8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

October 20, 2006
Date of Report (Date of earliest event reported)

Kellogg Company

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation) 1-4171
(Commission File Number) 38-0710690
(IRS Employer
Identification No.)

One Kellogg Square
Battle Creek, Michigan 49016-3599
(Address of principal executive offices) 49016-3599
(Zip Code)

Registrant’s telephone number, including area code: (269) 961-2000

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

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

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

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

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

TABLE OF CONTENTS

	ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
	ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
	ITEM 9.01(d) EXHIBITS
SIGNATURES
Letter Agreement between David Mackay and Kellogg Company
Letter Agreement between James M. Jenness and Kellogg Company
Press Release

ITEM 1.01   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On October 23, 2006, Kellogg Company (“Kellogg” or the “Company”) announced that on December 31, 2006 (the first day of the Company’s 2007 fiscal year), David Mackay, the Company’s President and Chief Operating Officer, would assume the role of Chief Executive Officer, and James M. Jenness, the Company’s Chairman of the Board and Chief Executive Officer, would continue in his role as Chairman. In connection with this announcement, the Company entered into letter agreements with Mr. Jenness and Mr. Mackay.

Mackay Letter Agreement

On October 20, 2006, the Company entered into a letter agreement with David Mackay, outlining the compensation and benefits that Mr. Mackay will be entitled to while serving as the Chief Executive Officer of the Company and other related matters. Except as indicated below, upon becoming effective, this letter agreement supersedes Mr. Mackay’s other employment agreements with the Company.

Mr. Mackay’s starting base salary will be $1,100,000 per year, and he will be eligible for his first annual merit adjustment in April 2008. He will also continue to participate in the Kellogg Company Annual Incentive Plan (the “Annual Bonus Plan”) and the Company’s long-term incentive program. His target award for 2007 under the Annual Bonus Plan will be 125% of base salary, and his 2007 long-term incentive program (“LTIP”) target award will be established by the Compensation Committee of the Company’s Board of Directors at approximately $6,000,000. In addition, his 2005-2007 Executive Performance Plan (“EPP”) target award will be increased from 19,900 shares to 30,100 shares and his 2006-2008 EPP target award will be increased from 19,900 shares to 50,400 shares (which was the Chief Executive Officer target award in 2006). Mr. Mackay will continue to participate in the pension, savings, medical and other benefits provided by the Company to its executives and to its employees generally, as in effect from time to time, including benefits provided under the Company’s change of control policy pursuant to an agreement Mr. Mackay entered with the Company on July 26, 2000 (the form of which was filed by the Company on August 11, 2000 as Exhibit 10.05 to Form 10-Q and incorporated by reference herein).

Mr. Mackay is entitled to certain relocation benefits under an agreement entered into with the Company on September 1, 2003 (as filed by the Company on November 7, 2003 as Exhibit 10.1 to Form 10-Q and incorporated herein by reference, the “2003 Agreement”) and certain pension benefits under the 2003 Agreement and under an agreement entered into with the Company on August 17, 2004 (as filed by the Company on November 4, 2004 as Exhibit 10.3 to Form 10-Q and incorporated herein by reference, the “2004 Agreement”). Notwithstanding anything to the contrary in the 2003 Agreement and/or the 2004 Agreement, Mr. Mackay will only be entitled to the relocation benefits under the 2003 Agreement and the pension benefits under the 2004 Agreement upon a termination of his employment by the Company without cause (as defined in the letter agreement) (Mr. Mackay could also become entitled to such benefits upon certain terminations of his employment in connection with a change in control of the Company).

If Mr. Mackay’s employment is terminated by the Company without cause or by him for good reason (each, as defined in the letter agreement), other than under circumstances covered by the change of control policy (in which case he will be entitled to the relocation and pension benefits under the 2003 and 2004 Agreements), he will be entitled to receive severance in an amount determined by the Board, but in no event less than two times the amount of his then current base salary and target bonus. This payment will be conditioned upon his signing and not revoking a form of separation agreement furnished by the Company, which would include, among other things, a release of claims.

Mr. Mackay will also be subject to restrictive covenants, including covenants relating to non-competition and non-solicitation, and has signed a release of claims in consideration for the benefits provided to him under the letter agreement.

The letter agreement between Mr. Mackay and Kellogg is filed herewith as Exhibit 10.1, and the foregoing summary of its material terms and conditions is qualified in its entirety thereto.

Jenness Letter Agreement

On October 20, 2006, the Company entered into a letter agreement with James M. Jenness, outlining the compensation and benefits that Mr. Jenness will be entitled to while serving as Chairman of the Company and other related matters. Despite the time and effort required to fulfill the responsibilities of Chairman, Mr. Jenness’ preference is not to receive the compensation commensurate with the role. Given Mr. Jenness’ affection for and commitment to the Company and respecting his views, effective December 31, 2006, he will not receive any base salary, be eligible for any bonus awards under the 2007 or subsequent Annual Bonus Plans or receive any additional incentives under the LTIP (including stock options and EPP awards). In addition, effective December 31, 2006, he will no longer be eligible to participate in the Company’s change of control policy. He will remain eligible to receive his bonus under the 2006 Annual Bonus Plan.

Mr. Jenness will retain the equity awards previously granted to him, and will continue to vest in the stock options granted to him in 2005 and 2006, the stock grant he received when he became Chairman and Chief Executive Officer of the Company in February 2005 and his 2005-2007 EPP award. Again, based on Mr. Jenness’ preference, he is forfeiting his 2006-2008 EPP award. In addition, while serving as Chairman, Mr. Jenness will remain eligible to participate in the Company’s employee benefit plans and senior executive benefit plans, such as the Company’s pension plans, life insurance, medical insurance, dental plan and savings and investment plan. He will also remain entitled to receive the retiree medical insurance, relocation and home sale benefits as described in the letter agreement between him and the Company, dated December 20, 2004.

In addition, Mr. Jenness will be eligible to retire from the Company at the end of his employment period as the Company’s Chairman. In connection with his service to, and retirement from, the Company, Mr. Jenness will be provided a pension benefit (the “Pension Payment”), either in a single life annuity, joint survivor annuity or lump sum, as such alternatives are described in the Kellogg Company Salaried Pension Plan, the Kellogg Company Supplemental Retirement Plan,

the Kellogg Company Excess Benefit Plan and the Kellogg Company Key Executive Benefits Plan (collectively, the “Pension Plans”). If he elects the single life annuity payment, his annual aggregate payout would be equal to $155,167 per year during his lifetime, less any payments he is otherwise entitled to under the Pension Plans.

Mr. Jenness will not be entitled to additional compensation or benefits from the Company other than as provided for in the letter agreement or other benefits that are vested and accrued as of the termination of his employment. In addition, if Mr. Jenness’ employment is terminated by the Company for cause (as defined in the agreement), he will forfeit all outstanding equity awards and will not be entitled to the Pension Payment.

In consideration for the benefits provided to him under the letter agreement, Mr. Jenness has entered into non-competition and non-solicitation covenants and has signed a release of claims.

The letter agreement between Mr. Jenness and Kellogg is filed herewith as Exhibit 10.2, and the foregoing summary of its material terms and conditions is qualified in its entirety thereto.

ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

(b) Please see the first paragraph under Item 1.01 above, which is incorporated into this Item 5.02(b) by reference.

(c)(1) Please see the first paragraph under Item 1.01 above, which is incorporated into this Item 5.02(c)(1) by reference.

(2) Mr. Mackay, age 51, has served as a director of Kellogg since February 2005 and is currently President and Chief Operating Officer of Kellogg. Mr. Mackay joined Kellogg Australia in 1985 and held several positions with Kellogg USA, Kellogg Australia and Kellogg New Zealand before leaving Kellogg in 1992. He rejoined Kellogg Australia in 1998 as managing director and was appointed managing director of Kellogg United Kingdom and Republic of Ireland later in 1998. He was named Senior Vice President and President, Kellogg USA in July 2000, Executive Vice President in November 2000, and President and Chief Operating Officer in September 2003. He is also a director of Fortune Brands, Inc.

(3) A brief description of the material terms of the letter agreement between Mr. Mackay and Kellogg is set forth under Item 1.01 above and incorporated into this Item 5.02(c)(3) by reference.

On October 23, 2006, Kellogg issued a press release announcing the foregoing. A copy of the press release is attached hereto as Exhibit 99.4 and is incorporated herein by reference.

ITEM 9.01(d) EXHIBITS

Exhibit Number	Description
10.1	Letter Agreement, dated as of October 20, 2006, between David Mackay and Kellogg Company.
10.2	Letter Agreement, dated as of October 20, 2006, between James M. Jenness and Kellogg Company.
99.1	Employment Agreement, dated as of September 1, 2003, between David Mackay and Kellogg Company (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Company on November 7, 2003).
99.2	Retention Agreement, dated as of August 17, 2004, between David Mackay and Kellogg Company (incorporated by reference to Exhibit 10.3 to Form 10-Q filed by the Company on November 4, 2004).
99.3	Form of Employment Agreement (incorporated by reference to Exhibit 10.05 to Form 10-Q filed by the Company on August 11, 2000)
99.4	Press Release

SIGNATURES

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

	KELLOGG COMPANY
Dated: October 23, 2006	By:	/s/ Gary H. Pilnick
		Name:	Gary H. Pilnick
		Title:	Senior Vice President

Exhibit Index

Exhibit Number	Description
10.1	Letter Agreement, dated as of October 20, 2006, between David Mackay and Kellogg Company.
10.2	Letter Agreement, dated as of October 20, 2006, between James M. Jenness and Kellogg Company.
99.1	Employment Agreement, dated as of September 1, 2003, between David Mackay and Kellogg Company (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Company on November 7, 2003).
99.2	Retention Agreement, dated as of August 17, 2004, between David Mackay and Kellogg Company (incorporated by reference to Exhibit 10.3 to Form 10-Q filed by the Company on November 4, 2004).
99.3	Form of Employment Agreement (incorporated by reference to Exhibit 10.05 to Form 10-Q filed by the Company on August 11, 2000)
99.4	Press Release

EX-10.1

Exhibit 10.1

October 20, 2006

Mr. A. D. David Mackay
Kellogg Company
One Kellogg Square
Battle Creek, Michigan 49017

Dear David:

     We are very excited that you have agreed to be the Chief Executive Officer (“CEO”) of Kellogg Company (the “Company”). David, we know you are the right person to be our next CEO. Your understanding and respect for our values and people, and your intimate knowledge of every facet of our business gives us great confidence that your continued leadership as CEO will deliver sustainable results into the future.

     The purpose of this letter (the “Agreement”) is to outline compensation and other related matters.

1. Base Salary; Annual Incentive Plan.

     As we discussed, on December 31, 2006 (the first day of the Company’s 2007 fiscal year) (the “Start Date”) you will assume the role of CEO, and Jim will be Chairman. Your base salary as of the Start Date will be $1,100,000 per year, and you will be eligible for your first annual merit adjustment in April 2008. Under the Kellogg Company Executive Compensation Deferral Plan, all base salary in excess of $950,000 per year will be subject to mandatory deferral in stock units, to be distributed in cash following your departure from employment with the Company.

     You will also participate in the Kellogg Company 2007 Annual Incentive Plan (the “AIP”), with a target award for 2007 of 125% of base salary.

2. Long-Term Incentives.

     You will also continue to participate in the Company’s long-term incentive program (the “LTIP”). Your 2007 LTIP target award will be established by the Compensation Committee of the Company’s Board of Directors at approximately $6,000,000. In addition, your 2005-2007 Executive Performance Plan (EPP) target award shall be increased from 19,900 shares to 30,100 shares and your 2006-2008 EPP target award shall be increased from 19,900 shares to 50,400 shares (which was the CEO target award in 2006).

Mr. A. D. David Mackay
Page 2
October 20, 2006

3. Other Arrangements.

     You and the Company are parties to agreements dated September 1, 2003 (the “2003 Agreement”), and August 17, 2004 (the “2004 Agreement”, collectively, the “Prior Agreements.”) Under the Prior Agreements, you received certain relocation, pension and severance benefits. As you have agreed, notwithstanding the terms of the Prior Agreements, you will be entitled to receive these benefits only if your employment is terminated by the Company without Cause.

     (a) Relocation: Paragraph 2 of the 2003 Agreement remains in full force and effect, however, notwithstanding anything to the contrary in the 2003 Agreement, you will only be entitled to receive these benefits if your employment is terminated by the Company without Cause.

     (b) Pension: Paragraph 3 of the 2003 Agreement and Paragraph 1(a) of the 2004 Agreement remain in full force and effect, however, notwithstanding anything to the contrary in the 2003 Agreement, you will only be entitled to receive the benefits under Paragraph 1(a) of the 2004 Agreement if your employment is terminated by the Company without Cause.

     (c) Termination/Severance:

          (i) If your employment is terminated by reason of your death or disability, your estate or you, as the case may be, shall be entitled to receive benefits provided under the Company’s general policy for such events and the benefits specified in Paragraphs 2 and 3 of the 2003 Agreement and Paragraph 1(a) of the 2004 Agreement.

          (ii) If your employment is terminated by the Company without Cause, or by you for Good Reason, you would be entitled to receive severance in an amount as determined by the Board and otherwise pursuant to the terms of the Kellogg Company Severance Benefit Plan (but in no event no less than two times your then-current base and target bonus conditioned upon your signing and not revoking a form of separation agreement furnished by the Company, which would include, among other things, a release of claims. You would not be eligible to receive severance payments if you are otherwise eligible to receive payments under the Company’s Change of Control policy.

          (iii) The Company may terminate your employment under this Agreement for “Cause.” For purposes of this Agreement, termination for “Cause” means termination by the Company because of (i) your willful engaging in illegal conduct or gross misconduct pursuant to which the Company has suffered a loss, or (ii) your willful and continued failure to perform substantially your duties hereunder in any material respect; provided, however, that in the case of clause (ii), the Company must provide written notice of such breach or failure within thirty (30) days of its discovery thereof, and you shall have thirty (30) days from such written notice to cure such breach or failure.

Mr. A. D. David Mackay
Page 3
October 20, 2006

          (iv) You may at any time terminate your employment for “Good Reason.” For purposes of this Agreement, termination for “Good Reason” means termination by you because of (i) a reduction in your base salary, as in effect from time to time, (ii) the Company’s failure to provide any fringe benefit plan or substantially similar benefit or compensation plan which has been made generally available to other management employees of the Company at a level which is generally consistent with past practices; provided, however, that nothing in this clause shall be construed to constrain the Company from amending or eliminating any benefit or compensation plan; (iii) a breach by the Company of its obligations to you under this Agreement in any material respect, or (iv) the assignment of any duties inconsistent with the role of CEO of the Company or a diminution in your responsibilities, authority or duties as in effect immediately prior to such change; provided however, that in the case of each of clauses (i) through (iv) hereof, you must provide written notice of any such alleged action of the Company within thirty (30) days of the date you knew of such action and the Company shall have thirty (30) days from such written notice to cure such action.

          (v) You may at any time terminate your employment without Good Reason, in which case you shall be entitled to receive (i) such benefits as the Company makes generally available to employees who have voluntarily terminated their employment without Good Reason and (ii) the benefits described in Paragraph 3 of the 2003 Agreement.

          (vi) Notwithstanding any other provision in this Agreement, if (i) your employment is terminated and you qualify for benefits under Section 5 of the Employment Agreement between you and the Company dated July 26, 2000 (the “Change of Control Agreement”), then (i) you shall be entitled to the benefits described in Paragraph 2 of the 2003 Agreement, (ii) you shall retain the benefits described in Paragraph 3 of the 2003 Agreement, (iii) you shall be entitled to the benefits described in Paragraph 1(a) of the 2004 Agreement, and (iv) this Agreement shall otherwise be deemed null, void and of no further force or effect.

4. Other 2004 Agreement Provisions.

     The following provisions from the 2004 Agreement shall remain in full force and effect: Paragraph 3(a) Non-Compete, 3(b) Confidentiality, 3(c) Non-Disparagement, 4(a) Severability, 4(b) Controlling Law/Venue, 4(d) Employment Relationship, 4(e) Taxes, and 4(f) Counterparts.

5. Release.

     In consideration of the compensation and benefits provided pursuant to this Agreement, the sufficiency of which is hereby acknowledged, you, for yourself and for any person who may claim by or through you, irrevocably and unconditionally release, waive and forever discharge the Company and its past, present and future subsidiaries, divisions, affiliates, successors, and their respective officers, directors, attorneys, agents and employees, from any and all claims or causes of action that you had, have

Mr. A. D. David Mackay
Page 4
October 20, 2006

or may have, known or unknown, relating to your employment with the Company up until the date of this Agreement, including but not limited to, any claims arising under Title VII of the Civil Rights Act of 1964, as amended, Section 1981 of the Civil Rights Act of 1866, as amended, the Civil Rights Act of 1991, as amended, the Family and Medical Leave Act, the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act, the Employee Retirement Income Security Act; claims under any other federal, state or local statute, regulation or ordinance; claims for discrimination or harassment of any kind, breach of contract or public policy, wrongful or retaliatory discharge, defamation or other personal or business injury of any kind; and any and all other claims to any form of legal or equitable relief, damages, compensation or benefits (except rights you may have under the Employee Retirement Income Security Act of 1974 to recover any vested benefits), or for attorneys fees or costs. You additionally waive and release any right you may have to recover in any lawsuit or proceeding against the Company brought by you, an administrative agency, or any other person on your behalf or which includes you in any class. You understand that he you are entitled to consider this Agreement for at least twenty-one (21) days before signing it. However, after due deliberation, you may elect to sign this Agreement without availing yourself of the opportunity to consider its provisions for at least twenty-one (21) days. You hereby acknowledge that any decision to shorten the time for considering this Agreement prior to signing it is voluntary, and such decision is not induced by or through fraud, misrepresentation, or a threat to withdraw or alter the provisions set forth in this Agreement in the event you elected to consider this Agreement for at least twenty-one (21) days prior to signing it. You understand that you may revoke this Agreement as it relates to any potential claim that could be brought or filed under the Age Discrimination in Employment Act, 29 U.S.C. §§621-634, within seven (7) days after the date on which you sign this Agreement, and that this Agreement as it relates to such a claim does not become effective until the expiration of the seven (7) day period. In the event that you to revoke this Agreement within the seven (7) day period, you understand that you must provide such revocation in writing to the Company, Attn: General Counsel.

6. Entire Agreement; Amendment.

     You agree that, except as provided for herein, this Agreement and the Change of Control Agreement constitute the entire agreement between you and the Company, and that this Agreement and the Change of Control Agreement supersede any and all prior and/or contemporaneous written and/or oral agreements relating to your employment with the Company and termination therefrom. For avoidance of doubt, this Agreement replaces and supersedes the Prior Agreements and consequently, except as provided for herein, the Prior Agreements are null, void and of no further legal force or effect. You acknowledge that this Agreement may not be modified except by written document, signed by you and the General Counsel of the Company.

Mr. A. D. David Mackay
Page 5
October 20, 2006

7. Section 409A.

     If any compensation or benefits provided by this Agreement result in the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the Company shall modify this Agreement in the least restrictive manner necessary in order to comply with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and, in each case, without any material diminution in the value of the payments to Employee.

     We are delighted that you are becoming the next Chief Executive Officer of the Kellogg Company. Upon your execution of this letter agreement, it will become a binding agreement between you and the Company.

Sincerely,
 

/s/ Gordon Gund 

Gordon Gund 

Chairman, Nominating and Governance Committee 

Acknowledged and agreed this
20th day of October, 2006
 

/s/ A. D. David Mackay  

A. D. David Mackay 

EX-10.2

Exhibit 10.2

October 20, 2006

Mr. Jim Jenness
Kellogg Company
One Kellogg Square
Battle Creek, MI 49017

Dear Jim,

     We are very excited that you will be the Chairman of Kellogg Company (the “Company”). Like you, we believe that David Mackay is the right person to be the next Chief Executive Officer for the Company, and we are delighted that you will continue as Chairman as David transitions into his new role.

     The purpose of this letter (the “Agreement”) is to outline certain compensation and other related matters.

     1. Compensation Arrangements

     As we discussed, on December 31, 2006 (the first day of the Company’s 2007 fiscal year) (the “Start Date”), David will assume the role of CEO, and you will be Chairman. Despite the time and effort required to fulfill the responsibilities of Chairman, your preference is not to receive the compensation commensurate with the role. Jim, we understand and respect your views, as well as your affection for and commitment to Kellogg Company and its shareholders. Consequently, from the Start Date through the period you are employed with the Company (the “Employment Period”), you would not receive any base salary, be eligible for any bonus awards under the 2007 or subsequent Annual Incentive Plans, or receive any incentives under the long term incentive program (which would mean that you would not receive any more stock option grants or grants under any future Executive Performance Plan (EPP)). You also understand that you would no longer participate in the Company’s Change of Control Policy after the Start Date.

     To be clear, you will retain the equity awards (the “Equity Awards”) that have been previously awarded to you. During the Employment Period, you will continue to vest in stock options that were granted in 2005 and 2006 (but will not receive any additional grants in 2007 or thereafter), the stock grant you received when you joined the Company, and the EPP grant from the 2005 — 2007 plan, each in accordance with the relevant plans. However, you have agreed to forfeit your EPP award under the 2006 —2008 plan.

     In addition, you will be eligible to retire from the Company at the end of the Employment Period. You shall be entitled to a pension payment (either in a single life

Mr. Jim Jenness
Page 2
October 20, 2006

annuity, joint survivor annuity or lump sum, as such alternatives are described in the Kellogg Company Salaried Pension Plan, the Kellogg Company Supplemental Retirement Plan, the Kellogg Company Excess Benefit Plan and the Kellogg Company Key Executive Benefits Plan (the “Pension Plans”)). To be in compliance with Section 409A of the Internal Revenue Code of 1986, the pension payments will commence on January 1, 2008. If you elect the single life annuity payment, your annual aggregate payout would be equal to $155,167 per year, less any payments you are otherwise entitled to under the Pension Plans. You shall make your election in writing to the Company’s General Counsel within 30 days of the date of this Agreement.

     If your employment is terminated for “Cause” during the Employment Period, you would forfeit any right or interest in and to any of the Equity Awards and the supplemental pension payments.

     For purposes of this Agreement, termination for “Cause” means termination by the Company because of (i) your willful engaging in illegal conduct or gross misconduct pursuant to which the Company has suffered a loss, or (ii) your willful and continued failure to perform substantially your duties hereunder in any material respect; provided, however, that in the case of clause (ii), the Company must provide written notice of such breach or failure within thirty (30) days of its discovery thereof, and you shall have thirty (30) days from such written notice to cure such breach or failure.

     You will also remain eligible to receive your bonus under the Kellogg Company 2006 Annual Incentive Plan with respect to the Company’s 2006 fiscal year, based on the terms of the plan. During the Employment Period, you will also remain eligible (except as set forth above) to participate in the Company’s other employee benefit plans and senior executive benefit plans, as in effect from time to time such as the Company’s life insurance, medical insurance, dental plan, and savings and investment plan. You will also receive the retiree medical insurance, relocation and home sale benefits as described in the letter agreement between you and the Company dated December 20, 2004. You acknowledge that you will not be entitled to additional compensation or benefits from the Company other than as set forth or described in this Agreement or other benefits vested and accrued as of the end of the Employment Period. Without limiting the foregoing, you acknowledge you will have no entitlement to receive severance benefits from the Company.

     2. Release. In consideration of the compensation and benefits provided pursuant to this Agreement, the sufficiency of which is hereby acknowledged, you, for yourself and for any person who may claim by or through you, irrevocably and unconditionally release, waive and forever discharge the Company and its past, present and future subsidiaries, divisions, affiliates, successors, and their respective officers, directors, attorneys, agents and employees, from any and all claims or causes of action that you had, have or may have, known or unknown, relating to your employment with the Company up until the date of this Agreement, including but not limited to, any claims arising under Title VII of the Civil Rights Act of 1964, as amended, Section 1981 of the Civil Rights Act of 1866, as amended, the Civil Rights Act of 1991, as amended, the

Mr. Jim Jenness
Page 3
October 20, 2006

Family and Medical Leave Act, the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act, the Employee Retirement Income Security Act; claims under any other federal, state or local statute, regulation or ordinance; claims for discrimination or harassment of any kind, breach of contract or public policy, wrongful or retaliatory discharge, defamation or other personal or business injury of any kind; and any and all other claims to any form of legal or equitable relief, damages, compensation or benefits (except rights you may have under the Employee Retirement Income Security Act of 1974 to recover any vested benefits), or for attorneys fees or costs. You additionally waive and release any right you may have to recover in any lawsuit or proceeding against the Company brought by you, an administrative agency, or any other person on your behalf or which includes you in any class. You understand that he you are entitled to consider this Agreement for at least twenty-one (21) days before signing it. However, after due deliberation, you may elect to sign this Agreement without availing yourself of the opportunity to consider its provisions for at least twenty-one (21) days. You hereby acknowledge that any decision to shorten the time for considering this Agreement prior to signing it is voluntary, and such decision is not induced by or through fraud, misrepresentation, or a threat to withdraw or alter the provisions set forth in this Agreement in the event you elected to consider this Agreement for at least twenty-one (21) days prior to signing it. You understand that you may revoke this Agreement as it relates to any potential claim that could be brought or filed under the Age Discrimination in Employment Act, 29 U.S.C. §§621-634, within seven (7) days after the date on which you sign this Agreement, and that this Agreement as it relates to such a claim does not become effective until the expiration of the seven (7) day period. In the event that you to revoke this Agreement within the seven (7) day period, you understand that you must provide such revocation in writing to the Company, Attn: General Counsel.

     3. Section 409A. This letter and the agreements herein will be interpreted to avoid any penalty sanctions under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and to deliver the full economic value of all the benefits provided herein. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. Upon your request, the Company agrees to make any changes to this letter and the agreements herein that will assure that no sanctions will be imposed under Section 409A of the Code.

     4. No Other Representations. You represent and warrant that no promise or inducement has been offered or made except as herein set forth and that you are entering into and executing this Agreement without reliance on any statement or representation not set forth within this Agreement by the Company, or any person(s) acting on its behalf.

     5. Non-Assignment of Rights. You represent and warrant that you have not sold, assigned, transferred, conveyed or otherwise disposed of to any third party, by operation of law or otherwise, any action, cause of action, debt, obligation, contract,

Mr. Jim Jenness
Page 4
October 20, 2006

agreement, covenant, guarantee, judgment, damage, claim, counterclaim, liability or demand of any nature whatsoever relating to any matter covered in this Agreement.

     6. Non-Compete. You agree that, for a period beginning at the end of the Employment Period and ending on the second anniversary of such date (the “Restricted Period”), you shall not, without the prior written consent of the CEO of the Company:

(a)	directly or indirectly, accept any employment, consult for or with, or otherwise provide or perform any services of any nature to, for or on behalf of any person, firm, partnership, corporation or other business or entity that manufactures, produces, distributes, sells or markets any of the Products (as hereinafter defined) in the Geographic Area (as hereinafter defined); or
(b)	directly or indirectly, permit any business, entity or organization which Employee, individually or jointly with others, owns, manages, operates, or controls, to engage in the manufacture, production, distribution, sale or marketing of any of the Products in the Geographic Area.

For purposes of this Paragraph, the term “Products” shall mean ready-to-eat and hot cereal products; toaster pastries; cereal bars; granola bars; frozen waffles, pancakes, and French toast; fruit snacks; crispy marshmallow squares, cookies, crackers, ice cream cones, any other grain-based convenience food, or meat substitutes; and the term “Geographic Area” shall mean any country in the world where the Company manufactures, produces, distributes, sells or markets any of the Products at any time during the applicable Restricted Period.

     7. Non-Solicitation. You agree that during the Restricted Period, you shall not, without the prior written consent of the Chief Executive Officer of the Company, directly or indirectly employ, or solicit the employment of (whether as an employee, officer, director, agent, consultant or independent contractor) any person who is or was at any time during the year prior to such employment or solicitation an officer, director, or employee of the Company (except for solicitation pursuant to an advertisement of general solicitation not directed at such parties).

     8. Non-Disparagement of the Company. You agree not to engage in any form of conduct or make any statements or representations that disparage, criticize or otherwise are critical, or otherwise impair the reputation, goodwill or commercial interests, of the Company, or its past, present and future subsidiaries, divisions, affiliates, successors, officers, directors, attorneys, agents and employees.

     9. Continuation of Indemnification and Insurance. The Company shall continue to indemnify you in accordance with its Bylaws to the fullest extent permitted by law for your acts while an officer or director of the Company, and shall continue to provide coverage under the Company’s Directors and Officers Insurance policy for such acts.

Mr. Jim Jenness
Page 5
October 20, 2006

     Upon your execution (and non-revocation) of this letter agreement, it will become a binding agreement between you and the Company.

Sincerely,
 

/s/ Gordon Gund 

Gordon Gund 

Chairman, Nominating and Governance Committee 

Acknowledged and agreed this
20th day of October, 2006
 

/s/ James M. Jenness  

James M. Jenness 

EX-99.4

Exhibit 99.4

	Kellogg Company News
	For release: October 23, 2006
	Media Contact: Celeste Clark, Ph.D. (269) 961-3799
	Analysts Contact: Simon Burton, CFA (269) 961-6636

David Mackay Named Chief Executive Officer of Kellogg Company
Effective December 31, 2006

Jim Jenness to Continue as Chairman

BATTLE CREEK, Mich.—Kellogg Company (NYSE:K) announced today that the company’s Board of Directors has elected David Mackay, 51, as chief executive officer effective December 31, 2006. Jim Jenness, 60, will continue as chairman of Kellogg and a member of the Board of Directors.

“David’s promotion to CEO is gr-r-reat for our company and shareholders. His contribution to growing and sustaining the company’s performance has been invaluable,” said Kellogg chairman and chief executive officer, Jim Jenness. “With David at the helm, a strong management team, and the 26, 000 employees around the world, our commitment to deliver sustainable performance driven by realistic goals will continue to be the focus.”

Mr. Mackay joined Kellogg Australia as group product manager in 1985, and since that time, he has held numerous management and leadership positions in the United States, Australia, and Europe. After leaving the company for a brief period, he rejoined Kellogg Australia in 1998 and returned to the U.S. business in 2000. Mr. Mackay was actively involved in developing the growth strategy for the company and has been a member of the Executive Management Team for five years. Most recently, he served as president and chief operating officer.

Jim Jenness, who has over a 30-year relationship with the company, has led Kellogg since 2004. During this time, Mr. Jenness continued to build on the success of the company and has delivered sustainable results quarter after quarter.

Commenting further, Mr. Jenness said, “I have a deep passion for Kellogg and enormous respect for our dedicated employees. There is no doubt David will continue to leverage the vision and values of Mr. Kellogg.”

Speaking on behalf of Kellogg’s Board of Directors, Gordon Gund, chairman of the nominating and governance committee, indicated, “Jim’s style and love for Kellogg have set exactly the right tone. We are grateful to him for the continued growth under his leadership and the continuity of our management team. We are pleased that he will continue to provide his perspective and insights as chairman of the Board.”

Mr. Gund continued, “David has been a member of the Board for the past two years, and we have seen firsthand his leadership and strong operational expertise. His Kellogg accumulated knowledge is a tremendous asset for the company. “

Commenting on his appointment, Mr. Mackay said, “I am humbled by the opportunity to lead the company and sincerely appreciate the confidence Jim and the Board have in me. I look forward to continuing to drive our focused strategy and business model.”

About Kellogg Company

     With 2005 sales in excess of $10 billion, Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles and meat alternatives. The Company’s brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Club, Nutri-Grain, Rice Krispies, All-Bran, Special K, Mini-Wheats, Chips Deluxe, Sandies, Morningstar Farms, Famous Amos, and Kashi. Kellogg products are manufactured in 17 countries and marketed in more than 180 countries around the world. For more information, visit Kellogg Company’s web site at www.kelloggcompany.com.

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