Stock Compensation Plans

3 Months Ended

Mar. 31, 2019

STOCK COMPENSATION PLANS

The Company recorded stock compensation expense as follows for the three months ended March 31, 2019 and 2018 (in millions):



	Three Months Ended March 31,
	2019		2018
Cost of goods sold	$	0.5	$	0.8
Selling, general and administrative expenses	12.0		8.4
Total stock compensation expense	$	12.5	$	9.2

Stock Incentive Plan

Under the Company’s Long-Term Incentive Plan (the “Plan”), up to 10,000,000 shares of AGCO common stock may be issued. As of March 31, 2019, of the 10,000,000 shares reserved for issuance under the Plan, approximately 3,127,344 shares were 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 weighted average grant-date fair value of performance awards granted under the Plan during the three months ended March 31, 2019 and 2018 was $61.01 and $71.40, respectively.

During the three months ended March 31, 2019, the Company granted 542,180 performance awards related to varying performance periods. The awards granted assume the maximum target levels of performance are achieved. The compensation expense associated with all awards granted under the 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. Performance award transactions during the three months ended March 31, 2019 were as follows and are presented as if the Company were to achieve its maximum levels of performance under the plan awards:



Shares awarded but not earned at January 1	938,862
Shares awarded	542,180
Shares forfeited	(3,620	)
Shares earned	(11,200	)
Shares awarded but not earned at March 31	1,466,222

As of March 31, 2019, 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 $53.2 million, and the weighted average period over which it is expected to be recognized is approximately two years. The compensation cost not yet recognized could be higher or lower based on actual achieved levels of performance.

Restricted Stock Unit Awards

During the three months ended March 31, 2019, the Company granted 165,160 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 compensation expense associated with these 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 three months ended March 31, 2019 and 2018 was $61.01 and $71.40, respectively. RSU transactions during the three months ended March 31, 2019 were as follows:



RSUs awarded but not vested at January 1	352,975
RSUs awarded	165,160
RSUs forfeited	(1,192	)
RSUs vested	(111,419	)
RSUs awarded but not vested at March 31	405,524

As of March 31, 2019, the total compensation cost related to the unvested RSUs not yet recognized was approximately $20.9 million, and the weighted average period over which it is expected to be recognized is approximately two years.

Stock-Settled Appreciation Rights

Compensation expense associated with the stock-settled appreciation rights (“SSAR”) awards is amortized ratably over the requisite service period for the awards that are expected to vest. The Company estimated the fair value of the grants using the Black-Scholes option pricing model. SSAR transactions during the three months ended March 31, 2019 were as follows:



SSARs outstanding at January 1	1,099,592
SSARs granted	243,600
SSARs exercised	(56,738	)
SSARs canceled or forfeited	(1,862	)
SSARs outstanding at March 31	1,284,592

As of March 31, 2019, the total compensation cost related to the unvested SSARs not yet recognized was approximately $6.0 million, and the weighted average period over which it is expected to be recognized is approximately three years.

Director Restricted Stock Grants

The Plan provides for annual restricted stock grants of the Company’s common stock to all non-employee directors. The 2019 grant was made on April 25, 2019 and equated to 19,386 shares of common stock, of which 14,105 shares of common stock were issued after shares were withheld for taxes. The Company recorded stock compensation expense of approximately $1.4 million during the three months ended June 30, 2019 associated with these grants.