AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN
(EFFECTIVE JANUARY 1,
2008)
I. PURPOSE;
EFFECTIVE DATE; PLAN YEAR
1.1
Purpose . Consistent with AGCO’s compensation
philosophy, the purpose of this Management Incentive Plan
(“Plan”) is to facilitate alignment of management with
corporate objectives and shareholder interests, in order to achieve
outstanding performance and to meet specific AGCO Corporation
(“Corporation”) financial goals. It is the intention of
the Corporation to establish an incentive compensation plan where
payments are competitive, tied to performance and offer shareholder
protection, and assist with the attraction and retention of key
management staff.
1.2
Effective Date . The Plan, as amended, will become effective
as of January 1, 2008.
1.3
Plan Year . The “Plan Year” shall be the twelve
(12)-month period ending December 31 of each year.
II.
ADMINISTRATION OF THE PLAN
Subject
to the provisions of the Plan, unless determined otherwise by the
Corporation’s Board of Directors, the Compensation Committee
of the Board of Directors (“Committee”) shall have the
sole authority and discretion:
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To
construe and interpret the Plan;
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To
establish, amend, change, add to, alter and/or and rescind rules,
regulations and guidelines for administration of the
Plan;
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To
make all designations and determinations specified in the
Plan;
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Except as noted herein, to determine
the amount of awards and payments to be made under the Plan and the
status and rights of any Participant to payments under the Plan;
and
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To
decide all questions concerning the Plan and to make all other
determinations and to take all other steps necessary or advisable
for the administration of the Plan.
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The
Plan will be funded annually as a part of the Corporation’s
annual budgeting process.
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Participation
is limited to key full-time personnel of the Corporation and its
subsidiaries who have the ability to materially impact the
financial success of the Corporation and have an acceptable
performance review or rating. Management will select the
participants each year with the approval of the Senior Vice
President, Human Resources. Notwithstanding the foregoing, the
Committee must approve all awards to elected officers of the
Corporation. As a guideline, eligible jobs should fall in grades
fourteen (14) and above. The Plan replaces any other type of bonus
or non-qualified profit sharing program that a participant may have
participated in previously.
Target
incentive awards will be a percentage of a participant’s
salary for the Plan Year. The Committee may change the target award
levels from time-to-time as it deems advisable. Initial target
award levels are:
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CEO: 130%
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CFO: 100%
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GMs: 70%
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Other SVPs: 50%
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Other Participants: Not more than
40%
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VI.
PERFORMANCE CRITERIA AND GOALS
6.1
Performance Criteria . Awards under the Plan may be based
upon corporate, regional/functional or personal goals. The
Corporate portion must be a minimum of 50% of the total target
award. Generally, three (3) to seven (7) performance measures will
be used to measure performance, and will differ depending on
participant’s position with the Corporation. The initial
performance measures are:
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SVP/Regional
General
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CEO and
CFO
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Managers
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Other
Participants
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• Corporate:
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• Corporate:
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EPS
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EPS
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- Free Cash
Flow
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- Free Cash
Flow
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- Customer
Satisfaction
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- Customer
Satisfaction
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• Functional/ Regional:
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• Functional/ Regional:
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Varies
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Varies
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6.2 Performance
Measures .
Performance
measures for executive officers (“Section 162(m)
Officers”), who are, or reasonably could be expected during
the Plan Year to be, among those subject to the deductibility
limitations of Section 162(m) of the Internal Revenue Code
(“Section 162(m)”) shall consist of one (1) or
more of the following, which may be applied on a company-wide,
geographic or operating unit basis:
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Earnings per share and/or growth in
earnings per share in relation to target objectives;
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Operating or free cash flow and/or
growth in operating or free cash flow in relation to target
objectives;
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Return on invested capital in
relation to target objectives;
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Revenue and/or growth in revenue in
relation to target objectives;
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Total stockholder return (measured
as the total of the appreciation of and dividends declared on the
Common Stock) in relation to target objectives;
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Net
income and/or growth in net income in relation to target
objectives;
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Return on stockholders’ equity
in relation to target objectives;
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Return on assets in relation to
target objectives;
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Return on common book equity in
relation to target objectives; and
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Customer satisfaction and/or
improvement in customer satisfaction.
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Specific
definitions initially shall be:
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EPS: Diluted and adjusted to exclude
restructuring and certain other infrequent items.
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Free Cash Flow: Cash flow from
operations less capital expenditures. Excludes cash flow from
financing such as increases in accounts receivables
securitizations.
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Customer Satisfaction: Overall
customer satisfaction index that measures after-sales service,
sales experience and product quality.
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Functional/Regional: Must be
approved by the appropriate Senior Vice President, CEO or
CFO.
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6.3
Weighting of Measures . The weighting will differ depending
on a participant’s position with the Corporation. The initial
weighting will be:
3
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Senior
Vice
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Regional
General
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CEO and
CFO
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Presidents
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Managers
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Other
Participants
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• Corporate
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• Corporate
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• Corporate
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Performance
is 70%
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Performance
is 50% of
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Performance
is not less
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of total
weight
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total
weight
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than 50% of
total
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- EPS:
43%
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- EPS:
40%
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weight
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• Weighting of
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- Free Cash
Flow:
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- Free Cash
Flow: 40%
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Functional/
Regional
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43%
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Performance
— Varies
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(Equal to
balance of
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Customer
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Customer
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weight not
applied to
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Satisfaction:
14%
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Satisfaction:
20%
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Corporate
measures)
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• Functional
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• Regional
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Performance
is 30%
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Performance
is 50% of
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of total
weight
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total
weight
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Varies
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Varies
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6.4
Performance Goals . The Committee shall approve annual
written objective performance goals reflecting corporate
performance not later than ninety (90) days after the
commencement of the Plan Year to which the goals relate (or such
earlier or later date as is permitted or required by
Section 162(m)). Such performance goals must be uncertain of
achievement at the time that they are established and determinable
by a third party with knowledge of the relevant facts. The
Committee may not exercise any discretion to increase the amount of
compensation that otherwise would be due upon attainment of any
performance goal.
VII. PLAN
TRIGGER; PAYMENT OF AWARDS; ADJUSTMENTS; DISCRETIONARY
AWARDS
7.1
Plan Trigger . Incentive awards will not be paid for any
category of performance measurement unless the Corporation achieves
the minimally acceptable specified plan trigger, which may be
specified as a percentage of budget. Notwithstanding the foregoing,
the Committee may waive one or more triggers to the extent
app
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