Stock Incentive Plan

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Under the Plan, up to 10,000,000 shares of AGCO’s common stock may be issued. As of December 31, 2021, of the 10,000,000 shares reserved for issuance under the Plan, approximately 4,000,968 shares remained available for grant, assuming the maximum number of shares are earned related to the performance award grants discussed below. The Plan allows the Company, under the direction of the Board of Directors’ Compensation Committee, to make grants of performance shares, stock appreciation rights, restricted stock units and restricted stock awards to employees, officers and non-employee directors of the Company.

Long-Term Incentive Plan and Related Performance Awards

The Company’s primary long-term incentive plan is a performance share plan that provides for awards of shares of the Company’s common stock based on achieving financial targets, such as targets for return on invested capital, operating margins, return on net assets and revenue growth, as determined by the Company’s Board of Directors. The stock awards under the Plan are earned over a performance period, and the number of shares earned is determined based on annual cumulative or average results for the specified period, depending on the measurement. Performance periods for the Company’s primary long-term incentive plan are consecutive and overlapping three-year cycles, and performance targets are set at the beginning of each cycle. The primary long-term incentive plan provides for participants to earn 33% to 200% of the target awards depending on the actual performance achieved, with no shares earned if performance is below the established minimum target. Awards earned under the Plan are paid in shares of common stock at the end of each three-year performance period. The percentage level achievement is determined annually or over the three-year cycle in aggregate, with the ultimate award that is earned determined based upon the average of the three annual percentages. The 2021 grant of performance award shares is subject to a total

shareholder return modifier. The compensation expense associated with these awards 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.

During 2021, the Company granted 281,310 performance awards related to varying performance periods. Compensation expense recorded during 2021, 2020 and 2019 with respect to awards granted was based upon the fair value as of the grant date. For the 2021 awards that included a market condition, the Company measured the fair value using a Monte Carlo simulation. The weighted average grant-date fair value of performance awards granted under the Plan during 2021, 2020 and 2019 was as follows:


	Years Ended December 31,
	2021		2020		2019
Weighted average grant-date fair value	$	123.33	$	70.84	$	61.01

Performance award transactions during 2021 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			582,952
Shares awarded			281,310
Shares forfeited			(40,350)
Shares earned			(309,198)
Shares awarded but not earned at December 31			514,714

Based on the level of performance achieved as of December 31, 2021, 330,174 shares were earned under the related performance period, including 97,818 shares earned as of December 31, 2020 related to certain retirees and other individuals. 330,174 shares were issued in February 2022, net of 125,363 shares that were withheld for taxes related to the earned awards. The Plan allows for the participant 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 participant’s statutory minimum federal, state and employment taxes which would be payable at the time of grant. In addition, assuming the maximum target levels of performance achieved, there were 59,182 shares earned as of December 31, 2021 related to certain retirees and other individuals that will be issued at the end of the relevant performance periods based on the ultimate level of performance achieved with respect to those periods.

As of December 31, 2021, 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, was approximately $20.6 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years. This estimate is based on the current projected levels of performance of outstanding awards. The compensation cost not yet recognized could be higher or lower based on actual achieved levels of performance.

Restricted Stock Units

During the year ended December 31, 2021, the Company granted 92,848 restricted stock unit (“RSU”) awards. These awards entitle the participant to receive one share of the Company’s common stock for each RSU granted and vest one-third per year over a three-year requisite service period. The 2020 grant of RSUs to certain executives has a three-year cliff vesting requirement subject to adjustment based on a total shareholders return metric relative to the Company's defined peer group. The compensation expense associated with all RSU awards is being amortized ratably over the requisite service period for the awards that are expected to vest. The weighted average grant-date fair value of the RSUs granted under the Plan during the years ended December 31, 2021, 2020 and 2019 were $113.91, $70.83 and $61.01, respectively. RSU transactions during the year ended December 31, 2021 were as follows:


Shares awarded but not vested at January 1			143,287
Shares awarded			92,848
Shares forfeited			(9,797)
Shares vested			(67,110)
Shares awarded but not vested at December 31			159,228

A majority of the 67,110 shares vested with respect to RSU awards during 2021 were issued in January 2021. 3,830 shares earned during 2021 related to certain retirees. During January 2022, 44,991 RSUs shares were issued, net of 23,726 shares that were withheld for taxes. The Plan allows for the participant 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 participant's statutory minimum federal, state and employment taxes which would be payable at the time of grant. As of December 31, 2021, the total compensation cost related to the unvested RSUs not yet recognized was approximately $8.5 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

Stock-settled Appreciation Rights

Certain executives and key managers were eligible to receive grants of SSARs through the year ended December 31, 2020. The Company did not grant any SSARs during the year ended December 31, 2021. The SSARs provide a participant with the right to receive the aggregate appreciation in stock price over the market price of the Company’s common stock at the date of grant, payable in shares of the Company’s common stock. The participant may exercise his or her SSARs at any time after the grant is vested but no later than seven years after the date of grant. The SSARs vest ratably over a four-year period from the date of grant. SSAR awards made to certain executives and key managers under the Plan are made with the base price equal to the price of the Company’s common stock on the date of grant. The Company recorded stock compensation expense of approximately $0.8 million, $1.9 million and $2.4 million associated with SSAR awards during 2021, 2020 and 2019, respectively. The compensation expense associated with these awards is being amortized ratably over the vesting period. The Company estimated the fair value of the grants using the Black-Scholes option pricing model.

The weighted average grant-date fair value of SSAR awards granted under the Plan and the weighted average assumptions under the Black-Scholes option model were as follows for the years ended December 31, 2020 and 2019:



	2020			2019
Weighted average grant-date fair value	$	12.31		$	11.34
Weighted average assumptions under Black-Scholes option model:
Expected life of awards (years)	3.0			3.0
Risk-free interest rate	1.5		%	2.6		%
Expected volatility	24.1		%	24.2		%
Expected dividend yield	0.9		%	1.0		%

SSAR transactions during the year ended December 31, 2021 were as follows:


SSARs outstanding at January 1	403,150
SSARs granted	—
SSARs exercised	(194,661)
SSARs canceled or forfeited	(13,878)
SSARs outstanding at December 31	194,611
SSAR price ranges per share:
Granted	$	—
Exercised	43.88 - 73.14
Canceled or forfeited	46.58 - 73.14
Weighted average SSAR exercise prices per share:
Granted	$	—
Exercised	64.41
Canceled or forfeited	68.51
Outstanding at December 31	68.33

At December 31, 2021, the weighted average remaining contractual life of SSARs outstanding was approximately four years. As of December 31, 2021, the total compensation cost related to unvested SSARs not yet recognized was approximately $0.8 million and the weighted-average period over which it is expected to be recognized is approximately one and one-half years.

The following table sets forth the exercise price range, number of shares, weighted average exercise price, and remaining contractual lives by groups of similar price as of December 31, 2021:


	SSARs Outstanding				SSARs Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Exercisable as of December 31, 2021	Weighted Average Exercise Price
$46.58 - $63.47	80,523	3.51	$	61.91	38,923	$	60.91
$72.74 - $73.14	114,088	4.41	$	72.86	35,013	$	72.99

	194,611				73,936	$	66.63

The total fair value of SSARs vested during 2021 was approximately $1.5 million. There were 120,675 SSARs that were not vested as of December 31, 2021. The total intrinsic value of outstanding and exercisable SSARs as of December 31, 2021 was $9.3 million and $3.7 million, respectively. The total intrinsic value of SSARs exercised during 2021 was approximately $13.6 million.

The excess tax benefit realized for tax deductions in the United States related to the exercise of SSARs, vesting of RSU awards and vesting of performance awards under the Plan was approximately $3.3 million for the year ended December 31, 2021. The excess tax benefit realized for tax deductions in the United States related to the exercise of SSARs and vesting of RSU awards and vesting of performance awards under the Plan was approximately $2.5 million for the year ended December 31, 2020. The excess tax benefit realized for tax deductions in the United States related to the exercise of SSARs and vesting of RSU awards and vesting of performance awards under the Plan was approximately $2.7 million for the year ended December 31, 2019. The Company realized an insignificant tax benefit from the exercise of SSARs, vesting of performance awards and vesting of RSU awards in certain foreign jurisdictions during the years ended December 31, 2021, 2020 and 2019.

On January 20, 2022, the Company granted 137,283 performance award shares (subject to the Company achieving future target levels of performance) and 91,583 RSUs under the Plan. The 2022 grant of performance award shares is subject to a total shareholder return modifier.

Director Restricted Stock Grants

Pursuant to the Plan, all non-employee directors receive annual restricted stock grants of the Company’s common stock. All restricted stock grants made to the Company’s directors 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 2021 grant was made on April 22, 2021 and equated to 9,117 shares of common stock, of which 7,899 shares of common stock were issued, after shares were withheld for taxes. The Company recorded stock compensation expense of approximately $1.4 million during 2021 associated with these grants.