Company Name: American Society of Corporate Secretaries
Public Availability Date: Jan. 06, 1993

STAFF REPLY LETTER

January 6, 1993

Karl R. Barnickol, Esq.
Chairman, Securities Law Committee
American Society of Corporate Secretaries
c/o Monsanto Company
800 N. Lindbergh Blvd.
St. Louis, Missouri 63167

Dear Mr. Barnickol:

This is in response to your request for the Divisions views on questions you have raised concerning the recently adopted revisions to the Commissions newly adopted executive compensation disclosure requirements. The following are the staffs responses, coupled with the questions you have presented. Unless otherwise noted all references are to Item 402 of Regulation S-K; the same analysis applies to any corresponding item in Regulation S-B.

PERFORMANCE GRAPH

Q1. May a registrant plot monthly or quarterly returns in the Performance Graph required by Item 402 (1) (1)?

Response: Yes, provided that each return must be plotted at the same intervals, and the annual changes in cumulative total return must be reflected clearly.

Q2. At what points should a registrant that presents in the Performance Graph a self-constructed peer or market capitalization index, weight that index?

Response: In calculating the measurement point, a registrant should weight the stock prices of the entities in the index in accordance with the market capitalization for such entities as of that date. The returns of the component entities should be weighted according to their market capitalization as of the end of each period for which a return is indicated. Thus, for example, where a registrant graphs annual returns in the Performance Graph, it must weight the returns to reflect market capitalization at the end of each such annual period; likewise, if quarterly returns are graphed, returns would be weighted to reflect market capitalization at the end of each such quarterly period. The registrant may elect to adjust returns more frequently than the periods reflected, provided it so notes.

Q3. Is a change to the composition of a registrant-constructed peer or market capitalization index always equivalent to a change in the index used?

Response: Generally, a change to a self-constructed peer or market capitalization index is equivalent to a change in the index used, which requires presentation of both the old and new indices. Presentation on the old basis, however, is not required if the information omitted is no longer available to the registrant or, in the case of a peer index, the entity omitted is no longer in the same industry or line of business. In all cases, a description of, and the basis for, the change must be disclosed.

Q4. May a registrant-constructed peer or market capitalization index exclude the registrant?

Response: Yes.

Q5. In lieu of data for the last trading day prior to the end of a given fiscal year, may a registrant use data for the last day in that year made available by a third-party index provider?

Response: Yes.

Q6. May a registrant created by a spin-off being its Performance Graph presentation on the effective date of the registration of its common stock under Section 12 of the Securities Exchange Act of 1934?

Response: Yes.

Q7. How should a registrant that spins off a portion of its business reflect that transaction in its Performance Graph?

Response: A registrant that spins off a portion of its business should treat that transaction as a special dividend, make the appropriate adjustments to its shareholder return data, and disclose the occurrence of the transaction and resultant adjustments.

Q8. Does a merger or other acquisition involving the registrant, where the registrant remains in existence and its common stock outstanding, change the presentation of the registrants Performance Graph?

Response: No.

Q9. If a registrant has several distinct lines of business, may it construct a composite peer group index composed of entities from different industry groups, representing each of the registrants lines of business (with the lines of business weighted by revenues or assets)? Alternatively, may the registrant plot a separate peer index line for each of its lines of business?

Response: Yes, either approach is permissible. If a composite peer group index is used, the basis and amount of the weighting should be disclosed.

OTHER

Q10. Must a registrant report earnings on salary and bonus deferred pursuant to non-tax qualified arrangements, where the return on such earnings is calculated in the same manner and at the same rate as earnings on externally managed investments available to employees participating in a tax qualified plan providing for broad-based employee participation? For example, many issuers provide for deferral of salary or bonus amounts not covered by tax-qualified plans, where the return on such amounts is the same as the return paid on amounts invested in an externally managed investment fund, such as an equity mutual fund, available to all employees participating in a non-discriminatory, tax-qualified plan (e.g., 401(k) plan).

Response: No.

Q11. Where a named executive officer exercises "reload" options and receives additional options upon such exercise, is the registrant required to report the additional options as an option grant?

Response: Yes.

Sincerely,

Gregg W. Corso
Deputy Chief
Office of Tender Offers