<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 26, 2000
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 26, 2000, at 9:00 a.m., local time, for the following purposes:
1. To elect two directors to serve for the ensuing three years or
until their successors have been duly elected and qualified;
2. To approve certain amendments to the AGCO Corporation Amended and
Restated Long-Term Incentive Plan; 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 6, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting. During the period from April 16, 2000 until the annual
meeting, a list of stockholders as of the close of business on March 6, 2000
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 of the Board
Atlanta, Georgia
March 30, 2000
<PAGE> 3
AGCO CORPORATION
------------------------------------
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2000
------------------------------------
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 the proposal on the proxy card and your shares
will be voted accordingly. If you indicate a preference to abstain on the
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 $25,000.
This proxy statement and form of proxy are first being sent to stockholders
on or about March 30, 2000. The Company's 1999 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 6, 2000
will be entitled to notice of and to vote at the annual meeting to be held on
April 26, 2000 (the "Annual Meeting"). On March 6, 2000, the Company had
outstanding 59,587,761 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 matters and
voting instructions have not been received from the beneficial owner (a "broker
non-vote"). With
<PAGE> 4
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 nine, which will be reduced to seven upon the resignation of
Messrs. Fike and Robinson as of April 26, 2000. 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 two directors to serve as Class II directors. The Governance Committee has
recommended, and the Board of Directors has nominated, the two individuals named
below to serve as Class II directors until the annual meeting in 2003 or until
their successors have been duly elected and qualified.
The following is a brief description of the business experience of each
nominee.
HENRY J. CLAYCAMP, age 69, has been a Director of the Company since June
1990. Mr. Claycamp has been President of MOSAIX Associates management consulting
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.
WOLFGANG SAUER, age 70, has been a Director of the Company since May 1997.
Dr. Sauer has been a 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 Volkswagen for their operations in Argentina and Brazil and
served as President and Chief Executive Officer of the Ford-Volkswagen
joint-venture, Autolatina, in such countries from March 1987 to November 1990.
In February 1998, Dr. Sauer was designated Ambassador Extraordinary and
Plenipotentiary of the Sovereign Military Order of Malta for Brazil.
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.
2
<PAGE> 5
The two 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.
DIRECTORS CONTINUING IN OFFICE
The five individuals named below are now serving as Directors of the
Company with terms expiring at the annual meetings in 2001 and 2002, as
indicated.
Directors who are continuing in office as Class III Directors whose terms
expire at the annual meeting in 2001 are listed below.
GERALD B. JOHANNESON, age 59, 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.
ROBERT J. RATLIFF, age 68, has been Chairman of the Board of Directors
since August 1993, and a Director since June 1990. Mr. Ratliff previously served
as Chief Executive Officer of the Company from January 1996 until November 1996
and from August 1997 to February 1999 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.
Directors who are continuing in office as Class I Directors whose terms
expire at the annual meeting in 2002 are listed below:
ANTHONY D. LOEHNIS, age 64, has been a Director of the Company since July
1997. Mr. Loehnis has been a director of St. James's Place Capital plc since
July 1993 and its J. Rothschild Assurance plc subsidiary since February 1993.
Mr. Loehnis also serves as Non-Executive Director of Tokyo-Mitsubishi
International plc and Alpha Bank London Limited. Mr. Loehnis is Non-Executive
Chairman of Henderson Japanese Smaller Companies Trust plc and the Knox D'Arcy
Trust plc. Previously, from 1989 to 1992, Mr. Loehnis was a director of S. G.
Warburg Group plc, and, from 1981 to 1989, Mr. Loehnis was Executive Director of
the Bank of England in charge of international affairs.
JOHN M. SHUMEJDA, age 54, has been a Director of the Company since February
1999. He has been Chief Executive Officer and President for the Company since
February 1999. He served as President and Chief Operating Officer for the
Company from January 1998 to February 1999 and Executive Vice President,
Technology and Manufacturing from February 1997 to January 1998. Mr. Shumejda
was President, Corporate Operations and Technology from August 1996 to February
1997, Executive Vice President, Technology and Development from January 1996 to
August 1996 and Executive Vice President and Chief Operating Officer from
January 1993 to January 1996.
WOLFGANG DEML, age 54, has been a Director of the Company since March 1999.
Since July 1991, Mr. Deml has been President and Chief Executive Officer of
BayWa Corporation, a trading and services company located in Munich, Germany.
Mr. Deml is also currently Vice President of the German Raiffeisen Organization;
Executive Officer of the Austrian Raiffeisen Organization; a member of the
Supervisory Board of MAN Nutzfahrzeuge AG; a member of the Advisory Committee of
Allianz AG; a member of the Supervisory Board of VK Muhlen AG; a member of the
Supervisory Board of the Landwirtschaftliche Rentenbank Frankfurt; and a member
of the Supervisory Board of Raiffeisen Ware Austria.
WILLIAM A. FIKE, currently a Class III Director, and HAMILTON ROBINSON,
JR., currently a Class I Director, have notified the Company that they will
retire and resign from the Board of Directors effective April 26, 2000. The
Company intends to fill these vacancies in the near future.
3
<PAGE> 6
BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
During 1999, the Board of Directors held nine 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 in lieu of the retainer fee of
$50,000 as compensation for serving as Chairman of the Executive Committee of
the Board and an annual fee of $120,000 for serving as a marketing consultant to
the Company. 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 1997 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 a director departs 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 6, 2000, Messrs. Claycamp, Fike, Johanneson and Robinson had
earned 5,000 shares and Messrs. Deml, Loehnis and Sauer had earned 1,500 shares
under the Director Plan.
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 no
meetings in 1999 and is currently composed of Messrs. Claycamp, Loehnis,
Johanneson, Ratliff, Sauer and Shumejda.
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 1999 and is
currently composed of Messrs. Deml, Loehnis 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
executive officer and other key executives, compensation levels or plans
affecting the compensation of the
4
<PAGE> 7
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 ten
meetings in 1999 and is currently composed of Messrs. Deml, Johanneson and
Loehnis.
The Governance Committee plays a central role in planning the size and
composition of the Board of Directors, developing criteria and implementing
the process of identifying, screening and nominating candidates for
election to the Board, evaluating Board performance and recommending action
to improve corporate governance. The Governance 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
Governance Committee held four meetings in 1999 and is currently composed
of Messrs. Claycamp, Deml, Loehnis 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 seven meetings in 1999 and is currently composed of
Messrs. Claycamp, Johanneson, Ratliff, Sauer and Shumejda.
During fiscal 1999, 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, Messrs. Deml, Fike, Johanneson, Loehnis and Robinson
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 1999.
PROPOSAL NUMBER 2
AMENDMENT OF THE AGCO CORPORATION AMENDED AND
RESTATED LONG-TERM INCENTIVE PLAN ("LTIP")
On April 27, 1994, the stockholders approved the LTIP, effective December
14, 1993, to be the primary long-term incentive vehicle for senior management.
On April 23, 1997, the stockholders approved certain amendments to the LTIP. The
LTIP is designed to advance the interests of the Company and strengthen the
Company's long-term financial performance by encouraging senior management to
seek ways to improve efficiencies, spend capital wisely, reduce debt and
generate cash, all of which should combine to cause stock price appreciation.
Executive officers and senior managers of the Company and its subsidiaries
(currently 18 persons), are eligible to receive awards of restricted stock under
the LTIP.
5
<PAGE> 8
The following table summarizes the shares which have been granted under the
LTIP for the years ended December 31, 1997, 1998 and 1999.
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Shares awarded but not earned at January 1.................. 927,500 965,000 1,597,500
Shares awarded, net of forfeitures.......................... 133,500 (37,500) (270,000)
Shares earned............................................... (15,000) -- (362,500)
--------- --------- ---------
Shares awarded but not earned at December 31................ 1,046,000 927,500 965,000
Shares available for grant.................................. 1,234,000 1,367,500 1,330,000
--------- --------- ---------
Total shares reserved............................. 2,280,000 2,295,000 2,295,000
========= ========= =========
Shares vested............................................... 441,166 375,833 194,000
========= ========= =========
</TABLE>
Currently, the Board of Directors in its sole discretion may modify or
amend the LTIP without the approval of the stockholders. However, any amendments
to the LTIP must still comply with the applicable requirements, if any, of the
Internal Revenue Code and ERISA and the rules of the NYSE and not cause the
shares awarded under the LTIP to fail to be treated as qualified
performance-based compensation under applicable Treasury Regulations. Most
significantly, under current NYSE rules and applicable Treasury Regulations, an
amendment to the LTIP which increases the number of shares authorized for
issuance under the LTIP requires the approval of the Company's stockholders.
The Board of Directors has approved and recommends that the stockholders
approve amendments to the LTIP to
- increase the number of shares of Common Stock authorized for issuance
under the LTIP by 1,250,000 shares,
- extend the termination date of the LTIP until December 31, 2009 from its
current termination date of December 14, 2003, and
- modify the restrictions on shares earned under the LTIP.
Currently, 4,750,000 shares may be granted under the LTIP. To date,
3,516,000 shares have been awarded under the LTIP, 2,470,000 of which have been
earned by plan participants. Consequently, 2,280,000 shares are reserved for
issuance under the LTIP, of which 1,046,000 are currently outstanding as
unearned awards. The proposed amendments would increase the number of shares
reserved for issuance from 2,280,000 to 3,530,000 and enable the Company to
award an additional 2,484,000 shares of Common Stock pursuant to the LTIP.
The proposed amendments would also modify the restrictions on shares earned
under the LTIP. Currently, shares earned under the LTIP vest over a five-year
period where one-third of the shares vest on each of the third, fourth and fifth
anniversary of the earning of the shares. The proposed amendment would replace
the vesting period with a non-transferability period for all future grants under
the LTIP. During the non-transferability period, participants will be restricted
from selling, assigning, transferring, pledging or otherwise disposing of any
earned shares, but earned shares are not subject to forfeiture. The non-
transferability period will match the former vesting schedule for participants
who earned shares and who remain employees of the Company and will add two years
to the non-transferability period for participants who earned shares while
employed with the Company but who no longer are employees. The Company is
modifying the restrictions on shares earned under the LTIP to more closely match
the accounting recognition of compensation expense by the Company with the
achievement of increases in the Company's stock price. Under the LTIP as
currently in effect, compensation expense related to earned shares and the cash
bonus awards are amortized over the five-year vesting schedule. The proposed
amendments would allow the Company to record the entire compensation expense
associated with an earned award at the time the shares are earned. In addition,
under the proposed amendment, the restriction period on earned shares under the
LTIP does not change, but earned shares will no longer be subject to forfeiture.
6
<PAGE> 9
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 amendments to the LTIP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL TO AMEND THE LTIP.
In February 2000, the Compensation Committee of the Board approved a grant,
subject to stockholder approval of the amendments to the LTIP, of 1,605,000
shares which include 1,425,000 shares to executive officers and 180,000 shares
to senior managers who are not executive officers. No awards were made to
directors who are not executive officers. The following table sets forth certain
information about these awards to be granted to Robert J. Ratliff, who served as
Chairman and Chief Executive Officer until February 1999 and as Chairman
thereafter, and the four other most highly compensated executive officers of the
Company during 1999, all executive officers as a group and all non-executive
senior managers as a group.
<TABLE>
<CAPTION>
SHARES
NAME AND PRINCIPAL POSITION AWARDED(1)
- --------------------------- ----------
<S> <C>
Robert J. Ratliff........................................... 200,000
Executive Chairman of the Board
John M. Shumejda............................................ 250,000
President and Chief Executive Officer
James M. Seaver............................................. 50,000
Chief Executive Officer, AGCO Finance
Edward R. Swingle........................................... 150,000
Senior Vice President, Sales and Marketing,
North and South America
Chris E. Perkins............................................ 100,000
Vice President, Worldwide Parts
All executive officers as a group........................... 1,425,000
All non-executive senior managers as a group................ 180,000
</TABLE>
- ---------------
(1) These shares may be earned in increments during a five-year performance
period for each 20% increase in the Company's average stock price (based on
the average closing price over 20 consecutive trading days) over the base
price of $11.875.
The material features of the LTIP, assuming approval of the amendments, are
outlined below. The LTIP, as amended, will govern all future grants of awards. A
copy of the LTIP as amended by the proposed amendments is included in this Proxy
Statement as Appendix A.
ADMINISTRATION
The LTIP is administered by the Compensation Committee of the Board of
Directors of the Company consisting of not less than three members of the Board
of Directors. All members of the Compensation Committee are required to be
"non-employee directors" as defined in Rule 16b-3 and "outside directors" within
the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code. The
Compensation Committee selects the participants and determines (i) when to grant
a restricted stock award and (ii) the base price and the amount of Common Stock
subject to each restricted stock award.
SHARES SUBJECT TO THE PLAN
The stock subject to the LTIP may be unissued shares of Common Stock or
shares of issued Common Stock held in the Company's treasury, or both. No
individual may receive awards for over 1,000,000 shares of Common Stock over the
life of the LTIP.
7
<PAGE> 10
GRANTS OF AWARDS
The LTIP provides opportunities for participants to earn shares of the
Company's Common Stock if performance goals and continued employment
requirements are met. The LTIP operates over a five-year performance period.
Under the LTIP, each participant is granted a contingent allocation of shares
which can be earned during the five-year performance period. The size of the
participant's total share allocation is established to provide a long-term
incentive opportunity which is competitive with the practices of a cross-
section of U.S. industrial companies.
The LTIP requires stock appreciation to earn awards. The share allocation
is earned in increments for each 20% increase in the average stock price (with
the average calculated over 20 consecutive trading days) over the base price set
by the Compensation Committee. Accordingly, the stock price must double during a
five-year performance period for the full allocation to be earned. If the share
allocation is not fully earned during the performance period, any unearned
shares are forfeited. In order to earn any increment of an award, the
participant must continue to be employed by the Company or a participating
subsidiary, through the date on which the applicable stock price increase (for
the required twenty day period) is achieved. Upon termination of a participant's
employment for any reason, such participant's opportunity to earn any increment
of an award, which is unearned as of the date of termination, is forfeited.
When an increment of the share allocation is earned, it is awarded in the
form of shares of restricted stock which carry a restriction period. During this
restriction period, the participant may not sell, assign, transfer, pledge or
otherwise dispose of or encumber such earned shares. The transfer restrictions
on the earned shares lapse with respect to one-third of the number of restricted
shares on each of the third, fourth and fifth anniversary of the date the shares
were earned. However, if the participant's employment with the Company is
terminated for any reason, other than death, disability or retirement, then the
restriction period is revised such that the transfer restrictions on the earned
shares lapse in one-third increments on each of the fifth, sixth and seventh
anniversaries of the applicable earned date. During the restriction period,
participants shall receive dividends on their earned shares and have voting
rights with respect to their earned shares.
The LTIP is structured to ensure that stockholders will realize a
significant return on their investment before participants realize any financial
gain from the awards.
CASH BONUS AWARDS
When shares of restricted stock are earned, a cash payment designed to
satisfy a portion of the federal and state income tax obligations of the
participant is made by the Company to the participant. The cash payment is to be
an amount equal to 40% of the market value of the earned shares on the date the
stock award is earned. The payment is provided to remove the necessity for the
executive to sell a significant 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 participants' share allocations.
ADJUSTMENTS
The Compensation Committee may adjust the number of shares of Common Stock
under the LTIP at any time to reflect any change in the outstanding shares of
Common Stock through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or other like change in capital structure of the
Company. With respect to outstanding awards, such adjustment shall be made such
that the participant shall be made whole and suffer no dilution as a result of
any change.
CHANGE OF CONTROL
In the event of a Change of Control (as defined in the LTIP), the Company
will require any successor to fulfill the terms and conditions of the LTIP in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. Further, effective with the
Change in Control, the restrictions on sales of earned shares will immediately
lapse and be of no further force or effect.
8
<PAGE> 11
TERMINATION AND AMENDMENT
Unless sooner terminated by the Board of Directors, the LTIP will terminate
on December 31, 2009. The termination or any amendment of the LTIP may not
impair or adversely affect the rights of holders of outstanding awards, without
the consent of the participants. If the proposed amendments to the LTIP are
approved by the stockholders, the Board of Directors will be able to amend the
LTIP 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 LTIP to fail to be treated as
qualified performance-based compensation under applicable Treasury Regulations.
TRANSFER RESTRICTIONS
An employee shall have no right to sell, assign, transfer, pledge or
otherwise dispose of or encumber any interest in any right to receive shares of
common stock granted under the LTIP except by will or the laws of descent and
distribution. Furthermore, with respect to earned shares, a participant may
dispose of such shares only in accordance with the applicable restriction
period, as described above. A participant under the LTIP shall, however, have
the right to transfer all or any portion of his earned shares to any of the
following: a revocable living trust primarily for the benefit of the
participant, an irrevocable trust in which the participant is the settlor, a
partnership in which the participant is a general partner or a partnership in
which the participant controls the general partner.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
associated with awards granted under the LTIP. This summary is based on the
provisions of the Internal Revenue Code, the Treasury regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all as in
effect as of the date hereof. It does not describe all federal income tax
consequences under the LTIP, nor does it describe state or local tax
consequences.
Restricted Stock Awards. An individual receiving an award under the LTIP
does not recognize taxable income on the date of grant of the contingent award.
However, the individual must generally recognize ordinary income at the time the
award is earned based upon the fair market value of the Common Stock on the date
the award is earned. 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. The Company
generally will be entitled to a deduction at the same time and in the same
amount as the taxable income recognized by the individual when the restricted
stock award is earned.
Cash Bonus Awards. An individual receiving a cash bonus award under the
LTIP must recognize ordinary income upon receipt of the award. The cash bonus
award is deductible by the Company in the year that the income is recognized by
the individual.
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. 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.
9
<PAGE> 12
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth certain information as of March 6, 2000
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
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
------------------- ------------- ----------
<S> <C> <C>
Franklin Resources, Inc.(2)................................. 7,593,500 12.7%
777 Mariners Island Boulevard
San Mateo, California 94404
Mellon Financial Corporation(3)............................. 3,692,243 6.2
One Mellon Center
Pittsburgh, Pennsylvania 15258
Forstmann-Leff Associates, LLC(4)........................... 3,233,674 5.4
590 Madison Avenue
New York, New York 10022
</TABLE>
- ---------------
(1) Based on 59,587,761 shares of Common Stock outstanding on March 6, 2000.
(2) Based on the Schedule 13G filed on January 18, 2000 by Franklin Resources,
Inc. ("FRI"), Templeton Global Advisors Limited, an investment adviser and
subsidiary of FRI, Mr. Charles B. Johnson, a principal shareholder of FRI,
and Rupert H. Johnson, Jr., a principal shareholders of FRI. Represents the
total number of shares held as of December 31, 1999 by FRI and its
affiliates as set forth in the Schedule 13G.
(3) Based on the Schedule 13G filed on January 27, 2000 by Mellon Financial
Corporation ("MFC"). Represents the total number of shares held as of
December 31, 1999 by MFC and its affiliates as set forth in the Schedule
13G.
(4) Based on the Schedule 13G filed on February 11, 2000 by Forstmann-Leff
Associates, LLC ("FLA"), an investment adviser, FLA Asset Management, LLC,
an investment adviser and subsidiary of FLA, FLA Advisers LLC, an investment
adviser whose managing members constitute a majority of the executive
committee of the board of managers of FLA, and Stamford Advisers, LLC, an
investment advisor and indirect subsidiary of FLA. Represents the total
number of shares held as of December 31, 1999 by FLA and its affiliates as
set forth in the Schedule 13G.
10
<PAGE> 13
The following table sets forth certain information as of March 6, 2000 with
respect to the beneficial ownership of the Company's Common Stock by the
Company's directors, the Executive Chairman of the Board of the Company during
1999 and the other four most highly compensated executive officers of the
Company during such period 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)........................................ 791,952 1.3%
Henry J. Claycamp........................................... 22,548 *
Wolfgang Deml............................................... 1,500 *
William H. Fike............................................. 10,000 *
Gerald B. Johanneson........................................ 10,000 *
Anthony Loehnis............................................. 4,500 *
Hamilton Robinson(6)........................................ 10,904 *
Wolfgang Sauer.............................................. 1,500 *
John M. Shumejda............................................ 362,093 *
James M. Seaver............................................. 225,013 *
Edward R. Swingle........................................... 186,728 *
Chris E. Perkins............................................ 55,100 *
All executive officers and directors as a group (18
persons).................................................. 1,914,853 3.2%
</TABLE>
- ---------------
* Less than one percent.
(1) Includes shares which may be purchased upon exercise of options which are
exercisable as of March 6, 2000 or become exercisable within 60 days
thereafter, for the following individuals: Mr. Ratliff -- 9,000; Mr.
Fike -- 4,000; Mr. Johanneson -- 5,000; Mr. Perkins -- 17,100; executive
officers and directors as a group -- 82,155.
(2) Includes the following numbers of unvested restricted shares of the
Company's Common Stock earned under the Long-Term Incentive Plan by the
following individuals: Mr. Shumejda -- 128,917; Mr. Seaver 90,833; Mr.
Swingle -- 54,167; Mr. Perkins -- 26,667; all executive officers and
directors as a group -- 429,750.
(3) Includes the following numbers of restricted shares of the Company's Common
Stock earned under the Director Plan by the following individuals: Mr.
Claycamp -- 3,000; Mr. Deml -- 1,500; Mr. Fike -- 3,000; Mr.
Johanneson -- 3,000; Mr. Loehnis -- 1,500; Mr. Robinson -- 3,000; Dr.
Sauer -- 1,500; all executive officers and directors as a group -- 16,500.
(4) Any securities not outstanding which are subject to options which are
exercisable as of March 8, 2000 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
59,587,761 shares of Common Stock outstanding on March 6, 2000.
(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 568,360 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 500 shares of Common Stock owned by Mr. Robinson's wife as to which
Mr. Robinson disclaims beneficial ownership.
11
<PAGE> 14
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 1999, 1998
and 1997, the cash and noncash compensation paid to or earned by Robert J.
Ratliff, who served as Chairman and Chief Executive Officer until February 1999
and as Chairman thereafter, and the four other most highly compensated executive
officers of the Company during 1999 (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ ------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND BONUS COMPENSATION STOCK AWARDS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($)(1) ($)(2) ($)(3) ($)($)
------------------ ---- ---------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ratliff -- 1999 $1,000,000 $ -- $ 12,500 $ -- $ 19,243
Executive Chairman of 1998 1,000,000 -- -- -- 255,957
the Board 1997 1,000,000 -- 1,052,088 1,731,250 171,515
John M. Shumejda -- 1999 486,036 -- 942,440 -- 94,070
President and Chief 1998 395,842 88,273 848,484 -- 159,393
Executive Officer 1997 350,000 292,613 274,491 1,592,750 131,246
James M. Seaver -- 1999 324,300 -- 562,225 -- 72,040
Chief Executive Officer, 1998 322,500 71,918 441,002 -- 102,982
AGCO Finance 1997 297,917 249,059 144,469 1,315,750 86,601
Edward R. Swingle -- 1999 258,154 -- 456,131 -- 38,031
Senior Vice President, 1998 213,786 42,223 438,643 -- 42,563
Sales and Marketing, 1997 190,469 67,807 201,904 554,000 31,461
North and South America
Chris E. Perkins -- 1999 224,000 -- 78,387 -- 11,363
Vice President, 1998 212,000 47,276 27,067 -- 17,577
Worldwide Parts 1997 183,333 153,266 -- 554,000 11,368
</TABLE>
- ---------------
(1) For Messrs. Shumejda, Seaver, Swingle and Perkins, 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.
(2) Other Annual Compensation includes cash payments made pursuant to the terms
of the LTIP designed to satisfy a portion of the federal and state income
tax obligations arising from the vesting of restricted stock awards ("LTIP
Cash Payments"). LTIP Cash Payments for the past three years were as
follows: Mr. Ratliff -- $692,500 in 1997; Mr. Shumejda -- $935,609 in 1999,
$793,584 in 1998 and $274,491 in 1997; Mr. Seaver -- $558,327 in 1999,
$441,002 in 1998 and $144,469 in 1997; Mr. Swingle -- $453,186 in 1999,
$403,786 in 1998 and $144,469 in 1997; and Mr. Perkins -- $76,467 in 1999
and $27,067 in 1998. Other Annual Compensation in 1999 also includes 3% of
the executive's salary that exceeds the maximum compensation limits under
the Company's 401(k) savings plan beginning July 30, 1999 as follows: Mr.
Ratliff -- $12,500; Mr. Shumejda -- $6,831; Mr. Seaver -- $3,898; Mr.
Swingle -- $2,945; and Mr. Perkins -- $1,920. Other Annual Compensation for
Mr. Ratliff in 1997 also 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 5.2 million shares of Common Stock in March
1997 and estate planning consulting by third parties in 1997 totaling
$217,336. Other Annual Compensation for Mr. Shumejda in 1998 also includes
the benefit for personal use of an airplane and automobile leased by the
Company in the amount of $54,900. Other Annual Compensation for Mr. Swingle
also includes relocation expenses and a related tax equalization payment in
the amount of $30,471 and $47,995 for 1998 and 1997, respectively.
(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, 1999, the number and value of the
12
<PAGE> 15
aggregate shares of unvested restricted Common Stock beneficially held by
each of the participants named above pursuant to the LTIP were as follows:
Mr. Shumejda, 128,917 shares with a value of $1,732,322; Mr. Seaver, 90,833
shares with a value of $1,220,568; Mr. Swingle, 54,167 shares with a value
of $727,869 and Mr. Perkins, 26,667 shares with a value of $358,338. Awards
earned under the LTIP by Mr. Ratliff have all vested.
(4) All Other Compensation for 1999 includes the following: (i) the value of the
benefit to the executive officer for life insurance policies funded by the
Company as follows: Mr. Shumejda -- $55,777; Mr. Seaver -- $40,532; Mr.
Swingle -- $13,316, and Mr. Perkins -- $6,563, (ii) contributions to the
Company's 401(k) Savings Plan in the amount of $4,800 for Messrs. Ratliff,
Shumejda, Seaver, Swingle and Perkins, and (iii) contributions to the
Company's deferred compensation plan as follows: Mr. Ratliff -- $14,443; Mr.
Shumejda -- $33,493; Mr. Seaver -- $26,708; Mr. Swingle -- $19,915,
including interest with respect to such deferred compensation which exceeded
120% of the applicable federal long-term rate provided under Section 1274(d)
of the Internal Revenue Code. The deferred compensation plan was terminated
and liquidated as of July 31, 1999.
STOCK OPTIONS
The Company did not grant any stock options pursuant to the Company's 1991
Stock Option Plan during the fiscal year ended December 31, 1999 to any of the
Named Executive Officers.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options
exercised during the last fiscal year and the unexercised options held as of the
end of the fiscal year under the Company's Option Plan for the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 (#) DECEMBER 31, 1999 ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ratliff.......... $-- $-- 9,000 -- $98,438 $--
John M. Shumejda........... -- -- -- -- -- --
James M. Seaver............ -- -- -- -- -- --
Edward R. Swingle.......... -- -- -- -- -- --
Chris E. Perkins........... -- -- 17,100 -- 15,094 --
</TABLE>
- ---------------
(1) Based on the market price of the Company's Common Stock on December 31, 1999
($13.4375), less the exercise price of "in-the-money" options.
EMPLOYMENT CONTRACTS
The Company has entered into employment contracts with Messrs. Ratliff,
Shumejda, Seaver, Swingle and Perkins. The employment contracts provide for base
salaries at the following rates per annum: Mr. Ratliff -- $1,000,000; Mr.
Shumejda -- $607,000; Mr. Seaver -- $304,000; Mr. Swingle -- $273,000; and Mr.
Perkins -- $224,000. Mr. Ratliff's contract, dated August 15, 1995, is for an
eight year term, and Mr. Shumejda's contract, dated January 1, 1996, is for a
ten 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 and Mr. Shumejda's
contracts. Mr. Seaver's, Mr. Swingle's and Mr. Perkins' employment contracts
continue in effect until terminated in accordance with the terms of the
contract.
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
13
<PAGE> 16
Management Incentive Compensation Plan (the "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.
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, the 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.
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.
14
<PAGE> 17
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, the Chief Executive Officer and
the other Named Executive Officers during 1999 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
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 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
achievement of corporate and personal objectives. Incentive compensation bonus
opportunities are expressed as a percentage of the executive officer's base
salary. 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's,
Seaver's, Swingle's and Perkins' objectives based entirely upon corporate
performance. Currently, the corporate objectives under the Management Incentive
Compensation Plan are based on achieving targets for net sales, pre-tax income,
return on invested capital and operating cash flow with a minimum pre-tax income
target required for any bonuses to be paid. For the year ended December 31,
1999, the Company did not meet the minimum pre-tax income target established by
the Board of Directors. Accordingly, the Company did not pay any bonuses in 1999
under the Management Incentive Compensation Plan to any executive officers.
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 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
15
<PAGE> 18
which should combine to cause stock price appreciation. The following summary
describes the material terms of the LTIP as in effect for all grants through the
date of this Proxy Statement. This summary does not give effect to the proposed
amendments to the LTIP, which are described under the heading "Proposal Number
2" elsewhere in this Proxy Statement.
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) 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. For all shares earned under grants prior to the
proposed amendments to the LTIP, the restricted stock generally vests ratably at
the end of the third, fourth, and fifth year after the shares are earned. In the
event of a change of control (as defined in the LTIP), all earned shares vest
immediately.
The LTIP requires stock price appreciation to earn awards and the ultimate
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. For all shares earned under grants
made prior to the proposed amendments to the LTIP, a cash payment designed to
satisfy a portion of the federal and state income tax obligations is paid by the
Company to each participant when the shares vest. The tax payment is provided to
remove the necessity for the executive to sell a significant 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 AGCO Corporation 1991 Stock Option Plan (the
"Option Plan") as a long-term incentive for key employees and consultants who 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 key employees 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.
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
16
<PAGE> 19
$160,000 which is the maximum amount allowable under the IRS regulations. In
addition, the Company pays directly to the executive officers 3% of their base
salary that exceeds $160,000. 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. The Company also allows limited
personal use of an airplane leased by the Company to certain executive officers.
Compensation of the Chairman of the Board and Chief Executive Officer
Mr. Ratliff served as Chairman of the Board and Chief Executive Officer
until February 1999 and continues to serve as Chairman 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, the Company has grown substantially and established itself
as one of the largest manufacturers and distributors of agricultural equipment
in the world.
In July 1995, Mr. Ratliff was granted 250,000 contingent shares which could
be earned under the LTIP during a five-year performance period. Mr. Ratliff has
earned 112,500 shares under the July 1995 grant 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 in 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 carry no
restrictions.
In February 1999, Mr. Shumejda was named Chief Executive Officer. Under the
terms of Mr. Shumejda's employment contract dated January 1, 1996, Mr.
Shumejda's compensation is principally comprised of a base salary of $607,000
per annum, participation in the Management Incentive Compensation Plan and
restricted stock awards pursuant to the LTIP. Mr. Shumejda's total compensation
is based on a comparison to a peer group of companies with similar size,
complexity and performance. In July 1995, Mr. Shumejda was granted 230,000
contingent shares which could be earned under the LTIP during a five-year
performance period. Mr. Shumejda has earned 103,500 shares under the July 1995
grant. For the remaining shares under the July 1995 grant to be earned, the
stock price must reach an average of $40.67 for a 20-day period. All shares
currently earned by Mr. Shumejda under the LTIP carry a five-year vesting
period.
In February 2000, subject to stockholder approval of the amendments to the
LTIP, Mr. Ratliff and Mr. Shumejda were granted 200,000 and 250,000 contingent
shares under the LTIP, respectively. These shares may be earned in increments
during a five-year performance period for each 20% increase in the Company's
average stock price (based on the average closing price over 20 consecutive
trading days) over the base price of $11.875.
In 1999, the Company made contributions to life insurance policies on
behalf of Mr. Shumejda. The value of the benefit related to such policies was
estimated to be $55,777 and is included in the All Other Compensation column in
the Summary Compensation Table in this Proxy Statement.
17
<PAGE> 20
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
Gerald B. Johanneson, Chairman
Wolfgang Deml
Anthony D. Loehnis
18
<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>
12/94 3/95 6/95 9/95 12/95 3/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AGCO Corporation 100 109 124 150 168 158 183 168 189 182 237 209 193 196 136 43 52 44 75 87 89
S&P Mid-Cap 400 100 108 118 129 131 139 143 147 156 154 176 205 206 229 224 192 245 230 262 240 281
S&P Machinery-
Diversified 100 110 123 116 123 142 141 152 154 155 196 203 196 215 193 135 150 152 193 176 173
</TABLE>
- ---------------
* Assumes $100 invested in the Company's Common Stock as of December 31, 1994.
Assumes the investment of the same amount as of December 31, 1994 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.
19
<PAGE> 22
EXECUTIVE OFFICERS
The following table sets forth information as of March 6, 2000 with respect
to each person who is an executive officer of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Robert J. Ratliff.................................. 68 Executive Chairman of the Board
John M. Shumejda................................... 54 President and Chief Executive Officer
Edward R. Swingle.................................. 58 Senior Vice President -- Sales and
Marketing, North and South America
Adri Verhagen...................................... 58 Senior Vice President -- Sales and
Marketing, Europe/Africa/Middle East and
East Asia/Pacific
Norman L. Boyd..................................... 56 Vice President -- Corporate Development
Aaron D. Jones..................................... 54 Vice President -- Manufacturing Operations
Worldwide
Stephen D. Lupton.................................. 55 Vice President and General Counsel
Chris E. Perkins................................... 37 Vice President -- Worldwide Parts
Dexter E. Schaible................................. 50 Vice President -- Engineering and
Development Worldwide
James M. Seaver.................................... 54 Chief Executive Officer -- AGCO Finance
Patrick S. Shannon................................. 37 Vice President and Chief Financial Officer
</TABLE>
For a description of Messrs. Ratliff's and Shumejda's business experience,
see "-- Directors Continuing in Office."
Edward R. Swingle has been Senior Vice President -- Sales and Marketing,
North and South America for the Company since June 1999. Mr. Swingle was Senior
Vice President -- Worldwide Marketing from September 1998 to May 1999, Vice
President -- Special Projects from July 1998 to September 1998, Vice President
- -- Parts, North America from July 1996 to July 1998, Vice President -- Parts,
Americas from February 1995 to July 1996 and Vice President -- Marketing from
May 1993 to February 1995.
Adri Verhagen has been Senior Vice President -- Sales and Marketing,
Europe/Africa/Middle East and East Asia/Pacific for the Company since June 1999.
Mr. Verhagen was Vice President -- Sales, Europe/Africa/Middle East from
September 1998 to May 1999, Director/General Manager, East Asia/Pacific from
October 1995 to September 1998 and Managing Director Massey Ferguson --
Australia Ltd. from July 1979 to October 1995.
Norman L. Boyd has been Vice President -- Corporate Development for the
Company since October 1998. Mr. Boyd was Vice President -- Europe/Africa/Middle
East Distribution from February 1997 to September 1998, Vice President --
Marketing, Americas from February 1995 to February 1997 and Manager -- Dealer
Operations from January 1993 to February 1995.
Aaron D. Jones has been Vice President -- Manufacturing Operations,
Worldwide for the Company since December 1998. Mr. Jones was Vice President --
Manufacturing and Technology for the Company from March 1998 to December 1998,
Vice President -- Global Manufacturing/Purchasing from February 1997 to March
1998, Vice President, Manufacturing from October 1995 to February 1997, 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 and General Counsel for the
Company since June 1999. Mr. Lupton was Vice President -- Legal Services,
International from October 1995 to May 1999, and
20
<PAGE> 23
Director -- Legal Services, International from June 1994 to October 1995. Mr.
Lupton was Director of Legal Services of Massey Ferguson from February 1990 to
June 1994.
Chris E. Perkins has been Vice President -- Worldwide Parts for the Company
since July 1998, Vice President and Chief Financial Officer for the Company from
January 1996 to July 1998, Vice President -- Finance, International from
February 1995 to January 1996, Director of Finance, International from June 1994
to February 1995 and Manager -- Corporate Development from August 1993 to June
1994.
Dexter E. Schaible has been Vice President -- Engineering and Product
Development, Worldwide for the Company since October 1998. Mr. Schaible was Vice
President -- Worldwide Product Development for the Company from February 1997 to
October 1998, Vice President -- Product Development from October 1995 to
February 1997 and Director -- Product Development from September 1993 to October
1995.
James M. Seaver has been Chief Executive Officer -- AGCO Finance for the
Company since June 1999. Mr. Seaver was Senior Vice President -- Worldwide Sales
from September 1998 to May 1999, Executive Vice President, Sales and Marketing
from February 1997 to September 1998, President, Corporate Sales and Marketing
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 and Vice President -- Sales,
Americas from May 1993 to February 1995.
Patrick S. Shannon has been Vice President and Chief Financial Officer
since July 1998. Mr. Shannon served as Vice President -- Corporate Finance for
the Company from January 1998 to July 1998, Vice President --Finance,
International from January 1996 to January 1998, Vice President and Controller
from February 1995 to December 1995 and Controller from June 1993 to February
1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At March 6, 2000, 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 -- $74,840; and Norman L. Boyd -- $166,867. The
proceeds of the loans were used primarily to exercise stock options.
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.
During 1999, the Company had net sales of $122.9 million to BayWa
Corporation in the ordinary course of business. Mr. Deml, a director of the
Company, is President and Chief Executive Officer of BayWa Corporation.
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, 1999, all Section
16(a) filing requirements applicable to its directors, executive officers and
greater than ten-percent beneficial owners were properly filed.
ANNUAL REPORT TO STOCKHOLDERS
The Company's 1999 Annual Report to Stockholders is being furnished with
this proxy material to stockholders of record as of March 6, 2000.
21
<PAGE> 24
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 1999 FISCAL
YEAR, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, ON THE WRITTEN
REQUEST OF THE BENEFICIAL OWNER OF ANY SHARES OF ITS COMMON STOCK ON MARCH 8,
2000, 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 2000. 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 2001
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 November 30, 2000; 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 2000 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.
Any stockholder of the Company who wishes to present a proposal at the 2001
annual meeting of stockholders of the Company, but not 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 February 25, 2001 and in accordance with the advance
notice provisions of the Company's Bylaws or the persons appointed as proxies
may exercise their discretionary voting authority if the proposal is considered
at the meeting. The advance notice provisions of the Company's Bylaws provide
that for a proposal to be properly brought before a meeting by a stockholder,
such stockholder must have given the Company notice of such proposal in written
form meeting the requirements of the Company's Bylaws no later than sixty days
and no earlier than ninety days prior to the anniversary date of the immediately
preceding annual meeting of stockholders.
22
<PAGE> 25
APPENDIX A
AGCO CORPORATION
AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN (LTIP III)
SECTION I
PURPOSE
The AGCO Corporation Long-Term Incentive Plan (the "LTIP" or the "Plan") is
intended to be 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 do not receive stock options. The Plan is
designed to advance the interests of AGCO Corporation (the "Company") by
encouraging senior management 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 Plan is not subject to any provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") nor is it qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
The original Plan was adopted in 1993 and amended in 1997, with such
adoption and amendment approved by the Company's stockholders.
The Company's address is 4830 River Green Parkway, Duluth, Georgia 30136,
and its telephone number is (770) 813-9200.
SECTION II
ADMINISTRATION
a. The Plan is administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee") consisting of not less than three
members of the Board of Directors. Each member of the Committee is selected
annually by the Board of Directors. Any member of the Committee may be removed
at any time, either with or without cause, and any vacancy on the Committee may
at any time be filled, by resolution adopted by the Board of Directors. All
members of the Committee are required to be "nonemployee directors" as defined
in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and "outside directors" within the meaning of Section
162(m)(4)(C)(i) of the Code. For additional information about the Committee,
participants should contact the Company at the address and telephone number
listed above.
b. The Committee, in its sole discretion, selects the participants and
determines: (i) when to grant a restricted stock award; and (ii) the base price
and the amount of Common Stock subject to each restricted stock award. The
Committee also has authority to construe and amend the Plan and all awards
granted under it, to prescribe, amend and rescind rules and regulations relating
to the Plan, to determine (subject to Sections VI and VII) the terms and
provisions of the awards granted under the Plan (which need not be identical)
and to make all other determinations necessary or advisable for administering
the Plan.
SECTION III
SHARES SUBJECT TO THE PLAN
a. Awards for a total of 6,000,000 shares of the Company's $.01 par value
Common Stock (the "Common Stock") may be granted pursuant to the terms of the
Plan. The Common Stock subject to the Plan may be unissued shares of Common
Stock or shares of issued Common Stock held in the Company's treasury, or both.
No individual may receive awards for over 1,000,000 shares of Common Stock over
the life of the Plan.
A-1
<PAGE> 26
b. The number of shares of the Company's Common Stock available under the
Plan, the maximum number of shares for which awards may be granted to any one
individual and the number of shares of outstanding awards are subject to
appropriate adjustment by the Committee in accordance with Section IX.
c. If any award granted under the Plan expires or otherwise terminates for
any reason without having been earned in full, the forfeited stock again becomes
available for issuance under the Plan.
SECTION IV
DURATION, AMENDMENT, AND TERMINATION
a. Unless sooner terminated by the Board of Directors, the Plan will
terminate on December 31, 2009. The termination or any amendment of the Plan may
not impair or adversely affect, without the consent of the participants, the
rights of holders of outstanding awards. The Boards of Directors may amend or
terminate the Plan at any time, and from time to time.
b. The Board of Directors may, from time to time, amend the Plan without
stockholder approval except to the extent that stockholder approval is required
in order to comply with any applicable provision of the Code, ERISA or the rules
of the New York Stock Exchange or in order for compensation provided hereunder
to be treated as qualified performance-based compensation under applicable
Treasury Regulations.
SECTION V
ELIGIBILITY
Awards may be granted under the Plan only to executive officers and senior
managers of the Company or any of its subsidiaries as determined in the sole
discretion of the Committee. Members of the Committee are not eligible to
receive awards.
SECTION VI
TERMS AND CONDITIONS OF AWARDS
a. The LTIP provides opportunities for participants to earn shares of the
Company's Common Stock if performance goals and continued employment
requirements are met.
b. The LTIP operates over a five-year performance period. Under the LTIP,
each participant receives an award consisting of a contingent allocation of
shares which can be earned during the five-year performance period ("Contingent
Award"). The size of the participant's total share allocation 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.
c. The share allocation of a Contingent Award is earned in the form of
shares of restricted stock in increments for each 20% increase in average stock
price (with the average calculated over 20 consecutive trading days) over the
base price set by the Committee (the fair market value of the stock at the time
the Contingent Award is made or, where the Committee deems appropriate and the
Contingent Award is made within 10 business days after a prior award has been
fully earned, the stock price at which such prior award has been fully earned);
accordingly, the stock price must double during a five-year period for the full
Contingent Award to be earned. A Contingent Award will be earned in the
following increments:
<TABLE>
<CAPTION>
% INCREASE CONTINGENT
IN STOCK PRICE AWARD EARNED
- -------------- ----------------
<S> <C>
20%......................................................... 10%
40%......................................................... 25%
60%......................................................... 45%
80%......................................................... 70%
100%........................................................ 100%
</TABLE>
A-2
<PAGE> 27
d. Absent any action by the Committee to the contrary, when an increment of
a Contingent Award is earned, it will be awarded in the form of Common Stock
("Earned Shares").
e. The LTIP requires stock price appreciation to earn awards, and the
actual value of the award is determined at the time the award is earned. During
the performance period, participants shall neither receive dividends on, nor
have voting rights with respect to, their Contingent Award, and in addition,
they may not sell, transfer, pledge or otherwise dispose of such Contingent
Award. After shares become Earned Shares, participants shall receive dividends
on their Earned Shares and have full voting rights with respect to their Earned
Shares, but they may not sell, transfer, pledge or otherwise dispose of or
encumber such Earned Shares except as provided in Section XII(c).
f. In order to earn any increment of an award, the participant must
continue to be employed by the Company or a participating subsidiary, through
the date on which the applicable stock price increase (for the required twenty
(20) day period) is achieved. Upon termination of a participant's employment for
any reason, such participant's opportunity to earn any increment of an award,
which is unearned as of such date, shall be forfeited.
SECTION VII
CASH BONUS AWARDS
a. When an increment of a Contingent Award is earned, a cash payment
designed to satisfy a portion of the federal and state income tax obligations of
the participant is then payable by the Company to the participant. Cash bonus
awards will be made on or as soon as practicable following the last day of the
month that each award is earned. The cash bonus award shall be an amount equal
to 40% of the value of the Earned Shares on the date the stock award is earned.
b. The tax payment is provided to remove the necessity for the executive to
sell a significant 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.
SECTION VIII
DEATH, DISABILITY OR RETIREMENT OF PARTICIPANT
a. Upon the death or total disability of a participant, or upon retirement
at no earlier than age 65, the restrictions on resales of Earned Shares,
described in Section XII, shall lapse and be of no further force or effect.
b. Any unpaid cash bonus award associated with any Earned Shares, shall be
made to the estate of the deceased or the disabled or retired participant.
SECTION IX
ADJUSTMENTS
The Committee may adjust the number of shares of Common Stock under the
Plan at any time to reflect any change in the outstanding shares of Common Stock
through merger, consolidation, reorganization, recapitalization, stock dividend,
stock split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company. With respect
to outstanding awards, such adjustment shall be made such that the participant
shall be made whole and suffer no dilution as a result of any change.
A-3
<PAGE> 28
SECTION X
FEDERAL INCOME TAX CONSEQUENCES
a. Contingent Award. An individual receiving a Contingent Award under the
Plan does not recognize taxable income on the date of grant of the Contingent
Award, assuming that no Code Section 83(b) election is made with respect to the
Contingent Award. An individual will ordinarily recognize taxable income on the
date that an increment of a Contingent Award becomes earned by such individual
based on the fair market value of the Common Stock on the date the award is
earned, and the Company will be entitled to a tax deduction at the same time and
in the same amount. Upon subsequent disposition, any further gain or loss is
taxable either as short-term or long-term capital gain or loss, depending upon
the length of time that the shares of Common Stock are held.
b. Dividends on Earned Shares. Any dividends paid on Earned Shares are
taxable to the individual recipient, and are deductible by the Company, as
ordinary compensation when paid, if no Code Section 83(b) election has been made
with respect to such stock.
c. Cash Bonus Awards. An individual receiving a cash bonus award under the
Plan must recognize ordinary income upon receipt of the award. The cash bonus
award is deductible by the Company in the year that the income is recognized by
the individual.
SECTION XI
CHANGE IN CONTROL
a. In the event of a Change in Control (as defined herein), the Company
will require any successor to fulfill the terms and conditions of the Plan in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. However, effective with the
Change in Control, the restrictions on resales of Earned Shares, described in
Section XII, shall lapse and be of nor further force or effect.
b. "Change in Control" shall mean change in the ownership of a corporation,
change in the effective control of a corporation or change in ownership of a
substantial portion of the corporation's assets, as described in Section 280G of
the Code, including the following:
(1) A change in the ownership of a corporation occurs on the date that
any one person, or more than one person acting as a group, acquires
ownership of stock of that corporation that, together with stock held by
such person or group, possess more than fifty percent (50%) of the total
fair market value or total voting power of the stock of such corporation
(unless any one person, or more than one person acting as a group, who is
considered to own more than fifty percent (50%) of the total fair market
value or total voting power of the stock of a corporation, acquires
additional stock).
(2) A change in the effective control of a corporation is presumed
(which presumption may be rebutted by the Committee) to occur on the date
that either: any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12)-month period ending on the
date of the most recent acquisition by such person or persons) ownership of
stock of the corporation possessing twenty percent (20%) or more of the
total voting power of the stock of such corporation; or a majority of
members of the corporation's board of directors is replaced during any
twenty four (24)-month period by directors whose appointment or election is
not endorsed by a majority of the members of the corporation's board of
directors prior to the date of the appointment or election of such new
directors.
(3) A change in the ownership of a substantial portion of a
corporation's assets occurs on the date that any one person, or more than
one person acting as a group, acquires (or has acquired during the twelve
(12)-month period ending on the date of the most recent acquisition by such
person or persons) assets from the corporation that have a total fair
market value equal to or more than one-third of the total fair market value
of all of the assets of the corporation immediately prior to such
acquisition or acquisitions unless the assets are transferred to: a
stockholder of the corporation (immediately before the
A-4
<PAGE> 29
asset transfer) in exchange for or with respect to its stock; an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly by the corporation; a person, or more than
one person acting as a group, that owns, directly or indirectly, fifty
percent (50%) or more of the total value or voting power of all of the
outstanding stock of the corporation; or an entity, at least fifty percent
(50%) of the total value or voting power is owned, directly or indirectly,
by a person, or more than one person acting as a group, that owns directly
or indirectly, fifty percent (50%) or more of the total value of voting
power of all of the outstanding stock of the corporation.
SECTION XII
RESTRICTIONS ON RESALES
a. An employee shall have no right to sell, assign, transfer, pledge or
otherwise dispose of or encumber interest in any right to receive shares of
Common Stock granted under the LTIP except by will or the laws of descent and
distribution; provided, that, with respect to any Earned Shares, the
restrictions set forth in this sentence shall lapse pursuant to the following
schedule: one-third of such Earned Shares may be disposed of on or after the
third anniversary of the date they were earned; an additional one-third may be
disposed of on the fourth anniversary thereof; and as of the fifth anniversary
of such earned date, the entire number of Earned Shares may be disposed of by
the participant; provided, further, that if the participant's employment is
terminated for any reason, other than those specified in Section VIII hereof,
the schedule set forth in the preceding portion of this sentence shall be
revised such that the transfer restrictions shall lapse in one-third increments
on each of the fifth, sixth, and seventh anniversaries, respectively, of the
applicable earned date.
b. Since the participants in the Plan would generally be considered
"affiliates" of the Company, as that term is defined in the Rules and
Regulations under the Securities Act of 1933 (the "Securities Act"), shares of
the Company's Common Stock acquired under awards may be subject to restrictions
on resale imposed by the Securities Act. Such shares could be resold under the
terms of Rule 144 of the Rules and Regulations, pursuant to another applicable
exemption, if any, from the registration requirements of the Securities Act, or
pursuant to an effective registration statement, should the Company elect to
prepare and file one with the Securities and Exchange Commission. Rule 144
limits the number of shares which may be sold by an affiliate within a
three-month period. An "affiliate," of the Company is defined by the Rules and
Regulations as a person that "directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with"
the Company. Directors, officers, substantial stockholders and others, who by
one means or another have the ability to exercise control over the Company, may
be deemed to be "affiliates." In connection with the awards, the Company may, in
order to ensure that resales are made in compliance with the Securities Act,
imprint a legend on certificates representing shares awarded to the effect that
the shares may not be resold in the absence of compliance with the applicable
restrictions or a determination that no restrictions are applicable.
c. Notwithstanding anything to the contrary herein, a participant may sell,
assign, transfer or otherwise dispose of all or any portion of the participants'
interest in any Earned Shares to any of the following: a revocable living trust
primarily for the benefit of the participant, an irrevocable trust in which the
participant is the settlor, or a partnership in which the participant is a
general partner, and in any event in compliance with applicable federal and
state securities laws.
SECTION XIII
MISCELLANEOUS
a. No award payable under the Plan shall be deemed salary or compensation
for the purpose of computing benefits under any employee benefit plan unless the
Company shall determine otherwise.
b. The Plan and the grant of awards shall be subject to all applicable
federal and state laws, rules and regulations and to such approval by any
governmental or regulatory agency as may be required.
c. The terms of the Plan shall be binding upon the Company and its
successors and assigns.
A-5
<PAGE> 30
d. Captions preceding the sections hereof are inserted solely as a matter
of convenience and in no way define or limit the scope or intent of any
provision hereof.
e. Nothing contained in this Plan shall prevent the Company from adopting
or continuing in effect other or additional compensation arrangements.
f. Participation in the Plan shall not give any participant any right to
remain in the employ of the Company, or any of its subsidiaries. Further, the
adoption of this Plan shall not be deemed to give any employee of the Company or
any other individual any right to be selected as a participant or to be granted
an award.
SECTION XIV
EFFECTIVE DATE
a. The Effective Date of this Amended and Restated Plan shall be February
1, 2000, subject to stockholder approval, and shall be applicable only to awards
granted after such Effective Date. The provisions of the prior Amended and
Restated Plan shall be effective for all prior grants. No awards will be granted
under the Plan after the expiration of ten years from the Effective Date.
A-6
<PAGE> 31
(Agco Logo)
<PAGE> 32
PROXY AGCO CORPORATION
4205 RIVER GREEN PARKWAY
DULUTH, GEORGIA 30096
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 26, 2000
The undersigned hereby appoints Patrick S. Shannon and Stephen D. Lupton 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 6, 2000 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
26, 2000, 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.
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: Henry J. Claycamp and Wolfgang Sauer
INSTRUCTIONS : To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.
- --------------------------------------------------------------------------------
2. Approve the amendments to the Amended and Restated AGCO Corporation Long-Term
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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.
