concerning executive compensation.
Who counts the
votes?
We have engaged Broadridge Financial
Solutions, Inc. as our independent agent to receive and tabulate shareowner
votes. Broadridge will separately tabulate for, against and withhold
votes, abstentions and broker non-votes. We have also retained an independent
election inspector to certify the results, determine the existence of a quorum
and the validity of proxies and ballots, and perform any other acts required
under the General Corporation Law of Delaware.
2 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
The telephone and Internet voting facilities for shareowners of record, but not including shares held in our Savings and Investment Plan (SIP) (which are described below), will close at 11:59 p.m. Eastern Standard Time on January 30, 2013. The Internet and telephone voting procedures are designed to authenticate shareowners by use of a control number and to allow you to confirm that your instructions have been properly recorded.
If you hold your shares in street name, your bank or broker will send you a separate package describing the procedures and options for voting your shares. Please read the voting instructions on the Notice or proxy card or the information sent by your broker or bank.
What does it
mean to give a proxy?
Your properly completed proxy/voting
instruction card will appoint Hugh Grant and David F. Snively as proxy holders
or your representatives, or The Northern Trust Company (Northern) as trustee
of our SIP, as the case may be, to vote your shares in the manner directed
therein by you. Mr. Grant is our chairman of the board and chief executive
officer. Mr. Snively is our executive vice president, secretary and general
counsel. If you hold shares in the SIP, your proxy permits you to direct the
proxy holders or to instruct Northern, as the case may be, to vote for,
against, or abstain from the nominees for director and Proposals 2, 3, 4,
and 5.
All of your shares entitled to vote and represented by a properly completed proxy or voting instruction received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions.
What happens
if I sign, date and return my proxy or voting instruction card but do not
specify how I want my shares voted on one of the
proposals?
Your proxy will be counted as a vote
for all of the nominees for directors, for Proposals 2, 3, and 4, and
against Proposal 5.
What happens
if I do not return a proxy card?
Shareowner of Record:
Your shares will not be voted if you
do not return a proxy card.
Street Name Shareowner: Your broker or nominee may vote your shares only on those proposals on which it has discretion to vote. We believe that under NYSE rules your broker or nominee has discretion to vote your shares on routine matters such as the ratification of our independent registered public accounting firm. However, your broker or nominee does not have discretion to vote your shares on non-routine matters such as the election of directors and Proposals 3, 4, and 5.
Can I change
my vote before the meeting?
Except as discussed below with
respect to voting instructions for shares held in our Savings and Investment
Plan, you can change your vote at any time before your proxy is exercised by
delivering a properly executed, later-dated proxy (including an Internet or
telephone vote), by revoking your proxy by written notice to the Secretary of
Monsanto, or by voting at the meeting. The method by which you vote by a proxy
will in no way limit your right to vote at the meeting if you decide to attend
in person.
Voting instructions with respect to shares held in our Savings and Investment Plan cannot be revoked or changed after 5:00 p.m. Eastern Standard Time on January 25, 2013.
If you are a Street Name Shareowner, please refer to the information forwarded by your bank or broker for procedures on changing your voting instructions.
How can I get
assistance in voting my shares?
To get help in voting your shares,
please contact Morrow & Co., LLC toll-free within the United States at (800)
607-0088 and at (203) 658-9400 outside of the U.S.
2012 PROXY STATEMENT | MONSANTO COMPANY | 3 |
|
Is the proxy statement
available on the Internet?
Yes. As
described in the prior question, most shareowners will receive the proxy
statement online. If you received a paper copy, you can also view these
documents on the Internet by accessing our website at
http://www.monsanto.com/investors/Pages/annual-report.aspx. You can elect to
receive future proxy statements and annual reports over the Internet instead of
receiving paper copies by mail by following the instructions set forth on your
proxy card.
Who is paying for the cost of
this proxy solicitation?
We will bear
the expense of preparing, printing and mailing this proxy material, as well as
the cost of any required solicitation. Our directors, officers or employees may
solicit proxies on our behalf. We have engaged Morrow & Co., LLC to assist
us in the solicitation of proxies. We expect to pay Morrow approximately $11,000
for these services plus expenses. In addition, we will reimburse banks, brokers
and other custodians, nominees and fiduciaries for reasonable expenses incurred
in forwarding proxy materials to beneficial owners of our stock and obtaining
their proxies.
What if I participate in the
Monsanto Savings and Investment Plan?
If you participate in a Monsanto stock fund under our Savings and
Investment Plan and had shares of our common stock associated with your account
on the record date of December 3, 2012, you will receive an electronic notice
unless you opted to receive paper copies of the proxy materials. The electronic
notice will contain voting instructions with respect to all shares registered in
the same name, whether inside or outside of the plan. If your accounts inside
and outside of the plan are not registered in the same name, you will receive a
separate electronic notice with respect to the shares associated with your
Savings and Investment Plan account.
Shares of common stock in our Savings and Investment Plan will be voted by Northern as trustee of the plan. Plan participants in a Monsanto stock fund should indicate their voting instructions to Northern by using the toll-free telephone number, indicating their instructions over the Internet or submitting an executed proxy card.
Voting instructions regarding plan shares must be received by 5:00 p.m. Eastern Standard Time on January 25, 2013, and all telephone and Internet voting facilities with respect to plan shares will close at that time. You can revoke your voting instructions with respect to shares held in our Savings and Investment Plan prior to such time by timely delivery of a properly executed, later-dated voting instruction card (or an Internet or telephone vote), or by delivering a written revocation of your voting instructions to Northern.
All voting instructions from plan participants will be kept confidential. If a participant does not timely submit voting instructions, the shares allocated to such participant, together with unallocated shares, will be voted in accordance with the pro-rata vote of the participants who did provide instructions.
4 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Caution Regarding Forward-Looking
Statements |
In this proxy statement, and from time to time throughout the year, we share certain expectations for our companys 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.
Our forward-looking statements represent our estimates and expectations at the time that we make them. However, circumstances change constantly, often unpredictably, and investors should not place undue reliance on these statements. Many events beyond our control will determine whether our expectations will be realized. 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. In the interests of our investors, and in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Part I. Item 1A. Risk Factors in our most recent Form 10-K report filed with the SEC explains some of the important reasons that actual results may be materially different from those that we anticipate.
2012 PROXY STATEMENT | MONSANTO COMPANY | 5 |
Corporate Governance and Ethics |
Our company is committed to the values of effective corporate governance and high ethical standards. Our board believes that these values are conducive to long-term performance and reevaluates our policies on an ongoing basis to ensure they sufficiently meet our companys needs. Listed below are some of the significant corporate governance practices and policies we have adopted.
Additional information is provided below regarding these and certain other key corporate governance and ethics policies that we believe enable us to manage our business in accordance with the highest standards of business practices and in the best interest of our shareowners. Our corporate website includes additional information and copies of these policies, as noted below. Most policies may be found at http://www.monsanto.com/whoweare/Pages/corporate-governance.aspx, along with copies of our certificate of incorporation and bylaws. Note that information on our website does not constitute part of this proxy statement. 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.
Board of Directors Charter and Committee
Charters |
Our board of directors has adopted clear corporate governance policies to assist the board and its committees in the exercise of their responsibilities, several of which are described below. Each of the board committees has a written charter that sets forth the purposes, goals and responsibilities of the committee as well as qualification for committee membership, procedures for committee membership, appointment and removal, committee structure and operations and committee reporting to the full board. The board and committee charters provide our shareowners a transparent view of how our board functions. The charters are found on our website at http://www.monsanto.com/whoweare/Pages/corporate-governance.aspx.
6 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Composition of the Board of
Directors |
The number of directors on our board will not be less than five nor more than 20 and is fixed, and may be increased or decreased from time to time by resolution of our board of directors. Currently, the board has fixed the number of directors at eleven members. Our board of directors is divided into three classes, with terms expiring at successive annual meetings. In the case of an appointment of a director or if there is a change in the number of directors, the number of directors in each class will be apportioned as nearly equally as possible. However, we are proposing an amendment to declassify our board of directors as described in Proposal 4: Proposal to Amend the Amended and Restated Certificate of Incorporation of the Company to Declassify the Board.
Nomination of
Directors |
Our board is responsible for nominating members and filling vacancies on the board that may occur between annual meetings of shareowners, in each case based upon the recommendation of the nominating and corporate governance committee. The committee seeks input from other board members and senior management to identify and evaluate nominees for director. The committee may hire a search firm or other consultant, and has hired a search firm to assist in identifying and evaluating potential candidates for our board. The committee will consider nominees recommended by shareowners for election provided the names of such nominees, accompanied by relevant biographical information, and relevant information about the shareowner submitting the nominee, are provided in writing to our Secretary in accordance with the requirements of our bylaws described below under Other Matters Shareowner Proposals for 2014 Annual Meeting.
When evaluating potential director candidates, our nominating and corporate governance committee takes into consideration the Desirable Characteristics of Directors in our board charter (see Appendix B), which includes consideration of diversity. The 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 board reviews its effectiveness in balancing these considerations through ongoing consideration of directors and nominees, as well as the boards annual self-evaluation process. The nominating and corporate governance committee also considers whether potential director candidates will likely satisfy the independence standards for service on the board, the audit and finance committee, the people and compensation committee and the nominating and corporate governance committee, as set forth in the board charter (see Appendix A).
Director Orientation and Continuing
Education |
Upon joining the board, directors are provided with an initial orientation about our company, including our business operations, strategy and governance. 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, or to participate in a comparable director education program offered at another board on which the director serves. The director may satisfy this requirement if he or she participated in a comparable program within two years prior to being elected to our board. We provide our directors with resources and ongoing education opportunities 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 company 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. As part of the board self-evaluation process, each director also conducts a self-evaluation. The process is designed and overseen by the nominating and corporate governance committee, and the results of the evaluations are reported to the full board.
2012 PROXY STATEMENT | MONSANTO COMPANY | 7 |
Each committee, other than the executive committee, reviews and reassesses the adequacy of its charter annually and recommends any proposed changes. Each committee also annually reviews its own performance and reports the results to the board. The nominating and corporate governance committee oversees and reports annually to the board its assessment of each committees performance evaluation process.
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 board has established independence standards for determining director independence, which conform to the NYSEs independence criteria. The standards are found in Appendix A.
In determining director independence, the board considered the independence standards and relevant facts and circumstances, including any direct or indirect transactions, relationships and arrangements between a director and Monsanto. Our board considered the following, each of which is within the NYSEs standards and our independence standards. Our board determined that the directors did not have a material interest in the transactions and that they would not impair each such directors independent judgment.
Based upon these considerations, the board has determined that the following directors are independent: David L. Chicoine, Janice L. Fields, Arthur H. Harper, Laura K. Ipsen, Gwendolyn S. King, C. Steven McMillan, Jon R. Moeller, William U. Parfet, George H. Poste, and Robert J. Stevens. Accordingly, ten of our eleven directors are independent, and each of the following committees of the board is composed solely of independent directors:
Charitable
Contributions |
Our board is committed to maintaining the independence of our independent directors. In support of this goal, our board implemented a Charitable Contributions Policy. The policy requires that any request by a director that the company make a charitable contribution 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) to determine whether the donation would impair the directors independence.
8 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Board Leadership Structure |
Our board believes that its current leadership structure, in which the roles of chairman and chief executive officer are held by one person, is best for Monsanto and its shareowners at this time. In his dual role, Mr. Grant is able to utilize the in-depth focus and perspective gained in running the company to effectively and efficiently guide our board. He fulfills his responsibilities in chairing the board through close interaction with our lead director, Robert Stevens, who was elected by the independent directors of our board.
The board has structured the role of our independent lead director to strike an appropriate balance to the combined chairman and chief executive officer role and to fulfill the important requirements of independent leadership on the board. As lead director, Mr. Stevens:
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.
Further information about board leadership roles, including a comparison of the duties of our chairman and lead director, is available at http://www.monsanto.com/whoweare/Pages/board-of-directors-leadership-roles.aspx.
Shareowners and other interested persons may contact Mr. Stevens directly by mail at the Office of the Lead Director, Monsanto Company, 800 North Lindbergh Boulevard, Mail Stop A3NA, St. Louis, Missouri 63167.
We will continue to reexamine our corporate governance policies and leadership structures on an ongoing basis to ensure that they continue to meet the companys needs.
Board Role in Risk Oversight and
Assessment |
Our company has an enterprise risk management program overseen by senior management. Enterprise risks are identified and prioritized by management, and each prioritized risk is assigned to a board committee or the full board for oversight. For example, strategic risks are overseen by the full board; financial and business conduct risks are overseen by the audit and finance committee; risks related to the companys governance structure and from related person transactions are overseen by the nominating and corporate governance committee; scientific risks are overseen by the science and technology committee; reputational and environmental risks are overseen by the sustainability and corporate responsibility committee; and, as further described in the following section, compensation risks are overseen by our people and compensation committee. Management regularly reports on enterprise risks to the relevant committee or the board. Additional review or reporting on enterprise risks is conducted as needed or as requested by the board or relevant committee. We believe that these processes are consistent with, and provide additional support for, the current board leadership structure.
2012 PROXY STATEMENT | MONSANTO COMPANY | 9 |
Compensation-Related
Risk |
Our company regularly assesses risks related to our compensation programs, including our executive compensation programs, and does 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 committees direction, management and the committees independent compensation consultant, Frederic W. Cook & Co., Inc. (Cook & Co.), provide ongoing information to the committee regarding compensation factors that could mitigate or encourage excessive risk-taking.
In addition, in August 2012, management provided a risk assessment of the companys compensation programs to the people and compensation 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:
Related Person Transactions
Policy |
The board has adopted a written policy regarding the review, approval or ratification of transactions involving certain persons that SEC regulations require to be disclosed in proxy statements, which are commonly referred to as related person transactions. A related person is defined under the applicable SEC regulation and includes our directors, executive officers, 5% or more beneficial owners of our common stock, and each of their immediate family members. Under the written policy, our nominating and corporate governance committee is responsible for reviewing, approving or ratifying any related person transactions. 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. Following is a description of matters reviewed by the nominating and corporate governance committee under this policy.
In June 2008, the board elected Kerry Preete as an executive officer of the company. William Sherk, Mr. Preetes brother-in-law, has worked in Former Monsantos and our Canadian business since 1999 in various positions. From September 2010 to December 2010 he was the national account manager, from December 2010 to June 2012 he was the crop protection sales manager and since June 2012 has been the crop protection business lead. Mr. Sherks 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 chief commercial officer, has been involved in approving any special pay actions and awards for Mr. Sherk. During fiscal 2012, Mr. Sherk received annual base pay of approximately $133,638. He also received an annual incentive award with respect to the fiscal 2012 performance period of approximately $39,891. These amounts are based on a September 1, 2012 exchange rate. In October 2012, Mr. Sherk was granted 300 stock options and 78 RSUs under our 2005 Long-Term Incentive Plan, as amended and restated as of January 24, 2012, as the long-term incentive component of his compensation.
10 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Other Policies and Practices That Guide and Govern Our
Actions |
In addition to our board of directors Charter and Related Person Transactions Policy, we have adopted several other policies and practices that guide and govern the manner in which we act, which are described below.
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. Our Pledge is available on our website at http://www.monsanto.com/whoweare/Pages/monsanto-pledge.aspx. Our annual Corporate Social Responsibility and Sustainability Report, which describes many of the ways in which we have implemented the Pledge, is available on our website at http://www.monsanto.com/whoweare/Pages/corporate-sustainability-report.aspx.
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 our directors, officers and employees. In addition, the Code of Business Conduct applies to all actions taken on our behalf by persons representing our company in matters that may be subject to risk behaviors such as consultants, agents, sales representatives, distributors and independent contractors, who agree not to act inconsistently with these commitments when performing services on our behalf. Our Code of Business Conduct is available on our website at http://www.monsanto.com/whoweare/Pages/business-conduct.aspx.
The Code of Business Conduct is designed to provide guidance on and articulate our commitment to several key matters such as 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 us 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 affirm their commitment to the Code on an annual basis.
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 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. Employees may submit a complaint or question via a private post office box, an internal toll-free telephone number or a special e-mail mailbox dedicated to business conduct matters.
Financial Governance |
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 Code of Ethics for Chief Executives and Senior Financial Officers is available on our website at http://www.monsanto.com/whoweare/Pages/code-of-ethics.aspx. 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.
2012 PROXY STATEMENT | MONSANTO COMPANY | 11 |
Sustainable Yield
Commitments |
Sustainable agriculture is at the core of our company. We are committed to focus our own efforts and work with others to develop the technologies that enable farmers to produce more crops while conserving more of the natural resources that are essential to their success and the sustainability of the earth. Our long-term goals are to partner with farmers to produce more, conserve more and improve lives. More information regarding our sustainable yield commitments is available on our website at http://www.monsanto.com/whoweare/Pages/our-commitment-to-sustainable-agriculture.aspx.
Human Rights Policy |
Our Human Rights Policy was adopted by the board in April 2006. The policy is an important expression of our values as described in the Monsanto Pledge. The policy is one of the ways we hold ourselves accountable and demonstrate our commitment to protect and respect human rights as we conduct our business globally. Monsanto will work to identify and do business with partners who aspire in the conduct of their businesses to ethical standards that are consistent with this policy and will 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 to protect, respect and remedy human rights violations would be the most effective and honest model to address these complex and multifaceted issues. Our Human Rights Policy is available on our website at http://www.monsanto.com/whoweare/Pages/human-rights.aspx.
Political Contributions |
We are committed to participating constructively in the political process, as we believe participation is essential to our companys 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 at http://www.monsanto.com/whoweare/Pages/political-disclosures.aspx for more information about the ways in which we participate in the political process.
Shareowner Communication with our Board of
Directors |
Our board of directors has adopted a policy that provides a process for shareowners to send communications to the board. Shareowners may contact our board or the independent directors of our board through our website at http://www.monsanto.com/whoweare/Pages/ContactOurDirectors.aspx or they may send correspondence to 800 North Lindbergh Boulevard, Mail Stop A3NA, St. Louis, Missouri 63167, c/o David F. Snively, our Corporate Secretary.
12 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Information Regarding Board of Directors |
The ages, principal occupations, directorships held and any other information with respect to our nominees and directors, and the classes into which they have been divided, are shown below as of December 1, 2012.
Nominees for Director Whose Terms
Would Expire at the 2016 Annual
Meeting |
The board has nominated four directors to be elected at the 2013 annual meeting to serve for a three-year term ending with the 2016 annual meeting, or until a successor is elected and has qualified, or his or her earlier death, resignation or removal. Each nominee is currently a director of our company and has agreed to serve if elected.
David L. Chicoine, Ph.D. Principal
Occupation: Professor of Economics
and President, South Dakota State University 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. 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. 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 and our sustainability and corporate responsibility committee. |
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Arthur H. Harper Principal
Occupation: Managing Partner,
GenNx360 Capital Partners 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. 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 have 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. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 13 |
Gwendolyn S. King Principal
Occupation: President, Podium
Prose, LLC President, Podium Prose, a speakers 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). 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. Kings 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 enables her to provide valuable perspectives to our management and as chair of our sustainability and corporate responsibility committee. In addition, Ms. Kings 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. |
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Jon R. Moeller Principal
Occupation: Chief Financial
Officer, The Procter & Gamble Company Chief Financial Officer, The Procter & Gamble Company, one of the worlds leading consumer products companies, since January 2009; Vice President and Treasurer, The Procter & Gamble Company, July 2007-January 2009; Vice President, Finance and Accounting, Global Beauty and Global Health Care, The Procter & Gamble Company, July 2005-July 2007. Qualifications: Mr. Moeller has substantial finance and management expertise developed through his 24 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 committee. 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. 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. |
14 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Directors Whose Terms Expire at the 2014 Annual
Meeting |
Laura K. Ipsen Principal
Occupation: Corporate Vice
President, Worldwide Public Sector, Microsoft Corp. Corporate Vice President, Worldwide Public Sector of Microsoft Corp. since February 2012; Prior to Microsoft, Senior Vice President and General Manager, Connected Energy Networks, Cisco Systems, Inc., a manufacturer of Internet Protocol based networking products, October 2009-February 2012; Senior Vice President, Global Policy and Government Affairs, Cisco, September 2007-September 2009; Vice President, Global Policy and Government Affairs, Cisco, October 2001-August 2007. Qualifications: Ms. Ipsen has global expertise in energy, environmental issues, public policy, international trade and sales and marketing developed through her career in consulting and the high tech industry. In her senior leadership roles with global information technology companies, Ms. Ipsen has led multiple strategic business, sustainability, policy and regulatory efforts both internally and externally with government leaders worldwide, and has risk management experience. She has significant experience directing a comprehensive corporate sustainability strategy, including the development of global partnerships and an extensive technology portfolio. In light of the increasing importance information technology will play in our business success, Ms. Ipsens 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, as well as strategic oversight of our management and sustainability efforts. |
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William U. Parfet Principal
Occupation: Chairman and Chief
Executive Officer, MPI Research, Inc. Chairman and Chief Executive Officer of MPI Research, Inc., a pre-clinical toxicology research laboratory, since 1999; Co-Chairman of MPI Research, LLC, 1995-1999. Public Company Directorships in the Last Five Years: Stryker Corporation; Taubman Centers, Inc. 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. Parfets 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 Executive International, enable him to provide expert guidance and oversight of our management in his role as chair of our audit and finance committee. In addition, his service on the governance committees of other public companies, including serving as lead independent director, enables Mr. Parfet to provide insight and value to our governance and compliance processes. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 15 |
George H. Poste, Ph.D., D.V.M. Principal
Occupation: Chief Executive,
Health Technology Networks and Chief Scientist, Complex Adaptive Systems
Initiative, Arizona State University 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 March 2009; Director of the Biodesign Institute, a combination of research groups at Arizona State University, May 2003-March 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). 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. |
Directors Whose Terms Expire at the 2015 Annual
Meeting |
Janice L. Fields Principal
Occupation: Former President, McDonalds
USA, LLC President of McDonalds USA, LLC, a subsidiary of McDonalds Corporation, the worlds leading global foodservice retailer, January 2010-November 2012; Executive Vice President and Chief Operating Officer, McDonalds USA, LLC, 2006-2010; President of McDonalds Central Division, 2003-2006. 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 and strategic matters reviewed by our board. As a senior leader at a major public company in the food industry, Ms. Fields also gained experience in public policy matters and governance and financial oversight, which is valuable in connection with her service on our nominating and corporate governance committee. In addition, her insights about the food industry are important as we consider strategic goals for the development of products to grow our business. |
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16 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Hugh Grant Principal
Occupation: Chairman of the Board
and Chief Executive Officer, Monsanto Company Chairman of the Board and Chief Executive Officer of Monsanto Company, since August 2012; Chairman of the Board, President and Chief Executive Officer of Monsanto Company, October 2003-August 2012; President and Chief Executive Officer, Monsanto Company, May 2003-October 2003; Executive Vice President and Chief Operating Officer, Monsanto Company, 2000-2003; Co-President, Agricultural Sector, Former Monsanto Company, 1998-2000. Public Company Directorships in the Last Five Years: PPG Industries, Inc. 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. Grants service on the board of another public company and its nominating and corporate governance and officers-directors compensation committees provides Mr. Grant additional insights about service as our board Chairman. |
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C. Steven McMillan Principal
Occupation: Retired Chairman and
Chief Executive Officer, Sara Lee Corporation Chairman of the Board of Sara Lee Corporation, a global consumer packaged goods company, October 2001-October 2005; Chief Executive Officer, Sara Lee Corporation, July 2000-February 2005; President and Chief Operating Officer, Sara Lee Corporation, 2000-2004; President, Sara Lee Corporation, 1997-2000. Qualifications: Mr. McMillan has had significant operational experience leading a major international consumer products company, where he has gained expertise in finance, strategy, marketing, manufacturing, mergers and acquisitions, and human resources, and has had primary responsibility for risk management. These skills assist him in providing oversight of our executive team in their management of our 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, he is experienced in governance matters due to his past service on five other public company boards, which is important 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. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 17 |
Robert J. Stevens Principal Occupation: Chairman of the
Board and Chief Executive Officer, Lockheed Martin Corporation; effective January 1, 2013, Executive Chairman,
Lockheed Martin Corporation Chairman of the Board and Chief Executive Officer of Lockheed Martin Corporation, a high technology aerospace and defense company, January 2010-December 2012; Chairman of the Board, President and Chief Executive Officer, Lockheed Martin Corporation, April 2005-January 2010; President and Chief Executive Officer, Lockheed Martin Corporation, August 2004-April 2005; President and Chief Operating Officer, Lockheed Martin Corporation, October 2000-August 2004; Chief Financial Officer, Lockheed Martin Corporation, 1999-2001; Vice President Strategic Development, Lockheed Martin Corporation, 1998-1999; President and Chief Operating Officer of the former Lockheed Martin Energy and Environmental Sector, 1998-1999. Public Company Directorships in the Last Five Years: Lockheed Martin Corporation. 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, 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 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. |
Board Meetings and Committees |
During fiscal 2012, our board of directors met seven times and acted once by written consent. All directors attended 75% or more of the aggregate meetings of the board and of the board committees on which they served during fiscal 2012. The following chart shows the attendance of each director at committee meetings.
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.
Our board of directors has the following six committees: (1) executive; (2) audit and finance; (3) nominating and corporate governance; (4) people and compensation; (5) science and technology; and (6) sustainability and corporate responsibility. The written charter for each committee is available on our website at http://www.monsanto.com/whoweare/Pages/ContactOurDirectors.aspx.
18 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Board Committee Membership |
The following chart shows the membership and chairpersons of our board committees, committee meetings held and actions by written consent taken, and committee member attendance.
Nominating | Sustainability | |||||||||||||||||||||||||||||||
& Corporate | People & | Science & | & Corporate | |||||||||||||||||||||||||||||
Executive | Audit & Finance | Governance | Compensation | Technology | Responsibility | |||||||||||||||||||||||||||
Number of Meetings Held | ||||||||||||||||||||||||||||||||
in Fiscal 2012 | 0 | 13 | 5 | 7 | 5 | 5 | ||||||||||||||||||||||||||
Actions by written consent | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
David L. Chicoine | 5 | 5 | ||||||||||||||||||||||||||||||
Janice L. Fields | 5 | 5 | 5 | |||||||||||||||||||||||||||||
Hugh Grant | 0 | * | ||||||||||||||||||||||||||||||
Arthur H. Harper | 13 | 6 | ||||||||||||||||||||||||||||||
Laura K. Ipsen | 4 | 4 | ||||||||||||||||||||||||||||||
Gwendolyn S. King | 5 | 7 | 5 | * | ||||||||||||||||||||||||||||
C. Steven McMillan | 13 | 5 | 7 | * | ||||||||||||||||||||||||||||
Jon R. Moeller | 13 | 5 | ||||||||||||||||||||||||||||||
William U. Parfet | 0 | 11 | * | 6 | ||||||||||||||||||||||||||||
George H. Poste | 4 | * | 4 | |||||||||||||||||||||||||||||
Robert J. Stevens | 0 | 13 | 5 | * |
* Chairperson
Executive Committee |
Members: Messrs.
Grant (Chair), Parfet and Stevens
Our
executive committee has the powers of our board of directors in directing 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 which are reserved for our entire board of directors by
statute, our certificate of incorporation or our bylaws). Actions of the
executive committee are reported at the next regular meeting of our board of
directors.
Audit and Finance Committee |
Members: Messrs.
Parfet (Chair), Harper, McMillan, Moeller and Stevens
The audit and finance committee assists our board of
directors in fulfilling its responsibility to oversee:
As noted in the Report of the Audit and Finance Committee, our board of directors believes that all members of the audit and finance committee meet the independence and experience requirements of the listing standards of the NYSE. In addition, our board of directors has determined that each of the members of the audit and finance 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.
2012 PROXY STATEMENT | MONSANTO COMPANY | 19 |
For additional information regarding the audit and finance committee, please see Proxy Item No. 2: Ratification of Independent Registered Public Accounting Firm on page 28 and Report of the Audit and Finance Committee on page 26. |
Nominating and Corporate Governance
Committee |
Members: Messrs.
Stevens (Chair) and McMillan, Ms. Fields and Ms. King
Our nominating and corporate governance committee
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. Our nominating and corporate governance committee also
identifies and recommends individuals to our board of directors for nomination
as members of the board and its committees, and leads our board of directors in
its annual review of the boards performance.
Pursuant to its charter, all members of the nominating and corporate governance committee must meet the independence requirements contained in the listing standards of the NYSE. We believe all members of the nominating and corporate governance committee meet the current listing standards of the NYSE pertaining to independence.
People and Compensation
Committee |
Members: Messrs.
McMillan (Chair), Harper and Parfet, and Ms. King
Our people and compensation committee is responsible for:
Pursuant to its charter, our people and compensation committee must be comprised of at least three members of our board of directors who, in the opinion of our board of directors, meet the independence requirements of the NYSE, are non-employee directors pursuant to Rule 16b-3 of the Exchange Act and are outside directors for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code). Our board of directors has determined that all members of the people and compensation committee meet these requirements.
20 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Compensation Committee Interlocks and Insider
Participation |
No member of our people and compensation committee 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 SECs proxy rules and regulations.
Science and Technology
Committee |
Members: Dr. Poste (Chair), Dr.
Chicoine, Ms. Fields, Ms. Ipsen and Mr. Moeller
Our science and technology committee reviews and monitors
our science and technology initiatives in areas such as technological programs,
research, agricultural biotechnology and information technology. Our science and
technology committee also identifies and investigates significant emerging
science and technology issues and oversees the management of risks related to
our technology portfolio and information technology platforms.
Sustainability and Corporate Responsibility
Committee |
Members: Ms. King (Chair), Dr.
Chicoine, Ms. Fields, Ms. Ipsen and Dr. Poste
Our sustainability and corporate responsibility committee
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. This
committee also reviews issues affecting company products in the marketplace,
including issues of agricultural biotechnology, and identifies and investigates
significant emerging issues. It also receives periodic reports on the companys
business conduct program, progress related to the companys Human Rights Policy,
and the companys charitable and political contributions and reports to the full
board as to the status of our companys programs and initiatives on
sustainability, environmental matters and social responsibility.
Compensation of Directors |
The objectives for our non-employee director compensation program are to attract highly-qualified individuals to serve on our board and to align their interests with those of our shareowners. Our non-employee directors are paid pursuant to our Non-Employee Director Equity Incentive Compensation Plan (the Directors Plan). 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.
Prior to the beginning of our fiscal 2012, our people and compensation committee considered the design of our director compensation program and reviewed information and recommendations from management; data from the same comparator group of companies it uses for determining compensation for our executives, as described on page 45, provided by Towers Watson & Co.; and other market data and analyses provided by the committees independent executive compensation consultant, Cook & Co. After reviewing the information, the committee determined that the plan design continued to align with market trends, yet the amount of our directors annual base retainer and certain retainers related to committee service were below the median range of our comparator group, considering our relative revenue at the time. The committee considered and recommended to our board of directors that it amend the Directors Plan, effective for fiscal 2012, to increase the annual base retainer from
2012 PROXY STATEMENT | MONSANTO COMPANY | 21 |
$195,000 to $215,000 and provide the following changes for annual additional retainer amounts for committee memberships or chairs: (i) $25,000 for service as our lead director (a new annual additional retainer); (ii) $35,000 for service as the chair of the audit and finance committee (increased from $25,000); (iii) $20,000 for service as the chair of the science and technology or sustainability and corporate responsibility committees (increased from $15,000); and (iv) $15,000 for service as a member of the audit and finance, people and compensation, and/or nominating and corporate governance committees, other than as the chair of any of those committees (increased from $10,000 for members of the audit and finance committee and a new annual additional retainer for members of the people and compensation and nominating and corporate governance committees). The board of directors approved the recommended increases, effective September 1, 2011. The increases positioned our program within our comparator groups median range of director pay, considering our relative revenue.
At the same time, the people and compensation committee recommended, and the board of directors approved, that effective for fiscal 2012, each of our non-employee directors is required to attain ownership of 12,000 shares of Monsanto common stock, increased from 10,000 shares. Other than the increased stock ownership requirement, no other changes were made to our non-employee director stock ownership policy, which is described below in this section.
Following is a summary of the Directors Plan for fiscal 2012:
Compensation Type | Amount | Form of Payment | |
Annual
Retainer (Components) |
Base retainer | $215,000 |
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 service as lead director | $25,000 | ||
Additional retainer amount for chair of the audit and finance committee | $35,000 | ||
Additional retainer amount for chair of the people and compensation and nominating and corporate governance committees | $25,000 | ||
Additional retainer amount for chairs of the science and technology and sustainability and corporate responsibility committees | $20,000 | ||
Additional retainer amount for each member of the audit and finance committee, people and compensation committee, and nominating and corporate governance committee (other than the chair) | $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 | $215,000 | Restricted stock that vests three years from grant date |
22 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
including 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.
In addition to the compensation described above, our non-employee directors are reimbursed for expenses incurred in connection with their attendance at board, committee and shareowners meetings, including expenses related to travel, lodging and food and related expenses. Non-employee directors are also reimbursed for reasonable expenses associated with other business activities related to service on our board of directors, such as participation in director education programs, and are insured under our travel accident policy while traveling on company business. Non-employee directors may use corporate aircraft, when available, for transportation to and from meetings and functions related to service as a director. Travel by any guests of directors traveling on the aircraft for business purposes is considered a perquisite to the director, although the company incurs minimal incremental costs for these guests. Personal use of our aircraft by our directors has been limited and is considered a perquisite.
Directors may participate in a matching gift program under which 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 $5,000. While our directors participate in the program on the same basis as our employees, SEC rules require that the amount of a directors participation in a charitable matching program be disclosed.
Our fiscal 2012 non-employee director compensation program required each of our non-employee directors to own 12,000 shares of Monsanto common stock. Shares may be counted toward these ownership requirements whether held directly or through a spouse, a retirement plan or a retirement account; provided, however, that shares pledged as security for a loan, stock options and restricted stock will not be counted toward ownership requirements. Until a director has met his or her stock ownership requirement, he or she must retain 25% of the pre-tax number of shares received upon an exercise of a stock option, vesting of restricted stock or settlement of other equity-based award granted under our long-term incentive plans (through the Directors Plan). The people and compensation committee reviews progress toward meeting the ownership requirements at least annually. As of the date of this proxy statement, all but three of our directors (each of whom only recently joined our board of directors) met his or her stock ownership requirements.
No changes have been made to our director compensation program for fiscal 2013.
2012 PROXY STATEMENT | MONSANTO COMPANY | 23 |
Director Compensation Table |
The following presents compensation to our non-employee directors for their services in fiscal 2012.
Fees Earned or | Stock | All Other | ||
Paid in Cash | Awards | Compensation | Total | |
Name | ($)1 | ($)2 | ($) | ($) |
David L. Chicoine, Ph.D. | 107,500 | 107,531 | 5,0003 | 220,031 |
Janice L. Fields | 115,010 | 115,010 | 230,020 | |
Arthur H. Harper | 122,489 | 122,489 | 244,978 | |
Laura K. Ipsen | 107,518 | 107,531 | 215,049 | |
Gwendolyn S. King | 132,500 | 132,483 | 264,983 | |
C. Steven McMillan | 135,000 | 135,034 | 5,0003 | 275,034 |
Jon R. Moeller | 115,000 | 114,975 | 229,975 | |
William U. Parfet | 132,500 | 132,483 | 264,983 | |
George H. Poste, Ph.D., D.V.M. | 117,526 | 117,526 | 235,052 | |
Robert J. Stevens | 139,997 | 139,997 | 279,994 |
1 The amounts shown in this column represent the elective half of the aggregate annual retainer payable to each director under the Directors Plan. The elective half of the retainer is payable, at the election of each director, in the form of deferred stock, restricted stock, current cash or deferred cash. For fiscal 2012, the following directors elected to receive deferred stock: Ms. Fields, 1,668.5 shares and Mr. Stevens, 2,031 shares. The following directors elected to receive restricted stock: Mr. Harper, 1,777 shares; Ms. Ipsen, 936 shares; and Dr. Poste, 1,705 shares. The following directors elected to receive current cash: Dr. Chicoine, Ms. Ipsen, Ms. King, Mr. McMillan, Mr. Moeller and Mr. Parfet. Each amount constitutes the aggregate grant date fair value of the equity awards for fiscal 2012 calculated in accordance with FASB ASC Topic 718, and because the awards were granted on the first day of the fiscal year and were fully vested at the end of the fiscal year, there is no unrecognized compensation expense for financial statement reporting purposes for fiscal 2012.
2 The amounts shown in this column represent the non-elective half of the aggregate annual retainer payable in deferred stock. The number of deferred shares granted to each director related to the non-elective half of the aggregate annual retainer was: Dr. Chicoine, 1,560; Ms. Fields, 1,668.5; Mr. Harper, 1,777; Ms. Ipsen, 1,560; Ms. King, 1,922; Mr. McMillan, 1,959; Mr. Moeller, 1,668; Mr. Parfet, 1,922; Dr. Poste, 1,705; and Mr. Stevens, 2,031. Each amount constitutes the aggregate grant date fair value of the equity awards for fiscal 2012 calculated in accordance with FASB ASC Topic 718, and because the awards were granted on the first day of the fiscal year and were fully vested at the end of the fiscal year, there is no unrecognized compensation expense for financial statement reporting purposes in fiscal 2012. The aggregate number of shares of deferred common stock credited to the account of each director as of Aug. 31, 2012 was: Dr. Chicoine, 5,199; Ms. Fields, 12,066; Mr. Harper, 8,787; Ms. Ipsen, 2,662; Ms. King, 36,817; Mr. McMillan, 45,990; Mr. Moeller, 1,819; Mr. Parfet, 46,098; Dr. Poste, 27,547; and Mr. Stevens, 46,640. The aggregate number of shares of restricted stock held by directors as of Aug. 31, 2012 was: Ms. Ipsen, 3,120 shares; and Mr. Moeller, 2,745 shares.
3 Represents a contribution by the company pursuant to its charitable matching program described above.
24 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Stock Ownership of Management and Certain Beneficial Owners |
Information is set forth below regarding beneficial ownership of our common stock, to the extent known to us, by:
No person is 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, 2012, except as otherwise noted.
Shares of Common | Shares Underlying | ||||
Stock Owned | Options | ||||
Directly or | Exercisable Within | Total | |||
Name | Indirectly (#) 1 2, 3 | 60 Days (#) 4 | (#) 5 | ||
Hugh Grant | 584,835 | 926,972 | 1,511,807 | ||
David L. Chicoine, Ph.D. | 8,030 | | 8,030 | ||
Janice L. Fields | 14,264 | | 14,264 | ||
Arthur H. Harper | 24,346 | | 24,346 | ||
Laura K. Ipsen | 8,517 | | 8,517 | ||
Gwendolyn S. King | 40,843 | | 40,843 | ||
C. Steven McMillan | 49,714 | | 49,714 | ||
Jon R. Moeller | 5,018 | | 5,018 | ||
William U. Parfet | 421,531 | | 421,531 | ||
George H. Poste, Ph.D., D.V.M. | 31,774 | | 31,774 | ||
Robert J. Stevens | 57,928 | | 57,928 | ||
Pierre C. Courduroux | 8,424 | 50,228 | 58,652 | ||
Brett D. Begemann | 78,904 | 213,866 | 292,770 | ||
Robert T. Fraley, Ph.D. | 64,301 | 237,274 | 301,575 | ||
David F. Snively | 30,874 | 106,366 | 137,240 | ||
All directors and executive officers as a group (22 persons) | 1,598,528 | 2,015,737 | 3,614,265 |
1 Includes the following shares of deferred stock deliverable within 60 days after Nov. 1, 2012 to each non-employee director as compensation under the Directors Plan as described beginning on page 21: Dr. Chicoine, 5,639; Ms. Fields, 13,010; Mr. Harper, 9,301; Ms. Ipsen, 3,091; Ms. King, 37,491; Mr. McMillan, 46,714; Mr. Moeller, 2,273; Mr. Parfet, 46,813; Dr. Poste, 28,124; Mr. Stevens, 47,928; and directors as a group, 240,384.
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, 6,693; Mr. Courduroux, 1,096; Mr. Begemann, 6,445; Dr. Fraley, 3,855; Mr. Snively, 19,719; and executive officers as a group, 71,545. 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, 41,535; Mr. Begemann, 7,853; Dr. Fraley, 17,399; Mr. Snively, 4,344; and executive officers as a group, 100,725; 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 executive officers as a group, 11,898. |
4 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, 2012 as the cut-off date, which is 60 days after Nov. 1, 2012. The shares indicated represent shares underlying stock options granted under the 2000 Long-Term Incentive Plan or the 2005 Long-Term Incentive Plan. The shares underlying options cannot be voted.
2012 PROXY STATEMENT | MONSANTO COMPANY | 25 |
5 The percentage of shares of our outstanding common stock, including options exercisable within 60 days after Nov. 1, 2012, beneficially owned by any director or executive officer does not exceed 1%. The percentage of shares of our outstanding common stock, including options exercisable within 60 days after Nov. 1, 2012, beneficially owned by all directors and executive officers as a group is approximately 0.7%.
Section 16(a) Beneficial Ownership Reporting Compliance |
Proxy Item No. 1: Election of
Directors |
The shareowners are being asked to elect each of Dr. Chicoine, Mr. Harper, Ms. King and Mr. Moeller to terms ending with the annual meeting to be held in 2016, until a successor is elected and qualified or until his or her earlier death, resignation or removal. The board nominated Dr. Chicoine, Mr. Harper, Ms. King and Mr. Moeller, for election at the 2013 meeting of shareowners upon the recommendation of the nominating and corporate governance committee. Each nominee is currently a director of our company. For more information regarding the nominees for director, see Information Regarding Board of Directors beginning on page 13 and Board Meetings and Committees beginning on page 18.
The board does not contemplate that any of the nominees will be unable 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 the board.
OUR BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES FOR DIRECTOR |
Report of the Audit and Finance Committee |
The audit and finance committee operates pursuant to a charter adopted and amended from time to time by our companys board of directors. The audit and finance committee has numerous oversight responsibilities beyond those related to the audited financial statements and the retention and oversight of the companys independent registered public accounting firm. One of the requirements contained in the audit and finance 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 audit and finance committee meet these requirements and are independent, as that term is used in relevant SEC rules. In addition, under the audit and finance committees charter, no director may serve as a member of the audit and
26 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
finance 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 audit and finance committee. Please see the audit and finance committees charter for a description of requirements for its members and its responsibilities.
In reliance on the reviews and discussions referred to below, and exercising our business judgment, the audit and finance committee has recommended to our board of directors (and our board of directors has approved) that the audited financial statements be included in the companys Annual Report on Form 10-K for the fiscal year ended August 31, 2012, for filing with the SEC. In fulfilling our responsibilities, the audit and finance committee, among other things, has reviewed and discussed the audited financial statements contained in the 2012 Form 10-K with the companys management and its independent registered public accounting firm.
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, the independent registered public accounting firm, 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 audit and finance committee discussed with the independent registered public accounting firm the matters required to be discussed by: Statement on Auditing Standards, AU Section 380 (SAS No. 61), Communication with Audit Committees, as amended; Statement on Auditing Standards, AU Section 722 (SAS 100), Interim Financial Information; and Rule 2-07 of Regulation S-X, Communication with Audit Committees; as well as the auditors independence from the company and its management, including the matters in the written disclosures and letter received by the audit and finance committee, as required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firms communications with the audit and finance committee concerning independence.
Members of the audit and finance committee rely, without independent verification, on the information and representations provided to them by management and on the representations made to them by the independent registered public accounting firm. Accordingly, the oversight provided by the audit and finance 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 companys financial statements by the independent registered public accounting firm has been carried out in accordance with auditing standards generally accepted in the United States.
For a detailed listing of the fees billed to the company by its independent registered public accounting firm, Deloitte and Touche LLP for fiscal years 2011 and 2012, see Proxy Item No. 2: Ratification of Independent Registered Public Accounting Firm below.
AUDIT AND FINANCE COMMITTEE
William U. Parfet, Chair
Arthur H. Harper
C. Steven McMillan
Jon
R. Moeller
Robert J. Stevens
October 16, 2012
In accordance with the rules of the SEC, the information contained in the Report of the Audit and Finance Committee shall not be deemed to be soliciting material or to be filed with the SEC or subject to the SECs Regulation 14A or to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically request that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.
2012 PROXY STATEMENT | MONSANTO COMPANY | 27 |
Proxy Item No. 2:
Ratification of Independent Registered Public Accounting
Firm |
Our audit and finance committee, pursuant to its charter, has appointed Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2013.
While the audit and finance committee is responsible for the appointment, compensation, retention, termination and oversight of the independent registered public accounting firm, the audit and finance committee and our board are requesting, as a matter of policy, that the shareowners ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm. The audit and finance 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 audit and finance 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. Furthermore, even if the appointment is ratified, the audit and finance 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.
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.
During and in connection with fiscal 2012, 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 sets forth an estimate of the fees that we expect to be billed for audit services for fiscal 2012, 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 sets forth the fees billed by Deloitte for audit, audit-related, tax and all other services during or in connection with fiscal 2011.
Amount Billed | ||
2012 Fiscal Year | 2011 Fiscal Year | |
Description of Professional Service | ($) | ($) |
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 |
9.7 million |
10.5 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 |
0.5 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 |
3.3 million |
All Other Fees expatriate assignment services (non-tax related) |
0.1 million |
0.3 million |
The audit and finance 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 audit and finance 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.
28 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Each year in connection with the audit and finance committees approval of the audit engagement plan for the following year, management submits to the audit and finance 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 audit and finance 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 audit and finance 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 audit and finance committee must specifically pre-approve the additional services and related fees. The chair of the audit and finance committee has the delegated authority to pre-approve the provision of additional services and fees not contemplated by these annual pre-approvals and will communicate any such approvals to the full audit and finance committee. In connection with any pre-approval, the audit and finance committee will consider whether such services are consistent with the rules of the SEC and the Public Company Accounting Oversight Board on auditor independence.
All of the audit services, audit-related services, tax services and all other services provided by Deloitte during or in connection with fiscal 2012 were pre-approved by the audit and finance committee in accordance with the audit and finance committees 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 2013 FISCAL YEAR |
Report of the People and Compensation
Committee |
The people and compensation committee of our board of directors has reviewed and discussed with management the following Compensation Discussion and Analysis. Based on that review and discussion, the people and compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement.
PEOPLE AND COMPENSATION COMMITTEE
C. Steven McMillan, Chair
Arthur H. Harper
Gwendolyn S. King
William U. Parfet
November 20, 2012
2012 PROXY STATEMENT | MONSANTO COMPANY | 29 |
Executive Compensation |
Compensation Discussion and Analysis |
The Compensation Discussion and Analysis, or CD&A, describes our overall executive compensation policies and practices, and focuses on fiscal 2012 compensation for the following individuals whom we refer to as our proxy officers: Hugh Grant, chairman and CEO; Pierre Courduroux, senior vice president and CFO; Brett Begemann, who assumed the role of our president and chief commercial officer on August 28, 2012; Robb Fraley, executive vice president and chief technology officer; and David Snively, executive vice president, general counsel and secretary.
These five individuals and six other officers make up our executive team. Our executive team is responsible for developing and implementing our strategic plans and initiatives and overseeing the day-to-day operations of the company. We refer to the 11 members of our executive team as our executives.
The CD&A is divided into the following sections:
Executive Summary |
Performance
Overview
Exceptional
Company Performance in Fiscal 2012
Building upon the strategy adopted in fiscal 2010 and momentum begun in fiscal 2011, our company achieved significantly improved financial results for fiscal 2012, attributable to excellent operational performance and substantial growth across our global business.
Our CEO and his executive team led the implementation of our disciplined growth strategy, focusing on bringing more product choices to our farmer customers to enable them to maximize yield on their lands to support a growing world population. Execution of this strategy enabled us to achieve financial, business and organizational results that include the following highlights:
| In fiscal 2012, we announced a new $1 billion stock repurchase program and increased our dividend by 25%. Over the last three years, we have returned approximately $3.3 billion in cash to shareowners through dividends and stock repurchases. |
| We introduced new products which enabled us to improve our product mix to achieve sales growth and share gains, supporting our solid earnings growth. | |
| Our Genuity® reduced refuge family of corn products were planted on more than 27 million acres and our Genuity® Roundup Ready 2 Yield® soybean products were planted on 32 million acres. | |
| We stabilized our glyphosate operations in our agricultural productivity segment, addressing the significant challenges arising from the commoditization of the global glyphosate business. |
30 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
| The BioDirectTM biologicals platform, and the acquisition of Beeologics; and | |
| The Integrated Farming SystemsTM platform, and the acquisition of Precision Planting. |
Organizational Effectiveness. We focused on the importance of maintaining a talented and diverse workforce as a key driver of long-term growth, as evidenced by the following:
| Succession planning and development programs; retention of top talent; organizational surveys; and | |
| External recognition including being ranked as one of Forbes 2012 World’s Most Innovative Companies and among the 2012 Great Place to Work® World’s Best Multinational Workplaces. |
Key Performance Measures Included in Officer Compensation Program. Our growth was reflected in our fiscal 2012 performance against key measures that are important to our shareowners and which are included in our officer compensation program: ongoing earnings per share (“EPS”), free cash flow, net sales and return on capital (“ROC”)1.The following table illustrates the company’s performance with respect to these metrics over a three year period.
See Appendix C for a reconciliation
of our ongoing EPS, free cash flow and ROC results reported in accordance with
generally accepted accounting principles.
____________________
1 Ongoing EPS excludes certain after-tax items that Monsanto does 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. ROC is expressed as a percentage, which represents the result of dividing operating profit after-tax (excluding certain items) by average capital.
When evaluating performance in determining compensation, our people and compensation committee considers EPS, as adjusted by the committee for certain items, either positive or negative, that it deems to be extraordinary. These adjustments are generally the same or similar to the after-tax items excluded for ongoing EPS. At the end of fiscal years 2010-2012, the adjusted EPS considered by the people and compensation committee was the same as ongoing EPS.
2012 PROXY STATEMENT | MONSANTO COMPANY | 31 |
Executive Compensation continued |
Pay-for-Performance Approach to
Executive Compensation
Our people and
compensation committee (“Committee”) believes in a pay-for-performance approach
to executive compensation and designs our program to focus our executives on
achieving key financial and strategic business objectives and reward them when
objectives are achieved.
| stock options, to align a significant portion of pay to value created for our shareowners; and | |
| multi-year, financial goal-based restricted stock units, which we call “Financial Goal RSUs,” to link an element of pay to company longer-term performance against goals for key financial performance measures. |
Amounts our executives may receive from AIP awards and Financial Goal RSUs are directly related to company performance against a combination of financial measures including EPS, free cash flow, net sales, and ROC and, with respect to AIP awards, individual performance related to strategic and operational objectives.
Summary of Committee Actions for
Fiscal 2012 Proxy Officer Compensation
The Committee took the following actions with respect to our proxy
officers’ fiscal 2012 compensation:
Our Compensation
Practices
The Committee continues to
implement and maintain leading practices in our executive compensation program
and related areas. These practices include the following:
The Committee retains an independent consultant, Frederic W. Cook & Co., Inc. (Cook & Co.), to advise the Committee on executive compensation matters. Cook & Co. provides no services to our company other than those provided directly to or on behalf of the Committee (described on page 44).
32 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Committee Consideration of the
Company’s 2012 Shareowner Vote on Executive Compensation
Our company has continued its practice of engaging in
dialogue with our major shareowners throughout the year about various corporate
governance topics, including executive compensation. The Committee values
insights gained from these discussions and finds them to be helpful as the
members consider and adopt compensation policies affecting our employees,
including our proxy officers.
At our January 2012 annual meeting, a significant majority of our shareowners, or 87% of votes cast, supported our proposal to approve our fiscal 2011 executive compensation program. In our investor outreach throughout the year, our largest shareowners did not express concerns regarding our program. However, following the annual meeting, we sought to identify which of our top 50 shareowners did not vote in favor of our fiscal 2011 executive compensation program, in order to seek an opportunity to understand the reasons for their vote. The smallest holdings in this group of investors represented voting authority for approximately 0.2% of our outstanding shares. Due to the overall high level of support for the proposal, we did not identify a large number of investors from among this group that cast negative votes. However, of those investors from which we sought feedback, we found that most were unwilling or unavailable to comment and several indicated that their firms had policies prohibiting them from providing us specific information about their vote. One investor indicated the firm had not supported our vote on executive compensation because it generally does not support the use of stock options in executive compensation programs. Another investor stated that the firm had voted against our executive compensation proposal in accordance with an advisory firm recommendation but that the investor had no issues with our program. We will continue to seek opportunities for dialogue with our investors on this subject.
Committee Action to Adjust Compensation Program for Fiscal 2013. Despite limited specific investor feedback regarding the 2012 shareowner vote on executive compensation, when designing our executive compensation programs, the Committee does consider investor views and comments we receive throughout the year. Based on extensive discussion of these views, and taking into consideration evolving best practices, the Committee determined to make certain changes to the design of the LTI component of the fiscal 2013 executive compensation program. Specifically, for fiscal 2013, the Committee
The Committee will continue to consider shareowner sentiments about our core principles and objectives when determining executive compensation.
2012 PROXY STATEMENT | MONSANTO COMPANY | 33 |
Executive Compensation continued |
Overview of Our Executive Compensation
Program |
Program
Objectives
The Committee designs our
executive compensation program to reflect its pay-for-performance philosophy and
core principles of:
The Committee believes that our fiscal 2012 program successfully incorporates these principles and reflects best practices in executive compensation.
Pay For Performance Compensation
Mix
For fiscal 2012, a significant
portion of our proxy officers’ compensation is again at risk and the actual
amounts realized depend upon company annual and longer-term performance and our
stock price. The Committee provides more than half of their target total direct
compensation through LTI award value in recognition of their accountability for
delivering results and to ensure that their realized compensation is aligned
with longer-term company operational performance and shareowner experience. The
Committee also believes that 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 total direct compensation is illustrated in the charts below. At risk compensation includes the target AIP opportunity and LTI opportunity (delivered in the form of stock options and Financial Goal RSUs).
34 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Measuring
Performance
For fiscal 2012, the
Committee again chose to use EPS, free cash flow and net sales performance
measures for our AIP Performance Measures and EPS, free cash flow and ROC
performance measures (“Financial Goal RSU Performance Measures”) for our
Financial Goal RSUs, as follows:
Performance | Financial | ||
Measure | Rationale | AIP | Goal RSUs |
EPS | EPS sets the growth expectation for our shareowners; we use EPS as the key accounting measure and evaluation of how our company is performing | 50% weighting |
1/3 weighting |
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 | 40% weighting |
1/3 weighting |
Net Sales | Net sales measures the growth of the business, both organically and through acquisitions, and provides an indication of future success | 10% weighting |
N/A |
ROC | ROC 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 | N/A | 1/3 weighting |
The Committee believes that these performance measures, which have been incorporated into the company’s annual budget and long-term planning, best represent the measures used by our shareowners to assess our company’s value. Additionally, the consistent use of these performance measures enables the Committee to evaluate our proxy officers’ performance in generating sustainable growth. The Committee also believes 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 and highlights the importance of their leading the organization to achieve both short-term and long-term financial and strategic goals.
The standards for determining company performance against these performance measures are derived from our financial statements, which follow generally accepted accounting principles. However, in evaluating performance, the Committee may exercise discretion in determining whether pre-established goals with respect to EPS and free cash flow have been attained. The Committee believes that retaining discretion to adjust the calculation of performance results to exclude items it considers extraordinary encourages management’s willingness to take actions that may limit short-term company performance, yet support long-term growth in the best interests of our shareowners. See Annual Incentive Plan on pages 52-53 for additional information on the items the Committee may, in its discretion, exclude as extraordinary for purposes of the EPS and free cash flow calculations and Appendix C for a reconciliation of adjusted performance results to results calculated under generally accepted accounting principles.
2012 PROXY STATEMENT | MONSANTO COMPANY | 35 |
Executive Compensation continued |
Summary of Elements of Fiscal 2012
Compensation
The information in the
following chart summarizes the elements of fiscal 2012 proxy officer
compensation included in the Summary
Compensation Table on page 49, in
addition to benefits under broad-based benefit plans in which proxy officers
participate. The narratives to the compensation tables provide more information
about the design of each element of the total direct compensation.
Total Direct Compensation | ||
Compensation | Key Features | Objectives |
Base Pay |
|
|
Annual |
|
|
Long-Term |
Stock options (75%): Exercise price equal to the fair market value of a share of company stock on the grant date Ratable vesting over a three-year service period Double-trigger vesting in the event of a change of control Financial Goal RSUs (25%): Shares eligible for vesting based on company performance against two-year cumulative EPS and free cash flow and two-year average ROC goals Vest at end of three-year service period Double-trigger vesting in the event of a change of control Award settled in shares of company stock No dividends paid prior to vesting date |
|
|
||
36 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Other Compensation | ||
Compensation | Key Features | Objectives |
Benefits |
|
|
Perquisites |
Executive Health Management Program (comprehensive annual physical exam and associated diagnostic/laboratory testing) Airplane usage Increased coverage under our travel accident plan
|
|
Detailed Information about Our Executive Compensation
Program |
The Committee targets each element of a proxy officer’s annual total direct compensation to the median range for comparable positions in comparator group, which it considers generally to be 90%-110% of the median. The members of our comparator group are described on pages 45-46. The Committee may use its discretion to adjust a component of a proxy officer’s pay above or below the median range to acknowledge the experience and value he brings to the role, sustained high-level performance, internal value and 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 attributable 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.
Base Pay
The Committee generally implements any base pay increases
on a calendar year basis, with mid-year increases for a recently-promoted proxy
officer. The table below includes each proxy officer’s base pay as of August 31,
2012 in comparison to his base pay as of August 31, 2011. This information is
different than the base pay information provided in the Summary Compensation Table on page 49, which reflects base pay received on a fiscal
year basis, including increases effective in January or at other times during
the fiscal year.
Fiscal Year-End Base Pay | ||||
Base Pay ($) | ||||
August 31, | August 31, | % | ||
Name | 2011 | 2012 | Increase | Reason for Increase |
Hugh Grant | 1,403,780 | 1,431,856 | 2% | Maintain alignment with comparator group; consistent with |
Company-wide percentage increase for U.S. employees | ||||
Pierre C. Courduroux | 475,000 | 550,000 | 16% | Promotion to CFO in 2011; better align with |
comparator group | ||||
Brett D. Begemann | 551,000 | 675,000 | 23% | Promotion to President in August 2012; better align with |
comparator group | ||||
Robert T. Fraley, Ph.D. | 612,000 | 624,240 | 2% | Maintain alignment with comparator group; consistent with |
Company-wide percentage increase for U.S. employees | ||||
David F. Snively | 520,000 | 530,400 | 2% | Maintain alignment with comparator group; consistent with |
Company-wide percentage increase for U.S. employees |
2012 PROXY STATEMENT | MONSANTO COMPANY | 37 |
Executive Compensation continued |
Annual Incentive
Plan
The design of our fiscal 2012
AIP is described in the section Annual
Incentive Plan at pages 52-53. The
Committee regularly evaluates the design of our AIP and performance measures to
assure that the plan continues to focus the organization on achieving key
financial results. The Committee determines the amount of each proxy officer’s
cash award under the AIP using the following process.
Target
AIP Opportunity |
x |
Award Pool Funding Factor |
+/- | Individual Performance |
= | Cash
Award |
Target AIP Opportunity Expressed as a Percentage of Base Pay. In October 2011, the Committee determined each proxy officer’s target AIP opportunity for the fiscal 2012 performance period. Each proxy officer’s fiscal 2012 target AIP opportunity is included in the table entitled Summary of Proxy Officer 2012 AIP Target Opportunities and Cash Payouts on page 40.
AIP Award Pool Funding Determined by Company Fiscal 2012 Performance Against Goals
Goals Reflect Fiscal 2012 Business Expectations. In August 2011, the Committee set fiscal 2012 threshold, target and outstandinglevel goals with respect to each of the AIP Performance Measures. The Committee’s deliberations focused on setting goals at levels sufficiently high to motivate the organization to achieve the year’s financial objectives, including mid-teens growth in EPS over fiscal 2011 performance, but within reasonably attainable parameters to discourage pursuit of excessively risky business strategies.
The Committee set the target-level goal for each of the AIP Performance Measures to correspond to the fiscal 2012 budget. Achievement of the EPS target-level goal would require mid-teens growth, consistent with the results of a growth company. The Committee set the threshold-level EPS and net sales goals to correspond to our fiscal 2011 performance, thus requiring improvement over prior year performance. Given the volatility in company cash flow over the past several years, the Committee broadened the performance ranges as compared to previous years in consideration of the challenges in predicting future cash flow.
In October 2011, after the company had determined to adjust portions of its financial statements due to a misapplication of complex accounting principles with respect to certain customer incentive programs for glyphosate products implemented during the period from the fourth quarter of fiscal 2009 through the third quarter of fiscal 2011 (“the Restatement”), the Committee reconsidered and increased the EPS goals to reflect the effect of the Restatement on fiscal 2011 EPS actual performance and the corresponding impact on our fiscal 2012 budget as revised by our board of directors. Specifically, the Committee increased the EPS threshold-level goal to correspond to fiscal 2011 EPS actual performance and the EPS target-level goal to correspond to the revised fiscal 2012 budget and require mid-teens growth. The Committee set the EPS outstanding-level goal to require 19% growth over fiscal 2011 EPS actual performance.
38 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Exceptional Performance Against Goals. The Committee engaged in extensive discussions when determining funding of the AIP award pool, and considered a number of factors, including:
Fiscal 2012 AIP Summary of Goals | ||||
Threshold | Target | Outstanding | ||
Level Goals | Level Goals | Level Goals | ||
AIP Performance Measure | (35% Funding) | (100% Funding) | (200% Funding) | Actual Results |
EPS | $2.96 | $3.35 | $3.52 | $3.70 |
Free Cash flow (Millions) | $1,120 | $1,400 | $1,680 | $2,017 |
Net sales (Millions) | $11,661 | $12,572 | $12,900 | $13,516 |
After careful deliberation, the Committee exercised its discretion under the plan and funded the AIP award pool at 211% of target-level funding: 200% of target-level funding for allocation among all AIP participants, plus an additional $15.3 million to reward exceptional team and individual performance at all levels of the organization.
Individual Proxy Officer Awards Recognize Leadership and Exceptional Performance
AIP Award for Our CEO. During its October 2012 meeting, the Committee met in private session to evaluate our CEO’s individual performance and determine his AIP award. Committee discussion focused on Mr. Grant having led his executive team and the entire organization to achieve exceptional fiscal 2012 financial results that surpassed targets in all areas, successfully executing our growth strategy and capturing the momentum in our business. The Committee agreed that Mr. Grant’s exemplary performance should be recognized and reflective of the company’s overall fiscal 2012 performance.
AIP Awards for Our Other Proxy Officers. In determining the amount of each other proxy officer’s AIP award, the Committee considered a number of factors, including the individual’s contributions to our exceptional fiscal 2012 results:
2012 PROXY STATEMENT | MONSANTO COMPANY | 39 |
Executive Compensation continued |
The Committee also considered the overall funding of the award pool, the CEOs evaluation of the proxy officers performance and the performance of the executive team as a whole, especially in light of their collective opportunities and responsibilities for managing the company.
Amount of Proxy Officer 2012 AIP Awards
Summary of Proxy Officer 2012 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 | 132% | $1,890,050 | $5,000,000 | 265% | |||||||||||||||||
Pierre C. Courduroux | 70% | $385,000 | $975,000 | 253% | |||||||||||||||||
Brett D. Begemann | 80% | $540,000 | $1,300,000 | 241% | |||||||||||||||||
Robert T. Fraley, Ph.D. | 80% | $499,392 | $1,200,000 | 240% | |||||||||||||||||
David F. Snively | 70% | $371,280 | $975,000 | 263% |
Long-Term
Incentives
The Committee regularly
evaluates the design of the LTI component of our proxy officers
annual total direct compensation to assure that the overall structure and equity
awards continue to meet the Committees core principles and objectives. For
fiscal 2012, the Committee maintained the same design as in previous years and
delivered each proxy officers LTI opportunity to him through stock options and
Financial Goal RSUs.
LTI Opportunities Delivered in Form of Equity Grants
Amount of LTI Opportunity. The Committee determined the dollar amount of each proxy officers fiscal 2012 LTI opportunity taking into consideration the median range of 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 officers past performance when determining the dollar amount of his fiscal 2012 LTI opportunity.
LTI Opportunities Converted to Grants of Stock Options and Financial Goal RSUs. The dollar amount of each proxy officers fiscal 2012 LTI opportunity was delivered as follows:
40 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Size of Fiscal 2012 LTI Opportunities and Equity Grants. The dollar amount of each proxy officers fiscal 2012 LTI opportunity is included in his fiscal 2012 total compensation in the Summary Compensation Table on page 49 as the grant value of the stock options and estimated probable value of the Financial Goal RSU awards on the grant date. The number of stock options and target number of Financial Goal RSUs granted to each proxy officer as delivery of his 2012 LTI opportunity is set forth in the following table.
Fiscal 2012 Proxy Officer LTI Opportunities, Stock Option Grants, and Target Number of Financial Goal RSUs | ||||||||||||||
2012 Long-Term Opportunities and Awards | ||||||||||||||
Target Number of | ||||||||||||||
Name | LTI Opportunity | Number of Stock Options | Financial Goal RSUs | |||||||||||
Hugh Grant | $7,500,000 | 188,030 | 25,071 | |||||||||||
Pierre C. Courduroux | $1,500,000 | 37,610 | 5,015 | |||||||||||
Brett D. Begemann | $1,900,000 | 47,640 | 6,352 | |||||||||||
Robert T. Fraley, Ph.D. | $2,500,000 | 62,680 | 8,357 | |||||||||||
David F. Snively | $1,500,000 | 37,610 | 5,015 |
Detailed Information About Financial Goal RSUs
Design and Award Process. The following information highlights the Committees process in designing and awarding fiscal 2012 Financial Goal RSUs to our proxy officers.
August 2011 Committee established fiscal 2012-2013 cumulative goals with respect to EPS, free cash flow and average ROC Performance Measures |
October
2011 |
October
2013 |
August 31,
2014 |
When structuring the fiscal 2012 Financial Goal RSUs to include two-year cumulative goals, 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 targets, given our evolving business strategy. The one-year additional service requirement following performance determination continues to tie the realizable value of the award to the value of our stock, reinforcing sustained company performance.
Fiscal 2012 Financial Goal RSU Performance Goals. In August 2011, the Committee established performance goals for each of the Financial Goal RSU Performance Measures for achievement over the fiscal 2012-2013 performance period. The Committee set target-level performance goals for each performance measure in line with our fiscal 2012 budget and our fiscal 2013 long-range business plan approved by our board, anticipating that it would be challenging for the company to achieve these levels of performance. The Committee set threshold-level performance goals at 85% and outstanding-level performance goals at 110% of the target-level goal for each performance measure. The Committee sets the threshold-level performance goals at a level that is viewed as reasonably achievable to support both performance motivation and retention objectives. The Committee believes that achievement of the outstanding-level performance goals requires significant stretch in performance
2012 PROXY STATEMENT | MONSANTO COMPANY | 41 |
Executive Compensation continued |
and represents what the Committee believes is company performance worthy of outstanding-level awards to our proxy officers. At its October 2011 meeting, the Committee reconsidered and increased the EPS goals to reflect the impact of the Restatement on our fiscal 2012 budget as revised by our board of directors.
RSUs Granted in Fiscal 2010 and
2011: Performance Determinations
Fiscal 2011 Financial Goal RSUs. Twenty-five percent (25%) of the dollar amount of each proxy officers
2011 LTI opportunity was delivered to him in the form of Financial Goal RSUs.
The performance measures and terms and conditions of the fiscal 2011 Financial
Goal RSUs were the same as the fiscal 2012 Financial Goal RSUs as described
earlier in this section and in the section Financial Goal RSUs at page
54.
In October 2012, the Committee reviewed the company's financial results and the information in the chart below to determine the size of each proxy officers award and number of Financial Goal RSUs eligible for vesting.
Fiscal 2011 Financial Goal RSU Grant Summary of Goals | |||||||||||||||||||||
Financial Goals | |||||||||||||||||||||
Threshold | Target | Outstanding | |||||||||||||||||||
Performance | Performance | Performance | |||||||||||||||||||
2011 Fiscal Year Grant | (50% of Units | (100% of Units | (200% of Units | ||||||||||||||||||
for fiscal 2011 and 2012 Performance | eligible for vesting) | eligible for vesting) | eligible for vesting) | Actual Results | |||||||||||||||||
Cumulative EPS (1/3 of Units) | $5.31 | $5.89 | $6.48 | $6.66 | |||||||||||||||||
Cumulative free cash flow (Millions) (1/3 of Units) | $1,669 | $1,854 | $2,039 | $3,856 | |||||||||||||||||
Average ROC (1/3 of Units) | 13.0% | 14.4% | 15.8% | 16.7% |
Since the company exceeded the outstanding performance level with respect to each of the Financial Goal RSU Performance Measures, the Committee determined that 200% of the target-number of Financial Goal RSUs awarded to each proxy officer as delivery of part of his fiscal 2011 LTI opportunity (the maximum) is eligible for vesting, based on the following formula:
200% of Target Performance for EPS (1/3 weighting) _______ Result: 200% |
+ | 200% of Target Performance for Free Cash Flow (1/3 weighting) _______ Result: 200% |
+ | 200% of Target Performance for Average ROC (1/3 weighting) _______ Result: 200% |
= | 200% of Target-Number of Fiscal 2011 Financial Goal RSUs Eligible for Vesting, subject to employment on August 31, 2013 _______ |
The number of Financial Goal RSUs eligible for vesting will be settled in shares of company stock on August 31, 2013 only if the proxy officer meets the awards required three-year service period. Therefore, the value the proxy officer may realize, if any, is dependent upon the number of his fiscal 2011 Financial Goal RSUs eligible for vesting and the value of our stock on August 31, 2013. The target number of fiscal 2011 Financial Goal RSUs granted to each proxy officer as delivery of 25% of his fiscal 2011 LTI opportunity and the number of Financial Goal RSUs eligible for vesting on August 31, 2013 is as follows:
Proxy Officer Fiscal 2011 Financial Goal RSUs Eligible for Vesting | |||||||||||
Target Number of Financial Goal | Number of RSUs Eligible for | ||||||||||
Name | RSUs Awarded | Vesting on August 31, 2013 | |||||||||
Hugh Grant | 31,940 | 63,880 | |||||||||
Pierre C. Courduroux* | 1,950 | 3,900 | |||||||||
Brett D. Begemann | 6,820 | 13,640 | |||||||||
Robert T. Fraley, Ph.D. | 10,650 | 21,300 | |||||||||
David F. Snively | 5,540 | 11,080 |
* Mr. Courdurouxs award was pro-rated as of the date he became our CFO and member of our executive team.
42 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Fiscal 2010 Strategic Goal RSU Grant Summary of Goals | |||||||||||||||||||||
Goals | |||||||||||||||||||||
Threshold | Target | Outstanding | |||||||||||||||||||
Performance | Performance | Performance | |||||||||||||||||||
2010 Fiscal Year Grant | (50% of Units | (100% of Units | (200% of Units | ||||||||||||||||||
for fiscal 2010, 2011 and 2012 Performance | eligible for vesting) | eligible for vesting) | eligible for vesting) | Actual Results | |||||||||||||||||
SmartStax® Corn Gross Profit (Millions) (50%) | $2,743.0 | $2,965.4 | $3,187.8 | $706.6 | |||||||||||||||||
Roundup Ready 2 Yield® Gross Profit (Millions) (40%) | $1,441.2 | $1,558.1 | $1,675.0 | $967.3 | |||||||||||||||||
Drought Corn Commercialization (Units Sold) (10%) | 20,000 | 0 |
Retirement and Welfare
Benefits
The company provides each of
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 and
non-qualified pension and savings plans, health benefits, life insurance, and
other welfare benefits. Base salary and AIP cash awards (but not LTI
opportunities or the value of perquisites) are included in retirement plan
calculations. In the U.S., the company sponsors 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 Internal Revenue Code. No service credit is provided for
years not worked. The company does not provide our proxy officers with any
special retirement or welfare plan benefits that are not provided to other
employees, other than increased coverage under our travel accident insurance
plan and the executive medical plan, which we consider to be perquisites and are
discussed below and on pages 50-51. The Committee adopted the executive medical
plan to encourage our proxy officers and other officers to maintain or improve
their health and productivity.
Mr. Grant is eligible for a disability benefit under the terms of our Third Country National (TCN) Retirement Plan, which from January 1, 1983 to October 31, 2002 was Former Monsantos and then our regular, non-qualified pension plan designed to protect retirement benefits for employees who were transferred from their home country to another country at the companys request. The provisions of the disability benefit are described in footnote 3 to our Potential Effect on Compensation Upon Termination or Change of Control Table on pages 68-69. Since September 1, 2006, Mr. Courduroux has participated in our International Supplemental Retirement Account Plan (IRP), which, since October 31, 2002, has been our regular, non-qualified deferred compensation plan intended to provide certain supplemental retirement benefits to employees who experience permanent cross-border transfers. The provisions of IRP are described in the section International Supplemental Retirement Account Plan on page 62.
Perquisites
The company provides our proxy officers with limited
perquisites, the most significant of which is access to the companys aircraft
for personal flights. Most of these personal flights result from our boards
requirement that our CEO travel on the companys aircraft for security reasons.
Personal use of the companys aircraft by other proxy officers is allowed on a
limited basis with the prior approval of our CEO. The company provides no tax
gross-ups on any perquisites. Perquisite values are not considered for purposes
of determining any AIP opportunity, retirement or severance benefit or any other
benefit payment. Further discussion of the perquisites provided to our proxy
officers is included on pages 50-51 in the footnotes to the Summary
Compensation Table.
2012 PROXY STATEMENT | MONSANTO COMPANY | 43 |
Executive Compensation continued |
Our Fiscal 2013 Executive Compensation
Program |
For fiscal 2013, the Committee again tied a significant portion of our CEOs and other proxy officers compensation to company performance over fiscal 2013 and the longer term by providing total direct compensation through base pay, a target AIP opportunity and a LTI opportunity (delivered through grants of stock options and Financial Goal RSUs). After careful deliberations, the Committee again chose to use EPS, free cash flow and net sales performance measures for our AIP and EPS, free cash flow and ROC performance measures for Financial Goal RSU awards. The Committee did, however, change the mix of LTI awards from 75% stock options and 25% Financial Goal RSUs to 60% stock options and 40% Financial Goal RSUs and extended the Financial Goal RSU performance period from two to three years to enhance focus on longer-term operating performance.
Setting Executive
Compensation |
The Committee considers a broad range of factors and tools when structuring our officer compensation program and making individual proxy officer pay decisions.
Committee
Processes
The following information
summarizes responsibilities and sources of data associated with the Committees
determinations of our executive compensation program.
Committee (comprised of four independent directors) |
|
Cook &
Co. (independent Committee consultant) |
|
44 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Management | Committee of executive team
members appointed by our CEO
|
CEO and EVP-HR | |
| |
Towers Watson
& Co. (consultant retained by management) |
|
Competitive
Analyses
Our Comparator Group
of Companies. To ensure an
understanding of compensation levels, practices and trends in the market in
which we compete for talent, the Committee compares our proxy officers
compensation to executive compensation at a group of companies we call our
comparator group. The companies in our comparator group have one or more of
the following characteristics, which the Committee considers essential to our
success:
2012 PROXY STATEMENT | MONSANTO COMPANY | 45 |
Executive Compensation continued |
The Committee reviews the composition of our comparator group annually. The companies listed below constitute our comparator group for fiscal 2012 proxy officer compensation. The companies are the same as the companies in our fiscal 2011 comparator group except for Genzyme which was acquired by Sanofi-Aventis in April 2011.
|
|
|
The Committee considers a subset of our comparator group representing technology-based companies when evaluating Dr. Fraleys compensation (indicated with an asterisk (*) in the group of companies listed above). The Committee believes that the group of noted companies better represents his role within our organization, technologys impact on our business and the market in which our company competes for scientific talent.
The Committee reviews compensation data for our comparator group to compare our size and performance to the comparator group with respect to key publicly available financial metrics. At the time the Committee determined our proxy officers fiscal 2012 compensation, our revenue was in the median range of the comparator group, and our one-year EPS growth and market capitalization each were slightly above the median range of our comparator group.
Use of Tally Sheets and Wealth Accumulation Analyses
The Committee reviews tally sheets and wealth accumulation analyses for each proxy officer to understand the realized and potential value of overall compensation and individual elements of compensation payable to our proxy officers (including 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 the Committee to evaluate whether:
Equity Grants
When determining the aggregate LTI
opportunities and equity grants to our proxy officers and all other employees,
the Committee considers the:
Our run rate and overhang levels for equity grants to our proxy officers and other employees are significantly below the median levels of our comparator group.
46 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
The Committee, with input from its independent consultant, regularly reviews our equity grant practices to assure alignment with what it believes constitute best practice guidelines.
Other Arrangements and Policies Related to Our Executive
Compensation Program |
Deductibility of
Performance-Based Compensation
The
Committee structures and administers our annual and long-term incentive
compensation plans and arrangements for our proxy officers with the goal of
maximizing the tax deductibility of the payments as performance-based
compensation under Code Section 162(m), to the extent practical and deemed
appropriate, consistent with maintaining competitive compensation. For example,
we maintain our Code Section 162(m) Annual Incentive Plan for Covered
Executives, which we refer to as our Code Section 162(m) Plan. The
shareowner-approved plan provides that a proxy officer who is subject to Code
Section 162(m) is eligible for an AIP award only if the Committee certifies that
the company attained the pre-established corporate adjusted net income
performance goal for the fiscal year performance period. Under our Code Section
162(m) Plan, the maximum AIP award the officer may receive is .75% of corporate
adjusted net income for the performance year; however, the Committee determines
the actual amount of the award under the terms of the AIP through the exercise
of negative discretion. Similarly, the terms and conditions of the Financial
Goal RSUs granted to our proxy officers provide that units are eligible for
vesting only if the Committee certifies that the company attained the
pre-established Code Section 162(m) performance goal of positive net income for
the two-year performance period. If the corporate net income performance goal
has been attained, the Committee determines the actual number of units that will
vest (which may range from zero to 200%) under the terms and conditions of the
Financial Goal RSUs. While the Committee believes that tax deductibility of
compensation is an important consideration, with the goal of providing
compensation that is in the best interest of the company and its shareowners,
the Committee reserves the flexibility to approve compensation arrangements that
are not fully tax deductible.
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, as described in the section Change of Control Employment Security
Agreements beginning on page 65. The
Committee believes that the agreements serve the interests of our company and
its 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. At least
annually, the Committee reviews the potential cost and the terms of the
agreements, in addition to the list of other officers and executives eligible
for the agreements.
Stock Ownership
Requirements
We have stock ownership
requirements for our proxy officers and other key executives to align their
interests with those of our shareowners. The stock ownership requirement for
each proxy officer and other executives subject to the policy is expressed as a
fixed number of shares calculated based on an assigned multiple (which, for our
CEO is five and our other proxy officers is three), of annual base pay as of a
fixed date, and the stock price on that fixed date. The ownership requirement
remains at the fixed number of shares until the Committee determines that a
re-calibration is appropriate. For example, our CEOs current fixed-share stock
ownership requirement is valued at more than eight times his current base
pay.
2012 PROXY STATEMENT | MONSANTO COMPANY | 47 |
Executive Compensation continued |
Shares may be counted toward the policys ownership requirements whether held directly or through a spouse, retirement plan or retirement account; provided that shares pledged as security for a loan, stock options, restricted stock and restricted stock units issued after September 1, 2008 which have not yet vested, and performance-RSUs for which performance has not yet been determined will not be counted toward the policys ownership requirements.
The information in the chart below sets forth, with respect to our CEO and the average of the other proxy officers: (1) the fixed number of shares ownership requirement, as determined on June 27, 2006, the last time the Committee re-calibrated ownership for all executives, or based on the proxy officers base pay and our stock price on the date such officer became subject to the ownership requirement, if later; (2) required ownership as a multiple of August 31, 2012 base pay; (3) actual ownership as of August 31, 2012; and (4) actual ownership as a multiple of his August 31, 2012 base pay.
Required Ownership as a | Actual | Actual as a Multiple | |||||||||||||||||
Required | Multiple of Base Pay | Ownership | of Base Pay | ||||||||||||||||
Ownership | (8/31/12) | (8/31/12) | (8/31/12) | ||||||||||||||||
Chief Executive Officer | 143,509 | 8.7 | 507,377 | 30.9 | |||||||||||||||
Other Proxy Officers (average) | 29,719 | 4.4 | 47,417 | 6.9 |
Until an executive has met 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 granted under our long-term incentive plans. Each proxy officer has met his stock ownership requirement other than Mr. Courduroux who first became subject to a requirement in January 2011, when he took over as our chief financial officer.
Recoupment
Policy
In order to further align
managements interests with the interests of shareowners and support good
governance practices, our board originally adopted a recoupment policy in
October 2006, as amended and restated in October 2009, applicable to AIP awards,
Financial Goal RSUs and other performance-based compensation to our proxy
officers and other members of our executive team. The amended and restated
policy generally provides that in the event our company is required to prepare
an accounting restatement due to our companys material noncompliance with any
financial reporting requirement under the securities laws as a result of
misconduct or an error (as determined by the members of our board who are
considered independent for purposes of the listing standards of the NYSE), our
company may, in the exercise of its discretion (as determined by such board
members) take action to recoup the amount by which such award exceeded the
payment that would have been made based on the restated financial results. Our
companys 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 performance-vesting criteria. A copy
of our current policy was filed as Exhibit 10.27 to our annual report on Form
10-K for the fiscal year ended August 31, 2009.
Prohibition on
Derivative Trading
Our company
prohibits derivative transactions in our company stock by officers, directors
and their families. Specifically, they may not, at any time:
48 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Summary Compensation Table |
The table and footnotes below describe the total compensation paid to each of our proxy officers for fiscal years 2012, 2011 and 2010. The components of the total compensation are described below and in more detail in the tables following. For information on the role of each component within the total 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 | 2012 | 1,432,936 | 1,875,060 | 4,121,618 | 5,000,000 | 1,247,920 | 548,072 | 14,225,606 | |||||||||||||||||
Chairman of the Board | 2011 | 1,409,179 | 1,875,197 | 4,682,812 | 3,070,769 | 330,547 | 200,166 | 11,568,670 | |||||||||||||||||
and Chief Executive Officer | 2010 | 1,409,179 | 7,032,241 | 3,583,784 | 0 | 775,941 | 371,196 | 13,172,341 | |||||||||||||||||
Pierre C. Courduroux | 2012 | 517,500 | 375,072 | 824,411 | 975,000 | 178,215 | 76,061 | 2,946,259 | |||||||||||||||||
Senior Vice President and | 2011 | 382,500 | 135,798 | 493,379 | 571,000 | 34,940 | 19,095 | 1,636,712 | |||||||||||||||||
Chief Financial Officer | |||||||||||||||||||||||||
Brett D. Begemann | 2012 | 590,162 | 475,066 | 1,044,269 | 1,300,000 | 559,371 | 86,371 | 4,055,239 | |||||||||||||||||
President | 2011 | 549,185 | 3,181,573 | 999,005 | 800,000 | 123,577 | 26,744 | 5,680,084 | |||||||||||||||||
and Chief Commercial Officer | 2010 | 542,077 | 1,406,731 | 716,757 | 0 | 342,729 | 45,344 | 3,053,638 | |||||||||||||||||
Robert T. Fraley, Ph.D. | 2012 | 624,711 | 625,020 | 1,373,946 | 1,200,000 | 675,540 | 118,435 | 4,617,652 | |||||||||||||||||
Executive Vice President and | 2011 | 610,062 | 3,714,128 | 1,561,068 | 865,000 | 262,683 | 31,510 | 7,044,451 | |||||||||||||||||
Chief Technology Officer | 2010 | 602,308 | 2,344,787 | 1,194,755 | 0 | 543,612 | 92,771 | 4,778,233 | |||||||||||||||||
David F. Snively | 2012 | 530,800 | 375,072 | 824,411 | 975,000 | 359,743 | 83,708 | 3,148,734 | |||||||||||||||||
Executive Vice President, | 2011 | 506,538 | 2,711,700 | 811,716 | 640,000 | 108,926 | 25,945 | 4,804,825 | |||||||||||||||||
Secretary and General Counsel | 2010 | 481,846 | 1,219,403 | 621,397 | 0 | 253,140 | 42,855 | 2,618,641 |
1 | 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 for performance-based awards. The assumptions used in determining the fair value of the awards are set forth in Note 21 to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended Aug. 31, 2012. Additional information regarding the awards is set forth below under the Grants of Plan-Based Awards Table, Additional Information Explaining Summary Compensation and Grants of Plan-Based Awards Tables and the Outstanding Equity Awards at Fiscal Year-End Table. | |
2 | 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 2012, 2011 and 2010, respectively, would be: Mr. Grant, $3,750,120, $3,750,394 and $14,064,482; Mr. Courduroux, $750,144 and $271,596 (for fiscal 2011); Mr. Begemann, $950,132, $3,581,975 and $2,813,462; Dr. Fraley, $1,250,040, $4,339,390 and $4,689,574; Mr. Snively, $750,144, $3,036,952, and $2,438,806. | |
With respect to performance-based awards, accounting guidance requires the company to evaluate the likelihood of the achievement of the different possible levels of performance in terms of the goals specified in the awards each quarter and incur expense based on the most probable outcome. Actual amounts that will be received by the proxy officers for performance-based RSUs will be determined at the end of the performance period based upon actual performance, which may differ from the amounts reported above. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 49 |
Executive Compensation
continued |
Based on our evaluation at the end of our fiscal 2012, we incurred expense at 200% of the number of fiscal 2012 Financial Goal RSUs granted to our proxy officers in October 2011. Performance will be evaluated at each reporting period, and changes in expected performance could cause this expense to be reversed in future periods. In October 2012, after evaluating our performance with respect to the fiscal 2011 Financial Goal RSUs, the people and compensation committee determined that 200% of each proxy officer's target-level award would be made available for vesting, subject to the additional service requirement. In October 2011, after evaluating our performance with respect to fiscal 2010 Financial Goal RSUs, the people and compensation committee determined that 62.4% of each Mr. Grants, Mr. Begemanns, Dr. Fraleys and Mr. Snivelys target-level award would be made available for vesting. On August 31, 2012, the additional service requirement of these awards was satisfied and the awards vested. Mr. Courduroux did not participate in the award of fiscal 2010 Financial Goal RSUs. | ||
Stock award values for fiscal 2010 reflect a special grant of Strategic Goal RSUs, which were granted in addition to an annual award of Financial Goal RSUs as part of each proxy officers fiscal 2010 compensation (other than Mr. Courduroux, who was not an officer during fiscal 2010). At the same time, the award value of the 2010 Financial Goal RSUs granted to each proxy officer was reduced compared to the fiscal 2011 award values. In October 2012, after evaluating our performance with respect to the Strategic Goal RSUs, the people and compensation committee determined that the company failed to achieve the threshold-level of performance with respect to the awards performance measures and that no Strategic Goal RSUs had been earned by any of our proxy officers. | ||
Stock awards for fiscal 2011 for Messrs. Begemann and Snively and Dr. Fraley include an additional grant of restricted stock units designed for retention purposes. | ||
3 | This column represents cash awards earned by our proxy officers during the respective fiscal year under the applicable AIP, which were paid in November of the subsequent fiscal year. Our AIP is discussed in further detail on pages 52-53 and in the Compensation Discussion and Analysis section beginning on page 30. | |
4 | This column represents the aggregate actuarial increase in the present value of benefits under all of our pension plans during the respective 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 is set forth in the Pension Benefits Table beginning on page 60. 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 the companys Deferred Payment Plan (which is set at the average Moodys 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, in 2012, 2011 and 2010 and as follows: Mr. Begemann, $1,492, $907 and $1,032; and Dr. Fraley, $10,586, $8,011 and $11,482. The Deferred Payment Plan is discussed in further detail under Deferred Payment Plan beginning on page 64. | |
5 | Following is additional information on the amounts reported in the All Other Compensation column for fiscal 2012. |
Company Contributions to SIP A | |||||||||||
Non-Qualified | |||||||||||
Qualified Plan | Parity Plan | Perquisites B | Total | ||||||||
Name | ($) | ($) | ($) | ($) | |||||||
Hugh Grant | 17,850 | 305,043 | 225,179 | 548,072 | |||||||
Pierre C. Courduroux | 17,850 | 58,211 | 76,061 | ||||||||
Brett D. Begemann | 15,645 | 70,726 | 86,371 | ||||||||
Robert T. Fraley, Ph.D. | 17,850 | 88,797 | 11,788 | 118,435 | |||||||
David F. Snively | 17,850 | 65,858 | 83,708 |
A | Represents matching contributions made by the company during fiscal 2012 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 SIP Parity Plan. Our SIP is a tax-qualified defined contribution plan and our SIP Parity Plan is a non-qualified defined contribution plan under the Code. Information regarding the company matching contribution levels is provided under SIP Parity Plan on page 64. | ||
B | Amounts represent the aggregate incremental cost to the company of perquisites provided to our proxy officers, except for Messrs. Courduroux, Begemann and Snively, for whom such amounts are less than $10,000. The amounts shown for Mr. Grant include personal use of corporate aircraft of $218,741, home security expenses, and de minimus gifts and entertainment expenses. The amounts shown for Dr. Fraley include personal use of corporate aircraft of $8,308, personal use of a car and driver, and de minimus gifts and entertainment expenses. |
50 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
For security, our board of directors requires our CEO, Mr. Grant, to use company aircraft for both business and personal flights. Other proxy officers are permitted to use the aircraft on a limited basis for personal flights. Personal travel by a guest of a proxy officer, even on a business trip, is considered a perquisite to the proxy officer. The incremental cost of company aircraft used for a non-business flight is calculated by multiplying the aircrafts hourly variable operating cost by a trips flight time, which includes any flight time of an empty return or deadhead flight, and varies considerably based on the type of aircraft. Fixed costs that do not vary based on usage are not included in the calculation of direct operating costs. The company incurs minimal incremental costs for passengers who travel as the guest of executives traveling on the aircraft for business purposes.
When our board of directors holds a multi-day meeting to visit a company facility outside of the St. Louis area, the company invites our proxy officers spouses; any incidentals provided at the meetings to the proxy officers or their spouses, such as leisure activities or a gift, are considered perquisites. We also provide our proxy officers increased coverage under our travel accident insurance plan, pursuant to an industry standard policy that requires no incremental cost to the company. In addition, when otherwise unused for business purposes, our proxy officers may occasionally request tickets to entertainment or sporting events for personal use.
Grants of Plan-Based
Awards Table |
The following table provides additional information about plan-based awards granted to our proxy officers during fiscal 2012. See Additional Information Explaining Summary Compensation and Grants of Plan-Based Awards Tables for more information about the terms of the awards.
All Other | |||||||||||||||||||||||||||||||
Option | |||||||||||||||||||||||||||||||
Estimated Possible | Estimated Future Payouts | Awards; | Exercise | Grant Date | |||||||||||||||||||||||||||
Grant | Payouts Under Non-Equity | Under Equity Incentive | Number of | or Base | Fair Value | ||||||||||||||||||||||||||
Date for | Incentive Plan Awards 1 | Plan Awards 2 | Securities | Price of | of Stock | ||||||||||||||||||||||||||
Equity- | Underlying | Option | and Option | ||||||||||||||||||||||||||||
Award | Based | Threshold | Target | Maximum | Threshold | Target | Maximum | Options | Awards | Awards | |||||||||||||||||||||
Name | Type | Awards | ($) | ($) | ($) 1 | (#) | (#) | (#) | (#) 3 | ($/Sh) 4 | ($) 5 | ||||||||||||||||||||
Hugh Grant | Annual Incentive |
| 661,517 | 1,890,050 | |||||||||||||||||||||||||||
Stock Options |
10/24/11 | 188,030 | 74.79 | 4,121,618 | |||||||||||||||||||||||||||
Financial Goal | 10/24/11 | 12,536 | 25,071 | 50,142 | 1,875,060 | ||||||||||||||||||||||||||
RSUs | |||||||||||||||||||||||||||||||
Pierre C. Courduroux |
Annual | | 134,750 | 385,000 | |||||||||||||||||||||||||||
Incentive | |||||||||||||||||||||||||||||||
Stock | 10/24/11 | 37,610 | 74.79 | 824,411 | |||||||||||||||||||||||||||
Options | |||||||||||||||||||||||||||||||
Financial Goal | 10/24/11 | 2,508 | 5,015 | 10,030 | 375,072 | ||||||||||||||||||||||||||
RSUs | |||||||||||||||||||||||||||||||
Brett D. Begemann |
Annual | | 189,000 | 540,000 | |||||||||||||||||||||||||||
Incentive | |||||||||||||||||||||||||||||||
Stock | 10/24/11 | 47,640 | 74.79 | 1,044,269 | |||||||||||||||||||||||||||
Options | |||||||||||||||||||||||||||||||
Financial Goal | 10/24/11 | 3,176 | 6,352 | 12,704 | 475,066 | ||||||||||||||||||||||||||
RSUs | |||||||||||||||||||||||||||||||
Robert T. Fraley, Ph.D. |
Annual | | 174,787 | 499,392 | |||||||||||||||||||||||||||
Incentive | |||||||||||||||||||||||||||||||
Stock | 10/24/11 | 62,680 | 74.79 | 1,373,946 | |||||||||||||||||||||||||||
Options | |||||||||||||||||||||||||||||||
Financial Goal | 10/24/11 | 4,179 | 8,357 | 16,714 | 625,020 | ||||||||||||||||||||||||||
RSUs | |||||||||||||||||||||||||||||||
David F. Snively | Annual | | 129,948 | 371,280 | |||||||||||||||||||||||||||
Incentive | |||||||||||||||||||||||||||||||
Stock | 10/24/11 | 37,610 | 74.79 | 824,411 | |||||||||||||||||||||||||||
Options | |||||||||||||||||||||||||||||||
Financial Goal | 10/24/11 | 2,508 | 5,015 | 10,030 | 375,072 | ||||||||||||||||||||||||||
RSUs |
2012 PROXY STATEMENT | MONSANTO COMPANY | 51 |
Executive
Compensation continued |
1 | Amounts in this column represent the threshold, target and maximum payouts under the companys AIP with respect to our attainment of specified performance criteria. Threshold payout is 35% of the target award and the maximum payout is set by our Code Section 162(m) Annual Incentive Plan for Covered Executives, which was designed to maximize the tax-deductibility of AIP awards to our proxy officers who are subject to Code Section 162(m). Under this plan, the maximum AIP award a covered proxy officer may receive is three-quarters of one percent (.75%) of corporate adjusted net income for the applicable performance year, or $14.97 million for fiscal 2012. The people and compensation committee has discretion to award less than the maximum amount and historically has determined the amount of all AIP awards based on company and individual performance measured against pre-established goals under our AIP as described below. The AIP awards have been substantially lower than the maximum amount for Code Section 162(m) purposes. See Deductibility of Performance-Based Compensation on page 47 for more information about Code Section 162(m) Annual Incentive Plan for Covered Executives, and the information under Annual Incentive Plan beginning on page 38 for a more detailed description of awards made under our AIP. The actual amounts earned are reported in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table on page 49. | |
2 | Amounts in this column represent the threshold, target and maximum payout for Financial Goal RSUs granted under our 2005 LTIP as part of our proxy officers fiscal 2012 long-term incentive compensation. We describe the terms of the Financial Goal RSUs in more detail beginning on page 54. | |
3 | Amounts in this column represent stock options granted under our 2005 LTIP to our proxy officers on Oct. 24, 2011 (which will vest ratably on each of Nov. 15, 2012, Nov. 15, 2013 and Nov. 15, 2014) as part of their fiscal 2012 long-term incentive compensation. See Stock Options on pages 53-54 for additional information regarding vesting and other terms of these options. | |
4 | Exercise prices are equal to the closing prices of our stock on the respective dates of grant. | |
5 | The grant date fair value of options was $21.92 per option for options awarded on Oct. 24, 2011. In accordance with SEC rules, amounts reported in this column for Financial Goal RSUs disclose the fair value at the date of grant based on the probable outcome, regardless of when or whether these amounts are ultimately realized by the proxy officer. The grant date fair value of the fiscal 2012 Financial Goal RSUs awarded on Oct. 24, 2011 was $74.79 per unit. Fair value is calculated as the target number of Financial Goal RSUs multiplied by the closing price of our common stock on the date of grant, in accordance with the requirements of the Compensation-Stock Compensation topic of the ASC. The actual amounts that will be received by the proxy officer for Financial Goal RSUs will be determined at the end of the performance period based upon our actual performance, which may differ from the performance that was probable at the date of grant. The assumptions used in determining the fair value of the awards are set forth in Note 21 to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended Aug. 31, 2012. |
Additional Information Explaining Summary
Compensation and Grants of Plan-Based Awards
Tables |
The following provides information about the terms of our fiscal 2012 AIP and our long-term incentive awards, pursuant to which our proxy officers were awarded non-equity incentive compensation, stock option awards and Financial Goal RSU awards for fiscal 2012, as detailed in the tables above. For additional information regarding the application of these plans and awards to our proxy officers in fiscal 2012, see Compensation Discussion and Analysis.
Annual Incentive Plan |
Our fiscal 2012 AIP is designed to reward financial and operational performance that drives shareowner value. Awards under the AIP are paid in cash. Our proxy officers participate in the same AIP in which most of our other employees participate. The AIP focuses the organization on achieving financial goals as shown below, all of which affect shareowner value.
The people and compensation committee establishes threshold, target and outstanding-level goals for the fiscal year performance period for the following financial metrics: net sales (weighted 10%), EPS (weighted 50%) and free cash flow (weighted 40%). Each AIP participant also has individual goals, and our proxy officers are evaluated against key business priorities and performance of their respective business units. In addition, each participant is provided a target award opportunity, communicated as a percentage of base pay. The fiscal 2012 target opportunity for our proxy officers is shown on page 40.
52 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
After the end of the performance period, the people and compensation committee evaluates the companys performance against the pre-established financial goals and other subjective factors to determine the funding factor for the award pool. The award pool is calculated by multiplying the funding factor by the target award pool (which is the sum of all participants base salaries on August 31, 2012, multiplied by their respective target AIP opportunities).
The AIP provides that in the event the company paid dividends with respect to each of its financial quarters ending during the fiscal year, the award pool will fund at no less than 20% of target-level funding. However, if the company does not attain at least the threshold-level of performance with respect to the AIPs EPS goal, the AIP may not fund above the 20% funding level. The AIP also provides that the overall funding of the award pool is capped at 200% unless the people and compensation committee, in its sole discretion, determines to fund above 200%.
Under the terms of the AIP, the people and compensation committee may exercise discretion in determining plan funding. In particular, although the metrics for determining our companys performance against the EPS and free cash flow goals are derived from our financial statements, which follow generally accepted accounting principles, the people and compensation committee may make the following adjustments when determining company performance against goals.
|
restructuring charges and reversals; | ||
|
the impact of lawsuit outcomes; | ||
|
in-process R&D write-offs on acquisitions; | ||
|
the impact of liabilities, expenses, settlements or agreements associated with Solutia, Inc.s reorganization plan; | ||
|
the impact of unbudgeted business sales/divestitures; or | ||
|
the impact of changes in accounting rules. |
|
the impact of acquisitions; or | ||
|
the impact of agreements associated with Solutia Inc.s bankruptcy. |
For information regarding the fiscal 2012 AIP awards to our proxy officers, please see Annual Incentive Plan beginning on page 38. Our annual incentive plans for fiscal 2011 and 2010 were substantially the same as the AIP for fiscal 2012.
Long-Term
Incentive Awards |
In fiscal 2012, we granted equity awards to our proxy officers under the 2005 Long-Term Incentive Plan (the 2005 LTIP). Under the 2005 LTIP, we may grant stock options, performance-based RSUs, RSUs, restricted stock, stock appreciation rights, stock or cash to our employees and directors. The forms of awards granted to our proxy officers in fiscal 2012, 2011 and 2010 are described in more detail below.
Stock Options
We generally award stock options with ten year terms that vest
ratably over three years, except in certain circumstances. In the event of
death, disability, involuntary termination without cause or retirement, options
held for at least one year become fully vested. Retirement is a termination of
employment (other than for cause) after attaining age 55 with five years of
service.
2012 PROXY STATEMENT | MONSANTO COMPANY | 53 |
Executive
Compensation continued |
Upon a change of control of the company (as defined on page 65), stock options granted for fiscal 2011 or later are subject to double-trigger vesting and stock options granted for years prior to fiscal 2011 are subject to single-trigger vesting, in each case even if the stock options have been held less than one year.
Financial Goal
RSUs
In addition to stock options, we have
awarded our proxy officers Financial Goal RSUs, which vest over a three-year
period, except in certain circumstances, and are settled in shares of our common
stock. Dividend equivalents are accrued during the designated service period and
are paid upon vesting based on the number of units that vest.
Except as described below, vesting of the Financial Goal RSUs is subject to
After the end of the two-year performance period, the people and compensation committee determines performance against the goal the committee established for purposes of Code Section 162(m).
For the fiscal 2012 grant, the people and compensation committee established a Code Section 162(m) performance goal of positive net income for the September 1, 2011 through August 31, 2013 performance period. Net income is defined as gross profit (i) minus (a) sales, general and administrative expenses, (b) research and development expense, (c) amortization, (d) net interest expense, and (e) income taxes and (ii) plus or minus other income and expense, all as reported in the companys financial statements, but excluding positive or negative effects of (1) restructuring charges and reversals, (2) the outcome of lawsuits, (3) research and development write-offs on acquisitions, (4) impact of liabilities, expenses or settlements related to Solutia, Inc. or agreements associated with a Solutia, Inc. plan of reorganization, (5) unbudgeted business sales and divestitures and (6) the cumulative effects of changes in accounting methodology made after August 31, 2011.
If the Code Section 162(m) performance goal is met, the people and compensation committee considers a corresponding portion of the units initially awarded to each proxy officer, from zero to 200%, as eligible for vesting based on the companys attainment of the pre-established goals during the performance period.
54 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Financial Goal RSUs are eligible for modified vesting under the following circumstances:
|
In the case of a termination following a change of control during the first year of the performance period, vesting would be based on the target number of units. | ||
|
In the case of a termination following a change of control during the second year of the performance period, vesting would be based on: (i) 50% of the target number of units, plus (ii) 50% of the units based on performance. | ||
|
In the case of a termination following a change of control following the performance periods, the number of units earned. |
The following chart shows Financial Goal RSU grants outstanding at August 31 and vesting on or after August 31, 2012:
Financial Goal RSUs Grant Vesting Table | ||||
For Fiscal Year | Grant Date | Performance Period | Performance Determination Date | Vesting Date |
2011 | 10/25/2010 | Fiscal Years 2011-2012 | October 2012 | 8/31/2013 |
2011 | 1/1/2011 | Fiscal Years 2011-2012 | October 2012 | 8/31/2013 |
2012 | 10/24/11 | Fiscal Years 2012-2013 | October 2013 | 8/31/2014 |
Retention
RSUs
Restricted stock units (RSUs) were
granted to proxy officers Begemann, Fraley and Snively in fiscal 2011 for
retention purposes. These awards represent the right to receive a specified
number of shares of our common stock upon vesting, subject to certain conditions
described below. A participant to whom retention RSUs are awarded has no rights
as a shareowner with respect to the shares represented by the RSUs unless and
until shares are actually delivered to the participant in settlement of the
award. Dividend equivalents accrue on the RSUs and will be paid to the
participant upon vesting of the award.
The retention RSUs include a Code Section 162(m) performance goal of positive net income for the September 1, 2011 through August 31, 2014 performance period. Net income is defined as on page 54, except that it includes the cumulative effects of changes in accounting methodology made after August 31, 2011.
If the people and compensation committee determines that the Code Section 162(m) performance goal has been met, the retention RSUs will vest in 2015, subject to the participants continued employment. Vesting may be modified for certain termination events.
2012 PROXY STATEMENT | MONSANTO COMPANY | 55 |
Executive
Compensation continued |
Strategic Goal
RSUs
Strategic goal performance-RSUs
(Strategic Goal RSUs) were granted to proxy officers other than Mr. Courduroux in fiscal 2010. These awards represented the
right to receive a specified number of shares of our common stock if the
Strategic Goal RSUs had vested. Vesting of the Strategic Goal RSUs was subject
to:
In October 2012, the committee determined that the company failed to achieve the threshold level of performance with respect to each of the goals and that no Strategic Goal RSUs are eligible for vesting.
56 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Outstanding Equity Awards at Fiscal Year-End Table |
The table below provides information regarding outstanding equity awards as of August 31, 2012 for each proxy officer. The equity awards in this table consist of stock options, retention RSUs, Financial Goal RSUs, and Strategic Goal RSUs.
Stock Awards 1 | |||||||||||||||||||||
Option Awards 1 | Restricted Stock Units | Performance-RSUs | |||||||||||||||||||
Equity Incentive | Equity Incentive | ||||||||||||||||||||
Plan Awards; | Plan Awards; | ||||||||||||||||||||
Number of | Number of | Number of | Market or Payout | ||||||||||||||||||
Securities | Securities | Market Value | Unearned | Value of Unearned | |||||||||||||||||
Underlying | Underlying | Number of | of Units of | Shares, Units | Shares, Units or | ||||||||||||||||
Grant Date or | Unexercised | Unexercised | Option | Option | Units of Stock | Stock That | or Other Rights | Other Rights That | |||||||||||||
Performance | Options (#) | Options (#) | Exercise | Expiration | That Have Not | Have Not | That Have Not | Have Not Vested | |||||||||||||
Name | Period | Exercisable | Unexercisable | Price ($) | Date | Vested (#) | Vested ($) 2 | Vested (#) | ($) 2 | ||||||||||||
Hugh Grant | 10/24/2011 | 188,030 | 74.79 | 10/24/2021 | |||||||||||||||||
10/25/2010 | 79,843 | 159,687 | 58.71 | 10/25/2020 | |||||||||||||||||
10/26/2009 | 99,466 | 49,734 | 70.69 | 10/26/2019 | |||||||||||||||||
10/20/2008 | 157,220 | 89.45 | 10/20/2018 | ||||||||||||||||||
10/22/2007 | 149,230 | 87.14 | 10/22/2017 | ||||||||||||||||||
10/26/2006 | 248,960 | 44.06 | 10/26/2016 | ||||||||||||||||||
9/1/11-8/31/13 | 3 | 50,142 | 4,367,870 | ||||||||||||||||||
9/1/10-8/31/12 | 4 | 63,880 | 5,564,587 | ||||||||||||||||||
9/1/09-8/31/12 | 5 | 0 | 0 | ||||||||||||||||||
Pierre C. | 10/24/2011 | 37,610 | 74.79 | 10/24/2021 | |||||||||||||||||
Courduroux | 1/1/2011 | 4,863 | 9,727 | 69.64 | 1/1/2021 | ||||||||||||||||
10/25/2010 | 2,663 | 5,327 | 58.71 | 10/25/2020 | |||||||||||||||||
10/26/2009 | 4,160 | 2,080 | 70.69 | 10/26/2019 | |||||||||||||||||
5/15/2009 | 520 | 89.95 | 5/15/2019 | ||||||||||||||||||
10/20/2008 | 3,360 | 89.45 | 10/20/2018 | ||||||||||||||||||
10/22/2007 | 4,320 | 87.14 | 10/22/2017 | ||||||||||||||||||
10/26/2006 | 8,200 | 44.06 | 10/26/2016 | ||||||||||||||||||
9/1/11-8/31/13 | 10,030 | 873,713 | |||||||||||||||||||
9/1/10-8/31/12 | 3 | 3,900 | 339,729 | ||||||||||||||||||
Brett D. Begemann | 10/24/2011 | 47,640 | 74.79 | 10/24/2021 | |||||||||||||||||
10/25/2010 | 17,033 | 34,067 | 58.71 | 10/25/2020 | |||||||||||||||||
10/26/2009 | 19,893 | 9,947 | 70.69 | 10/26/2019 | |||||||||||||||||
10/20/2008 | 31,450 | 89.45 | 10/20/2018 | ||||||||||||||||||
10/22/2007 | 27,980 | 87.14 | 10/22/2017 | ||||||||||||||||||
10/26/2006 | 42,560 | 44.06 | 10/26/2016 | ||||||||||||||||||
10/28/2005 | 32,090 | 29.2175 | 10/28/2015 | ||||||||||||||||||
3/2/2011 | 39,680 | 3,456,525 | |||||||||||||||||||
9/1/11-8/31/13 | 3 | 12,704 | 1,106,645 | ||||||||||||||||||
9/1/10-8/31/12 | 4 | 13,640 | 1,188,180 | ||||||||||||||||||
9/1/09-8/31/12 | 5 | 0 | 0 |
2012 PROXY STATEMENT | MONSANTO COMPANY | 57 |
Executive
Compensation continued |
Stock Awards 1 | ||||||||||||
Option Awards 1 | Restricted Stock Units | Performance-RSUs | ||||||||||
Name | Grant Date or Performance Period |
Number
of Securities Underlying Unexercised Options (#) Exercisable |
Number
of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
Number
of Units of Stock That Have Not Vested (#) |
Market Value of Units of Stock That Have Not Vested ($) 2 |
Equity
Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity
Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) 2 | |||
Robert T. Fraley, | 10/24/2011 | 62,680 | 74.79 | 10/24/2021 | ||||||||
Ph.D. | 10/25/2010 | 26,616 | 53,234 | 58.71 | 10/25/2020 | |||||||
10/26/2009 | 33,160 | 16,580 | 70.69 | 10/26/2019 | ||||||||
10/20/2008 | 52,410 | 89.45 | 10/20/2018 | |||||||||
10/22/2007 | 53,800 | 87.14 | 10/22/2017 | |||||||||
10/26/2006 | 86,390 | 44.06 | 10/26/2016 | |||||||||
3/2/2011 | 44,070 | 3,838,938 | ||||||||||
9/1/11-8/31/13 | 3 | 16,714 | 1,455,957 | |||||||||
9/1/10-8/31/12 | 4 | 21,300 | 1,855,443 | |||||||||
9/1/09-8/31/12 | 5 | 0 | 0 | |||||||||
David F. Snively | 10/24/2011 | 37,610 | 74.79 | 10/24/2021 | ||||||||
10/25/2010 | 13,840 | 27,680 | 58.71 | 10/25/2020 | ||||||||
10/26/2009 | 17,246 | 8,624 | 70.69 | 10/26/2019 | ||||||||
10/20/2008 | 23,060 | 89.45 | 10/20/2018 | |||||||||
10/22/2007 | 17,220 | 87.14 | 10/22/2017 | |||||||||
6/7/2011 | 35,360 | 3,080,210 | ||||||||||
9/1/11-8/31/13 | 3 | 10,030 | 873,713 | |||||||||
9/1/10-8/31/12 | 4 | 11,080 | 965,179 | |||||||||
9/1/09-8/31/12 | 5 | 0 | 0 |
1 | Stock options, restricted stock units and Financial Goal RSUs and Strategic Goal RSUs become exercisable or vested in accordance with the vesting schedules below, subject to performance conditions and accelerated vesting under certain circumstances described under Long-Term Incentive Awards beginning on page 53. |
2 | Amounts in these columns are based on the closing stock price of $87.11 for our common stock on Aug. 31, 2012. |
3 | Financial Goal RSUs, which were granted in October 2011. As required by the SECs disclosure rules, the number of units shown assumes that outstanding levels of performance (200%) will be achieved. In October 2013, the people and compensation committee will determine the actual levels of performance achieved for these awards. |
4 | Financial Goal RSUs, which were granted in October 2010. The table reports the actual number of units eligible for vesting. In October 2012, after evaluating our performance with respect to these Financial Goal RSUs, the people and compensation committee determined that the company exceeded the outstanding levels of performance and 200% of the target number of units are eligible for vesting, subject to the additional one-year service requirement. |
5 | Strategic Goal RSUs, which were granted in October 2009. The table reports the actual number of units eligible for vesting. In October 2012, the people and compensation committee determined that the company failed to achieve the threshold level of performance with respect to each of the awards performance goals and that no Strategic Goal RSUs are eligible for vesting. |
58 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Equity Award Vesting Summary |
Stock Options | |
Grant Date | One-third vests on each of: |
10/24/2011 | Nov. 15, 2012, Nov. 15, 2013 and Nov. 15, 2014 |
1/1/2011 | Jan. 1, 2012, Nov. 15, 2012 and Nov. 15, 2013 |
10/25/2010 | Nov. 15, 2011, Nov. 15, 2012 and Nov. 15, 2013 |
10/26/2009 | Nov. 15, 2010, Nov. 15, 2011 and Nov. 15, 2012 |
Restricted Stock Units | |
Grant Date | Vesting |
6/7/2011 | Fully vest on Jun. 1, 2015 |
3/2/2011 | Fully vest on Jan. 30, 2015 |
Financial Goal RSUs | |
Performance Period | Vesting |
9/1/11 - 8/31/13 | Eligible for vesting on Aug. 31, 2014 |
9/1/10 - 8/31/12 | Eligible for vesting on Aug. 31, 2013 |
Option Exercises and Stock Vested Table |
The following table provides information about the value realized by our proxy officers on the exercise of stock options and vesting of stock awards during fiscal 2012.
Option Awards | Stock Awards 1 | ||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) 2 |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) 3 |
Total Value Realized on Exercise and Vesting ($) | ||||||||||
Hugh Grant | 336,920 | 17,758,514 | 12,418 | 1,081,732 | 18,840,246 | ||||||||||
Pierre C. Courduroux | 15,220 | 750,520 | 0 | 0 | 750,520 | ||||||||||
Brett D. Begemann | 32,090 | 1,731,830 | 2,484 | 216,381 | 1,948,211 | ||||||||||
Robert T. Fraley, Ph.D. | 40,110 | 2,005,881 | 4,144 | 360,984 | 2,366,865 | ||||||||||
David F. Snively | 0 | 0 | 2,153 | 187,548 | 187,548 |
1 | Amounts in these columns reflect the vesting of Financial Goal RSUs that were granted on Oct. 26, 2009. The units were subject to a two-year performance period (Sept. 2009 Aug. 2011) upon which a performance determination was made and stock vested on Aug. 31, 2012. |
2 | Amounts represent the difference between the market price upon exercise and the exercise price. |
3 | Amounts in this column are based on the fair market value of $87.11 for common stock vesting on Aug. 31, 2012. |
Pension Benefits |
Our proxy officers currently participate in the same defined benefit retirement plans as our other eligible U.S. employees: the company Pension Plan and the Parity Pension Plan. As a result of their prior positions outside the United States, Mr. Grant and Mr. Courduroux have also accrued benefits under defined benefit retirement plans available to our ex-U.S. employees, as described below.
2012 PROXY STATEMENT | MONSANTO COMPANY | 59 |
Executive
Compensation continued |
Pension Benefits Table |
The following table reports the present value of accumulated benefits payable to each of our proxy officers under our defined benefit retirement plans as of August 31, 2012. For the Pension Plan, the present value of the accumulated benefit has been calculated assuming, for valuation purposes only, that the proxy officer will remain in service until age 65, that the discount rate is 3.45%, and that 80% of the benefit is payable as a lump sum and the remainder as a single life annuity. For the Parity Pension Plan, the present value of the accumulated benefit has been calculated assuming, for valuation purposes only, that the proxy officer will remain in service until age 65, that the discount rate is 3.05%, and the benefit is payable as a lump sum. The post-retirement mortality assumption for all of the retirement plans is based on the RP-2000 Healthy Annuitants table without collar or adjustments, projected to 2019 using scale AA.
Name | Plan Name | Number of Years Credited Service (#) |
Present Value of Accumulated Benefits ($) |
Payments During Last Fiscal Year ($) | ||||||
Hugh Grant | Pension Plan (US) 1 | 16.67 | 472,507 | | ||||||
Parity Pension Plan (US) 2 | 16.67 | 4,440,082 | | |||||||
Pension Plan (United Kingdom) 3 | 15.04 | 372,471 | | |||||||
Total | 31.71 | 5,285,060 | | |||||||
Pierre C. Courduroux | Pension Plan 1 | 4.92 | 158,385 | | ||||||
Parity Pension Plan 2 | 4.92 | 143,111 | | |||||||
International Supplemental Retirement Account Plan 4 | 6.00 | 27,787 | | |||||||
Total | 6.00 | 329,283 | | |||||||
Brett D. Begemann | Pension Plan 1 | 29.63 | 871,278 | | ||||||
Parity Pension Plan 2 | 29.63 | 1,316,424 | | |||||||
Total | 29.63 | 2,187,702 | | |||||||
Robert T. Fraley, Ph.D. | Pension Plan 1 | 31.67 | 1,282,042 | | ||||||
Parity Pension Plan 2 | 31.67 | 3,190,665 | | |||||||
Total | 31.67 | 4,472,707 | | |||||||
David F. Snively | Pension Plan 1 | 28.94 | 1,068,728 | | ||||||
Parity Pension Plan 2 | 28.94 | 759,766 | | |||||||
Total | 28.94 | 1,828,494 | |
1 | The estimated Aug. 31, 2012 notional account balances under our Pension Plan (as opposed to the present value of accumulated benefits shown in the table) are as follows: Mr. Grant, $394,086; Mr. Courduroux, $115,057; Mr. Begemann, $778,322; Dr. Fraley, $1,290,651; and Mr. Snively, $1,061,210. | |
2 | The estimated Aug. 31, 2012 notional account balances under our Parity Pension Plan (as opposed to the present value of accumulated benefits shown in the table) are as follows: Mr. Grant, $3,648,823; Mr. Courduroux, $102,764; Mr. Begemann, $1,025,286; Dr. Fraley, $3,066,107; and Mr. Snively, $679,238. | |
3 | In addition to the retirement benefits for Mr. Grant based on his years of service as our employee in the U.S., Mr. Grant also is eligible for regular retirement benefits based on his years of service as our employee in the U.K. The U.K. plan is closed to new entrants. Mr. Grant ceased accruing benefits in the U.K. plan in 1996 when he moved to the U.S. The U.K. plan is calculated as follows: (i) 18% times final plan salary, times (ii) pre-Jan. 1, 1995 service, plus (iii) 20%, times (iv) final plan salary, times (v) post-Jan. 1, 1995 plan service. Benefits for service prior to 1993 must be no less than the amounts offered under a prior U.K. pension plan. Benefits increase in accordance with cost of living indices. | |
4 | In addition to the pension plan benefits for Mr. Courduroux based on his years of service as our employee in the U.S., Mr. Courduroux also is eligible for regular pension plan benefits under the companys International Supplemental Retirement Account Plan, described on page 62, based on his years of service as our employee on assignment from France to Switzerland in 2006 and 2007. Mr. Courdurouxs notational account balance under the International Supplemental Retirement Account Plan accrues interest credits at 8% per annum posted over the course of his employment. Mr. Courdurouxs account balance as of Aug. 31, 2012 is $13,682. |
60 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Pension Plan |
We maintain the Monsanto Company Pension Plan for the benefit of our U.S. employees. The Pension Plan is a form of pension plan known as a cash balance plan, and is a tax-qualified defined benefit plan under the Code. Under the cash balance plan design, there are two types of participant accounts: a prior plan account and a cash balance account. Cash balance plan participants who were employed by Former Monsanto and then by us in the U.S. before and after 1997, including Messrs. Grant, Begemann, Snively and Dr. Fraley, have both a prior plan account and a cash balance account. Mr. Courduroux became a participant in the Pension Plan as of October 1, 2007, at the time he transferred employment to the U.S. and has only a cash balance account under the Pension Plan.
The prior plan account generally preserves (and grows) benefits earned under the pension plan maintained by Former Monsanto through December 31, 1996. The opening balance of the prior plan account was (at a minimum) the actuarial equivalent lump sum value of the participants old defined benefit plan monthly retirement benefit accrued prior to January 1, 1997. Each month, the prior plan account is increased by (1) interest credits at an annual rate of 8.5% until the earlier of the participant reaching age 55 or when benefits begin; and (2) pay credits at an annual rate of 4%, until the participant retires or terminates employment.
The cash balance account is credited for all service earned on or after January 1, 1997. The cash balance account grows by the addition of various compensation-based and interest-based credits posted over the course of participants employment. We credit annual contributions, expressed as a percentage of eligible compensation, to the cash balance account in amounts depending upon a participants age as follows: 3% before age 30, 4% for ages 30 to 39, 5% for ages 40 to 44, 6% for ages 45 to 49 and 7% for age 50 and over. Participants also receive contribution credits equal to 3% of eligible compensation in excess of the social security wage base. Participants who were covered under the prior traditional defined benefit plan on December 31, 1996 also received transition credits while employed based on the number of years of benefit service earned as of that date (up to a maximum of ten years). The applicable percentages and age ranges were 2% before age 30, 3% for ages 30 to 39, 4% for ages 40 to 44, 5% for ages 45 to 49, and 6% for age 50 and over. In addition, each participants cash balance account accrues monthly interest credits, based on the average interest rate for 30-year Treasury Bonds for October of the prior calendar year, with a minimum rate of 5% and a maximum rate of 10%.
A pension plan participant may elect to receive his or her vested plan benefit on the first day of any month following the date upon which the participants employment with our company and affiliated companies is terminated or the participant becomes disabled (but no later than the April 1 following the calendar year in which the participant attains age 70½). Pension plan benefits are normally paid in either a single life annuity for unmarried participants or a 50% joint and survivor annuity for married participants, with additional optional forms of benefit available, including a lump sum distribution. All available forms of distribution are actuarially equivalent to the single life annuity.
Parity Pension Plan |
Our Parity Pension Plan provides pension benefits to certain of our U.S. management-level employees, including the proxy officers, who cannot receive full benefits from our Pension Plan because of limitations and restrictions imposed by federal law and regulations. The amount of a participants Parity Pension Plan benefit is the excess of the amount of benefit that he or she would have received under our Pension Plan but for the imposition of these limitations and/or the deferral of the annual incentive award over the amount payable in the Pension Plan.
Parity Pension Plan benefits are vested only to the extent a participants Pension Plan benefits are vested, but are forfeited in the event of a termination for cause. Effective December 31, 2008, the provisions of the Parity Pension Plan relating to the timing of distributions were amended to comply with the final regulations under Code Section 409A, and certain payment options were eliminated from the grandfathered portion of the plan.
2012 PROXY STATEMENT | MONSANTO COMPANY | 61 |
Executive
Compensation continued |
Pre-2005 benefits (grandfathered) under the Parity Pension Plan are those benefits that were earned and vested prior to December 31, 2004. There are two payment options under the Parity Pension Plan for pre-2005 benefits. Benefits may be paid as:
Post-2004 benefits under the Parity Pension Plan are those benefits that were earned and vested after December 31, 2004. There are two payment options under Parity Pension Plan for post 2004 benefits. Benefits may be paid as:
During any waiting or deferral period, we credit participants Parity Pension Plan benefits with interest, currently based on the prior years average of the monthly averages of the Moodys Baa Bond Index, which was 6.04% in calendar year 2011 and 5.66% in calendar year 2012. A Parity Pension Plan participant who has elected to defer receipt of benefits may request an emergency benefit distribution during the waiting period, deferral period or after benefit payments have begun if he or she incurs a severe, unforeseeable financial hardship.
International Supplemental Retirement Account Plan |
Our International Supplemental Retirement Account Plan IRP is a non-qualified defined benefit plan maintained to provide certain benefits to employees who have met certain age and service requirements and who experience a permanent international transfer and meet the eligibility requirements of the plan.
The IRP provides benefits that are a function of a notational account maintained on behalf of plan participants. The IRP account grows by the addition of various compensation-based and interest-based credits posted over the course of the participants employment. We credit annual contributions in amounts depending upon the participants age and a set comparison of company-provided retirement benefits in his home country and country of assignment, in amounts ranging from 2% to 13% of eligible compensation (which the plan defines as base pay plus any bonus or AIP award). In addition, each participants IRP account accrues interest credits at 8% per annum.
IRP benefits are vested only to the extent a participants home country pension plan benefit would be vested or, if there is no home country pension plan, upon completion of five years of continuous service, death or disability. Currently, vested benefits may be paid as follows:
62 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Non-Qualified Deferred
Compensation |
Our proxy officers are eligible to participate in the two non-qualified deferred compensation plans we maintain for certain of our management-level U.S. employees: our SIP Parity Plan and our Deferred Payment Plan. Additionally, in fiscal 2004, Mr. Grant deferred receipt of Financial Goal RSUs awarded that year, to be paid out following his retirement.
Non-Qualified Deferred Compensation Table |
The following table provides information for each proxy officer regarding fiscal 2012 aggregate individual and company contributions, aggregate earnings and year-end account balances under our deferred compensation plans:
Name and Non-Qualified Plan |
Executive Contributions in Last FY ($) 1 |
Monsanto Contributions in Last FY ($) 2 |
Aggregate Earnings in Last FY ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Last FYE ($) 4 |
||||||||||
Hugh Grant | |||||||||||||||
SIP Parity Plan | 466,601 | 305,043 | 1,533,913 | 0 | 10,151,384 | ||||||||||
Deferred Payment Plan | 0 | 0 | 0 | 0 | 0 | ||||||||||
Deferred RSUs 3 | 0 | 0 | 1,330,243 | 0 | 6,402,911 | ||||||||||
Pierre C. Courduroux | |||||||||||||||
SIP Parity Plan | 88,023 | 58,211 | 7,433 | 0 | 173,873 | ||||||||||
Deferred Payment Plan | 0 | 0 | 0 | 0 | 0 | ||||||||||
Brett D. Begemann | |||||||||||||||
SIP Parity Plan | 79,181 | 70,726 | 216,262 | 0 | 1,618,948 | ||||||||||
Deferred Payment Plan | 0 | 0 | 197,187 | 0 | 945,229 | ||||||||||
Robert T. Fraley, Ph.D. | |||||||||||||||
SIP Parity Plan | 123,453 | 88,797 | 434,652 | 0 | 3,865,376 | ||||||||||
Deferred Payment Plan | 0 | 0 | 28,212 | 0 | 502,537 | ||||||||||
David F. Snively | |||||||||||||||
SIP Parity Plan | 91,640 | 65,858 | 185,241 | 0 | 1,195,046 | ||||||||||
Deferred Payment Plan | 0 | 0 | 0 | 0 | 0 |
1 | Amounts in this column reflect the proxy officers deferral of base pay and fiscal 2011 AIP award, paid during fiscal 2012. Proxy officer deferrals of base pay for the 2012, 2011, and 2010 fiscal years into the SIP Parity Plan are also included in the Salary column of the Summary Compensation Table and for 2012 are as follows: for Mr. Grant, $128,816; Mr. Courduroux, $30,923; Mr. Begemann, $23,181; Dr. Fraley, $36,953; and Mr. Snively, $27,640. |
2 | Amounts in this column reflect company matching allocations. These amounts are also included in the All Other Compensation column of the Summary Compensation Table. |
3 | In fiscal 2004, Mr. Grant deferred receipt of 68,640 shares of common stock underlying Financial Goal RSUs (34,320 pre-split shares) awarded that year, to be paid out following his retirement. The Aggregate Earnings in Last FY column reflects the change in value of these deferred shares and all cash dividends paid in fiscal 2012. The Aggregate Balance at Last FYE reflects the total value of these shares based on the August 31, 2012 stock price of $87.11 and all cash dividends paid since the shares were deferred. |
4 | Includes, among other things, proxy officer contributions from salary or incentive compensation reported in the Summary Compensation Table of our previous proxy statements for the year earned to the extent the proxy officer was a proxy officer for that period. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 63 |
Executive
Compensation continued |
SIP Parity Plan |
All eligible U.S. employees may contribute up to 25% of eligible pay to our Savings and Investment Plan (SIP), which is a tax-qualified defined contribution plan. During fiscal 2012, the company made matching contributions to SIP equal to 60% of up to the first 7% of eligible compensation contributed by the participant, and may make an annual discretionary matching contribution on up to 10% of eligible compensation contributed by the participant.
Once contributions to the SIP reach a Code limit on compensation or contributions, hypothetical amounts are allocated to notional accounts under the SIP Parity Plan. Employee deferrals under the SIP Parity Plan are fully vested; however, matching amounts vest 20% per year over five years. The company credits both participant contributions and its matching amounts to the SIP Parity Plan with earnings or losses matching the performance of one or more investment options available under the SIP, as determined by the participant. The plan currently offers 16 investment options, one of which is a book account based on our company stock, which provided a return of 25.7% for fiscal 2012. The other 15 investment options provided returns ranging from 0.6% to 17.9% for fiscal 2012. A participant may change his or her investment elections at any time, except that reallocations involving our common stock funds must be made in compliance with our policies on trading of our stock. After termination of employment, the plan credits accounts with interest, currently based on the prior years average of the monthly averages of the Moodys Baa Bond Index Rate, as in effect from time to time, which was 6.04% in calendar year 2011 and 5.66% in calendar year 2012.
There are two payment options under the SIP Parity Plan for contributions that were credited and vested prior to 2005. Such benefits may be paid as:
There are also two payment options for benefits under the SIP Parity Plan attributable to contributions that were credited and vested after December 31, 2004. Such benefits may be paid as:
Deferred Payment Plan |
Until such time as our Deferred Payment Plan was frozen with respect to new deferrals, the plan provided certain management-level employees the opportunity to defer, until a specific date in the future or until termination of employment or beyond, the receipt of all or a portion of their annual incentive plan cash awards. Our Deferred Payment Plan was amended to provide that our proxy officers and certain other members of senior management may not make any new deferral elections under the plan after August 31, 2009 (effective for our fiscal 2010 annual incentive plan), and that other participants may not make any new deferral elections after August 31, 2010 (effective for our fiscal 2011 annual incentive plan).
With respect to amounts deferred under the Deferred Payment Plan prior to its amendment, the plan permits participants to elect among two investments: (1) the cash election, under which earnings on deferred amounts accrue at a rate equal to the average yield of the Moodys Baa Bond Index for the prior calendar year; and (2) the stock election, under which earnings accrue at a rate that tracks the performance of our common stock (including reinvestment of dividends), with deferred amounts converted into hypothetical stock units based on
64 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
the average trading price during the preceding ten trading days. Participants may transfer between funds subject to certain rules and procedures. Amounts are distributed on either the date specified by the participant at the time of the deferral election or in a lump sum or monthly installments for up to ten years following termination of employment. Amounts attributable to the cash election are paid in cash, and amounts attributable to the stock election are paid in shares of our common stock unless the participant otherwise elects to receive cash. If approved by the plans administrative committee, at its discretion, a participant may receive an early distribution of benefits if he or she incurs a severe, unforeseeable financial hardship.
Potential Payments Upon Termination or Change of
Control |
Change of Control Employment Security
Agreements |
We have entered into change of control employment security agreements with each of the proxy officers and other executives that may require us to make payments to these individuals in the event of the termination of their employment following a change of control. Under the terms of the agreements, we will provide certain protections to the proxy officers for a period of two years following a change of control (the protected period). If a proxy officer incurs an involuntary termination of employment or a voluntary termination of employment for good reason during such period, he would be provided with severance benefits under the terms of the agreement.
A change of control generally means:
The same definition is used with respect to the equity awards included in the tables below.
During the protected period, the agreements generally provide that the proxy officers position, job location and travel requirements will not materially change following the change of control. In addition, during the protected period, the proxy officers will receive compensation and benefits, for which the opportunity or terms, respectively, shall be no less favorable than those in effect prior to the change of control.
Termination
Other Than for Cause or Disability; Voluntary Termination for Good
Reason
If the proxy officer is
terminated other than for cause or disability, or the proxy officer terminates
employment for good reason (as described below) during the protected period
and executes a timely release, he would be entitled to a lump sum payment within
60 days after the termination date equal to the following:
Upon such a termination, all benefits accrued through the termination date under our Pension Plan and supplemental pension or retirement plans will be vested and paid in accordance with their terms.
2012 PROXY STATEMENT | MONSANTO COMPANY | 65 |
Executive Compensation continued |
Following a severance-qualifying termination, the applicable proxy officer is eligible for outplacement benefits, in accordance with our normal practice for our most senior executives, and will receive specified welfare benefits (i.e., medical, prescription drug, dental, vision, disability and life insurance), through the end of the severance period; provided, if the proxy officer becomes eligible to receive specified welfare benefits under another employer provided plan, our companys benefits will cease. Further, for purposes of eligibility for retiree welfare benefits, if the proxy officer is age 50 on the termination date, has provided at least 10 years of service, and has a combined age and years of service of 65, the proxy officer will be entitled to receive retiree medical benefits.
Good reason generally means:
provided that the proxy officer has given us notice of the existence of, and an opportunity to cure, an event or condition constituting good reason, in accordance with the agreement.
Termination
for Death or Disability
If the
proxy officer is terminated on account of death or disability during the
protected period, the company will pay the proxy officer (or his estate or
beneficiaries):
Termination
for Cause or Voluntary Termination Other Than for Good
Reason
If the proxy officer is
terminated for cause during the protected period, no severance payments are
due. Cause is defined as a proxy officers:
If the proxy officer voluntarily terminates, other than for good reason, during the protected period, the company must pay the proxy officer in a lump sum in cash within 30 days of the date of termination:
Treatment of
Golden Parachute Excise Tax
If
a change of control occurs, and a proxy officer is subject to the excise tax
imposed under Section 4999 of the Internal Revenue Code, we will reduce payments
to the proxy officer such that the aggregate amount equals the maximum amount
that can be paid without triggering imposition of the excise tax, if the net
amount received by the proxy officer after tax would be greater than it would be
absent such a reduction.
66 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
|
Other Arrangements |
In addition, many of our executive compensation, benefit and deferred compensation plans provide our proxy officers with certain rights or the right to receive payments in the event of the termination of their employment, as described in more detail in the section Long-Term Incentive Awards beginning at page 53. Our proxy officers participate in our companys broad-based Employees Separation Pay Plan covering our full-time U.S. employees. Under the terms of the plan, a proxy officer would receive severance benefits in the event of his involuntary termination without cause, absent a change of control. The amount of the severance benefits would be paid as a lump sum equal to the product of: (a) 15, times (b) the sum of: (i) the proxy officers monthly base salary in effect at the time of the termination, plus (ii) the average of his annual incentive plan awards paid to him under our annual incentive plan for the three prior years, divided by 12. Their severance benefit calculation follows the same formula used in determining all other U.S. employees severance pay upon an involuntary termination without cause under the Separation Pay Plan.
Potential Effect on Compensation Upon Termination or Change of Control Table |
The table and footnotes following show potential incremental payments, incremental benefits, equity award accelerations and equity award forfeitures upon termination of our proxy officers or a change of control. The amounts have been estimated under existing agreements and plans under various termination scenarios on August 31, 2012. However, because the compensation impact upon termination or a change of control depends on several factors, the actual impact can only be determined at the time of the event. Material assumptions used in calculating the estimated compensation and benefits under each triggering event are noted below. All amounts included in the table are stated in the aggregate, even if the payments will be made on a monthly basis. The table does not reflect amounts attributable to vested, non-forfeited equity-based awards or accrued compensation; retirement and other benefits; and deferred compensation. For information about these previously earned and accrued amounts, see the Summary Compensation Table, Outstanding Equity Awards at Fiscal Year End Table, Pension Benefits Table and Non-Qualified Deferred Compensation Table located elsewhere in this proxy statement.
2012 PROXY STATEMENT | MONSANTO COMPANY | 67 |
Executive Compensation continued |
Potential Effect on Compensation Upon Termination or Change of Control Table | |||||||||
Termination Event | |||||||||
Change of | |||||||||
Control | |||||||||
Involuntary | Change of | Without | |||||||
Voluntary | Not for Cause | For Cause | Death | Disability | Control | Termination | |||
Name | ($) | ($) 1 | ($) | ($) | ($) | ($) 2 | ($) 2 | ||
Hugh Grant | Cash Severance Payment | 0 | 3,515,300 | 0 | 0 | 0 |
3 |
12,366,337 | 0 |
Stock Options 4 | 0 | 5,351,743 | 0 | 5,351,743 | 5,351,743 | 7,668,273 | 0 | ||
Performance-RSUs 5 | 0 | 7,751,570 | 0 | 7,751,570 | 7,751,570 | 6,357,375 | 6,932,214 | ||
Total | 0 | 16,618,613 | 0 | 13,103,313 | 13,103,313 | 26,391,985 | 6,932,214 | ||
Enhanced Health & Welfare Benefits 6 | 0 | 104,203 | 0 | 0 | 0 | 127,580 | 0 | ||
Forfeited Equity Value | |||||||||
Stock Options | (7,668,273) | (2,316,530) | (22,286,774) | (2,316,530) | (2,316,530) | 0 | 0 | ||
Performance-RSUs | (9,932,456) | (2,180,886) | (9,932,456) | (2,180,886) | (2,180,886) | 0 | 0 | ||
Total | (17,600,729) | (4,497,416) | (32,219,230) | (4,497,416) | (4,497,416) | 0 | 0 | ||
Pierre C. Courduroux | Cash Severance Payment | 0 | 958,958 | 0 | 0 | 0 | 3,212,000 | 0 | |
Stock Options 4 | 0 | 355,371 | 0 | 355,371 | 355,371 | 818,726 | 0 | ||
Performance-RSUs 5 | 0 | 777,195 | 0 | 777,195 | 777,195 | 691,653 | 0 | ||
Total | 0 | 2,091,524 | 0 | 1,132,566 | 1,132,566 | 4,722,379 | 0 | ||
Enhanced Health & Welfare Benefits 6 | 0 | 0 | 0 | 0 | 0 | 36,307 | 0 | ||
Forfeited Equity Value | |||||||||
Stock Options | (818,726) | (463,355) | (1,400,629) | (463,355) | (463,355) | 0 | 0 | ||
Performance-RSUs | (1,213,442) | (436,247) | (1,213,442) | (436,247) | (436,247) | 0 | 0 | ||
Total | (2,032,168) | (899,602) | (2,614,071) | (899,602) | (899,602) | 0 | 0 | ||
Brett D. Begemann | Cash Severance Payment | 0 | 1,287,500 | 0 | 0 | 0 | 4,125,000 | 0 | |
Stock Options 4 | 0 | 1,130,833 | 0 | 1,130,833 | 1,130,833 | 1,717,757 | 0 | ||
Performance-RSUs 5 | 0 | 1,742,374 | 0 | 1,742,374 | 1,742,374 | 1,444,458 | 1,386,791 | ||
Restricted Stock Units 7 | 0 | 1,324,682 | 0 | 1,324,682 | 1,324,682 | 3,456,525 | 0 | ||
Total | 0 | 5,485,389 | 0 | 4,197,889 | 4,197,889 | 10,743,740 | 1,386,791 | ||
Enhanced Health & Welfare Benefits 6 | 0 | 125,605 | 0 | 0 | 0 | 130,049 | 0 | ||
Forfeited Equity Value | |||||||||
Stock Options | (1,717,757) | (586,925) | (6,218,116) | (586,925) | (586,925) | 0 | 0 | ||
Performance-RSUs | (2,294,826) | (552,452) | (2,294,826) | (552,452) | (552,452) | 0 | 0 | ||
Restricted Stock Units | (3,456,525) | (2,131,843) | (3,456,525) | (2,131,843) | (2,131,843) | 0 | 0 | ||
Total | (7,469,108) | (3,271,220) | (11,969,467) | (3,271,220) | (3,271,220) | 0 | 0 | ||
Robert T. Fraley, Ph.D. | Cash Severance Payment | 0 | 1,265,717 | 0 | 0 | 0 | 3,937,720 | 0 | |
Stock Options 4 | 1,784,089 | 1,784,089 | 0 | 1,784,089 | 1,784,089 | 772,218 | 0 | ||
Performance-RSUs 5 | 2,584,554 | 2,584,554 | 0 | 2,584,554 | 2,584,554 | 2,119,561 | 2,311,028 | ||
Restricted Stock Units 7 | 0 | 1,471,201 | 0 | 1,471,201 | 1,471,201 | 3,838,938 | 0 | ||
Total | 4,368,643 | 7,105,561 | 0 | 5,839,844 | 5,839,844 | 10,668,437 | 2,311,028 | ||
Enhanced Health & Welfare Benefits 6 | 0 | 0 | 0 | 0 | 0 | 19,403 | 0 | ||
Forfeited Equity Value | |||||||||
Stock Options | (772,218) | (772,218) | (7,575,778) | (772,218) | (772,218) | 0 | 0 | ||
Performance-RSUs | (726,846) | (726,846) | (3,311,400) | (726,846) | (726,846) | 0 | 0 | ||
Restricted Stock Units | (3,838,938) | (2,367,737) | (3,838,938) | (2,367,737) | (2,367,737) | 0 | 0 | ||
Total | (5,338,002) | (3,866,801) | (14,726,116) | (3,866,801) | (3,866,801) | 0 | 0 |
68 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Potential Effect on Compensation Upon Termination or Change of Control Table | ||||||||
Termination Event | ||||||||
Change of | ||||||||
Control | ||||||||
Involuntary | Change of | Without | ||||||
Voluntary | Not for Cause | For Cause | Death | Disability | Control | Termination | ||
Name | ($) | ($) 1 | ($) | ($) | ($) | ($) 2 | ($) 2 | |
David F. Snively | Cash Severance Payment | 0 | 1,015,500 | 0 | 0 | 0 | 1,525,408 | 0 |
Stock Options 4 | 927,718 | 927,718 | 0 | 927,718 | 927,718 | 463,355 | 0 | |
Performance-RSUs 5 | 1,402,645 | 1,402,645 | 0 | 1,402,645 | 1,402,645 | 1,160,741 | 1,202,118 | |
Restricted Stock Units 7 | 0 | 954,813 | 0 | 954,813 | 954,813 | 3,080,210 | 0 | |
Total | 2,330,363 | 4,300,676 | 0 | 3,285,176 | 3,285,176 | 6,229,714 | 1,202,118 | |
Enhanced Health & Welfare Benefits 6 | 0 | 0 | 0 | 0 | 0 | 15,582 | 0 | |
Forfeited Equity Value | ||||||||
Stock Options | (463,355) | (463,355) | (2,067,309) | (463,355) | (463,355) | 0 | 0 | |
Performance-RSUs | (436,247) | (436,247) | (1,838,892) | (436,247) | (436,247) | 0 | 0 | |
Restricted Stock Units | (3,080,210) | (2,125,397) | (3,080,210) | (2,125,397) | (2,125,397) | 0 | 0 | |
Total | (3,979,812) | (3,024,999) | (6,986,411) | (3,024,999) | (3,024,999) | 0 | 0 |
1 | These amounts reflect estimated severance benefits in the event of the proxy officers involuntary termination without cause, absent a change of control based on the formula set forth in our broad-based U.S. Separation Pay Plan. Each proxy officer would also be entitled to outplacement services for 12 months following termination, at an aggregate cost of $2,800 per proxy officer. | |
2 | In the event of a termination coincident with or following a change of control, the proxy officer would receive the value of both columns, as all outstanding awards would fully vest. The values of Strategic Goal RSUs, which would vest at target in the event of a change of control without termination, are reflected in the Change of Control Without Termination column and, accordingly, are not also reflected in the Change of Control column under Termination Event. Restricted stock units and stock options with value would not vest following a change of control without a termination unless a comparable replacement award was not provided. The terms of these awards are described in more detail above under Long-Term Incentive Awards on page 53. Each proxy officer would also be entitled to outplacement services for 12 months following termination, at an aggregate cost of $2,800 per proxy officer. | |
3 | In the event Mr. Grant should incur a termination due to disability, he would be entitled to an annual payment of $1,233,800 under the terms of the TCN plan described on page 43, offset by any benefits due him under the terms of our U.S. disability plan, until he attains age 65, so long as he remains disabled. The net present value of future payments until age 65, assuming continued disability and no mortality, is $11,366,737. | |
4 | These amounts reflect the value of accelerated vesting of stock option awards based on our closing stock price on Aug. 31, 2012 of $87.11. | |
5 | These amounts are based on our closing stock price on Aug. 31, 2012 of $87.11. Performance-RSUs include non-vested fiscal 2011 and fiscal 2012 Financial Goal RSUs and Strategic Goal RSUs. See Financial Goal RSUs on pages 54-55 for descriptions of: (i) vesting of Financial Goal RSUs in the event of involuntary termination without cause, retirement, death or disability; and (ii) accelerated vesting of Financial Goal RSUs in the event of a change of control. In the event a change of control had occurred on Aug. 31, 2012, the Strategic Goal RSUs would have vested at target-level (100%). | |
Dr. Fraley and Mr. Snively each has attained age 55 and five years of service with the company and thus, in the event of a voluntary termination or involuntary termination of employment without cause, death or disability on Aug. 31, 2012, would have been deemed to have retired and thus eligible for a pro-rata portion of units based upon actual performance over the performance period with respect to the fiscal 2011 and fiscal 2012 Financial Goal RSUs. For purposes of valuation, the table assumes that the outstanding (200%) level of performance for fiscal 2011 and fiscal 2012 Financial Goal RSUs will be achieved, consistent with assumptions applied in the Outstanding Equity Awards at Fiscal-Year End Table on pages 57-58. The table reflects this level of payout. | ||
6 | This amount reflects the net present value of any extended health and welfare benefit coverage for the proxy officer in the event of various termination events. In the event of an involuntary termination without cause absent a change of control, Mr. Grant and Mr. Begemann would become eligible for retiree benefits under our broad-based U.S retiree medical plan. Dr. Fraley and Mr. Snively currently qualify for retiree benefits and Mr. Courdurouxs current age would preclude him from eligibility; thus they would receive no incremental benefits. | |
In the event of change of control and a subsequent involuntary termination without cause or a voluntary termination for good reason during the protected period, under the terms of our change of control employment security agreements, health and welfare benefits would continue for each proxy officer for two years and Messrs. Grant and Begemann would become eligible for retiree benefits under our broad-based U.S. health and welfare plans. | ||
7 | Reflects pro-rata vesting of restricted stock unit awards in the case of involuntary termination of employment without cause, or termination due to death or disability and vesting in full for a termination following a change of control. See Retention RSUs on page 55 for more information. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 69 |
Equity Compensation Plan Table |
We maintain three compensation plans under which our equity securities had been authorized for issuance to employees or non-employee directors: (i) the Monsanto Company Long-Term Incentive Plan, as amended (which we refer to as the 2000 LTIP), (ii) the Monsanto Company 2005 Long-Term Incentive Plan, as amended (which we refer to as the 2005 LTIP), and (iii) the Monsanto Broad-Based Stock Option Plan, as amended (which we refer to as the Broad-Based Plan). Each of the plans was approved by our shareowners.
On January 24, 2012, our shareowners approved the second amended and restated 2005 LTIP in order to authorize the issuance of an additional number of shares under the plan. Our shareowners approved a total of 33,552,308 shares to be available for grants of awards under the 2005 LTIP after August 31, 2011. Upon approval, no further awards were granted under the 2000 LTIP or the Broad-Based Plan.
The following table shows the number of shares of common stock to be issued upon exercise of options outstanding at August 31, 2012, the weighted average exercise price of those options and the number of shares of common stock remaining available for future issuance at August 31, 2012, excluding shares to be issued upon the exercise of outstanding options.
Number of securities | ||||||||||||||
remaining available for future | ||||||||||||||
Number of securities to be | issuance under equity | |||||||||||||
issued upon exercise of | Weighted-average exercise | compensation plans | ||||||||||||
outstanding options, warrants | price of outstanding options, | (excluding securities to be | ||||||||||||
Plan Category | and rights | warrants and rights 2 | issued upon exercise 1) | |||||||||||
Equity compensation plans approved | 21,148,814 | $58.56 | 30,702,543 | |||||||||||
by security holders 1 | ||||||||||||||
Equity compensation plans not | | | | |||||||||||
approved by security holders | ||||||||||||||
Total | 21,148,814 | $58.56 | 30,702,543 |
1 | At Aug. 31, 2012, there was a total of 19,454,934 shares of common stock to be issued upon exercise of outstanding options granted having a weighted average exercise price of $58.56 and 30,702,543 shares of common stock remaining available for future issuance (excluding shares to be issued upon exercise of outstanding options). As of Aug. 31, 2012, 240,487 shares of deferred stock were issued. Based on the probable outcome of performance-RSUs, the table above reflects 1,453,393 shares of unvested RSUs. The terms of the unvested RSUs are described under Long-Term Incentive Awards beginning on page 53. The actual number of performance-RSUs that may be eligible for vesting will be determined after the end of the respective performance periods and may differ from the number of performance-RSUs included in the table. | |
2 | This calculation does not take into account awards of deferred stock or restricted stock units. |
70 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
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 have described in this proxy statement. While this vote is advisory, and not binding on our company, it will provide information to our people and compensation committee regarding investor sentiment about our core principles and objectives, which the committee will be able to consider when determining executive compensation in the future.
Shareowners should review the Compensation Discussion and Analysis beginning on page 30, 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 was designed and is administered by our people and compensation committee to:
The committee regularly reviews our officer compensation strategies, policies and programs to assure the program continues to meet these overall objectives.
Your vote is requested. We believe that the information we have provided above in this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure managements interests are aligned with our shareowners interests to support long-term value creation. Accordingly, the Board of Directors 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 companys proxy officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement.
OUR BOARD OF DIRECTORS
RECOMMENDS |
2012 PROXY STATEMENT | MONSANTO COMPANY | 71 |
Proxy Item No. 4: | Proposal to Amend the Amended and Restated Certificate of Incorporation of the Company to Declassify the Board |
Background
The
Board of Directors (the Board) proposes to amend Article VI of our Amended and
Restated Certificate of Incorporation (the Certificate of Incorporation) to
phase out the present three-year, staggered terms of our directors and instead
provide for the annual election of directors. Currently, the Board is divided
into three classes, with directors elected to staggered three-year terms.
Approximately one-third of our directors stand for election each year. On
November 19, 2012, upon the recommendation of the Nominating and Corporate
Governance Committee, the Board approved, and recommended that the Companys
shareowners approve at the 2013 Annual Meeting of Shareowners, a plan to
declassify the Board.
Rationale for
Declassifying the Board
The
Board took into consideration arguments in favor and against continuation of the
classified board and determined that it is in the Companys best interests to
propose to declassify its board of directors. In its review, the Board
considered the advantages of maintaining the classified Board structure in light
of our current circumstances, including that a classified Board structure
promotes Board continuity and stability and encourages a long-term perspective
by company management, because a majority of directors will always have
experience as directors of the Company. Classified boards also provide
protection against certain abusive takeover tactics and more time to solicit
higher bids in a hostile takeover situation because it is more difficult to
change a majority of directors on the board in a single year. While the Board
continues to believe that these are important considerations, the Board also
considered potential advantages of declassification in light of our current
circumstances, including the ability of shareowners to evaluate directors
annually. Annually elected boards are perceived by many institutional
shareholders as increasing the accountability of directors to such shareholders.
After carefully weighing all of these considerations, the Board approved the
proposed amendment to the Certificate of Incorporation, the text of which is
attached to this Proxy Statement as Appendix D, and recommended that the
shareowners adopt this amendment by voting in favor of this proposal.
Proposed
Declassification Amendments
If
the proposed amendment to the Certificate of Incorporation is approved,
directors will be elected to one-year terms of office beginning at the Companys
2014 Annual Meeting of Shareowners. Directors who have been elected to
three-year terms prior to the effectiveness of the amendment, including
directors elected at the 2013 Annual Meeting of Shareowners, would complete
those three-year terms, and thereafter would be eligible for annual re-election
after completion of their current terms. If the proposed measure is approved,
beginning with the 2016 Annual Meeting of Shareowners, the Board will be
completely declassified and all directors will be subject to annual election to
one-year terms. In addition, until the Board is completely declassified, any
director appointed to the Board as a result of an increase in the size of the
Board or to fill a vacancy on the Board will hold office until the next election
of the class for which such director is chosen; thereafter, any director so
appointed will hold office until the next annual meeting of
shareowners.
The above description is qualified in its entirety by the actual text of proposed amendment to the Certificate of Incorporation, which is set forth in Appendix D.
If the proposed amendment to the Certificate of Incorporation is approved by shareowners, the Board will adopt conforming amendments to our Bylaws.
72 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Under the Certificate of Incorporation, the proposed amendment to the Certificate of Incorporation must be approved by the affirmative vote of the holders of at least 70% of the voting power of the outstanding shares of capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class. Accordingly, this proposal will be approved upon the affirmative vote of the holders of 70% of our outstanding Common Stock. Abstentions and broker non-votes will therefore have the same effect as an Against vote with respect to this proposal.
Legal Effectiveness
If the proposed amendment to the Certificate of Incorporation is approved by the requisite vote of the shareowners, it will become effective upon the filing of an appropriate amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware. We would make such filing promptly after the 2013 Annual Meeting of Shareowners.
OUR BOARD OF DIRECTORS
RECOMMENDS |
2012 PROXY STATEMENT | MONSANTO COMPANY | 73 |
Proxy Item No. 5: Shareowner Proposal |
This proposal was submitted by Harrington Investments, Inc., 1001 2nd Street, Suite 325, Napa, CA 94559, as lead proponent of a filing group. The proposal has been carefully considered by the board of directors, which has concluded that its adoption would not be in the best interests of the company or its shareowners. For the reasons stated after the proposal, the board recommends a vote Against the shareowner proposal.
The proposal and supporting statement are presented as received from the shareowner proponents in accordance with the rules of the Securities and Exchange Commission, and the board of directors and the company disclaim any responsibility for its content. We will furnish, orally or in writing as requested, the name, address and claimed share ownership position of the proponents of this shareowner proposal promptly upon written or oral request directed to the companys Secretary.
Information regarding the inclusion of proposals in Monsantos proxy statement can be found on page 77 under Shareowner Proposals for 2014 Annual Meeting.
Shareowner Statement
Whereas:
The labeling of genetically modified organisms (GMOs) is an increasing matter of concern among state legislators across the United States;
Whereas:
Vermont, Alaska, Maine and Nebraska have passed laws requiring labeling of GMOs and at least fifteen states have offered legislation that would require similar labeling;
Whereas:
The biological and physical movement of material derived from genetically engineered crops is difficult and sometimes impossible to control or recall;
Whereas:
Many domestic and global food markets demand foods with zero or near-zero levels of material derived from genetically modified organisms;
Whereas:
Genetically modified crops have been found to contaminate conventional (non-GMO) and organic farms, threatening farmers livelihoods, and affecting critical food supply, and imposing a significant financial burden on farmers seeking to satisfy markets for GMO-free products;
RESOLVED: The Monsanto board shall prepare a report, at reasonable expense and omitting proprietary information, assessing any material financial risks or operational potential impacts on the Company with:
74 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
The report shall also discuss the impact of such a policy regarding such issues and related public policies on our customers and consumers, and shall be available by July 1, 2013.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR THE FOLLOWING REASONS:
Disclosure of material financial risks or operational impacts on the company is required by SEC reporting requirements and we take seriously our responsibility to identify, analyze and transparently report such risks or potential impacts. Existing processes and procedures are in place that are intended to ensure compliance with SEC disclosure requirements relating to the topics raised by the proponent. An additional report to restate such risks or impacts as suggested in the proposal would be redundant and provide no meaningful additional information to shareowners.
We are committed to the practice of product stewardship which includes careful attention to coexistence and identity preservation. More details are available on our website at http://www.monsanto.com/ ourcommitments/Pages/product-stewardship.aspx .2 For example,
Constructive coexistence among diverse segments of agriculture is well established and practiced. It is commonplace to find different agricultural production methods working effectively side by side based on well established practices and a long, successful history in agriculture. Careful management of these production methods is in the interest of all concerned - our company, our customers, the value chain and consumers.
____________________ | ||
2 | Information contained on this website is for informational purposes only and is not incorporated by reference into this proxy statement. |
2012 PROXY STATEMENT | MONSANTO COMPANY | 75 |
THE BOARD OF DIRECTORS
RECOMMENDS |
76 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
Other Matters |
Shareowner Proposals for 2014 Annual
Meeting |
Proposals Included in Proxy
Statement |
Proposals of our shareowners that are intended to be presented by such shareowners at our 2014 annual meeting and that shareowners desire to have included in our proxy materials relating to such meeting must be received by our Corporate Secretary no later than 5:00 p.m., Central Time, August 12, 2013, which is 120 calendar days prior to the anniversary of this years mailing date. The proposal, including any accompanying supporting statement, may not exceed 500 words. Upon timely receipt of any such proposal, we will determine whether or not to include such proposal in the proxy statement and proxy in accordance with applicable regulations governing the solicitation of proxies.
Proposals Not Included in the Proxy
Statement |
If a shareowner wishes to present a proposal at our annual meeting in the year 2014 or to nominate one or more directors and the proposal is not intended to be included in our proxy statement relating to that meeting, the shareowner must give advance written notice to us prior to the deadline for such meeting determined in accordance with our bylaws. In general, our bylaws provide that such notice should be addressed to the Secretary and be received at our Creve Coeur Campus by the close of business no fewer than 90 nor more than 120 days prior to the first anniversary of the preceding years annual meeting, except in certain circumstances. For purposes of our 2014 annual meeting, such notice must be received not later than the close of business on November 2, 2013 and not earlier than the close of business on October 3, 2013. These time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority. Our bylaws set out specific requirements that such shareowners and written notices must satisfy. Any shareowner filing a written notice of nomination for director must describe various matters regarding the nominee and the shareowner and the underlying beneficial owner, if any, including, among other things, such information as name, address, occupation, shares, rights to acquire shares and other derivative securities or short interest held, and any relevant understandings or arrangements between the shareowner and beneficial owner, if any. Any shareowner filing a notice to bring other business before a shareowner meeting must include in such the same type of information as well as, among other things, the text of the proposal or business and the reasons therefor, and other specified matters.
Our bylaws also set out specific eligibility requirements that nominees for director must satisfy, which require nominees to:
|
will abide by the advance resignation requirements of our bylaws in connection with director elections; | ||
|
is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such prospective nominee, if elected as a director, will act or vote on any issue or question (a Voting Commitment) that has not been disclosed to us or (2) any Voting Commitment that could limit or interfere with the nominees ability to comply, if elected as a director, with the nominees fiduciary duties under applicable law; |
2012 PROXY STATEMENT | MONSANTO COMPANY | 77 |
|
|
is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than us with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein; and | ||
|
would be in compliance if elected as a director and will comply with all of our applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines. |
Copies of those requirements will be forwarded to any shareowner upon written request.
Other Information |
Our board of directors knows of no matter, other than those referred to in this proxy statement, which will be presented at the meeting. However, if any other matters, including a shareowner proposal excluded from this proxy statement pursuant to the rules of the SEC, properly come before the meeting or any of its adjournments, the person or persons voting the proxies will vote in accordance with their best judgment on such matters. Should any nominee for director be unable to serve or for good cause will not serve at the time of the meeting or any adjournments thereof, the persons named in the proxy will vote for the election of such other person for such directorship as our board of directors may recommend, unless, prior to the meeting, the board has eliminated that directorship by reducing the size of the board. The board is not aware that any nominee herein will be unable to serve or for good cause will not serve as a director.
We urge you to vote promptly and look forward to seeing you at the meeting.
By Order of the Board of Directors, | |
MONSANTO COMPANY | |
DAVID F. SNIVELY | |
Secretary | |
December 10, 2012 |
78 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
APPENDIX A BOARD OF DIRECTORS INDEPENDENCE STANDARDS |
ATTACHMENT A to BOARD OF DIRECTORS CHARTER AND CORPORATE GOVERNANCE GUIDELINES INDEPENDENCE STANDARDS |
An independent Director is one whom the Board affirmatively determines has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board of Directors has adopted the following categorical standards to assist it in the determination of each Directors independence. The Board of Directors will determine the independence of any Director with a relationship to the Company that is not covered by these standards and the Company will disclose the basis of such determinations and the identity of all directors who have been determined to be independent in the Companys annual proxy statements.
A Director will be presumed to be independent if the Director:
1. | Has not been an employee of the Company for at least three years, other than in the capacity as a former interim Chairman, Chief Executive Officer or other executive officer; | ||
2. | Has not, within the past three years, worked on the Companys audit as a partner or employee of a firm that is the Companys internal or external auditor, and is not a current partner or employee of such a firm; | ||
3. | Has not, during the last three years, been employed as an executive officer by a company for which an executive officer of the Company concurrently served as a member of such companys compensation committee; | ||
4. | Has no immediate family members (i.e., spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who shares the Directors home) who did not satisfy the foregoing criteria; provided, however, that, with respect to the employment criteria, such Directors immediate family member may (i) currently serve or have served as an employee (other than as a partner) in a firm that is the Companys internal or external auditor, unless such family member has personally worked on the Companys audit during that time; and (ii) currently serve or have served as an employee but not as an executive officer of the Company during such period; | ||
5. | Has not received, and has no immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company (other than director and committee meeting fees and pension or other deferred compensation for prior service, provided that such compensation is not contingent in any way on continued service); provided, however, that neither compensation received by a Director for former service as an interim Chairman or CEO or other executive officer nor compensation received by a Directors immediate family member for service as a non-executive employee shall be considered in determining independence; | ||
6. | Is not a current executive officer or employee, and has no immediate family member who is a current executive officer, of a company that made payments to, or received payments from, the Company for property or services in any of the last three fiscal years in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other companys consolidated gross revenues as measured against the most recent completed fiscal year; |
2012 PROXY STATEMENT | MONSANTO COMPANY | A-1 |
|
7. | Has not been, and has no immediate family member who has been, an executive officer of a foundation, university, non-profit trust or other charitable organization, for which charitable contributions from the Company and its respective trusts or foundations, account or accounted for more than 2% or $1 million, whichever is greater, of such charitable organizations consolidated gross revenues, in any single of the last three fiscal years, unless the Company discloses all contributions made to the recipient organization in its annual proxy statement; and | ||
8. | Does not serve, and has no immediate family member who has served, as an executive officer or general partner of an entity that has received an investment from the Company or any of its subsidiaries, unless such investment is less than $1 million or 2% of such entitys total invested capital, whichever is greater, in any of the last three years. |
In addition to the foregoing, in order to be considered independent for purposes of serving on the Companys Audit and Finance Committee, a member of the Audit and Finance Committee may not, other than in his or her capacity as a member of the Audit and Finance Committee, the Board of Directors, or any other Board committee:
1. | Accept, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or any subsidiary of the Company, other than in the Directors capacity as a director or committee member or any pension or other deferred compensation for prior service, provided that such compensation is not contingent in any way on continued service; or | ||
2. | Be an affiliated person of the Company or any subsidiary of the Company, as such term is defined by the Securities and Exchange Commission. |
A-2 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
APPENDIX B DESIRABLE CHARACTERISTICS OF DIRECTORS |
ATTACHMENT B to BOARD OF DIRECTORS CHARTER AND CORPORATE GOVERNANCE GUIDELINES DESIRABLE CHARACTERISTICS OF DIRECTORS |
1. 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. |
2. Core Competencies 1 | |
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. |
2012 PROXY STATEMENT | MONSANTO COMPANY | B-1 |
|
3. 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 directors 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. |
4. 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. |
1 The Board as a whole needs the core competencies represented by at least several directors.
B-2 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
APPENDIX C
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
The presentations of ongoing EPS, free cash flow, and return on capital in this proxy statement are not intended to replace net income (loss) attributable to Monsanto Company, cash flows, financial position or comprehensive income (loss), and they are not measures of financial performance as determined in accordance with generally accepted accounting principles (GAAP) in the United States. The following tables reconcile ongoing EPS, free cash flow, and return on capital to the respective most directly comparable financial measure calculated in accordance with GAAP.
Reconciliation of
EPS to Ongoing EPS
Our ongoing EPS
financial measure excludes certain after-tax items that we do not consider part
of ongoing operations. We believe that our ongoing EPS financial measure
presented with these adjustments best reflects our ongoing performance and
business operations during the periods presented and is more useful to investors
for comparative purposes. In addition, management uses the ongoing EPS financial
measure as a guide in its budgeting and long-range planning processes, and as a
guide in determining incentive compensation. The presentation of EPS on an
ongoing basis is intended to supplement investors understanding of our
operating performance. This non-GAAP financial measure may not be comparable to
similar measures used by other companies.
Fiscal 2010 | Fiscal 2011 | Fiscal 2012 | ||||||||||||
Diluted Earnings (Loss) Per Share | $ | 1.99 | $ | 2.96 | $ | 3.79 | ||||||||
Restructuring Charges, Net | 0.41 | | (0.02) | |||||||||||
Income on Discontinued Operations | (0.01) | | (0.01) | |||||||||||
Nitro Claims Settlement | | | 0.05 | |||||||||||
Resolution of Legacy Tax Matter | | | (0.11) | |||||||||||
Diluted Earnings (Loss) Per Share from Ongoing Business | $ | 2.39 | $ | 2.96 | $ | 3.70 |
The above results reflect the Restatement described in more detail on page 38.
Reconciliation of
Free Cash Flow
Free cash flow, which
we refer to as cash flow in our compensation plans, is defined as the total of
net cash provided or required by operating activities and net cash provided or
required by investing activities. We believe that free cash flow is useful to
investors and management as a measure of the ability of our business to generate
cash. This cash can be used to meet business needs and obligations, to reinvest
in the company for future growth, or to return to our shareowners through
dividend payments or share repurchases. Free cash flow is also used by
management as one of the performance measures in determining incentive
compensation.
(Dollars in millions) | Fiscal 2010 | Fiscal 2011 | Fiscal 2012 | |||||||||||
Net Cash Provided by Operating Activities | $ | 1,398 | $ | 2,814 | $ | 3,051 | ||||||||
Net Cash Required by Investing Activities | (834) | (975) | (1,034) | |||||||||||
Free Cash Flow | $ | 564 | $ | 1,839 | $ | 2,017 | ||||||||
Net Cash Required by Financing Activities | (1,038) | (864) | (1,165) | |||||||||||
Cash Assumed From Initial Consolidations of Variable Interest Entities | | 77 | | |||||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 3 | 35 | (141) | |||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | $ | (471) | $ | 1,087 | $ | 711 |
2012 PROXY STATEMENT | MONSANTO COMPANY | C-1 |
Reconciliation of
Return on Capital
Return on capital
(ROC) means net income (without the effect of certain items) exclusive of
after-tax interest expenses, divided by the average of the beginning year and
ending year net capital employed. We believe ROC is useful to investors and
management as a measure of how effectively the company utilizes capital to
generate earnings. ROC is also used by management as one of the performance
measures in determining incentive compensation.
(Dollars in millions) | Fiscal 2010 | Fiscal 2011 | Fiscal 2012 | ||||||||||||
Operating Profit After-Tax (excluding certain items) | $ | 1,395 | $ | 1,665 | $ | 2,077 | |||||||||
Average Capital | 10,493 | 11,198 | 11,246 | ||||||||||||
Return on Capital | 13.3% | 14.9% | 18.5% | ||||||||||||
Operating Profit After-Tax (excluding certain items): | |||||||||||||||
Net Income Attributable to Monsanto | 1,096 | 1,607 | 2,045 | ||||||||||||
Income on Discontinued Operations | (4) | (2) | (6) | ||||||||||||
Nitro Claims Settlement | | | 27 | ||||||||||||
Resolution of Legacy Tax Matter | | | (62) | ||||||||||||
Restructuring Charges, Net | 224 | (1) | (7) | ||||||||||||
Interest Expense - Net of Taxes | 79 | 61 | 80 | ||||||||||||
Operating Profit After-Tax (excluding certain items) | $ | 1,395 | $ | 1,665 | $ | 2,077 | |||||||||
Average Capital: | |||||||||||||||
Short-Term and Long-Term Debt | 2,103 | 2,221 | 2,074 | ||||||||||||
Shareowners Equity | 10,113 | 11,716 | 12,036 | ||||||||||||
Cash and cash equivalents | (1,485) | (2,572) | (3,283) | ||||||||||||
Cash for Operations | 150 | 150 | 150 | ||||||||||||
Total Capital | $ | 10,881 | $ | 11,515 | $ | 10,977 | |||||||||
Prior Period Capital | $ | 10,105 | $ | 10,881 | $ | 11,515 | |||||||||
Average Capital | $ | 10,493 | $ | 11,198 | $ | 11,246 |
C-2 | MONSANTO COMPANY | 2012 PROXY STATEMENT |
APPENDIX D PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION |
Subject to approval by the requisite vote of shareowners of the Company, Article VI of the Certificate of Incorporation would be amended to read in its entirety as follows:
ARTICLE VI
Section 1. Subject to the rights of the holders of any outstanding series of Preferred Stock or any other series or class of stock as set forth in this Certificate of Incorporation to elect additional directors under specified circumstances, the number of directors of the Corporation shall be fixed, and may be increased or decreased from time to time, by resolution of the Board.
Section 2. Unless and except to the extent that the Bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.
Section 3. The directors, other than those who may be elected by the holders of any outstanding series of Preferred Stock, shall, until the annual meeting of stockholders to be held in 2016, be classified with respect to the time for which they severally hold office into three classes, as nearly their equal in number as possible. The term of office for the class of directors elected at the annual meeting of stockholders held in 2011 shall expire at the annual meeting of stockholders to be held in 2014, the term of office for the class of directors elected at the annual meeting of stockholders held in 2012 shall expire at the annual meeting of the stockholders to be held in 2015, and the term of office for the class of directors elected at the annual meeting of stockholders held in 2013 shall expire at the annual meeting of stockholders to be held in 2016, with the members of each class to hold office until their successors are elected and qualified. Commencing at the annual meeting of stockholders to be held in 2014, directors succeeding those whose terms are then expired shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the year following the year of their election and until their successors are elected and qualified. Commencing with the annual meeting of the stockholders of the Corporation to be held in 2016, the classification of the directors shall terminate and all directors shall be of one class and shall serve until the next annual meeting of stockholders or until their earlier death, resignation, removal or disqualification.
Section 4. Except as provided in the subsequent sentence and subject to the rights of the holders of any outstanding series of Preferred Stock or any other series or class of stock as set forth in or pursuant to this Certificate of Incorporation to elect additional directors under specified circumstances, any director or the entire Board may be removed from office at any time with or without cause, but only by the affirmative vote of the holders of at least 70 percent of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Notwithstanding the immediately preceding sentence, until the annual meeting of the stockholders of the Corporation to be held in 2016, a director may be removed from office only for cause and only by the affirmative vote of the holders of at least 70 percent of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, subject to the rights of the holders of any outstanding series of Preferred Stock or any other series or class of stock as set forth in or pursuant to this Certificate of Incorporation to elect additional directors under specified circumstances. Notwithstanding anything in this Certificate of Incorporation to the contrary and in addition to any other vote required by law, the affirmative vote of the holders of at least 70 percent of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, repeal or adopt any provision inconsistent with this Article VI.
Section 5. Subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board. Any director so chosen shall hold office until his or her successor shall be elected and qualified and, if the Board at such time is classified, until the next election of the class for which such directors shall have been chosen. No decrease in the number of directors shall shorten the term of any incumbent director.
2012 PROXY STATEMENT | MONSANTO COMPANY | D-1 |
APPENDIX
E MAP |
Directions from downtown St. Louis:
Take Interstate 64 west to Lindbergh Boulevard (Hwy. 67) north. Take Lindbergh Boulevard north about 2½ miles to the Olive Boulevard east exit. Follow Olive to the second traffic light. Turn right into Monsantos Creve Coeur Campus. Please follow the signs to the parking area and entrance to Building A.
Directions from St. Louis International Airport (Lambert):
Take Interstate 70 west to Lindbergh Boulevard (Hwy. 67) south. Take Lindbergh Boulevard south about 6 miles to the Olive Boulevard east exit. Follow Olive to the second traffic light. Turn right into Monsantos Creve Coeur Campus. Please follow the signs to the parking area and entrance to Building A.
2012 PROXY STATEMENT | MONSANTO COMPANY | E-1 |
Monsanto Company
800
North Lindbergh Boulevard
St. Louis, Missouri 63167
Phone (314)
694-1000
http://www.monsanto.com
VOTE BY INTERNET -
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Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 P.M.
Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you access the web site and follow the instructions to obtain
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ELECTRONIC DELIVERY OF FUTURE
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proxy statements, proxy cards and annual reports electronically via e-mail or
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above to vote using the Internet and, when prompted, indicate that you agree to
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VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you call and then follow the
instructions.
VOTE BY MAIL
Mark, sign and
date your proxy card and return it in the postage-paid envelope we have provided
or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||
M50318-TBD | KEEP THIS PORTION FOR YOUR RECORDS | |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
MONSANTO COMPANY | |||||||||
The Board of Directors recommends you vote FOR the following proposals: | |||||||||
1. | Election of Directors | ||||||||
Nominees: | For |
Against |
Abstain | ||||||
1a. David L. Chicoine, Ph.D. | ¨ | ¨ | ¨ | ||||||
1b. Arthur H. Harper |
¨ |
¨ | ¨ | ||||||
1c. Gwendolyn S. King | ¨ | ¨ | ¨ | ||||||
1d. Jon R. Moeller | ¨ | ¨ | ¨ | ||||||
2. | Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2013. | ¨ | ¨ | ¨ | |||||
3. | Advisory, (Non-Binding) Vote to approve Executive Compensation. | ¨ | ¨ | ¨ | |||||
4. | Approval of Amendment to the Amended and Restated Certificate of Incorporation of the Company to Declassify the Board. | ¨ | ¨ | ¨ | |||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ¨ | ||||||||
Please indicate if you plan to attend this meeting. | ¨ | ¨ | |||||||
Yes | No | ||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
| ||||||||
|
||||||||
The Board of Directors recommends you vote AGAINST the following proposal: | For | Against | Abstain | |||||
5. |
Shareowner proposal requesting a report on certain matters related to GMO products. | ¨ | ¨ | ¨ |
|
|
|
|
| |
Signature [PLEASE SIGN WITHIN BOX] |
Date |
Signature (Joint Owners) | Date |
ADMISSION TICKET |
Annual Meeting of
Shareowners
January 31, 2013
1:30
P.M.
C.S.T.
800 N. Lindbergh
Blvd. "A" Building
St. Louis,
Missouri
63167
Doors will open at 1:00 P.M. C.S.T. Please present proof of ownership and photo identification for the shareowner named on the front of this card for admittance to the annual meeting. For security purposes, bags and purses will be subject to search at the door. Seating at the meeting will be limited and admittance will be based on space availability.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and our 2012 Annual Report
are available at www.proxyvote.com.
M50319-TBD |
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
OF MONSANTO COMPANY
The undersigned hereby appoints Hugh Grant and David F. Snively, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Monsanto Company Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareowners of the Company to be held January 31, 2013 or any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3, FOR PROPOSAL 4, AND AGAINST PROPOSAL 5 AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Address Changes/Comments: | |
Please sign, date and return
this proxy card promptly
using the enclosed envelope.
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Important Notice Regarding Availability of Proxy Materials
2013 MONSANTO COMPANY Annual Meeting of Shareowners
MEETING DATE: January 31,
2013
RECORD DATE: December 3, 2012
CUSIP NUMBER: 61166W101
This e-mail represents all shares in the following account(s):
NAME
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