STOCK COMPENSATION PLANS

The Company recorded stock compensation expense as follows for the three months ended March 31, 2014 and 2013 (in millions):



	Three Months Ended March 31,
	2014		2013
Cost of goods sold	$	0.5	$	0.6
Selling, general and administrative expenses	5.9		7.9
Total stock compensation expense	$	6.4	$	8.5

Stock Incentive Plan

Under the Company’s 2006 Long Term Incentive Plan (the “2006 Plan”), up to 10.0 million shares of AGCO common stock may be issued. The 2006 Plan allows the Company, under the direction of the Board of Directors’ Compensation Committee, to make grants of performance shares, stock appreciation rights and restricted stock awards to employees, officers and non-employee directors of the Company.

Employee Plans

The weighted average grant-date fair value of performance awards granted under the 2006 Plan during the three months ended March 31, 2014 and 2013 was $53.93 and $50.65, respectively.

During the three months ended March 31, 2014, the Company granted 864,600 awards related to the three-year performance period commencing in 2014 and ending in 2016, assuming the maximum target level of performance is achieved. The compensation expense associated with all awards granted under the 2006 Plan is amortized ratably over the vesting or performance period based on the Company’s projected assessment of the level of performance that will be achieved and earned. Performance award transactions during the three months ended March 31, 2014 were as follows and are presented as if the Company were to achieve its maximum levels of performance under the plan:



Shares awarded but not earned at January 1	2,808,519
Shares awarded	864,600
Shares forfeited or unearned	(67,296	)
Shares earned	—
Shares awarded but not earned at March 31	3,605,823

As of March 31, 2014, the total compensation cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved and earned, was approximately $49.0 million, and the weighted average period over which it is expected to be recognized is approximately two years.

During the three months ended March 31, 2014 and 2013, the Company recorded stock compensation expense of approximately $1.3 million and $1.1 million, respectively, associated with stock-settled appreciation rights (“SSAR”) awards. The Company estimated the fair value of the grants using the Black-Scholes option pricing model. The weighted average grant-date fair value of SSARs granted under the 2006 Plan and the weighted average assumptions under the Black-Scholes option model were as follows for the three months ended March 31, 2014 and 2013:



	Three Months Ended March 31,
	2014			2013
Weighted average grant-date fair value	$	13.13		$	22.22
Weighted average assumptions under Black-Scholes option model:
Expected life of awards (years)	3.0			5.5
Risk-free interest rate	0.9		%	0.8		%
Expected volatility	35.7		%	50.6		%
Expected dividend yield	0.8		%	0.8		%

SSAR transactions during the three months ended March 31, 2014 were as follows:



SSARs outstanding at January 1	1,094,836
SSARs granted	297,900
SSARs exercised	(5,575		)
SSARs canceled or forfeited	(20,181		)
SSARs outstanding at March 31	1,366,980
SSAR price ranges per share:
Granted	$	55.23
Exercised	21.45-52.94
Canceled or forfeited	21.45-56.98
Weighted average SSAR exercise prices per share:
Granted	$	55.23
Exercised	35.06
Canceled or forfeited	52.51
Outstanding at March 31	48.24

At March 31, 2014, the weighted average remaining contractual life of SSARs outstanding was approximately five years. As of March 31, 2014, the total compensation cost related to unvested SSARs not yet recognized was approximately $12.5 million and the weighted-average period over which it is expected to be recognized is approximately three years.

The following table sets forth the exercise price range, number of shares, weighted average exercise price, and remaining contractual life by groups of similar price as of March 31, 2014:



	SSARs Outstanding				SSARs Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$ 21.45 – $32.01	157,625	1.9	$	21.88	155,500	$	21.74
$ 33.65 – $43.39	128,900	2.9	$	33.87	127,450	$	33.76
$ 47.89 – $63.64	1,080,455	5.3	$	53.80	381,050	$	53.41
	1,366,980				664,000	$	42.22

The total fair value of SSARs vested during the three months ended March 31, 2014 was approximately $4.2 million. There were 702,980 SSARs that were not vested as of March 31, 2014. The total intrinsic value of outstanding and exercisable SSARs as of March 31, 2014 was $9.8 million and $8.7 million, respectively. The total intrinsic value of SSARs exercised during the three months ended March 31, 2014 was approximately $0.1 million. The Company realized an insignificant tax benefit from the exercise of these SSARs.

Director Restricted Stock Grants

The 2006 Plan provides for annual restricted stock grants of the Company’s common stock to all non-employee directors. The shares are restricted as to transferability for a period of one year. In the event a director departs from the Company’s Board of Directors, the non-transferability period expires immediately. The plan allows each director to have the option of forfeiting a portion of the shares awarded in lieu of a cash payment contributed to the participant’s tax withholding to satisfy the statutory minimum federal, state and employment taxes that would be payable at the time of grant. The 2014 grant was made on April 24, 2014 and equated to 18,846 shares of common stock, of which 14,907 shares of common stock were issued after shares were withheld for taxes. The Company will record stock compensation expense of approximately $1.1 million during the three months ended June 30, 2014 associated with these grants.

As of March 31, 2014, of the 10.0 million shares reserved for issuance under the 2006 Plan, approximately 2.5 million shares were available for grant, assuming the maximum number of shares are earned related to the performance award grants discussed above.