STOCK COMPENSATION PLANS

The Company recorded stock compensation expense as follows (in millions):



	Three Months Ended March 31,
	2012		2011
Cost of goods sold	$	0.6	$	0.3
Selling, general and administrative expenses	7.8		4.4
Total stock compensation expense	$	8.4	$	4.7

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, stock options 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, 2012 and 2011 was $52.86 and $52.23, respectively.

During the three months ended March 31, 2012, the Company granted 1,018,014 awards primarily related to the three-year performance period commencing in 2012 and ending in 2014, assuming the maximum target level of performance is achieved. During the three months ended March 31, 2012, the Company also granted 98,778 awards related to a three- to five-year performance period that commenced in 2011 and ending in 2015, assuming the maximum target level of performance is achieved for operating margin improvement. 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, 2012 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	2,207,981
Shares awarded	1,116,792
Shares forfeited or unearned	(24,186	)
Shares earned	—
Shares awarded but not earned at March 31	3,300,587

As of March 31, 2012, 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 $64.0 million, and the weighted average period over which it is expected to be recognized is approximately three years.

During the three months ended March 31, 2012 and 2011, the Company recorded stock compensation expense of approximately $0.9 million and $0.7 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 Company utilized the “simplified” method for estimating the expected term of granted SSARs during the three months ended March 31, 2012 as afforded by SEC Staff Accounting Bulletin (“SAB”) No. 107, “Share-Based Payment (SAB Topic 14),” and SAB No. 110, “Share-Based Payment (SAB Topic 14.D.2).” The expected term used to value a grant under the simplified method is the mid-point between the vesting date and the contractual term of the SSAR. As the Company has only been granting SSARs since April 2006, it does not believe it has sufficient relevant experience regarding employee exercise behavior. 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, 2012 and 2011:



	Three Months Ended March 31,
	2012			2011
Weighted average grant-date fair value	$	22.50		$	22.58
Weighted average assumptions under Black-Scholes option model:
Expected life of awards (years)	5.5			5.5
Risk-free interest rate	0.8		%	2.0		%
Expected volatility	51.0		%	49.5		%
Expected dividend yield	—			—

SSAR transactions during the three months ended March 31, 2012 were as follows:



SSARs outstanding at January 1	832,060
SSARs granted	305,900
SSARs exercised	(21,250		)
SSARs canceled or forfeited	—
SSARs outstanding at March 31	1,116,710
SSAR price ranges per share:
Granted	$ 51.37-52.94
Exercised	21.45-33.65
Canceled or forfeited	—
Weighted average SSAR exercise prices per share:
Granted	$	52.89
Exercised	24.93
Canceled or forfeited	—
Outstanding at March 31	41.42

At March 31, 2012, the weighted average remaining contractual life of SSARs outstanding was approximately five years. As of March 31, 2012, the total compensation cost related to unvested SSARs not yet recognized was approximately $11.0 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 lives by groups of similar price:



	SSARs Outstanding				SSARs Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Exercisable as of March 31, 2012	Weighted Average Exercise Price
$21.45 – $32.01	256,532	3.6	$	22.18	187,563	$	22.04
$33.65 – $44.55	300,891	3.7	$	35.57	203,891	$	35.98
$47.89 – $56.98	559,287	5.8	$	53.39	138,837	$	55.61
	1,116,710				530,291	$	36.19

The total fair value of SSARs vested during the three months ended March 31, 2012 was approximately $2.4 million. There were 586,419 SSARs that were not vested as of March 31, 2012. The total intrinsic value of outstanding and exercisable SSARs as of March 31, 2012 was $9.9 million and $7.0 million, respectively. The total intrinsic value of SSARs exercised during the three months ended March 31, 2012 was approximately $0.6 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 three years, but are not subject to forfeiture. 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 2012 grant was made on April 26, 2012 and equated to 19,251 shares of common stock, of which 13,986 shares of common stock were issued after shares were withheld for taxes. The Company will record stock compensation expense of approximately $0.9 million during the three months ended June 30, 2012 associated with these grants.

As of March 31, 2012, of the 10.0 million shares reserved for issuance under the 2006 Plan, approximately 4.0 million shares were available for grant, assuming the maximum number of shares are earned related to the performance award grants discussed above.

Stock Option Plan

During the three months ended March 31, 2012, 2,000 stock options outstanding as of December 31, 2011 were exercised with an exercise price of $20.85. There were no stock options outstanding as of March 31, 2012 under the stock option plan. The total intrinsic value of options exercised during the three months ended March 31, 2012 was approximately $0.1 million. Cash proceeds received from stock option exercises was less than $0.1 million for the three months ended March 31, 2012. The Company did not realize a tax benefit from the exercise of these options.