<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
AGCO CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(AGCO LOGO)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1998
The Annual Meeting of Stockholders of AGCO Corporation will be held at the
offices of the Company, 4205 River Green Parkway, Duluth, Georgia 30096 on
Wednesday, April 29, 1998, at 9:00 a.m., local time, for the following purposes:
1. To elect four directors to serve for the ensuing three years or
until their successors have been duly elected and qualified;
2. To approve an amendment to the AGCO Corporation 1991 Stock Option
Plan, as amended; and
3. To transact any other business which may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on March 3, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting. During the period from April 19, 1998 until the annual
meeting, a list of stockholders as of the close of business on March 3, 1998
will be available at the location of the meeting, for examination during normal
business hours by any stockholder.
WE URGE YOU TO MARK AND EXECUTE YOUR PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IN THE EVENT YOU ARE ABLE TO ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
ROBERT J. RATLIFF
Chairman and Chief Executive Officer
Atlanta, Georgia
March 31, 1998
<PAGE> 3
AGCO CORPORATION
------------------------------------
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1998
------------------------------------
INFORMATION REGARDING PROXIES
This proxy solicitation is made by the Board of Directors (the "Board of
Directors" or the "Board") of AGCO Corporation (the "Company"), which has its
principal executive offices at 4205 River Green Parkway, Duluth, Georgia 30096.
By signing and returning the enclosed proxy card, you authorize the persons
named on the proxy card to represent you and vote your shares.
If you attend the meeting, you may vote by ballot. If you are not present
at the meeting, your shares can be voted only when represented by proxy. You may
indicate a vote for or against each proposal on the proxy card and your shares
will be voted accordingly. If you indicate a preference to abstain on any
proposal, no vote will be recorded. You may withhold your vote from any nominee
for director by writing his name in the appropriate space on the proxy card. You
may cancel your proxy before balloting begins by notifying the Corporate
Secretary in writing at 4205 River Green Parkway, Duluth, Georgia 30096. In
addition, any proxy signed and returned by you may be revoked at any time before
it is voted by signing and duly delivering a proxy bearing a later date or by
attendance at the meeting and voting in person. If you return a signed proxy
card that does not indicate your voting preferences, the persons named on the
proxy card will vote your shares in favor of all of the items set forth in the
attached notice.
The enclosed form of proxy is solicited by the Board of Directors of the
Company and the cost of solicitation of proxies will be borne by the Company. In
order to ensure that a quorum is represented by proxies at the meeting, proxy
solicitation may also be made personally or by telephone or telegram by officers
or employees of the Company, without added compensation. The Company will
reimburse brokers, custodians and nominees for their expenses in sending proxies
and proxy material to beneficial owners. The Company may retain an outside firm
to aid in the solicitation of proxies for fees which the Company expects would
not exceed $20,000.
This proxy statement and form of proxy are first being sent to stockholders
on or about March 31, 1998. The Company's 1997 Annual Report to its stockholders
is also enclosed and should be read in conjunction with the matters set forth
herein. See "Annual Report to Stockholders."
VOTING SHARES
Only stockholders of record as of the close of business on March 3, 1998
will be entitled to notice of and to vote at the annual meeting to be held on
April 29, 1998 (the "Annual Meeting"). On March 3, 1998, the Company had
outstanding 62,986,795 shares of Common Stock, par value $.01 per share (the
"Common Stock"), each of which is entitled to one vote on each matter coming
before the meeting. No cumulative voting rights are authorized, and dissenters'
rights for stockholders are not applicable to the matters being proposed.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of elections appointed for the meeting who will also determine
whether a quorum is present for the transaction of business. The Company's
Bylaws provide that a quorum is present if a majority of the outstanding shares
of Common Stock of the Company entitled to vote at the meeting are present in
person or represented by proxy. Abstentions will be treated as shares that are
present and entitled to vote for purposes of determining whether a quorum is
present. Shares held by nominees for beneficial owners will be counted for
purposes of determining whether a quorum is present if the nominee has the
discretion to vote on at least one of the matters presented even if the nominee
may not exercise discretionary voting power with respect to other
<PAGE> 4
matters and voting instructions have not been received from the beneficial owner
(a "broker non-vote"). With respect to any matter (other than the election of
directors) that may properly come before the meeting for stockholder
consideration, abstentions will be counted in determining the minimum number of
affirmative votes required for approval of any matter presented for stockholder
consideration and, accordingly, will have the effect of a vote against any such
matter. Broker non-votes will not be counted as votes for or against matters
presented for stockholder consideration.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
Currently, the Company's Board of Directors has fixed the number of
directors at ten. The Board is divided into three classes of directors,
designated Class I, Class II and Class III, with each class as nearly equal in
number as possible to the other two classes. The three classes serve staggered
three-year terms. Stockholders annually elect directors of one of the three
classes to serve for three years or until their successors have been duly
elected and qualified. At the Annual Meeting, stockholders will elect four
directors to serve as Class III directors. The Nominating Committee has
recommended, and the Board of Directors has nominated, the four individuals
named below to serve as Class III directors until the annual meeting in 2001 or
until their successors have been duly elected and qualified.
The following is a brief description of the business experience of each
nominee.
WILLIAM H. FIKE, age 61, has been a Director of the Company since April
1995. Mr. Fike has been Vice Chairman and Executive Vice President of Magna
International, Inc. since September 1994. From 1965 to 1994, Mr. Fike held
several managerial positions at Ford Motor Company, including Corporate Vice
President and President -- Ford of Europe, Executive Director of Ford Mexico
Automotive and North American Trim Operations and President -- Ford of Brazil.
GERALD B. JOHANNESON, age 57, has been a Director of the Company since
April 1995. Mr. Johanneson has been President and Chief Executive Officer of
Haworth, Inc. since June 1997. He served as President and Chief Operating
Officer of Haworth, Inc. from January 1994 to June 1997 and as Executive Vice
President and Chief Operating Officer from March 1988 to January 1994.
ALAN S. MCDOWELL, age 59, has been a Director of the Company since June
1990. Mr. McDowell is also a director of Buffets, Inc. Mr. McDowell has been a
private investor since 1983.
ROBERT J. RATLIFF, age 66, has been Chairman of the Board of Directors
since August 1993, Chief Executive Officer since August 1997 and a Director
since June 1990. Mr. Ratliff previously served as Chief Executive Officer of the
Company from January 1996 until November 1996 and President and Chief Executive
Officer from June 1990 to January 1996. Mr. Ratliff is also a director of the
National Association of Manufacturers and the Equipment Manufacturers Institute.
Mr. Ratliff is a member of the Board of Councilors of the Carter Center.
Each of these nominees has indicated a willingness to serve on the Board of
Directors of the Company. If any of the nominees shall become unable to serve,
or for good cause will not serve, the persons named on the enclosed proxy card
may exercise their discretion to vote for any substitute nominee or nominees
proposed by the Board of Directors. The Company's Bylaws provide that
nominations from the floor of persons other than the nominees proposed by the
Board of Directors will not be accepted unless the stockholder has provided
certain information concerning proposed nominees to the Company in writing no
later than sixty days and no earlier than ninety days prior to the anniversary
date of the immediately preceding annual meeting of stockholders. Because the
Company has not received such notice as provided under its Bylaws, nominees
other than those proposed by the Board of Directors will not be accepted.
The four nominees who receive the greatest number of votes cast for the
election of directors at the meeting shall become directors at the conclusion of
the tabulation of votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH ABOVE.
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DIRECTORS CONTINUING IN OFFICE
The six individuals named below are now serving as Directors of the Company
with terms expiring at the annual meetings in 1999 and 2000, as indicated.
Directors who are continuing in office as Class I directors whose terms
expire at the annual meeting in 1999 are listed below.
HAMILTON ROBINSON, age 63, has been a Director of the Company since June
1990 and was Chairman of the Board of Directors of the Company from September
1990 to August 1993. From 1984 until April 1997, Mr. Robinson was Managing
Director of Hamilton Robinson & Company, Incorporated ("HR&Co."), a private
institutional equity manager. Since April 1997, Mr. Robinson has been a private
investor.
ANTHONY D. LOEHNIS, age 62, has been a Director of the Company since July
1997. Mr. Loehnis has been a director of St. James' Place Capital plc since July
1993 and Chairman of its J. Rothschild International Marketing Limited
subsidiary since December 1995. Mr. Loehnis also has served as Non-Executive
Director of Tokyo-Mitsubishi International plc since April 1996 and Alpha Bank
London Limited since November 1994.
THOMAS H. WYMAN, age 68, has been a Director of the Company since January
1998. Mr. Wyman is a director of AT&T, General Motors Corporation, Hughes
Electronic Corporation and ZENECA Group PLC. Mr. Wyman also is a member of the
Advisory Board of Nestle USA Inc. and a member of the International Advisory
Group of Toshiba Corporation. Mr. Wyman was Vice Chairman of S.G. Warburg Group
PLC from 1993 until 1995 and Senior Advisor for SBC Warburg Inc. for the Council
of International Advisors of Swiss Bank Corporation from March 1996 to January
1998. Mr. Wyman served as Chairman, President and Chief Executive Officer of
CBS, Inc. from 1980 to 1986.
Directors who are continuing in office as Class II Directors whose terms
expire at the annual meeting in 2000 are listed below.
HENRY J. CLAYCAMP, age 67, has been a Director of the Company since June
1990. Mr. Claycamp has been President of MOSAIX Associates, a management
consulting firm, since 1985. From 1973 to 1982, Mr. Claycamp was Vice
President -- Corporate Planning and Vice President -- Corporate Marketing for
International Harvester Company. Previously, Mr. Claycamp held professorial
positions at Stanford University, Purdue University and the Massachusetts
Institute of Technology.
RICHARD P. JOHNSTON, age 67, has been a Director of the Company since June
1990. Mr. Johnston has been Chairman of the Board of Merbanco Inc., a private
equity investor, since 1976 and is Chairman of the Executive Committee of Royal
Precision Corporation, a golf component manufacturer, and a director of Myers
Industries, a material handling products manufacturing company. Mr. Johnston was
Chairman of the Board of Republic Realty Mortgage Corporation, a commercial
mortgage banking company, from January 1993 to January 1995. From July 1991 to
December 1993, Mr. Johnston was a Managing Director of HR&Co.
WOLFGANG SAUER, age 68, has been a Director of the Company since May 1997.
Dr. Sauer has been principal of WS Consult -- Wolfgang Sauer & Associates S/C
Ltda., an international consulting firm based in Brazil since November 1990.
Since 1992, Dr. Sauer has been Chairman of the Board of SP Trans -- Sao Paulo
Transporte and on the board or administrative council of Iochpe-Maxion S.A.,
Coca-Cola Industries Ltda., Hannover Seguros S.A., Xerox do Brasil S.A.,
Carborundum S.A., Atlas Copco do Brasil Ltda., Icatu Holding, WTC-World Trade
Center -- Sao Paulo and the Council of Brazil-German Chambers of Industry and
Commerce. From 1970 to March 1987, Dr. Sauer served as President and Chief
Executive Officer of Volkswagon for their operations in Argentina and Brazil and
served as President and Chief Executive Officer of the Ford-Volkswagon
joint-venture, Autolatina, in such countries from March 1987 to November 1990.
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BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
During 1997, the Board of Directors held eight meetings. Each nonemployee
director receives a retainer fee of $20,000 per annum, $1,000 for each Board
meeting attended and $1,000 for each committee meeting attended. Committee
chairmen receive an additional fee of $500 for each committee meeting attended.
The Company also pays Mr. Claycamp an annual fee of $150,000, as compensation
for serving as Chairman of the Executive Committee of the Board. In addition to
the above fees, the Company reimburses each director for 50% of the fees paid by
the director for personal estate planning consulting by third parties. Directors
who are employees of the Company are not paid any fees or additional
remuneration for service as members of the Board or its committees.
NONEMPLOYEE DIRECTOR STOCK INCENTIVE PLAN
At the 1995 annual meeting, the stockholders approved the AGCO Corporation
Nonemployee Director Stock Incentive Plan (the "Director Plan"), effective
December 14, 1994, which was amended by the stockholders at the 1996 annual
meeting. Pursuant to the Director Plan, each nonemployee director is awarded the
right to receive shares of Common Stock which can be earned during the three
year performance period in effect for that participant. The Director Plan
requires stock appreciation to earn awards. The awarded shares are earned in
increments for each 15% increase in the average stock price (with the average
calculated over 20 consecutive trading days) over the base price (the fair
market value of the stock at the time the shares are awarded). The stock price
must increase 60% in a three year period for the full allocation to be earned.
When an increment of the award is earned, the shares are issued in the form of
restricted stock, which vests 12 months after the last day of the three year
performance period. In the event of departure from the Board of Directors for
any reason, all earned awards vest. If the awarded shares are not fully earned
before the end of the three year performance period or before the participant's
departure from the Board of Directors for any reason, whichever comes first, any
unearned awards are forfeited. The ultimate value of the restricted stock is
determined by the stock price at the end of the vesting period. When the
restricted shares are earned, a cash payment designed to satisfy a portion of
the federal and state income tax obligations is paid by the Company to each
participant. The tax payment is provided to remove the necessity for the
nonemployee director to sell a significant portion of the stock earned under the
Director Plan to pay taxes.
As of March 3, 1998, each of Messrs. Claycamp, Johnston, Fike, Johanneson,
McDowell and Robinson had earned 3,500 shares under the Director Plan and had
2,500 shares that had been awarded but not earned. Each of Messrs. Loehnis,
Sauer and Wyman have been awarded 2,000 shares under the Director Plan, none of
which are earned.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has delegated certain functions to the following
standing committees of the Board:
The Executive Committee is authorized, between meetings of the Board,
to perform all of the functions of the Board of Directors except as limited
by the General Corporation Law of the State of Delaware or by the Company's
Certificate of Incorporation or Bylaws. The Executive Committee held two
meetings in 1997 and is currently composed of Messrs. Claycamp, Johanneson,
Johnston, Ratliff and Robinson.
The Audit Committee's functions are to recommend for appointment by
the Board of Directors a firm of independent certified public accountants
to act as auditors for the Company and to meet with the auditors to review
the scope, preparation and results of the Company's audits, to review the
Company's internal accounting and financial controls and to consider other
matters relating to the financial reporting process and safeguarding of the
Company's assets. The Audit Committee held four meetings in 1997 and is
currently composed of Messrs. Loehnis, McDowell, Robinson and Sauer.
The Compensation Committee's functions are to review, approve,
recommend and report to the chief executive officer and the Board of
Directors matters regarding the compensation of the Company's chief
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executive officer and other key executives, compensation levels or plans
affecting the compensation of the Company's other employees and
administration of the Company's Management Incentive Compensation Plan, the
1991 Stock Option Plan, the Long-Term Incentive Plan and the Director Plan.
The Compensation Committee held three meetings in 1997 and is currently
composed of Messrs. Fike, Johnston, Loehnis and McDowell.
The Nominating Committee's principal function is to identify
candidates and recommend to the Board of Directors nominees for membership
on the Board of Directors. The Nominating Committee expects to be able to
identify from its own resources the names of qualified nominees but will
accept recommendations of individuals to be considered as nominees from
stockholders. The Company's Bylaws provide that nominations from the floor
of persons other than the nominees proposed by the Board of Directors will
not be accepted unless the stockholder has provided certain information
concerning proposed nominees to the Company in writing no later than sixty
days and no earlier than ninety days prior to the anniversary date of the
immediately preceding annual meeting of stockholders. The Nominating
Committee held two meetings in 1997 and is currently composed of Messrs.
Claycamp, Fike and McDowell.
The Strategic Planning Committee's function is to oversee the
Company's strategic planning process and to ensure that the Company's
purpose and direction are defined. The Strategic Planning Committee reviews
the corporate goals and objectives established by executive management and
oversees the annual planning process by ensuring that the functional plan
supports the corporate goals and objectives. The Strategic Planning
Committee held one meeting in 1997 and is currently composed of Messrs.
Fike, Johanneson, Ratliff and Sauer.
The Succession Planning Committee's function is to ensure a continued
source of capable, experienced managers is present to support the Company's
future success. The Succession Planning Committee meets regularly with
senior members of management in an effort to assist executive management in
their plans for senior management succession, to review the backgrounds and
experience of senior management, and to assist in the creation of tailored
individual personal and professional development plans. The Succession
Planning Committee held six meetings in 1997 and is currently composed of
Messrs. Claycamp, Johanneson, Johnston and Robinson.
During fiscal 1997, each director attended at least 75% of the aggregate of
the number of meetings of the Board and respective committees on which he served
while a member thereof, with the exception of Mr. Loehnis who has attended 60%
of the meetings since being elected a director in July 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, Messrs. Fike, Johnston, Loehnis and McDowell served as
members of the Compensation Committee. No member of the Compensation Committee
was an officer or employee of the Company or any of its subsidiaries during
fiscal 1997.
PROPOSAL NUMBER 2
AMENDMENT OF THE 1991 STOCK
OPTION PLAN, AS AMENDED
On September 18, 1991, the Company adopted, and the stockholders approved,
the 1991 Stock Option Plan (the "Option Plan") providing for the grant to
certain directors, key employees and consultants of the Company and its
subsidiaries of options to purchase shares of Common Stock of the Company, which
options may be qualified as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code or nonqualified options. Only key
employees may be granted incentive stock options under the Option Plan. The
Company believes that the Option Plan is an important part of the Company's
compensation policy for key employees who are not executive officers. The Option
Plan provides an effective method to attract and
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retain qualified employees and provides a strong and direct link between
employee compensation and stockholder return.
The Board of Directors has approved and recommends that the stockholders
approve an amendment to the Option Plan to increase the number of shares of
Common Stock authorized for issuance under the Option Plan by 1,600,000 shares.
Currently, 2,400,000 shares may be made subject to options granted under the
Option Plan. To date, the Board has granted 2,133,495 of the options currently
available for grant under the Option Plan. The proposed amendment would increase
the number of shares authorized for issuance from 2,400,000 to 4,000,000 and
enable the Company to grant an additional 1,866,505 options under the Option
Plan.
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the meeting for this proposal will be
required to approve the amendment to the Option Plan.
The number of stock options that will be awarded to certain of the
Company's directors and key employees and consultants in the future pursuant to
the Option Plan is not currently determinable. The Company did not grant any
stock options pursuant to the Option Plan during the fiscal year ended December
31, 1997 to any of the Company's Chief Executive Officer, the other four most
highly compensated executive officers of the Company or the other executive
officers of the Company. In 1997, however, 193,900 options were granted to 77
employees, including certain current officers who are not executive officers.
The Board of Directors has amended the Option Plan to prohibit the
repricing of options granted to an employee upon cancellation of outstanding
options if the price of the new options would be lower than the option price
under the existing options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL TO AMEND THE
OPTION PLAN.
The material features of the Option Plan, assuming approval of the
amendment, are outlined below.
ADMINISTRATION
The Option Plan is administered by the Compensation Committee of the Board
of Directors, which selects the optionees and determines (i) the amount of
Common Stock subject to each option, (ii) the vesting schedule of the option,
(iii) the exercise price (which, in the case of the incentive stock options,
cannot be less than 100% of the estimated fair market value at the date of
grant), and (iv) the duration of the option (which, in the case of incentive
stock options, cannot exceed 10 years from the date of grant). The Compensation
Committee also has authority to construe and amend the Option Plan and all
options granted under it, to prescribe, amend and rescind rules and regulations
relating to the Option Plan, to determine the terms and provisions of the
options granted under the Option Plan (which need not be identical) and to make
all other determinations necessary or advisable for administering the Option
Plan.
TERMINATION AND AMENDMENT
Unless sooner terminated by the Board of Directors, the Option Plan will
terminate on September 17, 2001. The Board of Directors may amend the Option
Plan without stockholder approval except to the extent that any such amendment
fails to comply with any applicable provision of the Internal Revenue Code,
ERISA or the rules of the NYSE or causes the Option Plan to fail to be treated
as qualified performance-based compensation under applicable Treasury
Regulations.
ELIGIBILITY AND EXERCISE PLAN
Options may be granted under the Option Plan only to certain of the
Company's directors and key employees and consultants of the Company or any of
its subsidiaries. As of March 1, 1998, 161 individuals held options granted
under the Option Plan. In the case of incentive stock options, if the aggregate
fair market value (valued on the date of the grant of the option) of the stock
with respect to which incentive stock options are exercisable for the first time
by an optionee during any calendar year exceeds $100,000, any options which
otherwise qualify as incentive stock options to the extent of the excess will be
treated as nonqualified options.
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In granting an option, the Compensation Committee will designate whether
the option is an incentive stock option or a non-qualified stock option and fix
the number of shares of the Company's Common Stock that the grantee may purchase
on exercise of the option and the price at which the shares may be purchased. In
the case of any incentive stock option, such price may not be less than 100% of
the fair market value of the Company's Common Stock on the date of grant of the
option, except that in the event of any optionee who owns 10% or more of the
total combined voting power of all classes of stock of the Company (using the
attribution of stock ownership rules of Section 424(b) of the Internal Revenue
Code), the option price shall not be less than 110% of the fair market value of
the Company's Common Stock on the date of grant of the option and such option
must be exercised on or before the fifth anniversary date of the grant of the
option.
STOCK SUBJECT TO THE STOCK OPTION PLAN
As of March 10, 1998, 779,080 shares of Common Stock were reserved for
issuance upon exercise of options previously granted under the Option Plan and
266,505 shares remained available for the grant of future options under such
plan. If any option granted under the Option Plan for any reason expires or
otherwise terminates without having been exercised in full, the stock not
purchased under such option again becomes available for issuance under the
Option Plan. The stock subject to the Option Plan may be unissued shares of
Common Stock or shares of issued Common Stock held in the Company's treasury, or
both. If the proposed amendment is adopted, the number of shares authorized for
issuance under the Option Plan will be 4,000,000. No individual may receive
options for more than 250,000 shares of Common Stock over the life of the Option
Plan.
TERMS OF OPTIONS
The Compensation Committee, in its discretion, may grant options under the
Option Plan subject to such terms and conditions as the Compensation Committee
deems consistent with the terms of the Option Plan and not inconsistent with
applicable provisions of the Internal Revenue Code. The Compensation Committee
shall determine when each option shall expire (to the extent not fully
exercised), which date shall be no later than the tenth anniversary of the date
the option is granted, and on what schedule such options shall be exercised.
Upon exercise of an option, the holder must make payment in full of the option
price for the shares of the Company's Common Stock purchased in cash or in the
equivalent fair market value of shares of Common Stock.
All options are nontransferable other than by will or the laws of descent
and distribution, and incentive stock options are exercisable during the
lifetime of the optionee only while the optionee is in the employ of the Company
or within three months (one year in the case of disability) after termination of
employment. If an optionee dies, the option is exercisable not later than one
year from the date of death to the extent the optionee was entitled to exercise
the option on the date of death. The Company receives no consideration for the
grant of the options to optionees other than the services of the optionees to
the Company.
FEDERAL INCOME TAX CONSEQUENCES
Nonqualified Options. An individual receiving a nonqualified option under
the Option Plan does not recognize taxable income on the date of grant of the
option, assuming (as is usually the case with plans of this type) that the
option does not have a readily ascertainable fair market value at the time it is
granted. However, the individual must generally recognize ordinary income at the
time of exercise of the nonqualified option in the amount of the difference
between the option exercise price and the fair market value of the Common Stock
on the date of exercise. The amount of ordinary income recognized by an
individual is deductible by the Company in the year that the income is
recognized by the individual. Upon subsequent disposition, any further gain or
loss is taxable either as a short-term or long-term capital gain or loss,
depending upon the length of time that the shares of Common Stock are held.
Incentive Stock Options. An optionee who is granted an incentive stock
option under the Option Plan does not recognize taxable income either on the
date of grant or on the date of its timely exercise. However, the excess of the
fair market value of the Common Stock received upon the exercise of the
incentive stock
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option over the option exercise price is includable in the optionee's
alternative minimum taxable income and may be subject to the alternative minimum
tax ("AMT"). For AMT purposes only, the basis of the Common Stock acquired by
the exercise of an incentive stock option is increased by the amount of such
excess.
Upon the disposition of the Common Stock acquired upon exercise of an
incentive stock option, long-term capital gain or loss will be recognized in an
amount equal to the difference between the sales price and the option exercise
price (except that for AMT purposes, the gain or loss would be the difference
between the sales price and the optionee's basis increased as described in the
preceding paragraph), provided that the optionee has not disposed of the Common
Stock within two years after the date of grant or within one year from the date
of exercise. If the optionee disposes of the Common Stock without satisfying
both holding period requirements (a "Disqualifying Disposition"), the optionee
will generally recognize ordinary income at the time of such Disqualifying
Disposition to the extent of the lesser of (i) the difference between the
exercise price and the fair market value of the Common Stock on the date the
incentive stock option is exercised or (ii) the difference between the exercise
price and the amount realized on such Disqualifying Disposition. Any remaining
gain or any net loss is treated as a short-term or long-term capital gain or
loss, depending upon the length of time that the Common Stock is held. Unlike
the case in which a nonqualified option is exercised, the Company is not
entitled to a tax deduction upon either the timely exercise of an incentive
stock option or upon disposition of the Common Stock acquired pursuant to such
exercise, except to the extent that the optionee recognizes ordinary income in a
Disqualifying Disposition.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the meeting other than the election of directors and the amendment of
the Option Plan. If any other business should properly come before the meeting,
the persons named in the accompanying form of proxy intend to vote thereon in
accordance with their best judgment.
8
<PAGE> 11
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth certain information as of March 10, 1998
regarding persons or groups known to the Company who are, or may be deemed to
be, the beneficial owner of more than five percent of the Company's Common
Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
- ------------------- ------------- --------
<S> <C> <C>
Pioneering Management Corporation(2)........................ 6,262,500 9.9%
60 State Street
Boston, Massachusetts 02109
Franklin Resources, Inc.(3)................................. 5,749,630 9.1%
777 Mariners Island Boulevard
San Mateo, California 94404
Charles B. Johnson(3)....................................... 5,749,630 9.1%
777 Mariners Island Boulevard
San Mateo, California 94404
Rupert H. Johnson, Jr.(3)................................... 5,749,630 9.1%
777 Mariners Island Boulevard
San Mateo, California 94404
Templeton Global Advisors Limited(3)........................ 5,749,630 9.1%
Lyford Cay
P.O. Box N-7759
Nassau, Bahamas
Neuberger & Berman, LLC(4).................................. 5,577,700 8.9%
605 Third Ave.
New York, New York 10158-3698
Neuberger & Berman Guardian Portfolio(4).................... 5,577,700 8.9%
605 Third Ave.
New York, New York 10158-3698
Janus Capital Corporation(5)................................ 3,371,475 5.4%
100 Fillmore Street
Denver, Colorado 80206-4923
Thomas H. Bailey(5)......................................... 3,371,475 5.4%
100 Fillmore Street
Denver, Colorado 80206-4923
</TABLE>
- ---------------
(1) Based on 62,991,311 shares of Common Stock outstanding on March 10, 1998.
(2) The shares listed as beneficially owned by Pioneering Management Corporation
("Pioneering") are the total number of shares held as of December 31, 1997
in its capacity as investment advisor. Pioneering has sole voting power and
sole dispositive power with respect to all 6,262,500 shares. The information
regarding Pioneering is presented in reliance upon a Schedule 13G filed by
Pioneering with the Commission on or about January 5, 1998.
(3) The shares listed as beneficially owned by Franklin Resources, Inc. ("FRI")
are the total number of shares held as of December 31, 1997 in its capacity
as the parent holding company of Templeton Global Advisors Limited
("Templeton"). The shares listed as beneficially owned by Templeton are the
total number of shares held as of December 31, 1997 in its capacity as
investment advisor. Such shares are deemed to be beneficially owned by
Charles B. Johnson and Rupert H. Johnson, Jr., each of whom is a principal
shareholder of FRI. Templeton has sole voting power and dispositive power
with respect to all of the 5,749,630 shares deemed to be beneficially owned
by it. The information regarding the FRI Persons is
9
<PAGE> 12
presented in reliance upon a Schedule 13G filed by them with the Commission
on or about January 26, 1998.
(4) The shares listed as beneficially owned by Neuberger & Berman, LLC are the
total number of shares held as of May 30, 1997 in its capacity as investment
advisor. The shares listed as beneficially owned by Neuberger & Berman
Guardian Portfolio, a series of Equity Managers Trust, for which Neuberger &
Berman, LLC and Neuberger & Berman Management Inc. serve as sub-adviser and
investment manager, respectively, are the total number of shares held as of
December 31, 1997. Neuberger & Berman, LLC has sole voting power with
respect to 28,000 of the shares beneficially owned by it, shared voting
power with respect to 5,417,400 of such shares and shared dispositive power
with respect to 5,577,700 of such shares. Neuberger & Berman Guardian
Portfolio has shared voting power and dispositive power with respect to
4,387,400 of the shares beneficially owned by it. The information regarding
Neuberger & Berman, LLC and Neuberger & Berman Guardian Portfolio is
presented in reliance upon a Schedule 13G filed by them with the Commission
on or about June 12, 1997.
(5) The shares listed as beneficially owned by Janus Capital Corporation
("Janus") are the total number of shares held as of December 31, 1997 in its
capacity as investment advisor, and Janus disclaims beneficial ownership of
such shares. Such shares are deemed to be beneficially owned by Mr. Bailey
in his capacity as President and Chairman of the Board of Janus, and Mr.
Bailey disclaims beneficial ownership of such shares. Janus and Mr. Bailey
each may be deemed to have shared voting power and shared dispositive power
with respect to all of the 3,371,475 which they are deemed to beneficially
own. The information regarding Janus and Mr. Bailey is presented in reliance
upon a Schedule 13G filed by the Janus Group with the Commission on or about
February 13, 1998.
The following table sets forth certain information as of March 10, 1998
with respect to the beneficial ownership of the Company's Common Stock by the
Company's directors, Chairman, Chief Executive Officer and the other four most
highly compensated executive officers of the Company and all executive officers
and directors as a group. Unless otherwise indicated in the footnotes, each such
individual has sole voting and investment power with respect to the shares set
forth in the table.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP PERCENT OF
NAME OF BENEFICIAL OWNER (1)(2)(3) CLASS(4)
- ------------------------ ---------- ----------
<S> <C> <C>
Robert J. Ratliff(5)........................................ 980,202 1.6%
Henry J. Claycamp........................................... 21,048 *
William H. Fike............................................. 7,500 *
Gerald B. Johanneson........................................ 7,500 *
Richard P. Johnston(6)...................................... 109,500 *
Anthony Loehnis............................................. 1,000 *
Alan S. McDowell(7)......................................... 60,656 *
Hamilton Robinson(8)........................................ 51,954 *
Wolfgang Sauer.............................................. -- *
Thomas Wyman................................................ 1,200 *
John M. Shumejda............................................ 362,093 *
J-P Richard(9).............................................. 45,790 *
James M. Seaver............................................. 225,013 *
Daniel H. Hazelton.......................................... 163,500 *
Chris E. Perkins............................................ 52,100 *
All executive officers and directors as a group (26
persons)(10).............................................. 2,849,475 4.5%
</TABLE>
- ---------------
* Less than one percent.
(1) Includes shares which may be purchased upon exercise of options which are
exercisable as of March 10, 1998 or become exercisable within 60 days
thereafter, for the following individuals: Mr. Fike -- 3,000; Mr.
Johanneson -- 4,000; Mr. Perkins -- 14,100; Mr. Ratliff -- 9,000; executive
officers and directors as a group -- 75,155.
10
<PAGE> 13
(2) Includes the following numbers of restricted shares of the Company's Common
Stock earned under the Long-Term Incentive Plan by the following
individuals: Mr. Shumejda -- 336,250; Mr. Seaver -- 208,000; Mr.
Hazelton -- 158,500; Mr. Perkins -- 36,000; all executive officers and
directors as a group -- 1,380,500.
(3) Includes the following numbers of restricted shares of the Company's Common
Stock earned under the Nonemployee Director Stock Incentive Plan by the
following individuals: Mr. Claycamp -- 3,500; Mr. Fike -- 3,500; Mr.
Johanneson -- 3,500; Mr. Johnston -- 3,500; Mr. McDowell -- 3,500, Mr.
Robinson -- 3,500; all executive officers and directors as a group --
21,000.
(4) Any securities not outstanding which are subject to options which are
exercisable as of March 10, 1998 or become exercisable within 60 days
thereafter are deemed outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by any person
holding such securities but are not deemed outstanding for the purpose of
computing the percentage of the class owned by any other person. Based on
62,991,311 shares of Common Stock outstanding on March 10, 1998.
(5) Includes 2,742 shares of Common Stock owned by Mr. Ratliff's wife, 200,000
shares of Common Stock beneficially owned by Mr. Ratliff as trustee of the
Robert J. Ratliff Charitable Remainder Unitrust and 718,360 shares of
Common Stock owned by a family limited partnership of which Mr. Ratliff
controls the general partner. Mr. Ratliff disclaims beneficial ownership of
these shares.
(6) Includes 57,756 and 48,244 shares of Common Stock beneficially owned by Mr.
Johnston as trustee of the Johnston Family Unitrust #1 and Johnston Family
Unitrust #2, respectively and 3,500 shares of Common Stock beneficially
owned by RPJ/JAJ Partners, Ltd.
(7) Includes 7,156 shares of Common Stock held in trust for the benefit of Mr.
McDowell's children as to which Mr. McDowell disclaims beneficial ownership
and 50,000 shares of Common Stock owned by a family limited partnership of
which Mr. McDowell is the general partner as to which Mr. McDowell
disclaims beneficial ownership.
(8) Includes 1,500 shares of Common Stock owned by Mr. Robinson's wife as to
which Mr. Robinson disclaims beneficial ownership.
(9) Mr. Richard resigned from the Company in 1997. Includes Common Stock held
by Mr. Richard as of his resignation in August 1997. See "Employment
Contracts."
(10) Does not include 45,790 shares held by Mr. Richard.
11
<PAGE> 14
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 1997, 1996
and 1995, the cash and noncash compensation paid to or earned by the Chairman,
the Chief Executive Officer and the four other most highly compensated executive
officers of the Company (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND COMPENSATION STOCK AWARDS COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS($)(1) ($)(2) ($)(3) ($)(4)
------------------ ---- ---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ratliff -- 1997 $1,000,000 $ -- $1,052,088 $1,731,250 $ 171,515
Chairman and Chief 1996 1,000,000 -- 4,041,650 1,816,313 201,279
Executive Officer 1995 687,498 312,500 66,857 4,703,063 184,166
John M. Shumejda -- 1997 350,000 292,613 274,491 1,592,750 131,246
President and Chief 1996 350,000 376,617 -- 1,671,008 121,703
Operating Officer 1995 300,000 300,000 -- 3,309,563 130,816
J-P Richard(5) -- 1997 333,333 -- 96,218 967,500 3,009,417
President and Chief 1996 60,899 300,000 -- -- 1,827
Executive Officer 1995 -- -- -- -- --
James M. Seaver -- 1997 297,917 249,059 144,469 1,315,750 86,601
Executive Vice President, 1996 247,925 266,767 -- 1,380,398 92,438
Sales and Marketing 1995 197,766 151,439 -- 1,741,875 34,251
Daniel H. Hazelton -- 1997 195,000 72,153 144,469 554,000 16,774
Vice President, 1996 181,050 76,765 -- 581,220 15,247
Worldwide Parts 1995 178,050 70,437 115,142 1,741,875 14,151
Chris E. Perkins -- 1997 183,333 153,266 -- 554,000 11,368
Vice President and Chief 1996 150,000 63,450 -- 581,220 8,805
Financial Officer 1995 100,000 40,403 17,577 -- 5,563
</TABLE>
- ---------------
(1) For Messrs. Ratliff, Shumejda, Seaver and Hazelton, bonus includes payments
of bonuses earned under the Company's Management Incentive Compensation Plan
which are made in the subsequent fiscal year. Under the terms of Mr.
Ratliff's employment contract, effective August 15, 1995, Mr. Ratliff no
longer participates in the Company's Management Incentive Compensation Plan.
Mr. Ratliff's bonus for 1995 represents incentive compensation earned under
the Company's Management Incentive Compensation Plan through August 15,
1995. Mr. Richard's 1996 bonus represents a signing bonus paid upon being
named Chief Executive Officer in November 1996.
(2) Other Annual Compensation for Mr. Ratliff in 1997 includes underwriting
expenses and a related tax equalization payment paid by the Company in the
amount of $236,064 incurred in connection with Mr. Ratliff's sale of 200,000
shares of Common Stock as part of the Company's sale of 5,175,000 shares of
Common Stock in March 1997. Other Annual Compensation for Mr. Ratliff in
1996 and 1995 includes estate planning consulting by third parties totaling
$217,336 and $50,000, respectively. Other Annual Compensation for Mr.
Richard in 1997 and Mr. Hazelton in 1995 includes relocation expenses and a
related tax equalization payment totaling $80,936 and $115,142,
respectively. Other Annual Compensation for Mr. Perkins for 1995 includes
cost of living adjustments related to an overseas assignment in the amount
of $17,577. Other Annual Compensation for Messrs. Ratliff, Shumejda, Seaver
and Hazelton includes cash payments made pursuant to the terms of the
Amended and Restated Long Term Incentive Plan (the "LTIP") designed to
satisfy a portion of the federal and state income tax obligations arising
from the vesting of restricted stock awards in 1997 in the amount of
$692,500, $274,491, $144,469 and $144,469, respectively, and in 1996 for Mr.
Ratliff in the amount of $3,756,438.
12
<PAGE> 15
(3) Restricted Stock Awards represents the value as of the date restricted
shares of Common Stock of the Company were earned pursuant to the LTIP. At
December 31, 1997, the number and value of the aggregate shares of
restricted Common Stock earned and beneficially held by each of the
participants named above pursuant to the LTIP were as follows: Mr. Shumejda,
345,750 shares with a value of $10,113,188; Mr. Seaver, 213,000 shares with
a value of $6,230,250; Mr. Hazelton, 163,500 shares with a value of
$4,782,375 and Mr. Perkins, 36,000 shares with a value of $1,053,000. Awards
earned under the LTIP by Mr. Ratliff have all vested.
(4) All Other Compensation includes the following: (i) the value of the benefit
to the executive officer for life insurance policies funded by the Company
as follows: Mr. Ratliff -- $140,279; Mr. Shumejda -- $80,696; Mr.
Seaver -- $42,658; Mr. Hazelton -- $11,172, and Mr. Perkins--$6,168, (ii)
contributions to the Company's 401(k) Savings Plan in the amount of $4,500
for Messrs. Ratliff, Shumejda, Richard, Seaver, Hazelton and Perkins, and
(iii) contributions to the Company's deferred compensation plan as follows:
Mr. Ratliff -- $26,736; Mr. Shumejda -- $46,050; Mr. Seaver -- $39,443; Mr.
Hazelton -- $1,102 and Mr. Perkins -- $700, including interest with respect
to such deferred compensation which exceeded 120% of the applicable federal
long-term rate provided under Section 1274(d) of the Internal Revenue Code.
All Other Compensation for Mr. Richard includes (i) severance accrued by the
Company in the amount of $2,938,667 which consists of severance payments and
the forgiveness of a loan with the Company and (ii) costs incurred in the
purchase and sale of Mr. Richard's home in the amount of $66,250.
(5) Mr. Richard resigned from the Company in August 1997. See "Employment
Contracts."
STOCK OPTIONS
The Company did not grant any stock options pursuant to the Company's
Option Plan during the fiscal year ended December 31, 1997 to any of the Named
Executive Officers.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options
exercised during the last fiscal year and the unexercised options held as of the
end of the fiscal year under the Company's Option Plan for the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1997(#) DECEMBER 31, 1997($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ratliff....... $ -- $ -- 9,000 -- $240,750 $ --
J-P Richard(3).......... -- -- -- -- -- --
John M. Shumejda........ -- -- -- -- -- --
James M. Seaver......... 9,600 249,600 -- -- -- --
Daniel H. Hazelton...... -- -- -- -- -- --
Chris E. Perkins........ -- -- 14,100 3,000 223,800 43,875
</TABLE>
- ---------------
(1) Based on the difference between the fair market value of the Company's
Common Stock at the date of exercise, less the exercise price.
(2) Based on the market price of the Company's Common Stock on December 31, 1997
($29.25), less the exercise price of "in-the-money" options.
(3) Mr. Richard resigned from the Company in August 1997. See "Employment
Contracts."
EMPLOYMENT CONTRACTS
The Company has entered into employment contracts with Messrs. Ratliff,
Shumejda, Seaver, Hazelton and Perkins. The employment contracts provide for
base salaries at the following rates per annum:
13
<PAGE> 16
Mr. Ratliff -- $1,000,000; Mr. Shumejda -- $400,000; Mr. Seaver -- $300,000; Mr.
Hazelton -- $202,230; and Mr. Perkins -- $200,000. Mr. Ratliff's contract, dated
August 15, 1995, is for an eight year term. See "Compensation of the Chairman of
the Board and Chief Executive Officer" under the heading "Compensation Committee
Report on Executive Compensation" for additional details on Mr. Ratliff's
contract. Mr. Shumejda's contract, dated January 1, 1996, and Mr. Seaver's
contract, dated February 1, 1996, are for a ten year and five year term,
respectively. Mr. Hazelton's and Mr. Perkins's employment contracts are for a
three year term which currently expires in 2000. Mr. Hazelton's and Mr.
Perkins's contracts each contain annual automatic one year extensions unless the
Company gives written notification to the contrary.
With the exception of Mr. Ratliff's contract, in addition to the specified
base salary, the employment contracts provide that each officer shall be
entitled to participate in or receive benefits under the Company's Management
Incentive Compensation Plan. See "Compensation Committee Report on Executive
Compensation." The contracts further provide that each officer will be entitled
to participate in stock incentive plans, employee benefit plans, life insurance
arrangements and any arrangement generally available to senior executive
officers of the Company, including certain fringe benefits. The employment
contracts discussed above provide for the payment of certain benefits in the
event of a change of control (as defined therein) of the Company.
In connection with Mr. Richard's resignation from the Company in August
1997, the Company entered into an agreement whereby Mr. Richard's employment
contract was terminated. The agreement provided for Mr. Richard to receive
severance payments totaling $2,438,667 through the year 2001 and the forgiveness
of a $500,000 loan with the Company. In addition, Common Stock earned by Mr.
Richard under the LTIP will vest under the original terms of the LTIP upon
meeting all other terms of the severance agreement.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed entirely
of non-employee directors. The Compensation Committee is responsible for
developing and making recommendations to the Board with respect to the Company's
compensation plans and policies for the Company's executive officers as well as
the Board of Directors. In carrying out this responsibility, the Compensation
Committee approves the design of all compensation plans applicable to executive
officers and directors, reviews and approves performance goals, establishes
award opportunities, approves incentive award payouts, oversees the ongoing
operation of the various plans and makes recommendations to the Board regarding
certain of these matters. In addition, the Compensation Committee, pursuant to
authority delegated by the Board, determines on an annual basis the base
salaries to be paid to the Chairman of the Board and Chief Executive Officer and
each of the other executive officers as well as directors of the Company. The
Compensation Committee also, in conjunction with the Board, reviews compensation
policies applicable to executive officers as well as directors and considers the
relationship of corporate performance to that compensation. The Compensation
Committee has available to it an outside compensation consultant and access to
independent compensation data.
14
<PAGE> 17
EXECUTIVE OFFICER COMPENSATION POLICIES
The objectives of the Company's executive compensation program are to:
- Support the achievement of desired Company performance.
- Provide compensation that will attract and retain superior talent and
reward performance.
- Align the executive officers' interests with the success of the Company
by placing a portion of compensation at risk with payout being dependent
upon corporate performance and appreciation in the price of the Company's
Common Stock.
Effective January 1, 1994, Section 162(m) of the Internal Revenue Code was
enacted to disallow a corporate deduction for compensation in excess of
$1,000,000 per year per individual paid to the Company's Chief Executive Officer
and the other four most highly compensated officers, unless certain requirements
are met. To the extent compensation is "performance-based", as defined by the
Internal Revenue Code, it is excluded from compensation subject to the
$1,000,000 cap on tax deductibility. The Committee's policy is to design and
administer the Company's executive officer compensation program to comply with
Section 162(m) to the extent such compliance is practicable and in the best
interests of the Company and its stockholders in order to minimize any loss of
tax deductibility.
The executive compensation program provides an overall level of
compensation opportunity that is competitive with companies of comparable size
and complexity. The Compensation Committee will use its discretion to set
executive compensation at a level that, in its judgment, is warranted by
external, internal or individual circumstances.
The Compensation Committee endorses the position that stock ownership by
management and stock-based performance compensation arrangements are beneficial
in aligning management's and stockholders' interests in the enhancement of
stockholder value. The Chairman of the Board and Chief Executive Officer and the
other four most highly compensated officers are relatively substantial
stockholders in the Company and are thus motivated to act on behalf of all
stockholders to optimize overall Company performance.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's Executive Officer Compensation Program is comprised of base
salary, incentive compensation in the form of an annual bonus plan, the stock
option plan, the Company's Long-Term Incentive Plan, and various benefits,
including medical and savings plans which are generally available to employees
of the Company.
Base Salary
Base salaries for the Company's key executive officers are established
under employment contracts. The salaries are reviewed annually and are approved
by the Compensation Committee. In determining base salaries, the Compensation
Committee takes into consideration individual experience and performance as well
as other circumstances particular to the Company. Base salary levels for the
Company's executive officers are comparable to other companies of the same size
and complexity. The Compensation Committee has periodically used information
provided by independent consultants in evaluating base salary levels.
Incentive Compensation
The compensation policy of the Company, which was developed by the
Compensation Committee, is that a substantial portion of the annual compensation
of each officer relates to and must be contingent upon the performance of the
Company, as well as the individual contribution of each officer. As a result,
much of an executive officer's compensation is subject directly to annual bonus
compensation measured against established corporate and individual performance
goals. Under the Company's Management Incentive Compensation Plan (the
"Management Incentive Compensation Plan"), bonuses are paid based on the
executive officer's performance and the performance of the entire Company. The
purpose of the Management Incentive Compensation Plan is to provide a direct
financial incentive in the form of an annual cash bonus for the
15
<PAGE> 18
achievement of corporate and personal objectives. The corporate objectives are
set at the beginning of each year and must comprise at least 50% of the
individual's objectives, with Messrs. Shumejda, Seaver and Perkins' objectives
for the year-ended December 31, 1997 based entirely upon corporate performance.
For the year ended December 31, 1997, the corporate objectives under the
Management Incentive Compensation Plan were based on achieving targets for net
sales, pretax income and operating cash flow. Personal performance objectives
represent specific individual performance criteria agreed upon by the individual
and the Chief Executive Officer. Incentive compensation bonus opportunities are
expressed as percentages of the executive officers' base salaries. Each
executive officer's award was reviewed and approved by the Compensation
Committee. Effective August 15, 1995, pursuant to the terms of Mr. Ratliff's
amended employment contract, Mr. Ratliff's participation in the Management
Incentive Compensation Plan was discontinued.
The incentive compensation under the Management Incentive Compensation Plan
is variable and the Compensation Committee believes it is closely tied to
corporate and individual performance in a manner that encourages continuing
focus on maintaining profitability and building stockholder value.
In addition, special incentive awards can be made based on extraordinary
and unusual achievement as determined by the Compensation Committee. Such awards
are subject to approval by the Board of Directors.
Long-Term Incentive Plan
The Amended and Restated Long-Term Incentive Plan (the "LTIP") is
established as the primary long-term incentive vehicle for senior management.
While other managers and key employees are eligible to receive stock option
grants, participants in the LTIP are not eligible to receive stock options under
the stock option program. The plan is designed to encourage officers and key
employees to seek ways to improve efficiencies, spend capital wisely, reduce
debt and generate cash, all of which should combine to cause stock price
appreciation.
The LTIP provides opportunities for participants to earn shares of the
Company's Common Stock if performance goals (measured solely by the increase in
the price of the Common Stock) and continued employment requirements are met.
The LTIP operates over a five-year performance period. Under the LTIP, each
participant receives a contingent allocation of shares which can be earned
during the specific five-year performance period. The size of the participant's
total share allocation is based on the Compensation Committee's evaluation of
the participant's ability to contribute to the Company's overall performance and
is established to provide a long-term incentive opportunity which is competitive
with the practices of a cross-section of U.S. industrial companies. If the share
allocation is not fully earned during the performance period, any remaining
opportunity is forfeited. The share allocation is earned in increments for each
20% increase in average stock price (with the average calculated over 20
consecutive trading days) over the base price established by the Compensation
Committee. Accordingly, the stock price must double during a five-year period
for the full allocation to be earned. When an increment of the share allocation
is earned, it is awarded in the form of restricted stock which generally carries
a five-year vesting period.
The ultimate value of the restricted stock is determined by the stock price
at the end of the vesting period. During the vesting period, the earned awards
of restricted stock generally are forfeitable upon voluntary termination of
employment prior to age 65 or upon termination of employment by the Company for
"cause" (as defined in the LTIP). Thus, the LTIP requires stock price
appreciation to earn awards; the earned awards are forfeitable over the vesting
period, and the actual value of the award is determined by the stock price at
the end of the vesting period. During the vesting period, participants receive
dividends on their restricted shares and have full voting rights, but they may
not sell, transfer, pledge or otherwise dispose of such shares, provided,
however, that during the vesting period participants may transfer all or any
portion of their restricted shares to a revocable living trust primarily for the
benefit of a participant, an irrevocable trust in which the participant is the
settlor, or a partnership in which the participant is a general partner or a
partnership in which the participant controls the general partner. When the
restricted shares vest, a cash payment designed to satisfy a portion of the
federal and state income tax obligations which are then payable is paid by the
Company to each participant. The tax payment is provided to remove the necessity
for the executive to sell a significant
16
<PAGE> 19
portion of the stock earned under the LTIP to pay taxes. The value of the tax
payments is considered in determining the appropriate size of the participant's
share allocations.
Stock Option Program
The Company maintains the qualified AGCO Corporation 1991 Stock Option Plan
(the "Option Plan") as a long-term incentive for certain directors, key
employees and consultants which do not participate in the LTIP. The objectives
of the Option Plan are similar to those of the LTIP in aligning executive and
stockholder long-term interests by creating a strong and direct link between
executive compensation and stockholder return and enabling executives to develop
and maintain a significant, long-term stock ownership position in the Company's
Common Stock.
The qualified Option Plan authorizes the Compensation Committee to award
stock options to executives and key managers based on outstanding performance
and achievement. Options granted under the plan have an exercise price equal to
100% of the fair market value of the Company's Common Stock on the date of grant
and expire not later than ten years from the date of grant. Each recipient of
such options is entitled to immediately exercise up to 20% of the options issued
to such person and an additional 20% of such options vest in each subsequent
year over each of the next four years. Awards are made at levels believed to be
competitive with companies of comparable size and complexity.
Deferred Compensation Plan
The Company maintains a Deferred Compensation Plan for executive officers.
The Company sets aside for Messrs. Shumejda and Seaver and certain other
executive officers an additional 2 1/2% of each such executive's salary plus
interest on the outstanding balance at 2% above the long-term bond index rate
for each fiscal quarter during the term of the senior executive's employment
agreement. In addition, the Company contributes amounts equal to 3% of the
portion of the executive officer's base salary which exceeds $160,000. The plan
allows all executive officers to defer a portion of their compensation which
will earn interest at 2% above the long-term bond index rate. The individuals
are entitled to receive the total amount of deferred compensation at the earlier
of the end of the term of each of their employment contracts or the termination
of their employment with the Company.
Other Benefits
The Company provides to executive officers medical benefits and retiree
benefits in the form of contributions to a company sponsored 401(k) savings plan
equal to 3% of base salary up to a base salary of $160,000 which is the maximum
amount allowable under the IRS regulations. These benefits are comparable to
those generally available to company employees. The Company also funds life
insurance policies on behalf of its executive officers. The amount funded under
the policies and the amount of insurance provided to the executive is
commensurate with the executive's salary and level of responsibility. In
addition, the Company enables its directors to participate in the Company's
medical plans.
Compensation of the Chairman of the Board and Chief Executive Officer
Mr. Ratliff serves as Chairman of the Board and Chief Executive Officer
under an employment contract dated August 15, 1995, which was approved by the
Compensation and Executive Committees of the Board of Directors. Under the
employment contract, Mr. Ratliff's compensation is principally comprised of a
base salary and restricted stock awards which are tied to stock performance. Mr.
Ratliff's total compensation was evaluated in comparison to a peer group of
companies of similar size, complexity and performance.
The employment contract provides Mr. Ratliff with a base salary of
$1,000,000 per annum. The base salary reflects the discontinuance of Mr.
Ratliff's participation in the Company's Management Incentive Compensation Plan
and recognition of the Company's past performance and growth under Mr. Ratliff's
leadership. During the past three years, the Company has grown substantially and
established itself as one of the largest manufacturers and distributors of
agricultural equipment in the world. In 1997, the Company
17
<PAGE> 20
continued to achieve strong financial results including record levels of net
sales, net income and earnings per share which enhanced stockholder value and
resulted in continued stock price appreciation.
During 1997, Mr. Ratliff earned an award of 50,000 restricted shares of
Common Stock of the Company pursuant to the LTIP. These restricted shares
represented a portion of the 250,000 shares granted under the LTIP by the
Compensation Committee as of July 26, 1995, which can be earned during a
five-year performance period. The restricted shares were earned as a result of
the Company's average common stock price (with the average calculated over 20
consecutive trading days) appreciating 60% over the established base price of
$20.33. The value of such shares on the date such shares are earned is reflected
as a restricted stock award in the Summary Compensation Table on page 12 of this
Proxy Statement. For the remaining shares under the July 1995 grant to be fully
earned by Mr. Ratliff, the stock price must reach an average of $40.67 for a
20-day period. Under the terms of Mr. Ratliff's employment contract, all
restricted shares earned by Mr. Ratliff pursuant to the LTIP became fully vested
when Mr. Ratliff reached age 65 and all future shares earned under the LTIP will
vest immediately.
In 1997, the Company made contributions to a life insurance policy on
behalf of Mr. Ratliff. The value of the benefit related to such policy was
estimated to be $140,279 and is included in the All Other Compensation column in
the Summary Compensation Table on page 12 of this Proxy Statement.
The Compensation Committee believes that the executive officers
compensation program is suited to retaining and rewarding executives who
contribute to the success of the Company in achieving its business objectives
and increasing stockholder value. The Compensation Committee further believes
that the program strikes an appropriate balance among the interests and needs of
the Company, its stockholders and its executives.
Compensation Committee
Richard P. Johnston, Chairman
William H. Fike
Anthony D. Loehnis
Alan S. McDowell
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<PAGE> 21
PERFORMANCE GRAPH
The graph shown below is a line graph presentation of the Company's
cumulative stockholder returns on an indexed basis as compared to the S&P
Mid-Cap 400 Index and the S&P Machinery -- Diversified Index.
COMPARISON OF STOCKHOLDER RETURN*
AMONG AGCO CORPORATION, S&P MID-CAP 400 INDEX AND
S&P MACHINERY -- DIVERSIFIED INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P MACHINERY-
(FISCAL YEAR COVERED) AGCO CORPORATION S&P MID-CAP 400 DIVERSIFIED
<S> <C> <C> <C>
12/92 100 100 100
3/93 148 103 113
6/93 186 106 129
9/93 231 111 138
12/93 326 114 148
3/94 339 110 157
6/94 350 106 140
9/94 479 113 150
12/94 435 110 144
3/95 475 119 159
6/95 538 129 177
9/95 652 142 167
12/95 731 144 178
3/96 689 153 205
6/96 797 157 204
9/96 732 162 219
12/96 822 171 222
3/97 794 169 223
6/97 1033 194 283
9/97 911 225 293
12/97 841 226 283
</TABLE>
- ---------------
* Assumes $100 invested in the Company's Common Stock as of December 31,
1992. Assumes the investment of the same amount as of December 31, 1992 for the
S&P Mid-Cap 400 Index and the S&P Machinery -- Diversified Index. Total return
includes reinvestment of dividends. Returns for the Company are not necessarily
indicative of future performance.
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<PAGE> 22
EXECUTIVE OFFICERS
The following table sets forth information as of March 10, 1998 with
respect to each person who is an executive officer of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Robert J. Ratliff.................................. 66 Chairman and Chief Executive Officer
John M. Shumejda................................... 52 President and Chief Operating Officer
James M. Seaver.................................... 52 Executive Vice President, Sales and
Marketing
Norman L. Boyd..................................... 54 Vice President -- Europe/Middle East/Africa
Distribution
Judith A. Czelusniak............................... 40 Vice President -- Corporate Relations
Larry W. Gutekunst................................. 60 Vice President -- Worldwide Engineering
Daniel H. Hazelton................................. 59 Vice President -- Worldwide Parts
Aaron D. Jones..................................... 52 Vice President -- Manufacturing and
Technology
Stephen D. Lupton.................................. 53 Vice President -- Legal Services,
International
John G. Murdoch.................................... 52 Vice President -- North America Distribution
William A. Nix III................................. 46 Vice President -- Treasurer
Chris E. Perkins................................... 35 Vice President and Chief Financial Officer
Bruce W. Plagman................................... 46 Vice President -- North America Sales
Dexter E. Schaible................................. 48 Vice President -- Worldwide Product
Development
Patrick S. Shannon................................. 35 Vice President -- Corporate Finance
Michael F. Swick................................... 52 Vice President and General Counsel
Edward R. Swingle.................................. 56 Vice President -- Parts, North America
</TABLE>
For a description of Messrs. Ratliff's business experience, see "Election
of Directors."
John M. Shumejda has been President and Chief Operating Officer for the
Company since January 1998. He served as Executive Vice President, Technology
and Manufacturing for the Company from February 1997 to August 1997. Mr.
Shumejda was President, Corporate Operations and Technology for the Company from
August 1996 to February 1997, Executive Vice President, Technology and
Development from January 1996 to August 1996, Executive Vice President and Chief
Operating Officer from January 1993 to January 1996, Senior Vice
President -- Operations from October 1991 to January 1993, Senior Vice
President -- Combine Operations from May 1991 to October 1991 and Vice
President -- Combine Operations from June 1990 to May 1991.
James M. Seaver has been Executive Vice President, Sales and Marketing for
the Company since February 1997. Mr. Seaver was President, Corporate Sales and
Marketing for the Company from August 1996 to February 1997, Executive Vice
President, Sales and Marketing from January 1996 to August 1996, Senior Vice
President -- Sales and Marketing, Americas from February 1995 to January 1996,
Vice President -- Sales, Americas from May 1993 to February 1995, Vice President
Dealer Operations from January 1993 to May 1993, Vice President -- Financial
Services from January 1992 to January 1993, Vice President -- Parts Division
from October 1991 to December 1991, Vice President -- Sales from June 1991 to
October 1991 and Vice President -- Marketing from June 1990 to June 1991.
Norman L. Boyd has been Vice President -- Europe/Middle East/Africa
Distribution for the Company since February 1997. Mr. Boyd was Vice
President -- Marketing, Americas for the Company from February 1995 to February
1997 and Manager -- Dealer Operations from January 1993 to February 1995. From
January 1990 to January 1993, Mr. Boyd was a Business Unit General Manager with
Massey Ferguson.
Judith A. Czelusniak has been Vice President -- Corporate Relations for the
Company since November 1994. From March 1993 to November 1994, Ms. Czelusniak
managed AGCO's external communications on a
20
<PAGE> 23
contract basis while she was a Principal at The Dilenschneider Group, a public
relations consulting company. From 1991 to 1993, Ms. Czelusniak was Vice
President and Director of the Corporate Communications Group at Morgen-Walke
Associates, an investor relations firm based in New York. From 1989 to 1991, Ms.
Czelusniak was a Vice President for Hill and Knowlton, Inc.
Larry W. Gutekunst has been Vice President -- Worldwide Engineering for the
Company since February 1997. Mr. Gutekunst was Vice President -- Engineering for
the Company from October 1995 to February 1997, Director -- Engineering,
Americas from January 1994 to October 1995 and Director, Product Operations,
Independence Plant from February 1993 to January 1994. Mr. Gutekunst held
various engineering positions with the Company from June 1990 to February 1993.
Daniel H. Hazelton has been Vice President -- Worldwide Parts for the
Company since September 1997. He served as Vice President -- Sales, North
America for the Company from February to September 1997. Mr. Hazelton was Vice
President -- Sales, Americas for the Company from February 1995 to February 1997
and Vice President -- Parts from January 1992 to February 1995.
Aaron D. Jones has been Vice President -- Manufacturing and Technology for
the Company since March 1998. Mr. Jones was Vice President -- Global
Manufacturing/Purchasing from February 1997 to March 1998, Vice
President -- Manufacturing, International from March 1995 to October 1995 and
Director of Manufacturing, International from June 1994 to March 1995. From
April 1988 to June 1994, Mr. Jones was Managing Director of Massey Ferguson
Tractors Limited, a subsidiary of Massey Ferguson.
Steven D. Lupton has been Vice President -- Legal Services, International
since October 1995 and Director -- Legal Services, International from June 1994
to September 1995. Mr. Lupton was Director of Legal Services of Massey Ferguson
from February 1990 to June 1994.
John G. Murdoch has been Vice President -- North America Distribution for
the Company since February 1997. Mr. Murdoch was Vice President -- Sales and
Marketing, Europe/Middle East/Africa for the Company from October 1995 to
February 1997, Vice President -- Sales and Marketing, International from June
1994 to October 1995 and Vice President -- Massey Ferguson Operations from
January 1993 to June 1994. From 1965 to 1993, Mr. Murdoch held various positions
with Massey Ferguson, most recently as Vice President -- Sales.
William A. Nix III has been Vice President -- Treasurer for the Company
since October 1995. Mr. Nix was Director of Corporate Finance at Caraustar
Industries from September 1990 to October 1995 and was a senior manager with the
accounting firm of Arthur Andersen LLP, where he had been employed from
September 1979 to September 1990.
Chris E. Perkins has been Vice President and Chief Financial Officer for
the Company since January 1996, Vice President -- Finance and Administration,
International from February 1995 to December 1995, Director of Finance and
Administration, International from June 1994 to February 1995, Manager --
Corporate Development from August 1993 to June 1994 and Manager -- Financial and
Operational Controls from August 1992 to August 1993. Prior to joining the
Company, Mr. Perkins was a manager in the accounting firm of Arthur Andersen
LLP, where he had been employed since 1986.
Bruce W. Plagman has been Vice President -- North America Sales for the
Company since September 1997. He served as Vice President, General
Manager -- North America Operations for the Company from February to September
1997. Mr. Plagman was Vice President -- Parts, Europe/Middle East/Africa for the
Company from February 1995 to February 1997, Director of Parts, International
from June 1994 to February 1995, and Manager -- Massey Ferguson Parts Operations
from January 1993 to June 1994. From 1991 to 1993, Mr. Plagman was Director of
the Massey Ferguson Parts Company in North America.
Dexter E. Schaible has been Vice President -- Worldwide Product Development
for the Company since February 1997. Mr. Schaible was Vice President -- Product
Development for the Company from October 1995 to February 1997,
Director -- Product Development from September 1993 to October 1995 and Product
Marketing Manager from August 1991 to September 1993. Prior to joining the
Company, Mr. Schaible was Product Marketing Manager for Hesston Corporation
since 1979.
21
<PAGE> 24
Patrick S. Shannon has been Vice President -- Corporate Finance since
January 1998. Mr. Shannon served as Vice President -- Director of Finance,
International for the Company from January 1996 to January 1998, Vice President
and Controller from February 1995 to December 1995, Controller from June 1993 to
February 1995 and Assistant Controller from December 1991 to June 1993. Prior to
joining the Company, Mr. Shannon was a senior accountant with the accounting
firm of Arthur Andersen LLP, where he had been employed since 1987.
Michael F. Swick has been Vice President and General Counsel for the
Company since December 1991 and General Counsel since December 1990. Prior to
joining the Company, Mr. Swick was a partner with the law firm of Drew, Eckl &
Farnham.
Edward R. Swingle has been Vice President -- Parts, North America for the
Company since July 1996. Mr. Swingle was Vice President -- Parts, Americas for
the Company from February 1995 to July 1996, Vice President -- Marketing from
May 1993 to February 1995, Vice President -- Sales from October 1991 until May
1993, and Vice President -- Parts from January 1990 to October 1991.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At March 10, 1998, the Company had loans outstanding in excess of $60,000
bearing interest at 6% to the following executive officers: Robert J.
Ratliff -- $90,000; John M. Shumejda -- $118,191; Norman L. Boyd -- $175,239;
and Judith A. Czelusniak -- $220,605. The proceeds of the loans were used
primarily to exercise stock options.
In 1998, the Company purchased $404,000 of office furniture from Haworth,
Inc. Mr. Johanneson, a director of the Company, is President and Chief Executive
Officer of Haworth, Inc.
The Company has an agreement to source certain engines for use in the
Company's Brazilian production from Iochpe-Maxion, S.A. Dr. Sauer, a director
the Company, is also a director of Iochpe-Maxion S.A.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission and the New York Stock Exchange, Inc. initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Such persons are required by the Commission to
furnish the Company with copies of all Section 16(a) forms that are filed.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, for the fiscal year ended December 31, 1997, all Section
16(a) filing requirements applicable to its directors, executive officers and
greater than ten-percent beneficial owners were properly filed except that the
Company on behalf of Messrs. Johnston, McDowell and Robinson inadvertently filed
late Form 4's on four separate transactions for each individual in 1995. Each
filing involved shares earned under the Director Plan where the Company did not
file until the shares were actually issued as opposed to when the shares were
earned.
ANNUAL REPORT TO STOCKHOLDERS
The Company's 1997 Annual Report to Stockholders is being furnished with
this proxy material to stockholders of record as of March 3, 1998.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE 1997 FISCAL
YEAR, INCLUDING THE FINANCIAL STATEMENTS AND
22
<PAGE> 25
SCHEDULES THERETO, ON THE WRITTEN REQUEST OF THE BENEFICIAL OWNER OF ANY SHARES
OF ITS COMMON STOCK ON MARCH 3, 1998, PROVIDED THAT SUCH REQUEST SETS FORTH A
GOOD FAITH REPRESENTATION THAT, AS OF SUCH DATE, THE PERSON MAKING THE REQUEST
WAS A BENEFICIAL OWNER OF COMMON STOCK OF THE COMPANY. THE WRITTEN REQUEST
SHOULD BE DIRECTED TO: CORPORATE SECRETARY, AGCO CORPORATION, 4205 RIVER GREEN
PARKWAY, DULUTH, GEORGIA 30096.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, a firm of independent public accountants, has been
appointed the Company's independent public accountants for the year 1998. The
appointment of auditors is approved annually by the Board of Directors. The
decision of the Board is based on the recommendation of the Audit Committee.
A representative of Arthur Andersen LLP is expected to attend the Annual
Meeting and will have the opportunity to make a statement if he or she desires
to do so. The representative will also be available to respond to appropriate
questions from stockholders.
STOCKHOLDERS' PROPOSALS
Any stockholder of the Company who wishes to present a proposal at the 1999
annual meeting of stockholders of the Company, and who wishes to have such
proposal included in the Company's proxy statement and form of proxy for that
meeting, must deliver a copy of such proposal to the Company at its principal
executive offices at 4205 River Green Parkway, Duluth, Georgia 30096, Attention:
Corporate Secretary, no later than December 1, 1998; however, if next year's
annual meeting of stockholders is held on a date more than 30 days before or
after the corresponding date of the 1998 Annual Meeting, any stockholder who
wishes to have a proposal included in the Company's proxy statement for that
meeting must deliver a copy of the proposal to the Company at a reasonable time
before the proxy solicitation is made. The Company reserves the right to decline
to include in the Company's proxy statement any stockholder's proposal which
does not comply with the rules of the Securities and Exchange Commission for
inclusion therein.
23
<PAGE> 26
(AGCO LOGO)
<PAGE> 27
APPENDIX
PROXY AGCO CORPORATION
4205 RIVER GREEN PARKWAY
DULUTH, GEORGIA 30096
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 29, 1998
The undersigned hereby appoints Chris E. Perkins, Michael F. Swick and
Andrew H. Beck, and each of them, proxies with full power of substitution, to
represent and to vote as set forth herein all the shares of Common Stock of AGCO
Corporation held of record by the undersigned on March 3, 1998 at the Annual
Meeting of Stockholders of AGCO Corporation to be held at the offices of the
Company, 4205 River Green Parkway, Duluth, Georgia 30096, at 9:00 a.m., local
time, on Wednesday, April 29, 1998, and any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF ALL NOMINEES AND "FOR" PROPOSAL 2 BELOW.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary) nominees listed below
</TABLE>
Nominees: William H. Fike, Gerald B. Johanneson, Alan S. McDowell and Robert J.
Ratliff
INSTRUCTIONS : To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.
- --------------------------------------------------------------------------------
2. APPROVE THE AMENDMENT TO THE AGCO CORPORATION 1991 STOCK OPTION PLAN, AS
AMENDED.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on reverse side)
(continued from other side)
3. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
--------------------------------
Signatures
--------------------------------
Signature, if held jointly
Dated:
--------------------------
NOTE: PLEASE SIGN ABOVE EXACTLY
AS NAME APPEARS ON STOCK
CERTIFICATE. IF STOCK IS HELD IN
THE NAME OF TWO OR MORE PERSONS,
ALL MUST SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
