

<PAGE>

                                                  EXHIBIT 10.20


                                   ASHLAND INC.
                            DEFERRED COMPENSATION PLAN



1.       PURPOSE

         The purpose of this Ashland Inc.  Deferred  Compensation Plan (the
"Plan"),  is to provide  eligible  key  employees  of the  Company  with an
opportunity to defer  compensation to be earned by them from the Company as
a means of saving for retirement or other future purposes.

2.       DEFINITIONS

         The following definitions shall be applicable throughout the Plan:

         (a)      "Accounting Date" means each December 31, March 31,
June 30 and September 30.

         (b)      "Beneficiary" means the person(s) designated by the
Participant in accordance with Section 11.

         (c)      "Board" means the Board of Directors of Ashland Inc.

         (d)  "Change  in  Control"  shall be  deemed to occur (1) upon the
approval of the  shareholders  of the  Company (or if such  approval is not
required,  upon the  approval  of the  Board) of (A) any  consolidation  or
merger  of the  Company  in which  the  Company  is not the  continuing  or
surviving  corporation or pursuant to which shares of Common Stock would be
converted  into cash,  securities or other  property other than a merger in
which the holders of Common Stock immediately prior to the merger will have
the  same  proportionate   ownership  of  Common  Stock  of  the  surviving
corporation immediately after the merger, (B) any sale, lease, exchange, or
other transfer (in one transaction or a series of related  transactions) of
all or substantially all the assets of the Company,  or (C) adoption of any
plan or proposal for the  liquidation or  dissolution  of the Company,  (2)
when any "person" (as defined in Section  13(a)(9) or 13(d) of the Exchange
Act), other than Ashland Inc. or any subsidiary or employee benefit plan or
trust maintained by Ashland Inc. or any of its  subsidiaries,  shall become
the  "beneficial  owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 20% of the Common Stock outstanding at
the time,  without the prior  approval of the Board,  or (3) if at any time
during a period of two consecutive years,  individuals who at the beginning
of such  period  constituted  the  Board  shall  cease  for any  reason  to
constitute  at  least  a  majority  thereof,  unless  the  election  or the
nomination for election by the Company's  shareholders of each new director
during such two-year  period was approved by a vote of at least  two-thirds
of the directors  then still in office who were  directors at the beginning
of such two-year period.

         (e)      "Committee" means the Personnel and Compensation
Committee of the Board.

         (f)      "Common Stock" means the common stock, $1.00 per value,
of Ashland Inc.

         (g) "Common  Stock Fund" means that  investment  option in which a
Participant's  Compensation  Account  may be  invested  and may earn income
based on a hypothetical investment in Common Stock.

         (h)      "Company" means Ashland Inc., its divisions and
subsidiaries.

         (i)      "Compensation" means any employee compensation
determined by the Committee to be properly deferrable under the
Plan.

        
<PAGE>

         (j)      "Compensation Account" means the account to which the
Participant's Deferred Compensation is credited.

         (k)      "Corporate Human Resources" means the Corporate Human
Resources Department of the Company.

         (l) "Credit  Date" means such date as  designated by the Committee
that Deferred Compensation shall be credited to the Compensation Account.

         (m)      "Deferred Compensation" means the Compensation elected
by the Participant to be deferred pursuant to the Plan.

         (n) "Election" means a Participant's  delivery of a written notice
of election to Corporate Human  Resources  electing to defer payment of all
or a portion of his or her Compensation.

         (o) "Employee" means a full-time, regular salaried employee (which
term shall be deemed to include officers) of the Company and of its present
and  future  subsidiary  corporations  as  defined  in  Section  424 of the
Internal Revenue Code of 1986, as amended.

         (p)      "Exchange Act" means the Securities Exchange Act of
1934, as  amended.

         (q) "Fair Market Value" means,  as of any specified date (or, if a
weekend or holiday,  the next preceding business day), the closing price of
a share of Common  Stock,  as reported on the  Composite  Tape for New York
Stock Exchange issues.

         (r) "Fiscal  Year" means that annual period  commencing  October 1
and ending the following September 30.

         (s)  "Participant"  means an Employee selected by the Committee to
participate  in the Plan and who has  elected to defer  payment of all or a
portion of his or her Compensation under the Plan. "Participant" shall also
include  any  Employee  who had an account  under the Prior Plans which has
been transferred to this Plan.

         (t)      "Plan" means this Ashland Inc. Deferred Compensation
Plan.

         (u) "Prime Rate of Interest"  means the rate of interest quoted by
Citibank,  N.A.  as its prime  commercial  lending  rate on the latest date
practicable prior to the date of actual distribution under Section 12.

         (v)      "Prior Plans" mean the Ashland Inc. Deferred
Compensation Plan for ERISA Forfeitures and the Ashland Inc.
Deferred Compensation Plan for Key Employees, which are being
replaced by this Plan as of the effective date of this Plan
identified in Section 16.

         (w)      "Section 16(b) Participant" means a Participant who is
subject to Section 16(b) of the Exchange Act.

         (x) "Service Year" means the Fiscal Year or portion thereof during
which the services have been rendered for which Compensation is payable.

         (y)      "Stock Unit(s)" means the share equivalents credited to
the Common Stock Fund of a Participant's Compensation Account
pursuant to Section 6.

         (z)      "Termination" means retirement from the Company or
termination of services as an Employee for any other reason.


                                        -2-

<PAGE>



3.       SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION

         (a)      Shares Authorized for Issuance.  There shall be
reserved for issuance under the Plan 500,000 shares of Common
Stock, subject to adjustment pursuant to subsection (c) below.

         (b)      Units Authorized for Credit.  The maximum number of
Stock Units that may be credited to Participant's Compensation
Accounts under the Plan is 1,500,000, subject to adjustment
pursuant to subsection (c) below.

         (c) Adjustments in Certain  Events.  In the event of any change in
the  outstanding  Common Stock of the Company by reason of any stock split,
share dividend,  recapitalization,  merger, consolidation,  reorganization,
combination,   or  exchange  or  reclassification   of  shares,   split-up,
split-off, spin-off, liquidation or other similar change in capitalization,
or any distribution to common  shareholders other than cash dividends,  the
number  or kind of  shares or Stock  Units  that may be issued or  credited
under the Plan shall be  automatically  adjusted so that the  proportionate
interest of the  Participants  shall be maintained as before the occurrence
of such event.  Such  adjustment  shall be  conclusive  and binding for all
purposes of the Plan.

4.       ELIGIBILITY

         The  Committee  shall  have the  authority  to  select  among  any
Employee those Employees who shall be eligible to participate in the Plan.

5.       ADMINISTRATION

         Full power and authority to construe, interpret and administer the
Plan shall be vested in the Committee.  This power and authority  includes,
but is not  limited  to,  selecting  compensation  eligible  for  deferral,
establishing  deferral  terms and  conditions  and adopting  modifications,
amendments  and  procedures  as may be  deemed  necessary,  appropriate  or
convenient by the  Committee.  Decisions of the  Committee  shall be final,
conclusive and binding upon all parties.  Day-to-day  administration of the
Plan shall be the responsibility of Corporate Human Resources.

6.       PARTICIPANT ACCOUNTS

         Upon  election  to  participate  in  the  Plan,   there  shall  be
established a Compensation Account for the Participant to which there shall
be  credited  any  Deferred  Compensation,  as of each  Credit  Date.  Each
Participant's  Compensation  Account shall be credited (or debited) on each
Accounting Date with income (or loss) based on a hypothetical investment in
any one or more of the  investment  options  available  under the Plan,  as
prescribed by the Committee,  including (but not limited to) a Common Stock
Fund, as elected by the Participant under the terms of Section 8. Gains,  
losses and other elements of determining  value shall be determined
substantially  on the basis of a  hypothetical  investment  in the  various
investment  options,  as  determined  and  applied  in  the  manner  deemed
appropriate by the Committee.

         If a Participant elects to invest all or any portion of his or her
Compensation  Account  in  the  Common  Stock  Fund,  that  portion  of the
Participant's  Compensation  Account  shall be credited on each Credit Date
with Stock Units equal to the number of shares of Common  Stock  (including
fractions  of a share)  that could have been  purchased  with the amount of
such Deferred  Compensation at the Fair Market Value on the Credit Date. As
of any  dividend  payment  date for the  Common  Stock,  the  portion  of a
Participant's  Compensation Account invested in the Common Stock Fund as of
the dividend record date shall be credited with additional Stock Units. The
number of Stock Units  credited to the Common Stock Fund will be determined
by  dividing  (i) the  product  of (a) the  dollar  value  of the  dividend
declared in respect of a share of Ashland  Common Stock  multiplied  by (b)
the number of Stock Units credited to the  Participant's  Common Stock Fund
as of the dividend  record date by (ii) the Fair Market Value of a share of
Ashland Common Stock on the dividend payment date.

                                     -3-

<PAGE>


         A  Participant  who had an existing  account under the Prior Plans
shall automatically have such account transferred to a Compensation Account
under this Plan to be maintained and administered pursuant to the terms and
conditions of this Plan.

         Amounts credited to a Compensation  Account shall remain a part of
the general  funds of the Company and nothing  contained in this Plan shall
be deemed to  create a trust or fund of any kind or  create  any  fiduciary
relationship.  Nothing  contained  herein  shall  be  deemed  to  give  any
Participant any ownership or other proprietary, security or other rights in
any funds,  stock or assets owned or  possessed by the Company,  whether or
not  earmarked  for the  Company's  own purposes as a reserve or fund to be
utilized by the Company for the discharge of its obligations hereunder.  To
the  extent  that any  person  acquires  a right  to  receive  payments  or
distributions  from the  Company  under this Plan,  such right  shall be no
greater than the right of any unsecured creditor of the Company.

7.       FINANCIAL HARDSHIP

         Upon the written request of a Participant or a Participant's legal
representative  and a  finding  that  continued  deferral  will  result  in
financial  hardship  to  the  Participant,   the  Committee  (in  its  sole
discretion)  may  authorize  (a)  the  payment  of  all  or  a  part  of  a
Participant's  Compensation Account in a single installment prior to his or
her ceasing to be a Participant,  or (b) the acceleration of payment of any
multiple installments thereof. If, in the sole discretion of the Committee,
a delay in any  distribution  pursuant to this Section 7 shall be necessary
to avoid liability of the  Participant  under Section 16(b) of the Exchange
Act, any such distribution shall be so postponed.

8.       MANNER OF ELECTION

         (a) General. Any Employee selected by the Committee to participate
in the  Plan  may  elect  to do so in any  Fiscal  Year  by  delivering  to
Corporate  Human  Resources  a  written  notice  on a  form  prescribed  by
Corporate Human Resources electing to defer payment of all or a portion (in
25%  increments or other  increments so prescribed by the Committee) of his
or her  Compensation  (an  "Election").  The  Election  must be filed on or
before  September  30 in order to be  effective  for amounts  earned in the
immediately  succeeding  Fiscal  Year.  An  effective  Election  may not be
revoked or modified  (except as otherwise  stated herein) with respect to a
Service Year for which such Election is effective.

         (b)      Investment Alternatives - Existing Balances.  A
Participant may elect to change an existing selection as to the
investment alternatives in effect with respect to his or her
existing  Compensation  Account (in 25%  increments or other  increments so
prescribed by the Committee) one (1) time during any three-month  period by
filing with Corporate Human Resources a new Election, at least fifteen (15)
days prior to the  commencement  of the  quarter  in which the  Participant
desires the change to become effective. The change will be deemed effective
as of the first  business day of the next quarter  subsequent to the filing
of  such  Election.   Notwithstanding   the  foregoing,   a  Section  16(b)
Participant may elect to change an existing selection  involving the Common
Stock Fund during the "window  period"  beginning on the third business day
following the public release of quarterly  financial results by the Company
and ending on the twelfth day following  such release.  Such change will be
deemed  effective as of the last day of the month in which the Election was
filed.

         (c)      Change of Beneficiary.  A Participant may, at any time,
elect to change the designation of a Beneficiary.

         (d) Payment Period; Form of Payment. A Participant will be allowed
to change  the  Election  as to the  applicable  payment  period or form of
payment for all amounts  previously  deferred pursuant to such Election one
time,  subject to  approval by the  Committee.  Such change must be made no
later than eighteen months prior to such Participant's Termination.


                                    -4-

<PAGE>

9.       MANNER OF PAYMENT UPON TERMINATION

         In  accordance  with the  Participant's  Election  and  subject to
Committee  approval  upon  payout,  amounts  credited  to  a  Participant's
Compensation Account will be paid in a lump sum or in the form of annual or
quarterly installments, in shares of Common Stock or cash, or a combination
of both, to the  Participant  following his or her  Termination  or, in the
event of his or her death,  to a  Beneficiary.  If a Participant  elects to
receive  payment in  installments,  the payment period shall not exceed ten
years following the date of the Participant's Termination.

         The  amount of any cash  distribution  to be made in  installments
with respect to the Compensation  Account will be determined by multiplying
(i) the  balance  in  such  Compensation  Account  on the  Accounting  Date
immediately  preceding  the cash  distribution  (minus  any  amounts in the
Common  Stock Fund) by (ii) a fraction,  the  numerator of which is one and
the   denominator  of  which  is  the  number  of   installments  in  which
distributions remain to be made (including the current  distribution).  The
amount of any cash  distribution to be made in installments with respect to
Stock Units will be determined by (i) multiplying the number of Stock Units
attributable to such  installment  (determined as hereinafter  provided) by
(ii)  the  closing  price  of the  Common  Stock  on each  Accounting  Date
immediately  prior to the date on which such installment is to be paid. The
number of Stock Units attributable to an installment shall be determined by
multiplying  (i) the current number of Stock Units in the Common Stock Fund
by (ii) a fraction,  the numerator of which is one and the  denominator  of
which is the number of  installments  in which  distributions  remain to be
made (including the current distribution).

         The amount of any stock  distribution  to be made in  installments
with respect to the  Compensation  Account  shall be determined by dividing
the  amount  of  cash  attributable  to  such  installment  (determined  as
hereinafter  provided)  by the  closing  price of the Common  Stock on each
Accounting Date immediately  prior to the date on which such installment is
to be paid.  The amount of cash  attributable  to an  installment  shall be
determined  by  multiplying  (i) the current  balance in such  Compensation
Account on the Accounting Date immediately preceding the stock distribution
(minus any  amounts  in the  Common  Stock  Fund) by (ii) a  fraction,  the
numerator  of which is one and the  denominator  of which is the  number of
installments  in  which  distributions  remain  to be made  (including  the
current  distribution).  The amount of any stock distribution to be made in
installments with respect to the amount of a Compensation  Account invested
in the Common Stock Fund shall be determined by multiplying (i) the current
number of Stock Units by (ii) a fraction, the numerator of which is one and
the   denominator  of  which  is  the  number  of   installments  in  which
distributions remain to be made (including the current distribution).  Only
whole number of shares of Common Stock will be issued,  with any fractional
shares to be paid in cash.

10.      COMMENCEMENT OF PAYMENTS

         Payments of amounts  deferred  pursuant to a valid  Election shall
commence after a Participant's  Termination (i) with respect to a lump sum,
as soon as  reasonably  practicable  after  the first  business  day of the
calendar year selected by a Participant  in his or her Election,  (ii) with
respect to annual installments, as soon as reasonably practicable after the
first business day of the first calendar year of deferred  payment selected
by a  Participant  in  his or her  Election,  and  (iii)  with  respect  to
quarterly  installments,  as soon as reasonably practicable after the first
business day of the first calendar  quarter of deferred payment selected by
a Participant  in his or her Election.  If a Participant  dies prior to the
first deferred payment specified in an Election, payments shall commence to
the Participant's Beneficiary on the first payment date so specified.

11.      BENEFICIARY DESIGNATION

         A  Participant  may designate one or more persons to whom payments
are to be made if the  Participant  dies  before  receiving  payment of all
amounts due hereunder.  A designation of Beneficiary will be effective only
after the signed Election is filed with Corporate Human Resources while the
Participant is alive and will cancel all designations of Beneficiary signed
and filed earlier.  If the Participant  fails to designate a Beneficiary as
provided above,  the remaining unpaid amounts shall be paid in one lump sum
to the estate of such Participant.  If all Beneficiaries of the Participant
die before the  Participant or before  complete  payment of all amounts due
hereunder,  the remaining  unpaid  amounts shall be paid in one lump sum to
the estate of the last to die of such Beneficiaries.


                                -5-

<PAGE>

12.      CHANGE IN CONTROL

         Notwithstanding any provision of this Plan to the contrary, in the
event of a Change in Control, each Participant in the Plan shall receive an
automatic  lump  sum  cash  distribution  of  all  amounts  accrued  in the
Participant's Compensation Account (including interest at the Prime Rate of
Interest  from the date of the Change of Control  through the  business day
immediately preceding the date of distribution) not later than fifteen (15)
days after the date of the Change in Control. For this purpose, the balance
in the  portion of a  Participant's  Compensation  Account  invested in the
Common Stock Fund shall be  determined by  multiplying  the number of Stock
Units by the higher of (a) the highest Fair Market Value on any date within
the period  commencing  30 days prior to such Change in Control,  or (b) if
the  Change in  Control  of the  Company  occurs as a result of a tender or
exchange offer or consummation of a corporate transaction, then the highest
price paid per share of Common Stock pursuant  thereto.  Any  consideration
other than cash forming a part or all of the consideration for Common Stock
to be paid pursuant to the  applicable  transaction  shall be valued at the
valuation price thereon determined by the Board.

         In addition,  the Company shall  reimburse a  Participant  for the
legal fees and expenses  incurred if the Participant is required to seek to
obtain or  enforce  any  right to  distribution.  In the  event  that it is
determined   that  such   Participant  is  properly   entitled  to  a  cash
distribution hereunder, such Participant shall also be entitled to interest
thereon payable in an amount  equivalent to the Prime Rate of Interest from
the date such distribution  should have been made to and including the date
it is made.  Notwithstanding  any  provision of this Plan to the  contrary,
this Section 12 may not be amended after a Change in Control occurs without
the written consent of a majority in number of Participants.

13.      INALIENABILITY OF BENEFITS

         The interests of the  Participants and their  Beneficiaries  under
the Plan may not in any way be  voluntarily or  involuntarily  transferred,
alienated or assigned, nor subject to attachment, execution, garnishment or
other such equitable or legal process.  A Participant or Beneficiary cannot
waive the provisions of this Section 13.

14.      GOVERNING LAW

         The provisions of this plan shall be interpreted  and construed in
accordance  with the laws of the  Commonwealth  of Kentucky,  except to the
extent preempted by Federal law.

15.      AMENDMENTS

         The Committee may amend,  alter or terminate this Plan at any time
without  the prior  approval  of the  Board;  provided,  however,  that the
Committee may not, without approval by the Board and the shareholders:

         (a)      increase the number of securities that may be issued
under the Plan (except as provided in Section 3(c));

         (b)      materially modify the requirements as to eligibility
for participation in the Plan; or

         (c)      otherwise materially increase the benefits accruing to
Participants under the Plan.

16.      EFFECTIVE DATE

         The Plan shall be submitted to the shareholders of the Company for
their  approval and adoption on January 26, 1995,  or such other date fixed
for the next meeting of  shareholders  or any  adjournment or  postponement
thereof. If approved and adopted by the shareholders,  the Plan will become
effective as of October 1, 1994.

                                    -6-
