Donald DeFosset

About Donald DeFosset

Donald DeFosset, age 76, is an independent director of Terex (TEX) and has served on the Board since 1999. He retired in 2005 as Chairman, President and CEO of Walter Industries, and previously held senior operating roles at Dura Automotive and Navistar. He currently chairs Terex’s Compensation & Human Capital Committee (CHCC) and serves on the Governance, Nominating & Corporate Responsibility Committee (GNCRC). His experience centers on industrial operations, manufacturing, and CEO leadership, with deep knowledge of Terex built over his long tenure .

Past Roles

External Roles

Board Governance

• Independence: The Board determined all nominees are independent except the CEO; DeFosset is independent (no material relationship disclosed) .
• Committee assignments: CHCC Chair; GNCRC Member .
• Attendance and engagement: The Board met 9 times in 2024; all directors attended at least 75% of Board and committee meetings on which they served. Directors also conducted site visits in Mexico and Northern Ireland in 2024. Non-management directors meet in executive session at each regular meeting .
• Board leadership: Non-Executive Chairman structure (David A. Sachs) with regular independent executive sessions .
• Risk oversight:
  • Audit oversees financial controls, cybersecurity, related-party transactions/conflicts .
  • CHCC oversees compensation, human capital, culture/inclusion, and comp risk; no interlocks/insider participation in 2024 .
  • GNCRC oversees director independence, ESG, ethics/compliance, and Board evaluations .

Fixed Compensation

• Director pay structure and 2025 changes:
  • Annual Board retainer increased from $240,000 (2024) to $270,000 (2025) for outside directors; Non-Executive Chairman retainer increased from $150,000 (2024) to $170,000 (2025). No meeting fees .
  • Committee retainers (cash): Audit Chair $35,000; CHCC Chair $35,000; GNCRC Chair $25,000; Committee member $10,000 (each) .
  • Directors may elect cash, current shares (with 40% cash tax offset), or deferral into stock/bond funds per policy .

Policy note: 2024 outside director Board retainer was $240,000, plus CHCC Chair $35,000 and GNCRC member $10,000 as applicable; directors can choose cash vs stock vs deferral. No per‑meeting fees .

Performance Compensation

• Outside director equity: Directors can elect to take retainers in stock or defer into the stock fund; DeFosset received no stock award in 2024 (all-cash reported) .
• Company performance metrics overseen by CHCC (for executives; informs pay-for-performance governance):
  • Annual incentive quantitative metrics: Operating Profit (75% of quantitative portion; segment overweights for segment heads) and Net Working Capital as % of sales (25%). 2024 Company Operating Profit result: $531M → 45% of target; 2024 NWC quarterly results led to 29.3% of target for this metric .
  • Long-term incentives: 65% performance-based (ROIC and relative TSR) / 35% time-based RSUs. 2024 ROIC target 24.3% (ex-ESG); achieved 21.1% → 67.1% credit for 2024 tranche. TSR measured vs peer Benchmark Companies over 2024–2026 .

Other Directorships & Interlocks

• Current public company board: ITT Corporation (Director) .
• No CHCC interlocks or insider participation in 2024 (no reciprocal comp-committee relationships) .

Expertise & Qualifications

• Experienced CEO and senior operating executive in global industrials; brings manufacturing, operations, and financial acumen to Terex’s Board. Board biography cites extensive knowledge of Terex and insights into manufacturing, operational and financial matters .
• Board skills matrix attributes DeFosset with relevant strategy, manufacturing, risk management, technology oversight, CEO leadership, international business, and corporate governance experience (as summarized across the matrix) .

Equity Ownership

• Director stock ownership guideline: Outside directors are expected to hold stock equal to 3x annual retainer (i.e., $720,000 for 2024; $810,000 for 2025), accumulated within 4 years; invest at least half the retainer in stock until met .
• Anti-hedging/anti-pledging: Directors are prohibited from short sales, speculative trading (options), purchasing on margin or pledging Terex securities; insider trading policy governs all directors .
• Margin accounts: Proxy notes certain directors maintain margin securities accounts but reported no debt balances as of March 1, 2025 (mitigating collateral risk at that date) .

Governance Assessment

• Positives

  • Independent director; chairs CHCC with clear remit over compensation, culture, and human capital; GNCRC member overseeing ESG and governance; robust committee cadence (CHCC: 9; GNCRC: 5 meetings in 2024) .
  • Strong pay governance: independent consultant (Pay Governance), formal risk assessment, clear performance metrics (OP/NWC/STI; ROIC/TSR/LTI), clawback framework for officers, and robust stock ownership/anti-hedge/pledge policies .
  • Shareholder alignment signals: say‑on‑pay approval exceeded 97% in 2024 and ~94%+ each of last ten years; active outreach by CHCC chair to large holders .
  • Engagement: ≥75% attendance; Board site visits; routine executive sessions and governance evaluations .

• Potential Risk Indicators / RED FLAGS to monitor

  • Very long tenure (since 1999) may raise independence optics for some investors despite formal independence; balance with continuity benefits .
  • 2025 increase in guaranteed director cash retainers (Board retainer to $270k) could be viewed as pay inflation; rationale tied to benchmarking .
  • 2024 compensation for DeFosset reported entirely as cash ($225k), with no stock award in the proxy table—lower immediate equity alignment vs peers who elected stock; consider follow-up on stock ownership guideline status (guideline is 3x retainer) .
  • Not designated an audit committee financial expert; however, he does not serve on Audit .

No related-party transactions involving DeFosset were disclosed; Audit Committee reviews and must approve any such transactions under policy .