TEREX CORPORATION
500 Post Road East, Westport, Connecticut 06880
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1997
The Annual Meeting of Stockholders of Terex Corporation (hereafter, the
"Company") will be held at The Metropolitan Club, One East 60th Street, New
York, New York, on Thursday, May 8, 1997, at 11:00 a.m., local time, for the
following purposes:
1. To elect seven (7) directors to hold office for one year or until their
successors are duly elected and qualified.
2. To ratify the selection of Price Waterhouse LLP as independent
accountants of the Company for 1997.
3. To approve an amendment to the 1996 Terex Corporation Long-Term
Incentive Plan to increase the number of shares of the Company's Common Stock
available for issuance and qualify certain Performance Awards for tax
deductibility.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are described more fully in the Proxy Statement
accompanying this Notice.
The Board of Directors of the Company has fixed the close of business on April
3, 1997, as the record date for determining the stockholders entitled to notice
of, and to vote at, the meeting.
YOUR VOTE IS IMPORTANT. STOCKHOLDERS ARE URGED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF THE PROXY CARD
IS MAILED IN THE UNITED STATES. STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY
WITHDRAW THEIR PROXY AND VOTE IN PERSON IF THEY SO DESIRE. IT IS IMPORTANT THAT
YOUR PROXY CARD BE RETURNED PROMPTLY IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF
FURTHER SOLICITATION.
By order of the Board of Directors,
Marvin B. Rosenberg
Secretary
April 4, 1997
Westport, Connecticut
<PAGE>
TEREX CORPORATION
500 Post Road East
Westport, Connecticut 06880
Proxy Statement for the
Annual Meeting of Stockholders
to be held on May 8, 1997
This Proxy Statement is furnished to stockholders of Terex Corporation
("Terex" or the "Company") in connection with the solicitation of proxies by and
on behalf of the Company's Board of Directors (the "Board") for use at the
Annual Meeting of Stockholders of the Company to be held on May 8, 1997, at The
Metropolitan Club, Inn, One East 60th Street, New York, New York, and at any
adjournments or postponements thereof (collectively, the "Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders
(the "Notice").
The Notice and proxy card (the "Proxy") accompany this Proxy Statement.
This Proxy Statement and the accompanying Notice, Proxy and related materials
are being mailed on or about April 7, 1997, to each stockholder entitled to vote
at the Meeting. As of April 3, 1997, the record date for determining the
stockholders entitled to notice of, and to vote at, the Meeting, the Company had
outstanding 13,311,867 shares of common stock, $.01 par value per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote on all
matters to be voted on at the Meeting.
A majority of the outstanding shares of Common Stock must be
represented at the Meeting in person or by proxy to constitute a quorum for the
transaction of business at the Meeting. All matters other than the election of
directors will be decided by the affirmative vote of the holders of a majority
of the shares of Common Stock represented at the Meeting in person or by proxy.
Directors shall be elected by a plurality of the votes of shares of Common Stock
represented at the Meeting in person or by proxy.
Proxy solicitations will be made primarily by mail, but solicitations
may also be made by telephone, telegraph or personal interviews conducted by
officers or employees of the Company. All costs of solicitations, including (a)
printing and mailing of this Proxy Statement and accompanying material, (b) the
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Company's stock and (c)
supplementary solicitations to submit Proxies, if any, will be borne by the
Company.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Meeting, the shares of Common Stock represented thereby will be
voted in accordance with the instructions marked on the Proxy. If no
instructions are marked on the Proxy, the Proxy will be voted FOR election of
the nominees for Director, FOR the selection of Price Waterhouse LLP as the
independent accountants of the Company, FOR approval of the proposed amendment
to the 1996 Terex Corporation Long Term Incentive Plan (the "1996 Plan"), and as
determined by the Board of Directors in their discretion with respect to any
other matters that may properly come before the Meeting and that are deemed
appropriate. Management does not presently know of any other matters which may
come before the Meeting. Abstentions and broker non-votes will have no effect on
the outcome of the election of the directors. Ratification of the appointment of
Price Waterhouse LLP as independent accountants and approval of the proposed
amendment to the 1996 Plan require the affirmative votes of the majority of
shares present in person at the Annual Meeting or represented by proxy and
entitled to vote thereon. Abstaining from voting on the appointment of auditors
or approval of the proposed amendment to the 1996 Plan will have the same effect
as voting against the proposals. Broker non-votes on the proposals to ratify the
appointment of the auditors or approval to the proposed amendment to the 1996
Plan will not be included in the calculation of shares entitled to vote for such
proposals and will have no effect on the outcome.
<PAGE>
Any stockholder giving a Proxy has the right to attend the Meeting to
vote his or her shares of Common Stock in person (thereby revoking any prior
Proxy) and also has the right to revoke the Proxy at any time by written notice
received by the Secretary of the Company prior to the time the Proxy is voted.
All properly executed and unrevoked Proxies delivered pursuant to this
solicitation, if received in time, will be voted at the Meeting.
In order that your shares of Common Stock may be represented at the
Meeting, you are requested to:
- indicate your instructions on the Proxy;
- date and sign the Proxy;
- mail the Proxy promptly in the enclosed envelope; and
- allow sufficient time for the Proxy to be received by the Company
prior to the Meeting.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN
OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED AND
THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE OF THIS PROXY STATEMENT.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, seven directors of the Company are to be elected to
hold office until the Company's next Annual Meeting of Stockholders or until
their respective successors are duly elected and qualified. Directors shall be
elected by a plurality of the votes of shares of Common Stock represented at the
Meeting in person or by proxy. Unless marked to the contrary, the Proxies
received by the Company will be voted FOR the election of the seven nominees
listed below, all of whom are presently members of the Board. Each nominee has
consented to being named in this Proxy Statement and to serve as a director if
elected. However, should any of the nominees for director decline or become
unable to accept nomination if elected, it is intended that the Board will vote
for the election of such other person as director as it shall designate. The
Company has no reason to believe that any nominee will decline or be unable to
serve if elected.
The information set forth below has been furnished to the Company by
the nominees and sets forth for each nominee, as of February 15, 1997, such
nominee's name, business experience during the past five years, other
directorships held and age. There is no family relationship between any nominee
and any other nominee or executive officer of the Company. For information
regarding the beneficial ownership of the Common Stock by the current directors
of the Company, see "Security Ownership of Management and Certain Beneficial
Owners" below.
The Board of Directors recommends that the stockholders vote FOR the following
nominees for director.
<TABLE>
<CAPTION>
Positions and First Year
Name Age Offices with Company Elected Director
<S> <C> <C> <C>
Ronald M. DeFeo 44 President, Chief Executive Officer, 1993
Chief Operating Officer and Director
Marvin B. Rosenberg 56 Senior Vice President, 1992
General Counsel, Secretary and
Director
G. Chris Andersen 58 Director 1992
William H. Fike 60 Director 1995
Bruce I. Raben 43 Director 1992
David A. Sachs 37 Director 1992
Adam E. Wolf 82 Director 1983
</TABLE>
Ronald M. DeFeo was appointed President and Chief Operating Officer of
the Company on October 4, 1993, and Chief Executive Officer of the Company on
March 24, 1995. Mr. DeFeo joined the Company in May 1992 as President of the
Company's Heavy Equipment Group. A year later, he also assumed the
responsibility of serving as the President of the Company's Clark Material
Handling Company ("CMHC") subsidiary. Prior to joining the Company on May 1,
1992, Mr. DeFeo was a Senior Vice President of J.I. Case Company, the farm and
construction equipment division formerly of Tenneco Inc., and also served as a
Managing Director of Case Construction Equipment throughout Europe. While at
J.I. Case, Mr. DeFeo was also a Vice President of North American Construction
Equipment Sales and General Manager of Retail Operations.
Marvin B. Rosenberg was appointed a Senior Vice President of the
Company effective January 1, 1994. He has served as Secretary and General
Counsel of the Company since 1987. From 1987 through 1993, Mr. Rosenberg served
as General Counsel of KCS Industries, L.P., a Connecticut limited partnership
and its predecessor KCS Industries, Inc. ("KCS"), an entity that, until December
31, 1993, provided administrative, financial, marketing, technical, real estate
and legal services to the Company and its subsidiaries.
G. Chris Andersen was a Vice Chairman of PaineWebber Incorporated from
March 1990 through 1995. Mr. Andersen is currently a partner of Andersen,
Weinroth & Co. L.P. and also serves as a director of Sunshine Mining & Refining
Company, United Waste Systems, Inc., and Headway Corporation Services.
William H. Fike is the Vice Chairman of Magna International, Inc., an
automotive parts manufacturer based in Ontario, Canada ("Magna"). Prior to
joining Magna in September 1994, Mr. Fike was employed by Ford Motor Company
from 1966 to 1994, where he served most recently as President of Ford Europe.
Mr. Fike serves as a director of Magna and AGCO Corporation.
Bruce I. Raben is a managing director of CIBC Wood Gundy Securities Corp.
Prior to joining CIBC Wood Gundy Securities Corp. in February 1996, Mr. Raben
was employed as an Executive Vice President of Jefferies & Company, Inc. Mr.
Raben serves as a director of Equity Marketing Inc., Optical Security, Inc., and
Talton Holdings, Inc.
David A. Sachs is a principal of Onyx Partners, Inc., a merchant
banking firm. From 1990 to 1994, Mr. Sachs was employed at TMT-FW, Inc., an
affiliate of Taylor & Co., a private investment firm based in Fort Worth, Texas.
Mr. Sachs serves as a director of Talton Holdings, Inc.
Adam E. Wolf has been principally self-employed as an attorney
throughout his career. He has previously served on several boards of directors,
including those of a telephone company, a bank and a hospital.
The Board met ten times in 1996 at regularly scheduled and special
meetings including telephonic meetings. All of the directors in office during
1996 attended at least 75% of the meetings which took place during their tenures
as directors. The Board has an Audit Committee, a Compensation Committee and a
Nominating Committee.
The Audit Committee of the Board of Directors consists of Messrs. Sachs
(chairperson), Raben and Wolf. The Audit Committee met twice during 1996. The
Audit Committee recommends the engagement of the independent accountants and
makes other recommendations to the Board based on its review of all of the
financial matters of the Company. The Audit Committee also reviews related party
transactions.
The Compensation Committee of the Board of Directors consists of Messrs.
Andersen (chairperson), Fike and Sachs. The Compensation Committee met twice
during 1996. The Compensation Committee recommends to the Board compensation
arrangements for executive officers and for certain other key management
personnel. (See "Executive Compensation - Compensation Committee Report.")
The Nominating Committee of the Board of Directors consists of Messrs.
Raben (chairperson), Andersen and Fike. The Nominating Committee did not meet
during 1996. The Nominating Committee recommends nominees to fill vacancies on
the Board of Directors.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock by each person known by the Company to
own beneficially more than 5% of the Company's Common Stock, by each director,
by each executive officer of the Company named in the summary compensation table
below, and by all directors and executive officers as a group, as of February
15, 1997. Each person named in the following table has sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by such person, except as otherwise set forth in the notes to
the table. Shares of Common Stock that any person has a right to acquire within
60 days after February 15, 1997, pursuant to an exercise of options, warrants or
other rights or conversion of preferred stock or otherwise, are deemed to be
outstanding for the purpose of computing the percentage ownership of such
person, but are not deemed to be outstanding for computing the percentage
ownership of any other person shown in the table.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Randolph W. Lenz (1) 4,409,034 (2) 33.10%
c/o Equity Merchant Banking
2419 E. Commercial Blvd., Ste. 304
Fort Lauderdale, FL 33308
G. Chris Andersen 79,900 (3) *
821 West Shore Drive
Kinnelon, NJ 07405
William S. Buchan 11,250 (4) *
c/o Terex Equipment Limited
Newhouse Estate
Motherwell, Scotland MLI 5RY
Ronald M. DeFeo 149,325 (5) 1.12%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
William H. Fike 37,500 (6) *
c/o Magna International Inc.
26200 Lasher Road, Suite 300
Southfield, MI 48034
Fil Filipov 71,667 (7) *
c/o Terex Cranes, Inc.
Hwy 501 East, P.O. Box 260002
Conway, SC 29526-2602
David J. Langevin 152,285 (8) 1.14%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Bruce I. Raben 112,663 (9) *
c/o CIBC Wood Gundy
1999 Avenue of the Stars
Suite 1910
Los Angeles, CA 90067
Marvin B. Rosenberg 128,545 (10) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David A. Sachs 80,300 (11) *
c/o Onyx Partners
9595 Wilshire Boulevard
Suite 700
Beverly Hills, CA 90212
Adam E. Wolf 48,500 (12) *
875 East Donges Lane
Milwaukee, WI 53217
All directors and executive officers 897,352 (13) 6.57%
as a group (13 persons)
<FN>
- ------------------------------
* Amount owned does not exceed one percent (1%) of the class so owned.
(1) Mr. Lenz currently pledges, and intends to pledge in the future, shares of
the Common Stock owned by him as collateral for loans. If Mr. Lenz does not
pay such loans when due, the pledgee may have the right to sell the shares
of the Common Stock pledged to it in satisfaction of Mr. Lenz's
obligations. The sale of a significant amount of such pledged shares could
result in a change of control of the Company. Pursuant to a retirement
agreement between the Company and Mr. Lenz, Mr. Lenz has agreed to vote his
shares of the Company's Common Stock in the manner recommended by the
Company's Board of Directors. (See "Certain Relationships and Related
Transactions" below.)
(2) Includes (a) 3,243,820 shares of Common Stock directly owned by Mr. Lenz,
(b) 21,500 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days and held by Mr. Lenz, (c) 1,056,414 shares of
Common Stock indirectly owned by Mr. Lenz through four corporations that he
indirectly owns and controls and (d) 38,800 shares of Series B Cumulative
Redeemable Convertible Preferred Stock (the "Series B Preferred Stock")
convertible into 87,300 shares of Common Stock.
(3) Includes 55,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(4) Includes 8,750 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
(5) Includes 57,092 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days. (footnotes continued on following page)
(6) Includes 37,500 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(7) Includes 19,167 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(8) Includes 16,623 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(9) Includes 10,000 shares owned by Mr. Raben's wife as to which Mr. Raben does
not have dispositive or voting power and disclaims beneficial ownership.
Also includes 55,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Raben and which are exercisable within 60 days.
(10) Includes 12,762 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(11) Includes 3,300 shares of Common Stock owned by Mr. Sachs' wife. Mr. Sachs
disclaims the beneficial ownership of such shares. Also includes 52,500
shares of Common Stock issuable upon the exercise of options held by Mr.
Sachs which are exercisable within 60 days.
(12) Includes 47,500 shares of Common Stock issuable upon the exercise of
options held by Mr. Wolf which are exercisable within 60 days. Also
includes 800 shares of Common Stock held in a testamentary trust for which
Mr. Wolf has shared voting power and shared investment power and 200 shares
of Common Stock held by Mr. Wolf's wife for which he claims beneficial
ownership.
(13) Includes 373,144 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
</FN>
</TABLE>
MANAGEMENT OF THE COMPANY
The following table sets forth, as of February 15, 1997, the respective
names and ages of the Company's executive officers, indicating all positions and
offices held by each such person. Each officer is elected by the Board to hold
office for one year or until his successor is duly elected and qualified.
<TABLE>
<CAPTION>
Name Age Positions and Offices with Company
<S> <C> <C>
Ronald M. DeFeo 44 President, Chief Executive Officer and
Chief Operating Officer and Director
David J. Langevin 45 Executive Vice President
Marvin B. Rosenberg 56 Senior Vice President, General Counsel,
Secretary and Director
Joseph F. Apuzzo 41 Vice President-Finance and Controller
Brian J. Henry 38 Vice President-Finance, Treasurer and Director of
Investor Relations
Steven E. Hooper 43 Vice President, Human Resources
</TABLE>
For information regarding Messrs. DeFeo and Rosenberg, refer to the table
listing nominees in the prior section "Proposal 1: Election of Directors."
David J. Langevin became Executive Vice President of the Company effective
January 1, 1994, and served as Acting Chief Financial Officer of the Company
from March 1993 through December 1993. He had been employed as a Vice President
of KCS since 1988 until joining the Company in 1993.
Joseph F. Apuzzo was appointed Vice President-Finance and Controller of the
Company on May 15, 1996. Mr. Apuzzo previously held the position of Vice
President, Corporate Controller since joining the Company on October 9, 1995.
Mr. Apuzzo was Vice President of Corporate Finance at D'Arcy Masius Benton &
Bowles, Inc. from September 1994 until October 1995 when he joined the Company.
Mr. Apuzzo was employed by Price Waterhouse LLP in various capacities from 1983
until September 1994.
Brian J. Henry was appointed Vice President-Finance and Treasurer of the
Company on July 11, 1995. Mr. Henry also serves as the Company's Director of
Investor Relations. Mr. Henry formerly held the position of the Company's Vice
President - Corporate Development and Acquisitions and has been employed by the
Company since 1993. He was employed by KCS from 1990 until 1993.
Steven E. Hooper was appointed Vice President, Human Resources of the
Company on September 15, 1995, after serving as Director of Human Resources of
the Company since January 1994. He was previously a Human Resources Director at
AlliedSignal Aerospace from October 1992 to December 1993. Prior to October
1992, Mr. Hooper was with Tenneco Inc. for eight years in various senior level
human resources positions.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table below shows the compensation for the
past three fiscal years of the Company's Chief Executive Officer and its four
highest paid executive officers with 1996 earned qualifying compensation in
excess of $100,000 (the "Named Executive Officers"). The Company has included
the presidents of each of its two business segments, Mr. William S. Buchan,
President of Terex Trucks, and Mr. Filip Filipov, President of Terex Cranes, in
lieu of less highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------------------------ --------------------------
Awards
--------------------------
Other Restricted Securities All Other
Annual Stock Underlying Compen-
Name and Salary Bonus Compen- Awards Options/ sation
Principal Position Year ($) ($) sation ($) ($) SARS (#) ($)
------------------ ---- --------- ------------ ----------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald M. DeFeo 1996 $393,941 $ 360,000 $ - 0 - $1,312,500 (2) 25,000 $ 4,500 (5)
President, Chief Executive 1995 350,000 250,000 - 0 - 237,500 (3) 40,000 3,080 (5)
Officer and Chief Operating 1994 350,000 225,000 - 0 - 84,700 (4) 30,800 3,080 (5)
Officer (1)
David J. Langevin 1996 303,600 250,000 - 0 - 121,875 (7) 12,500 4,500 (5)
Executive Vice President (6) 1995 303,600 150,000 - 0 - - 0 - 10,000 3,080 (5)
1994 303,600 150,000 - 0 - 75,350 (4) 27,400 - 0 -
Marvin B. Rosenberg 1996 250,000 125,000 - 0 - - 0 - - 0 - 3,600 (5)
Senior Vice President, 1995 250,000 75,000 - 0 - - 0 - 5,000 - 0 -
Secretary and General 1994 250,000 75,000 - 0 - 62,150 (4) 22,600 - 0 -
Counsel (6)
William S. Buchan 1996 148,064 116,869 - 0 - - 0 - - 0 - 12,560 (10)
Terex Trucks 1995 114,229 61,676 - 0 - - 0 - 10,000 11,225 (10)
President (8) 1994 100,013 46,881 - 0 - 13,750 (4) 5,000 9,901 (10)
Fil Filipov 1996 227,083 506,205 (11) - 0 - 500,000 (9) - 0 - 4,500 (5)
Terex Cranes 1995 216,667 450,281 (11) - 0 - - 0 - 40,000 3,080 (5)
President 1994 181,667 329,850 (11) - 0 - 13,750 (4) 15,000 3,080 (5)
<FN>
- ----------------------
(1) Mr. DeFeo became Chief Executive Officer on March 24, 1995.
(2) As part of Mr. DeFeo's 1996 long term incentive compensation, on March 31,
1997, Mr. DeFeo was conditionally granted 100,000 shares of Restricted
Stock (as defined in the "Compensation Committee Report" below) under the
1996 Plan. See "Proposal 3: Approval of an Amendment to the 1996 Plan to
Increase the Number of Shares of the Company's Common Stock Available for
Issuance and to Qualify Certain Performance Based Awards for Tax
Deductibility." The value of the Restricted Stock granted to Mr. DeFeo set
forth in the table above for 1996 is based on the closing stock price on
the NYSE of Common Stock of $13.125 per share as of March 31, 1997, the
date of grant.
The shares of Restricted Stock conditionally awarded to Mr. DeFeo for 1996
become vested upon attainment of certain Company performance goals to be
established by the Compensation Committee no later than June 29, 1997. Upon
the earliest to occur of a change of control of the Company or the death or
disability of Mr. DeFeo, any unvested portion of such Restricted Stock
shall vest immediately. Dividends, if any, are paid on Restricted Stock
awards at the same rate paid to all stockholders.
(3) As part of Mr. DeFeo's 1995 long term incentive compensation, on February
15, 1996, Mr. DeFeo was granted 5,000 shares of Restricted Stock (as
defined in the "Compensation Committee Report" below) under the Company's
1994 Long Term Incentive Plan (the "1994 Plan") and 45,000 shares of
Restricted Stock under the 1996 Plan. The value of the Restricted Stock
granted to Mr. DeFeo set forth in the table above for 1995 is based on the
closing stock price on the NYSE of Common Stock of $5.00 per share as of
February 15, 1996, the date of grant. The shares of Restricted Stock
awarded to Mr. DeFeo for 1995 become vested to the extent of one-fourth of
the shares covered thereby on each of the first four anniversaries of
February 15, 1996; however, upon the earliest to occur of a change in
control of the Company or the death or disability of Mr. DeFeo, any
unvested portion of such Restricted Stock shall vest immediately.
Dividends, if any, are paid on Restricted Stock awards at the same rate as
paid to all stockholders.
(4) As part of their 1994 long term incentive compensation, on June 23, 1994,
the Named Executive Officers were granted shares of Restricted Stock under
the Company's 1994 Plan. The value of the Restricted Stock set forth in the
table above is based on the closing stock price of $5.50 per share on June
23, 1994, the date of grant. Dividends, if any, are paid on Restricted
Stock awards at the same rate as paid to all stockholders. The number and
market value, based on the closing stock price of $10.125 of the Restricted
Stock awards set forth in the table above as of December 31, 1996 for
Messrs. DeFeo, Langevin, Rosenberg, Buchan and Filipov are: Mr. DeFeo,
15,400 shares, $155,925; Mr. Langevin, 13,700 shares, $138,712.50; Mr.
Rosenberg, 11,300 shares, $114,412.50; Mr. Buchan, 2,500 shares,
$25,312.50; and Mr. Filipov, 2,500 shares, $25,312.50. The shares of
Restricted Stock covered by the Restricted Stock awards of each of the
Named Executive Officers become vested to the extent of one-fourth of the
shares covered thereby on each of the first four anniversaries of June 23,
1994; however, upon the earliest to occur of a change of control of the
Company or the death or disability of such Named Executive Officer, any
unvested portion of such Restricted Stock will vest immediately.
(5) Company's matching contribution to defined contribution plan account.
(6) In conjunction with the termination of the Company's management agreement
with KCS, Messrs. Langevin and Rosenberg (who became employees of the
Company on January 1, 1994), received cash and certain securities of the
Company in 1994. Such payments are not included as part of Messrs.
Langevin's and Rosenberg's 1994 annual compensation.
(7) As part of Mr. Langevin's 1996 long term incentive compensation, on
February 27, 1997, Mr. Langevin was granted 12,500 shares of Restricted
Stock) under the Company's 1994 Plan. The value of the Restricted Stock
granted to Mr. Langevin set forth in the table above for 1996 is based on
the closing stock price on the NYSE of Common Stock of $12.00 per share as
of February 27, 1997, the date of grant. The shares of Restricted Stock
awarded to Mr. Langevin for 1996 become vested to the extent of one-fourth
of the shares covered thereby on each of the first four anniversaries of
February 27, 1997; however, upon the earliest to occur of a change in
control of the Company or the death or disability of Mr. Langevin, any
unvested portion of such Restricted Stock shall vest immediately.
Dividends, if any, are paid on Restricted Stock awards at the same rate as
paid to all stockholders
(8) Mr. Buchan was paid all amounts in British pounds. The amounts listed above
as paid to Mr. Buchan were computed by using the exchange rate of 1.6207 to
convert the British pounds paid into US dollars.
(9) As part of Mr. Filipov's 1996 long term incentive compensation, on January
2, 1997, Mr. Filipov was granted 50,000 shares of Restricted Stock under
the Company's 1994 Plan. The value of the Restricted Stock so granted to
Mr. Filipov is based on the closing stock price on the NYSE of the
Company's Common Stock of $10.00 per share as of January 2, 1997, the date
of grant. The shares of Restricted Stock awarded to Mr. Filipov for 1995
become vested to the extent of one-fourth of the shares covered thereby on
each of the first four anniversaries of January 2, 1997; however, upon the
earliest to occur of a change in control of the Company or the death or
disability of Mr. Filipov, any unvested portion of such Restricted Stock
shall vest immediately. Dividends, if any, are paid on Restricted Stock
awards at the same rate as paid to all stockholders.
(10) Amounts paid by Terex Equipment Limited, a wholly owned subsidiary of the
Company ("TEL") on behalf on Mr. Buchan, to the TEL pension scheme. The
amounts listed above as "All Other Compensation" paid to Mr. Buchan were
computed by using the exchange rate of 1.6207 to convert the British pounds
paid into US dollars.
(11) Pursuant to the terms of compensation arrangements with the Company, Mr.
Filipov's annual bonus is equal to a percentage of net income (after
certain adjustments) of the Company division or subsidiary for which he has
responsibility. From May 1995 through 1996, Mr. Filipov's bonus was equal
to 4% of the Company's net income (after certain adjustments) from its PPM
S.A. and PPM Crane, Inc., subsidiaries. From January 1994 through April
1995, Mr. Filipov's bonus was equal to 7.5% of the Company's net income
(after certain adjustments) from its Koehring Cranes, Inc., subsidiary.
</FN>
</TABLE>
Stock Option Grants in 1996
The following table sets forth information on grants of stock options
under the Company's 1988 Incentive Stock Option plan covering key management
employees (the "1988 Plan"), as well as under the Company's 1994 Plan and the
Company's 1996 Plan during the Company's 1996 fiscal year to the Named Executive
Officers. The number of stock options and SARs granted to the Named Executive
Officers during the Company's 1996 fiscal year is also listed in the Summary
Compensation Table in the column entitled "Securities Underlying Options/SARs."
The exercise price of the options equaled or exceeded the fair market price of
the Common Stock at the time of the grant. Options granted under the 1988 Plan
vest ratably over three years from the date of grant. Options granted under the
1994 Plan and under the 1996 Plan vest ratably over four years from the date of
grant.
<TABLE>
<CAPTION>
Stock Option/SAR Grants in 1996
Individual Grants
---------------------------------------------------------------------------------------------
Number of
Securities % of Total Potential Realizable Value
Underlying Options Granted Exercise or at Assumed Annual Rates of
Options to Employees in Base Price Expiration Stock Price Appreciation
Name Granted(#)(1) Fiscal Year ($/Sh) Date for Option Term
- --------------------- ------------- --------------- ----------- ---------- --------------------------
5%($) 10%($)
--------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. DeFeo 25,000 30% $12.00 2/27/07 $ 188,668 $ 478,123
David J. Langevin 12,500 15% 12.00 2/27/07 94,334 239,061
Marvin B. Rosenberg - 0 - - 0 - - - - 0 - - 0 -
William S. Buchan - 0 - - 0 - - - - 0 - - 0 -
Filip Filipov - 0 - - 0 - - - - 0 - - 0 -
<FN>
- ------------------
(1) The options listed above for Messrs. DeFeo and Langevin, respectively, were
granted under the 1994 Plan and become vested to the extent of one-fourth
of the shares of Common Stock covered thereby on each of the first four
anniversaries of February 27 1997, the date of the respective grants.
</FN>
</TABLE>
<PAGE>
Aggregated Option Exercises in 1996 and Year-End Option Values
The table below summarizes options exercised during 1996 and year-end
option values of the Named Executive Officers listed in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1996 and Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Year-End (#) at Year-End ($) (1)
Shares Acquired Value Realized ------------------------- -------------------------
Name on Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Ronald M. DeFeo - 0 - - 0 - 57,092 / 43,708 $157,365.50 / $237,534.50
David J. Langevin - 0 - - 0 - 16,623 / 20,777 80,535.13 / 104,939.88
Marvin B. Rosenberg - 0 - - 0 - 12,762 / 14,838 60,851.75 / 73,048.25
William S. Buchan - 0 - - 0 - 8,750 / 10,000 26,250.00 / 55,625.00
Filip Filipov - 0 - - 0 - 19,167 / 35,833 77,676.17 / 151,648.84
<FN>
- -----------------------
(1) Based on the closing price of the Company's Common Stock on the New York
Stock Exchange ("NYSE") on December 31, 1996, of $10.125.
</FN>
</TABLE>
Pension Plans
The Company maintains four defined benefit pension plans covering certain
domestic employees, including, as described below, certain officers of the
Company or its subsidiaries. Retirement benefits for the plans covering the
salaried employees are based primarily on years of service and employees'
qualifying compensation during the final years of employment. In addition, TEL
maintains a pension scheme for its salaried employees.
Mr. DeFeo and Mr. Filipov participate in the Terex Corporation Salaried
Employees' Retirement Plan (the "Retirement Plan"). Messrs. Langevin and
Rosenberg do not participate because participation in the Retirement Plan was
frozen as of May 7, 1993, prior to their employment with the Company.
Participants of the Retirement Plan with five or more years of eligible
service are fully vested and entitled to annual pension benefits beginning at
age 65. Retirement benefits under the Retirement Plan are equal to the product
of (i) the participant's years of service (as defined in the Retirement Plan)
and (ii) 1.02% of final average earnings (as defined in the Retirement Plan)
plus 0.71% of such compensation in excess of amounts shown on the applicable
Social Security Integration Table for participants born prior to 1938. For
participants born during 1938-1954, the formula is modified by replacing the
1.02% and 0.71% figures with 1.08% and 0.65%, respectively. For participants
born after 1954, the formula is modified by replacing the 1.02% and 0.71%
figures with 1.13% and 0.60%, respectively. Service in excess of 25 years is not
recognized. There is no offset for primary Social Security. Participation in the
Retirement Plan was frozen as of May 7, 1993, and no participants, including Mr.
DeFeo, will be credited with service following such date. However, participants
not currently fully vested, including Mr. DeFeo, will be credited with service
for purposes of determining vesting only. The annual retirement benefits payable
at normal retirement age under the Retirement Plan will be $4,503 for Mr. DeFeo
and $259.28 for Mr. Filipov (assuming full vesting).
Mr. Buchan participates in the TEL pension scheme, which provides a pension
benefit to employee participants based primarily on an average of the last three
years of earnings prior to retirement and accumulates at a rate of 1/60 for each
year of pensionable service up to a maximum of 2/3 of final pensionable pay at
the normal retirement date. Early retirement causes the pension amount to be
reduced by approximately 4% per annum based on an actuarial valuation. Assuming
Mr. Buchan retires at normal retirement age and based on the most recent benefit
statement published, Mr. Buchan's pension benefits will be $40,355 per year
(assuming a 1.6207 exchange rate for converting British pounds to US dollars).
Compensation of Directors
The directors who are employees of the Company receive no additional
compensation by virtue of their being directors of the Company. Non-employee
directors receive an annual fee of $24,000. All directors of the Company are
reimbursed for travel, lodging and related expenses incurred in attending Board
and committee meetings.
In addition, under the 1996 Plan, outside directors are:
(i) awarded an option to purchase 25,000 shares of Common Stock on the date of
their appointment as an outside director at the closing price of a share of
Common Stock on the NYSE as of such appointment date.
(ii) awarded annually an option to purchase 7,500 shares of Common Stock five
business days after the date on which the Company files its Annual Report on
Form 10-K with the Securities and Exchange Commission ("SEC") at the closing
price of a share of Common Stock on the NYSE on such date.
(iii) awarded annually, (a) if such outside directors are serving as a
chairperson of a committee to the Board of Directors five business days after
the date on which the Company files its Annual Report on Form 10-K with the SEC,
an option to purchase 5,000 shares of Common Stock at the closing price of a
share of Common Stock on the NYSE on the date of all other annual awards; or (b)
if such outside directors are serving as a member of a committee (and not as a
chairperson of such committee) of the Board of Directors five business days
after the date on which the Company files its Annual Report on Form 10-K with
the SEC, awarded an option to purchase 2,500 shares of Common Stock at the
closing price of Common Stock on the NYSE on the date of all other annual
awards; provided, however, that an individual outside director shall not be
awarded an option to purchase more than 7,500 shares of Common Stock per year
for service as a committee chairperson and/or member, regardless of the number
of positions held.
The outside director options described above shall have a term of five
years, and the exercise price of the options shall be equal to the fair market
value of the Common Stock on the date preceding the day the grant is authorized,
unless otherwise provided. The options shall vest immediately upon grant.
Accordingly, within five business days following the date on which the Company
files its Annual Report on Form 10-K with the SEC, Messrs. Andersen, Raben and
Sachs will be granted an option to purchase 15,000 shares of Common Stock, Mr.
Fike will be granted an option to purchase 12,500 shares of Common Stock and Mr.
Wolf will be granted an option to purchase 10,000 shares of stock, in each case
at an option price equal to the closing price on the NYSE of the Company's
Common Stock on the date of grant.
Employment Contracts, Termination of Employment and
Change-in-Control Arrangements
The Company has agreed with Ronald M. DeFeo that in the event of a change
in ownership of the Company which prevents him from continuing in his position
as President and Chief Executive Officer, the Company will provide for a
continuance of his income for a period of 24 months.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board recommending compensation for
executive officers, including the Named Executive Officers, during the Company's
1996 fiscal year consisted of G. Chris Andersen, William H. Fike and David A.
Sachs. There are no Compensation Committee interlocks or insider participation
with respect to such individuals.
<PAGE>
Compensation Committee Report
Executive Compensation Philosophy
The objectives of the Company's executive compensation program are to (i)
attract and retain the executives with the skills critical to the long-term
success of the Company, (ii) to motivate and reward individual and team
performance in attaining business objectives and maximizing shareholder value,
and (iii) to grant equity-based awards over cash compensation so as to align the
interests of the executive officers with those of the stockholders. To meet this
objective, the total compensation program is designed to be competitive with the
total compensation program provided by other corporations of comparable revenue
size in industries with which the Company competes for customers and executives
and to be fair and equitable to both the employee and the Company. Consideration
is given to the employee's overall responsibilities, professional
qualifications, business experience, job performance, technical expertise,
career potential and their resultant combined value to the Company's long-term
performance and growth.
Executive Compensation Program
Each year, the Compensation Committee, which is comprised entirely of
outside directors, recommends to the Board of Directors compensation
arrangements for the Company's executive officers, including the Named Executive
Officers. Such compensation arrangements, all of which are subject to approval
by the full Board of Directors, include annual salary levels, annual and
long-term incentive plans and grants thereunder (including stock options and
grants of Common Stock subject to restrictions of transfer, conditions of
forfeitability or any other limitations or restrictions ["Restricted Stock"]),
standards of performance for new grants, plan participation and program design.
The Board of Directors approved the recommendations of the Compensation
Committee for 1996. Messrs. DeFeo and Rosenberg did not, however, participate in
the deliberations of the Compensation Committee or Board of Directors regarding
their own compensation.
The Company's executive compensation program is comprised of three
principal components: salary, annual incentive compensation and long-term
incentive compensation, each of which is described below. The Company's policies
with respect to each of the components described below are considered
separately. In addition, the Compensation Committee also considers and will
review, from time to time, the full compensation package afforded by the Company
and to executive employees.
Base Salaries
An executive officer's base salary is determined by evaluating the
responsibilities of the position held, the individual's past experience, current
performance and the competitive marketplace for executive talent. Salary ranges
for the Company's executive officers did not increase (absent a change in
responsibility) in 1996, in contrast to salary ranges of executives at
comparably sized companies, as reported in data furnished to the Compensation
Committee by the Company's outside sources.
Annual Bonuses
In addition to a base salary, executive officers are eligible for an annual
bonus, which may consist of cash and/or other performance awards under the 1988
Plan, the 1994 Plan, or the 1996 Plan. Bonuses are paid upon attainment of
Company operating profit and cash flow goals established annually, as well as
specific performance goals established for each executive officer at the
beginning of the fiscal year. Executive officers may earn a bonus of up to 50%
(or under circumstances for extraordinary performance, more than 50%) of their
base salary if the Company and individualized goals are attained. As described
in footnote (11) to the Summary Compensation Table with respect to Mr. Filipov,
in certain circumstances such as the acquisition of a new entity requiring
specific management skills, bonuses for key members of management may be based
on the profitability or other specific performance goals of a particular
division. The Compensation Committee believes that bonuses paid to the Named
Executive Officers and reported in the "Bonus Column" of the Summary
Compensation Table reflect the level of achievement of the Company goals and
individual performance goals during 1996.
Long-Term Incentive Compensation
The purpose of long-term awards, currently in the form of stock options and
grants of Common Stock including Restricted Stock, is to align the interests of
the executive officers with the interests of the stockholders. Additionally,
long-term awards offer executive officers an incentive for the achievement of
superior performance over time and foster the retention of key management
personnel. The Compensation Committee favors the granting of equity-based awards
over cash compensation for such reasons and believes that the granting of stock
options and Common Stock better motivates executive officers to exert their best
efforts on behalf of the Company and the stockholders. In determining stock
option grants, the Compensation Committee bases its decision on the individual's
performance and a potential to improve stockholder value. Based on information
furnished to the Compensation Committee by the Company's advisors, ranges
established by the Compensation Committee enable the Committee to make grants
and awards that can produce long-term incentive compensation opportunities
closer to the 50th percentile of comparably sized companies surveyed.
CEO Compensation
The compensation of the Chief Executive Officer ("CEO") is determined
pursuant to the principles noted above. Specific consideration is given to the
CEO's responsibilities and experience in the industry and the compensation
package awarded to chief executive officers of the comparable companies. As
indicated in the Summary Compensation Table, the 1996 base salary of Mr. DeFeo
was $393,941 and the 1996 annual bonus was $360,000, a total increase of
$153,941 from 1995. In addition, Mr. DeFeo also received a conditional award of
options to purchase an aggregate of 25,000 shares of Common Stock under the 1996
Plan, and an award of 100,000 shares of Restricted Stock under the 1996 Plan.
(See "Proposal 3: Approval of an Amendment to the 1996 Plan to Increase the
Number of the Company's Common Stock Available for Issuance and to Qualify
Certain Performance Based Awards for Tax Deductibility"). In determining the
overall level of Mr. DeFeo's compensation and each component thereof, the
Compensation Committee retained an outside consultant who specifically advised
on Mr. DeFeo's compensation, and also took into consideration information
provided by multiple other independent, professional sources. The increase in
salary and bonus paid and award of options to purchase Common Stock to Mr. DeFeo
placed Mr. DeFeo's total compensation package at a level which is competitive
with that of chief executive officers of comparably sized companies. The
Committee recommended and the Board approved Mr. DeFeo's increase in salary and
bonus and the Restricted Stock award reflecting the Committee's assessment of
Mr. DeFeo's performance against his objectives. Specifically, the Committee
determined that Mr. DeFeo met or exceeded all of his objectives including the
successful disposition of the Company's Clark Material Handling Company, Common
Stock price improvement and 1996 operations plans. The Committee further
believes that the conditional award of Restricted Stock to Mr. DeFeo which vests
upon the attainment of certain performance goals promotes increases in
shareholder value over the next three years.
Federal Tax Implications for Executive Compensation
Section 162(m) of the Internal Revenue Code provides that no U.S. income
tax deduction is allowable to a publicly held corporation for compensation in
excess of $1 million paid to the chief executive officer or any other employee
whose compensation is required to be reported in the Summary Compensation Table,
if those individuals are employed by the corporation at year end.
"Performance-Based Compensation" is exempt from the $1 million limitation.
Performance-Based Compensation must be based upon meeting pre-established and
objective performance goals under a plan which has been approved by the
shareholders. Performance goals are not objective if the Compensation Committee
has any discretion to pay amounts in excess of those earned in accordance with
the achievement of pre-established criteria or to pay such compensation when the
performance criteria are not met. No Company executive officer, including the
Named Executive Officers, received compensation in 1996 in excess of $1 million.
Therefore, during 1996, it was not necessary for the Compensation Committee to
take any action to comply with the limit. At this time, it is possible that Mr.
DeFeo's or other Named Executive Officers' compensation could exceed $1 million
for 1997. To reduce or eliminate the amount of compensation which will not
qualify for a tax deduction, the Committee is recommending to the Board of
Directors an amendment to the 1996 Plan in order to qualify certain awards as
granted under the 1996 Plan, including the conditional grant to Mr. DeFeo of
100,000 shares of Restricted Stock as Performance-Based Awards. This amendment
is described under the heading "Proposal 3: Approval of an Amendment of the 1996
Plan to Increase the Number of Shares of the Company's Common Stock Available
for Issuance and to Qualify Certain Performance Based Awards for Tax
Deductibility" below. The Compensation Committee will continue to monitor this
situation and will take appropriate action if it is warranted in the future.
COMPENSATION COMMITTEE
G. CHRIS ANDERSEN
WILLIAM H. FIKE
DAVID A. SACHS
<PAGE>
Performance Graph
The following is a stock performance graph which shows the change in
market value of $100 invested in the Company's Common Stock, Standard & Poor's
500 Stock Index and a "Peer Group" index for the period commencing December 31,
1991 through December 31, 1996. The cumulative total stockholder return assumes
dividends are reinvested. The "Peer Group" consists of the following companies,
which are in similar lines of business as the Company (manufacturing of mobile
cranes and aerial lift products and heavy earthmoving trucks): Caterpillar,
Inc., Deere & Company, Harnischfeger Industries, Inc., Ingersoll Rand Company,
JLG Industries, Inc., The Manitowoc Company and NACCO Industries, Inc. The
companies in the indices are weighted by market capitalization. The stockholder
return shown on the graph below is not indicative of future performance.
Terex Corporation, S&P 500, Peer Group.
(Performance results through December 31, 1996)
The vertical axis of the line graph is scaled from $0.00 at the origin
extending upwards to $300.00, marked in increments of $50.00. The horizontal
axis begins with the year 1991 at the origin extending to the right through the
year 1996, marked in one year increments. The value of an assumed initial
investment of $100.00 in the Company's stock, in the S&P 500, and in the Peer
Group is plotted for each year on the horizontal axis using the data listed
below.
<TABLE>
<CAPTION>
Name 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Terex Corporation 100.0 77.88 52.88 53.85 36.54 77.88
Standards & Poor's 500 100.0 107.79 118.66 120.56 165.78 204.32
Peer Group 100.0 109.66 171.39 181.42 229.09 291.92
</TABLE>
Source: Value Line, Inc.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 28, 1995, Randolph W. Lenz retired as Chairman of the Board
and a Director of the Company. Mr. Lenz remains the Company's principal
stockholder. As of February 15, 1997, he beneficially owned, directly or
indirectly, approximately 33% of the outstanding Common Stock of the Company. In
connection with his retirement, the Company (acting upon the recommendations of
a committee comprised of its independent directors and represented by
independent counsel) and Mr. Lenz entered into a retirement agreement providing
certain benefits to Mr. Lenz and the Company. The agreement provides, among
other things, for a five-year consulting engagement requiring Mr. Lenz to make
himself available to the Company to provide consulting services for certain
portions of his time. Mr. Lenz, or his designee, received a fee for consulting
services which included payments in an amount, and a rate, equal to his 1995
base salary of $486,000 until December 31, 1996. The agreement also provided for
the (i) granting of a five-year $1.8 million loan bearing interest at 6.56% per
annum which is subject to being forgiven in increments over the five-year term
of the agreement upon certain conditions, and (ii) equity grants having a
maximum potential of 200,000 shares of the Company's Common Stock conditioned
upon the Company achieving certain financial performance objectives in the
future. Mr. Lenz received 33,333 shares of the Company's Common Stock on January
24, 1997, pursuant to the agreement. Mr. Lenz also agreed not to compete with
the Company, to vote his shares of the Company's Common Stock in the manner
recommended by the Company's Board of Directors and not to acquire any
additional shares of the Company's Common Stock.
On May 16, 1995, the U.S. Department of Labor (hereinafter, the "DOL")
wrote a letter to Randolph W. Lenz in which it alleged that at the time he was a
fiduciary of the Company's retirement plans, Mr. Lenz violated various
provisions of the Employee Retirement Income Security Act of 1974, as amended
(hereinafter, "ERISA") in making certain investments which may have been
imprudent and by possibly engaging in prohibited transactions under ERISA. As of
January 31, 1997, the DOL and Mr. Lenz entered into a settlement agreement which
obligated Mr. Lenz to pay certain amounts to the Terex Corporation Master
Retirement Plan Trust and to the DOL. In connection with the DOL investigation
and settlement, the Company incurred expenses (including legal fees) of
$208,745.
The Company, certain directors and executive officers of the Company,
and KCS, a Connecticut limited partnership principally owned by Randolph W.
Lenz, with whom the Company prior to January 1, 1994, had a management contract
to provide administrative, financial, marketing, technical, real estate and
legal services to the Company, are named parties in various legal proceedings
and government investigations. During 1996, the Company incurred $300,578 of
legal fees and expenses on behalf of Randolph W. Lenz, David J. Langevin and
Marvin B. Rosenberg, each as a director and executive officer of the Company and
KCS for all or part of 1996.
The Company intends that all transactions with affiliates are on terms
no less favorable to the Company than could be obtained in comparable
transactions with an unrelated person. The Board will be advised in advance of
any such proposed transaction or agreement and will utilize such procedures in
evaluating their terms and provisions as are appropriate in light of the Board's
fiduciary duties under Delaware law. In addition, the Company has an Audit
Committee consisting solely of independent directors. One of the
responsibilities of the Audit Committee is to review related party transactions.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and each person who is the beneficial owner of more than 10%
of the Company's outstanding equity securities, to file with the SEC and the
NYSE initial reports of ownership and changes in ownership of equity securities
of the Company. Specific due dates for these reports have been established by
the SEC and the Company is required to disclose in this Proxy Statement any
failure to file such reports by the prescribed dates during 1996. Officers,
directors and greater than 10% beneficial owners are required by SEC regulation
to furnish the Company with copies of all reports filed with the SEC pursuant to
Section 16(a) of the Exchange Act.
To the Company's knowledge, based solely on review of the copies of
reports furnished to the Company and written representations that no other
reports were required, all filings required pursuant to Section 16(a) of the
Exchange Act applicable to the Company's officers, directors and greater than
10% beneficial owners were complied with during the year ended December 31,
1996, except that Mr. Raben did not file a Form 4 in a timely manner in March
1995 relating to the purchase of 2,000 shares of Common Stock and did not file a
Form 4 in a timely manner in August 1995 relating to the purchase of 2,000
shares of Common Stock.
PROPOSAL 2: INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse LLP audited the consolidated financial
statements of the Company for 1996. The Board of Directors desires to continue
the service of this firm for 1997. Accordingly, the Board of Directors
recommends to the stockholders ratification of the retention of Price Waterhouse
LLP as the Company's independent accountants for the fiscal year ending December
31, 1997. If the stockholders do not approve Price Waterhouse LLP as the
Company's independent accountants, the Board of Directors will reconsider its
selection.
Representatives of Price Waterhouse LLP are expected to be present at
the Meeting with the opportunity to make a statement if they desire to do so,
and they are expected to be available to respond to appropriate questions.
The Board of Directors recommends that the stockholders vote FOR the
ratification of Price Waterhouse LLP as independent accountants for 1997.
PROPOSAL 3: APPROVAL OF AN AMENDMENT TO THE 1996 PLAN TO
INCREASE THE NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK AVAILABLE FOR ISSUANCE AND TO QUALIFY CERTAIN
PERFORMANCE-BASED AWARDS FOR TAX DEDUCTIBILITY
General
The Board of Directors adopted the 1996 Terex Corporation Long-Term
Incentive Plan (the "1996 Plan") on December 13, 1995, and the shareholders
ratified the 1996 Plan on May 15, 1996. The purpose of the 1996 Plan is to (a)
advance the interests of the Company and its stockholders by providing
incentives and rewards to those employees who are in a position to contribute to
the long-term growth and profitability of the Company and to outside directors,
(b) assist the Company and its subsidiaries and affiliates in attracting,
retaining and motivating highly qualified employees and outside directors for
the successful conduct of their business and (c) make the Company's compensation
program competitive with those of primary competitors.
The 1996 Plan authorizes the granting of (i) options ("Stock Option
Awards") to purchase shares of Common Stock, (ii) shares of Common Stock,
including Restricted Stock ("Stock Awards"), and (iii) bonus awards, included
Restricted Stock, based upon a participant's job performance ("Performance
Awards"). Subject to adjustment as described below under "Adjustments," the
aggregate number of shares of Common Stock optioned or granted under the 1996
Plan shall not exceed 300,000 shares.
To ensure that there are sufficient shares available under the 1996
Plan to enable the Company to achieve the objectives set forth above, the
Company proposes to increase the aggregate number of shares of Common Stock
(including Restricted Stock, if any) available to be optioned or granted under
the 1996 Plan from 300,000 to 1,000,000.
The 1996 Plan provides that a committee (the "Committee") of the Board
of Directors consisting of two or more members thereof who are non-employee
directors, shall administer the 1996 Plan and has provided the Committee with
the flexibility to respond to changes in the competitive and legal environments,
thereby protecting and enhancing the Company's current and future ability to
attract and retain directors and officers and other key employees and
consultants.
To reduce or eliminate the amount of compensation that will not qualify
as "Performance-Based Compensation" (see discussion in the Compensation
Committee Report under the heading "Federal Tax Implications for Executive
Compensation" above), the Board of Directors has adopted an amendment to the
1996 Plan, subject to shareholder approval, to qualify as Performance-Based
Compensation those Performance Awards that are based on performance targets (as
delineated in Article VIII of the amended 1996 Plan set forth below). The
maximum amount of Performance Awards which qualify as Performance-Based
Compensation that may be granted to a single participant with respect to a
calendar year cannot exceed ten times the participant's annual salary.
Performance Awards based on discretionary performance measures will continue not
to qualify for the Performance-Based Compensation exception. The conditional
grant to Mr. DeFeo of 100,000 shares of Restricted Stock is intended to qualify
as Performance-Based Compensation under the 1996 Plan, as amended by the
proposed amendment.
The 1996 Plan also provides for automatic grants of Stock Option Awards
to non-employee directors in accordance with Rule 16b-3 (c) (2)(ii) under the
Exchange Act. Under the 1996 Plan: (a) any individual who is appointed a
non-employee director after stockholder approval of the 1996 Plan shall be
awarded an option to purchase 25,000 shares of Common Stock; (b) any individual
who is serving as a non-employee director during the Company's most recent
fiscal year, five business days following the date on which the Company's Annual
Report on Form 10-K is filed with the SEC in the applicable year, shall be
awarded an option to purchase 7,500 shares of Common Stock at the closing price
of the Common Stock on the NYSE on the date of award; (c) any individual who is
serving as a non-employee director during the Company's most recent fiscal year,
five business days following the date on which the Company's Annual Report on
Form 10-K is filed with the SEC in the applicable year: (i) who also serves as a
chairperson of a committee of the Board of Directors, shall be awarded an option
to purchase 5,000 shares of Common Stock at the closing price of the Common
Stock on the NYSE on the date of award; or (ii) who also serves as a member of a
committee of the Board of Directors (and not as chairperson of such committee)
shall be awarded an option to purchase 2,500 shares of Common Stock at the
closing price of the Common Stock on the NYSE on the date of award; provided,
however, that the total number of shares awarded pursuant to clause (c) shall
not exceed an option to purchase in excess of 7,500 shares of Common Stock
during a single fiscal year.
Description of the Proposed Amendment to the 1996 Plan
Shares Available
To ensure that there are sufficient shares available under the 1996
Plan to enable the Company to achieve the objectives of the 1996 Plan, the
Company has proposed that Section 5.2 of the 1996 Plan be amended to provide
that the current aggregate number of shares of Common Stock (including
Restricted Stock, if any) available to be optioned or granted shall be increased
from 300,000 shares to 1,000,000 shares.
Performance Awards
Pursuant to Article VIII of the 1996 Plan, the Committee may grant,
either alone or in addition to other awards granted under the 1996 Plan,
Performance Awards to such participants as the Committee, or its delegates,
authorizes. To qualify certain of the Performance Awards as "Performance-Based
Compensation" (as described in the Compensation Committee Report under the
heading "Federal Tax Implications for Executive Compensation" above), the Board
has approved an amendment to Article VIII of the 1996 Plan as follows:
<PAGE>
ARTICLE VIII
Performance Awards
The Committee may grant, either alone or in addition to other awards
granted under the Plan, cash bonuses or other awards, including Stock Options
and Restricted Stock, based on performance measures ("Performance Awards") to
such Participants as the Committee, or the Chairman, President, Executive Vice
President and Chief Financial Officer (acting as a group) of the Corporation, if
the Committee in its discretion delegates the right to allocate awards pursuant
to Section 4, authorizes and under such terms as the Committee establishes. With
respect to certain Performance Awards which the Committee intends to qualify for
a tax deduction ("Qualifying Performance Awards"), the Committee shall establish
targets only in terms of one or more of the following objective measures: Common
Stock price, earnings per share, total shareholder return, return on investment,
cost control, working capital, cash flow management, operating income, gross or
operating margins, cash flow margins, revenue growth, management development,
succession planning, earnings before interest and taxes, earnings before
interest, taxes, depreciation and amortization, net income, market share,
customer satisfaction or employee satisfaction. If the Committee does not desire
the Performance Award to qualify for a tax deduction, the measures of
performance or other criteria for such Performance Awards shall be established
by the Committee in its absolute discretion. Performance Awards, including
Qualifying Performance Awards, may be paid in cash, by grant of Stock Options or
Restricted Stock or any other form of property as the Committee shall determine.
Performance Awards shall entitle the Participant to receive up to a maximum of
100% of the Performance Award if the measures of performance established by the
Committee are met. The Committee shall determine the times at which Performance
Awards are to be made and all conditions of such awards. Performance awards
shall be subject to any applicable federal, state or local withholding tax
requirements. A Participant may not receive more than three (3) Performance
Awards in a single pay period. The maximum amount of Qualifying Performance
Awards that may be granted to any Participant with respect to each calendar year
(whether or not then vested) cannot exceed ten times the Participant's annual
salary. Qualifying Performance Awards shall be made in a manner that satisfies
Section 162(m) of the Internal Revenue Code of 1986, as amended.
The Board of Directors recommends that the stockholders vote FOR approval of the
proposed amendment to the 1996 Plan.
<PAGE>
OTHER BUSINESS
The Board does not know of any other business to be brought before the
Meeting. In the event any such matters are brought before the Meeting, the
persons named in the enclosed Proxy will vote the Proxies received by them as
they deem best with respect to all such matters.
STOCKHOLDER PROPOSALS
All proposals of stockholders intended to be included in the proxy
statement to be presented at the 1998 Annual Meeting of Stockholders must be
received at the Company's offices at 500 Post Road East, Westport, Connecticut
06880, no later than December 15, 1997.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, including financial statements, is being mailed to
stockholders of the Company with this Proxy Statement. The Annual Report does
not constitute a part of the Proxy Solicitation materials. Stockholders may,
without charge, obtain copies of the Company's Annual Report on Form 10-K filed
with the SEC. Requests for this report should also be addressed to the Company's
Secretary.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
Marvin B. Rosenberg
Secretary
April 4, 1997
Westport, Connecticut
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TEREX CORPORATION
The undersigned hereby appoints Ronald M. DeFeo, Marvin B. Rosenberg, and
David J. Langevin, and any one or more of them, proxies with power of
substitution to act, by unanimous vote, or if only one votes or acts then by
that one to vote for the undersigned at the Annual Stockholders' Meeting of
Terex Corporation, to be held at 11:00 A.M. local time, May 8, 1997 at the
Metropolitan Club, One East 60th Street, New York, New York, and any adjournment
thereof, as follows:
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE DIRECTORS NOMINATED IN ITEM 1. FOR THE RATIFICATION OF
SELECTION OF INDEPENDENT ACCOUNTANTS IN ITEM 2, FOR THE PROPOSED AMENDMENT TO
THE 1996 TEREX CORPORATION LONG TERM INCENTIVE PLAN IN ITEM 3, AND IN THE
DISCRETION OF THE BOARD OF DIRECTORS IN CONNECTION WITH ITEM 4. PLEASE MARK BOX
OR x .
1. ELECTION OF DIRECTORS: Ronald M. DeFeo, Marvin B. Rosenberg, G. Chris
Andersen, William H. Fike, Bruce I. Raben, David A. Sachs, Adam E. Wolf
FOR all WITHHOLD (INSTRUCTION: To withhold authority to
nominees AUTHORITY vote for an individual nominee, write
listed to vote for all that nominee's name on the space
above nominees listed above provided below.)
[ ] [ ] ___________________________________
2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF PROPOSED AMENDMENT TO THE 1996 TEREX CORP. LONG-TERM INCENTIVE
PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Upon such other business as may Please date, sign and mail this
properly come before the meeting or card in the enclosed
any adjournments, hereby revoking any envelope.
proxy heretofore given.
__________________________
(Stockholder's Signature)
__________________________
(Stockholder's Signature)
Dated __________________, 1997
Please sign exactly as name
appears above. When signing as
attorney, executor,
administrator, trustee, etc.,
use full title. If stock is held
jointly, each owner must sign.
1997 ANNUAL MEETING
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
