Eric Hansotia

About Eric Hansotia

Eric P. Hansotia, 56, is Chairman, President & CEO of AGCO and a director since October 2020; he became CEO on January 1, 2021 after serving as COO and senior leadership roles across AGCO’s precision agriculture and harvesting businesses . Under his tenure, AGCO executed major portfolio moves in 2024—including closing the PTx Trimble JV (85% ownership), merging PTx Trimble with Precision Planting, and divesting most of Grain & Protein—while delivering adjusted operating margin of 8.9% in an industry downturn, adjusted EPS of $7.50, and net sales of $11.7B (down 19.1% YoY) . For long-term incentives, AGCO uses three-year revenue growth and RONA with a relative TSR modifier; the 2022–2024 PSU cycle paid 126.2% of target, with TSR in the 63rd percentile vs MVIS Global Agribusiness Index . He is not an independent director; AGCO maintains a robust Lead Director structure to mitigate dual-role risks (CEO + Chairman) .

Past Roles

External Roles

Fixed Compensation

Notes:

• Annual base salary moved from $1.35M (2023) to $1.40M target rate in 2024 (+4%) .
• Aircraft personal use allowance up to 50 hours/year; life insurance equal to six times base salary .

Performance Compensation

Annual Incentive Plan (AIP) – 2024

AIP design: corporate-only goals (no individual goals), with sliding scale adjustments to manage cyclicality; exclusions applied for the first-year impact of PTx Trimble in 2024 to normalize targets .

Long-Term Incentives (LTI)

Design: PSUs 60% (3-year revenue growth 50% and 3-year RONA 50%, both subject to relative TSR modifier +/-20% vs MVIS Global Agribusiness Index); RSUs 40% (3-year ratable vesting) .

2022–2024 PSU Cycle Results:

Shares Earned (2022–2024 PSU):

2024 Grants:

Equity Ownership & Alignment

Employment Terms

Board Governance

• Board service: Director since October 2020; Chairman of the Board; Chair of the Executive Committee; not independent .
• Committee roles: Executive Committee Chair; not listed as member of Audit, Finance, Governance, Sustainability, or Talent & Compensation Committees .
• Board leadership: Combined CEO + Chairman with robust Lead Director model; Lead Director Michael C. Arnold; executive sessions held each regular Board meeting .
• Attendance: In 2024, the Board held five meetings; all directors attended at least 75% of Board and committee meetings on which they served .
• Director compensation: Employee directors (including Hansotia) receive no additional compensation for Board service .
• Independence: All directors independent except Hansotia and Mallika Srinivasan .

Multi-Year Compensation (CEO)

Compensation Structure Analysis

• High “at-risk” pay mix: Over 70% variable compensation for CEO, emphasizing long-term equity and performance alignment .
• Cyclicality management: Sliding scale targets for AIP and PSU RONA reduce volatility of payouts across cycles; 2024 AIP paid well below target amid industry downturn (27.5% attainment) .
• Governance safeguards: Double-trigger equity vesting on CIC; no excise tax gross-ups (post-2017 agreements; removed in CEO’s 2021 contract); NYSE-compliant clawback; hedging/pledging prohibited .
• Peer benchmarking: Target total compensation around the median of a 17-company industrial peer group (e.g., CNH Industrial, PACCAR, Trane, Rockwell Automation); updated in July 2024 to maintain comparability .

Equity Ownership & Alignment Details

Performance & Track Record

• 2024 financials: Net sales $11.6619B; adjusted operating margin 8.9%; adjusted net income $559.7M; adjusted EPS $7.50 .
• Strategic actions: Closed PTx Trimble JV (85% stake), launched PTx precision ag portfolio, divested majority of Grain & Protein, restructuring program to reduce structural costs .
• TSR context: Value of initial $100 TSR to $143.46 in 2024; PSU cycle TSR ranked 63rd percentile vs MVIS Global Agribusiness Index (no modifier applied) .

Say-on-Pay & Shareholder Feedback

• 2025 proposal: Board recommends “FOR” on NEO compensation; annual say-on-pay votes held .
• Engagement: Outreach to holders representing ~50% of shares; feedback supportive; no compensation concerns raised in 2024 engagement .

Compensation Committee Analysis

• Membership: Chaired by Suzanne P. Clark; members Sondra L. Barbour, David Sagehorn, Matthew Tsien; all independent .
• Consultant: Korn Ferry as independent adviser; no conflicts; 2024 fees ~$275,000 for comp advice; ~$218,600 for other services .

Related Party & Governance Red Flags

• Independence: Hansotia not independent; mitigated by strong Lead Director and committee independence .
• Hedging/pledging: Prohibitions in place; grandfathered pledges pre-12/3/2020 allowed until termination; equity pledged excluded from guideline counts .
• TAFE relationships: Board seat not continuing; Letter Agreement restricts accumulation; commercial relationships terminated in April 2024; ongoing litigation discussions .

Investment Implications

• Alignment and incentives: High equity weighting and stringent ownership requirements support long-term alignment; sliding scale metrics temper cyclical volatility but can elevate payout sensitivity when cycles turn, making PSU realization a key watchpoint .
• Retention and selling pressure: Significant unvested RSUs/PSUs and ENPP/DC benefits reduce near-term exit risk; monitor PSU vesting and Form 4 activity around vest dates for potential selling pressure signals .
• Governance risk mitigation: Dual CEO/Chair role offset by robust Lead Director structure, independent committees, clawback, and anti-hedging/pledging; no excise tax gross-ups reduce shareholder-unfriendly optics .
• Change-of-control costs: CIC payouts and full accelerated vesting imply meaningful transaction cost if a sale occurs; the illustrative CIC termination value ($35.3M) is material and should be considered in M&A scenarios .
• Strategic execution: Precision ag focus and portfolio restructuring are positive for margin resiliency; watch AIP and PSU target-setting changes and exclusions (e.g., PTx Trimble adjustments) to ensure continued pay-for-performance integrity .