UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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MONSANTO COMPANY
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[The following letter was sent by Monsanto Company to certain institutional
holders of Monsanto Company common stock beginning January 5, 2005.]
[LOGO]
January 5, 2005
Dear Shareowner:
Institutional Shareholder Services (ISS) has released its report recommending
a "withhold vote" for two of this year's three director nominees, William U.
Parfet and George H. Poste. I believe that ISS's recommendation is based on
misguided judgment, and I strongly urge you to vote FOR Messrs. Parfet and
Poste.
The vote for a member of the Board of Directors is one of the most important
votes that shareowners have, and should take into account a variety of factors,
including the director's experience, judgment, commitment and independence.
ISS's recommendation is based solely on one narrow issue: that your Board's
policy relating to any future adoption of a shareowner rights plan (or "poison
pill") does not, in their view, sufficiently address a non-binding shareowner
proposal adopted at the 2004 Annual Meeting. When you vote your proxy, please
consider all relevant information, including (1) that Messrs. Parfet and Poste
are independent directors with records of distinguished service on the Company's
Board, including Mr. Parfet's service as Chairman of the Company's Audit and
Finance Committee, (2) the Company's excellent financial performance, including
a 42.6% increase in the Company's stock price in fiscal year 2004, and (3) the
facts regarding the poison pill issue.
Here are those facts:
o The Company does NOT have a poison pill.
o The Company has NEVER had a poison pill and is NOT currently considering
adopting one.
o A non-binding shareowner proposal was approved at the 2004 Annual Meeting
requesting that, if the Board were to adopt a poison pill in the future,
the Board seek shareowner approval at the earliest subsequent shareowner
meeting for such adoption.
o In response to that proposal, your Board of Directors approved a policy in
May 2004, which is published on our website. The Board's policy is that it
will only adopt a shareowner rights plan if either (1) the shareowners have
approved adoption of the rights plan or (2) the Board in its exercise of
its fiduciary responsibilities, including a majority of the independent
members of the Board, makes a determination that, under the circumstances
existing at the time, it is in the best interests of the shareowners to
adopt a shareowner rights plan without the delay in adoption that would
come from the time reasonably anticipated to seek shareowner approval.
o No further shareowner proposal or request was received by the Company
relating to this issue for the 2005 Annual Meeting.
The Board believes that its policy is responsive to the shareowner proposal, and
in fact is more restrictive than the proposal by requiring shareowner approval
in advance of adoption, rather than at a subsequent shareowner meeting, unless a
majority of independent directors determines in the exercise of their fiduciary
responsibilities that the delay from seeking such shareowner approval would not
be in the best interests of shareowners. ISS is taking the view that the Board's
action was "insufficient" because the Board's policy does not expressly include
a 12-month "sunset" provision for any prospective rights plan that the Company
may approve in the future without shareowner approval. Your Board believes that
such an inflexible time limit could tie the hands of the Board in the future
when it may need to protect the Company and its shareowners from coercive and
abusive takeover tactics. We believe that the Board can best serve shareowners'
interests by evaluating the appropriateness of any future rights plan, its
duration and the timing of any shareowner approval by weighing all of the facts
and circumstances that exist at the time such a plan might be considered for
adoption.
We care very deeply about our shareowners' concerns and feel strongly that we
have been responsive to those concerns. Messrs. Parfet and Poste have provided
excellent service to the Company and its shareowners during their past terms as
directors, and they are committed to continuing to exercise their best judgment
and skills on our behalf.
I hope you will join me in giving them your support.
Sincerely,
Hugh Grant
Chairman of the Board of Directors
President and Chief Executive Officer