AGCO
Annual Report 2021

Plain-text annual report

2021 Annual Report ChChaiairmrmrmmanann’s’s MMMMesesessasasasagegegge aaandndndnd 2222020202021111 HiHiHiHighghghghlilililighghghghtststst NoNoNoNotititicecec oof f f AnAnAnnununualall MMeeeeetititt ngngngng PrProxoxy y StStatatemmene t fof r thhe Annunnun al MMMeeeeting of Stockholders AnA nual Report on Form 10-KKK F A R M E R I - F O C U S E D S O L U T O N S T O S U S T A N A B L Y F E E D O U R W O R L D I Passion for our farmers is at the heart of everything we do. DEAR FELLOW SHAREHOLDERS, EMPLOYEES, CUSTOMERS, AND PARTNERS, “Farmers are uniquely positioned to help tackle both global hunger and climate change concerns.” r ’ I C H A R M A N S M E S S A G E Eric P. Hansotia Chairman, President, and Chief Executive Officer At AGCO, we are on a mission to help them do just that, and we are making meaningful progress. T en years ago, the World Wildlife Foundation estimated that farmers would need to produce more food in the next four decades than they had in the last 8,000 years of agriculture combined to feed our growing population. By their count, we have thirty years left to help farmers maximize their productivity and help sustain humanity. Addressing this immense challenge is at the core of our purpose as an organization: Farmer-focused solutions to sustainably feed our world. We are rapidly innovating the solutions farmers need to maximize their productivity while minimizing — and countering — environmental impacts. Farmers are uniquely positioned to help tackle both global hunger and climate change concerns. At AGCO, we are on a mission to help them do just that, and we are making meaningful progress. 2021 Performance Our focus throughout the COVID-19 pandemic has been two-fold — keep employees healthy and safe and keep our factories running to enable farmers to serve the global food supply. Supply sources were impacted by COVID-19 disruptions, capacity constraints and transportation delays. Our supply chain team worked around the clock to creatively address those challenges and contribute to our record year. AGCO delivered record results in 2021 supported by demand to replace an aging fleet and increased commodity prices that benefitted farmers. During 2021, AGCO reported net sales of approximately $11.1 billion, an increase of approximately 21.7% compared to 2020. Adjusted operating margins expanded over 210 basis points to 9.1%, due to higher sales and production levels as well as favorable pricing that helped to offset significant inflationary pressures. Reported net income per share was $11.85 and adjusted net income per share was $10.38, an increase of approximately 85% from 2020. Free cash flow was approximately $390.4 million, 1 ’ I C H A R M A N S M E S S A G E Financial Highlights (In millions, except for share amounts) Net Sales $9,041 $9,150, $11,138 2019 2020 2021 Adjusted Operating Income* $1,017 $639 $534 2019 2020 2021 Adjusted Earnings Per Share* $10.38 $5.61 $4.44 2019 2020 2021 Free Cash Flow* $627 $423 $390 2019 2020 2021 *See reconciliations of non-GAAP measures on p4. 2 “Our strategy is designed to respond to what farmers most want and need.” as compared to $626.6 million in 2020, due to the additional working capital requirements caused by the supply chain disruptions. These results, combined with our team’s focused execution, allowed us to strengthen our investments in the smart, sustainable solutions that farmers require. AGCO’s record results and strong balance sheet also enabled the return of almost $500 million to shareholders in 2021 in the form of quarterly dividends, a special variable dividend, and share repurchases. Farmer-First Strategy Grounded in our purpose, our new farmer-first strategy brings our vision of being farmers’ most trusted partner for industry-leading smart farming solutions to life. Introduced to our key stakeholders throughout 2021, our strategy is designed to respond to what farmers most want and need: satisfying and seamless interactions with AGCO and our dealer partners, and high quality, smart solutions that deliver agronomic and economic value to their operations. Delivering the exceptional brand experiences farmers want starts by actively seeking and responding to their feedback. Our new customer experience organization initiated a global Net Promoter Score approach to improve the consistency and frequency of customer feedback. This new framework focuses our organization on making meaningful changes to the customer experience. Delivering the high quality, smart solutions farmers need to maximize productivity and minimize environmental impact starts with deep understanding of farmers’ pain points and the agronomic challenges they experience. In addition to ongoing customer interactions in the field, we initiated a series of customer panels in 2021 to directly connect our leaders with farmers in each region. Farmers have an essential role to play in addressing ongoing food security and the effects of climate change. Their adoption of sustainable farming practices and smart farming solutions are key to meeting these challenges. Our smart solutions help farmers maximize yield and minimize their inputs, while practices such as no-till farming help farmers sequester carbon in the soil. In 2021, our precision agriculture sales grew to approximately $540 million, which was a 34% increase over the prior year. With the launch of 23 precision agriculture products in 2021 and further innovation from our Precision Planting retrofit offering, our technology- supported products are driving meaningful growth. Supported by an increase of over $60 million in research and development investments compared to 2020, we accelerated our innovation and investment progress in smart solutions throughout 2021. We acquired Headsight, which brings smart solutions to harvesting; Faromatics, which leverages  Members of the Precision Planting team confirm the smart farming products on the planter have optimally placed every seed. artificial intelligence and robotics to monitor poultry health; and Creative Sites Media, a software and app development company. We also announced our agreement to acquire Appareo, which develops software and hardware technologies that enhance user experience and maximize productivity. In addition, we announced investments in Greeneye Technology, an innovator in precision spraying, and Apex.AI, a developer of safety-certified software for mobility and autonomous applications. These new capabilities will enhance our development of industry-leading smart farming solutions. Increasing the automation of our products’ features will help farmers improve and sustain their operations. Automating complicated tasks now provides immediate value to farmers and is an important step to delivering fully autonomous machines in the future. Decarbonizing our operations and products is another way AGCO — and farmers — can positively impact climate change. We have converted 40% of our operations to renewable energy sources, with a goal to reach 60% or more by 2025. We are also actively working to reduce the emissions of our products to support farmers’ achievement of their sustainability goals, through cleaner engines and our investments and research into electrification and alternative fuel power sources. ’ I C H A R M A N S M E S S A G E Ongoing Commitment to Good Governance We have continued to evolve the composition of our Board of Directors to align the expertise of our directors with our strategic priorities. We welcomed three new directors to our Board in 2021. Bob De Lange, Group President, Services, Distribution and Digital, at Caterpillar Inc., brings extensive digitalization and global distribution experience to our Board. Matthew Tsien, retired Executive Vice President and Chief Technology Officer at General Motors, adds important technology and product development expertise to our Board. Niels Pörksen, Chief Executive Officer at Südzucker AG, brings European and global agriculture industry expertise to our Board. We also recently named David Sagehorn, retired Executive Vice President and Chief Financial Officer at Oshkosh Corporation, to our Board. We look forward to leveraging his financial expertise and experience associated with technology- rich vehicles. Our ongoing Board refreshment program reflects shareholder feedback and is designed to enhance shareholder value. Making an Impact This past year marked my first year as CEO of AGCO and the first year of our farmer-first strategy. I am proud of what the AGCO team achieved together in 2021, and our results show that we are on the right path. Farmers need us to rapidly innovate to help them address global food security and climate change. Our AGCO team is up for the challenge. Together, we are advancing the future of AGCO and agriculture. Thank you for your ongoing trust and partnership. Sincerely, Eric Hansotia Eric Hansotia Chairman, President and Chief Executive Officer 3 Reconciliation of Non-GAAP Measures (In millions, except per share amounts) As reported Impairment charges Restructuring expenses Gain on sale of investment in affiliate Deferred income tax adjustment Swiss tax reform As adjusted 2021 2020 2019 Income from Operations Net Income⁽¹⁾ Net Income per Share⁽¹⁾ Income from Operations Net Income⁽¹⁾⁽²⁾ Net Income per Share⁽¹⁾ Income from Operations Net Income⁽¹⁾⁽²⁾ Net Income per Share⁽¹⁾⁽²⁾ $ 1,001.4 $ 897.0 $ 11.85 $ 599.7 $ 427.1 $ 5.65 $ 348.1 $ 125.2 $ 1.63 – 15.3 – – – – 11.8 – – 0.16 – (123.4) (1.63) – – 20.0 19.7 – – – 10.0 19.5 (32.5) – – 0.13 0.26 (0.43) – – 176.6 9.0 – – – 176.6 8.3 – 53.7 (21.8) 2.29 0.11 – 0.70 (0.28) $ 1,016.7 $ 785.4 $ 10.38 $ 639.4 $ 424.2 $ 5.61 $ 533.7 $ 341.9 $ 4.44 (1) Net income and net income per share amounts are after tax. (2) Rounding may impact summation of amounts. 2021 2020 2019 Net cash provided by operating activities $ 660.2 $ 896.5 $ 695.9 Less: capital expenditures (269.8) (269.9) (273.4) Free cash flow $ 390.4 $ 626.6 $ 422.5 FORWARD-LOOKING STATEMENTS This annual report includes forward- looking statements, including the statements in the Chairman’s Message and other statements in this report regarding market demand, strategic initiatives, commitments and their effects, and general economic conditions. These statements are subject to risks that could cause actual results to differ materially from those suggested by the statements, including: Our financial results depend entirely upon the agricultural industry, and factors that adversely affect the agricultural industry generally, including declines in the general economy, adverse weather, increases in farm input costs, and lower commodity prices, will adversely affect us. In addition, it is unclear at this point what the impact upon us will be from the recent significant increases in energy costs. We face significant competition, and if we are unable to compete successfully against other agricultural equipment manufacturers, we would lose our customers and our net sales would decline. Our success depends on the introduction of new products, which requires substantial expenditures and may not be well-received in the marketplace. In addition, if we are unable to deliver precision agriculture and high-tech solutions to our customers, it could materially adversely affect our performance. Most of our sales depend on the retail customers obtaining financing, and any disruption in their ability to obtain financing, whether due to economic downturns or otherwise, will result in the sale of fewer products by us. A majority of the retail sales of our products is financed by our retail finance joint ventures with Rabobank, and any interruption or decrease on Rabobank’s part in funding the venture would adversely impact net sales. We depend on suppliers for raw materials, components, and parts for our products, and any failure by our suppliers to provide products as needed, whether due to the coronavirus or otherwise, or by us to promptly address supplier issues, will adversely impact our ability to timely and efficiently manufacture and sell products. Recently we have experienced significant supply chain issues with respect to a wide range of parts and components with a portion arising from the global semiconductor shortage. We may continue to face supplier bottlenecks and delays in all regions, as well as continued challenges with freight logistics, and we continue to work to mitigate the impact of these issues in order to meet end-market demand. A majority of our sales and manufacturing take place outside the United States, and many of our sales involve products that are manufactured in one country and sold in a different country, and, as a result, we are exposed to risks related to foreign laws, taxes and tariffs, trade restrictions, economic conditions, labor supply and relations, political conditions and governmental policies. These risks may delay or reduce our realization of value from our international operations. Among these risks are the uncertain consequences of Brexit, Russia’s invasion of Ukraine and tariffs imposed on exports to and imports from China. In particular, we sell a meaningful quantity of products in Ukraine (which is a significant grain producer) and also are a party to a joint venture in Russia, and while it is clear that the Russian invasion of Ukraine will impact our business, the extent of that impact currently is unclear. Volatility with respect to currency exchange rates and interest rates can adversely affect our reported results of operations and the competitiveness of our products. We are subject to extensive environmental laws and regulations, and our compliance with, or our failure to comply with, existing or future laws and regulations could delay production of our products or otherwise adversely affect our business. We are subject to raw material price fluctuations, which can adversely affect our manufacturing costs. We disclaim any obligation to update forward-looking statements except as required by law. 4 p#_graphictitle 2022 Proxy Statement and Notice of Annual Meeting of Stockholders Notice of Annual Meeting of Stockholders TIME AND DATE 9:00 a.m., Eastern Time, on Thursday, April 28, 2022 PLACE AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096 RECORD DATE Only stockholders of record as of the close of business on March 18, 2022 are entitled to notice of and to vote at the Annual Meeting or any postponement or adjournment thereof. Attendance at the Annual Meeting is limited to stockholders of record at the close of business on March 18, 2022, and to any invitees of the Company. INSPECTION OF LIST OF STOCKHOLDERS OF RECORD A list of stockholders as of the close of business on March 18, 2022 will be available for examination by any stockholder at the Annual Meeting itself as well as for a period of ten days prior to the Annual Meeting at our offices at the above address during normal business hours. ITEMS OF BUSINESS: 1. To elect ten directors to the Board of Directors for terms expiring at the Annual Meeting in 2023; 2. To consider a non-binding advisory r r esolution to approve the compensation of the Company’s named executive officers; 3. To ratify t ff he appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2022; and 4. To transact any other business that may properly be brought before the meeting. We urge you to mark and execute your proxy card and return it promptly in the enclosed envelope or vote by telephone or electronically. In the event you are able to attend the meeting, you may revoke your proxy and vote your shares in person. We intend to hold our annual meeting in person. However, we are actively monitoring the COVID-19 pandemic, and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our annual meeting website at www.envisionreports.c / om/AGCO meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting. for updated information. If you are planning to attend our p rr By Order of the Board of Directors ROGER N. BATKIN Corporate Secretary Atlanta, Georgia March 28, 2022 2022 Proxy Statement 1 Summary This summary highlights information contained elsewhere in this proxy statement. Since this summary does not contain all of that information, we encourage you to read the entire proxy statement before voting. ANNUAL MEETING OF STOCKHOLDERS TIME AND DATE PLACE 9:00 a.m., Eastern Time, on Thursday, April 28, 2022 AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096 RECORD DATE March 18, 2022 VOTING Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. VOTING RECOMMENDATIONS Proposal Election of directors Board Vote Recommendation FOR EACH NOMINEE Advisory vote on executive compensation Ratification of the selection of KPMG LLP FOR FOR 2 AGCO Corp. DIRECTOR NOMINEES The following table provides summary information about each nominee. Directors are elected annually. AGCO has majorit y voting in uncontested elections of directors, such as this election. In the event that a nominee does not receive the affirmative vote of a majority of the votes cast in person or by proxy, he or she is required to tender his or her resignation. a SUMMARY Name Director Since Age Brief Biography Michael C. Arnold 65 2013 Lead Director of AGCO Corporation, Former President and CEO, Ryerson Inc. Sondra L. Barbour 59 2019 Former Executive Vice President, Lockheed Martinrr Corporation Suzanne P. Clark 54 2017 Chief Executive Officer, U.S. Chamber of Commerce Bob De Lange 52 2021 Group President, Servicrr and Digital, Caterpillar Inc. es, Distribution Committee Membership Independent EC AC TC FC GC l l l l l l l l l l Eric P. Hansotia 53 2020 Chairman, President and CEO, AGCO Corporation l George E. Minnich 72 2008 Former Senior Vice President and CFO, ITT Corporation l l l l Niels Pörksen 58 2021 Chief Executive Officer, Südzucker AG l l David Sagehorn 58 2022 Former Executive Vice President and CFO, Oshkosh Corporation Mallika Srinivasan 62 2011 Matthew Tsien 61 2021 Chairman and Managing Director, Tractors and Farm Equipment Limited (India) Former Executive Vice President and Chief Technology Officff er, General Motors, and Former President of General Motors Ventures EC Executive Committee TC Talent and Compensation Committee AC Audit Committee FC Finance Committee GC Governance Committee DIVERSITY OF NOMINEES(1) BOARD TENURE OF NOMINEES(1) 6 l l l Chair l Member 27% 18% 82% 73% Gender Ethnic 3 2 (1) As of March 18, 2022. < 4 years 4-8 years > 8 years 2022 Proxy Statement 3 SUMMARY GOVERNANCE UPDATE Commencing in 2020, we have continued to focus significant attention on a systematic and comprehensive review of our governance practices. Changes to-date include: • Adoption of a five-year term limit for chairs of our Audit, Governance and Talent and Compensation Committees; • A general refresh of committee assignments in order to bring fresh perspective; • A strengthening of our Lead Director Duties; • Adoption of a five-year term limit for our Lead Director; • An increase in the share ownership requirements for our directors and CEO; • Continuation of our board refresh process, with the addition of five new independent members within the last three years; including four since the beginning of 2021; and • A tightening of our hedging and pledging policy. The Governance Committee will continue to review and update our governance practices to serve the best interests of all of our shareholders. EXECUTIVE COMPENSATION ADVISORY VOTE We are asking stockholders to approve on an advisory br asis our named executive officer compensation. Commencing in 2020, in response to shareholder feedback, the Talent and Compensation Committee implemented significant changes to the performance-based aspects of our executive compensation. These followed a number of other changes made in 2020, including: • Changing the Chair of the Talent and Compensation Committee; • Engaging a new independent compensation consultant; • Significantly modifying ff executive retirement benefits; and • Refreshing the peer group of companies used for comparative purposes. In addition, our proxy statements include enhanced disclosure with respect to executive compensation related to 2020 and 2021. For more information on the Company’s executive compensation programs, please see “Proposal 2 — Non-Binding Advisory Resolution to Approve the Compensation of the Company’s NEOs” and “Compensation Discussion and Analysis” in this proxy statement. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for 2022. The Audit Committee has appointed KPMG LLP as the Company’s independent registered public accounting firm for 2022. KPMG LLP served as the Company’s independent registered public accounting firm for 2021 and is considered to be well-qualified. The Company’s Audit Committee considered a number of factors when selecting KPMG LLP, including qualifications, staffing considerations, and independence and quality controls. Set forthr below is summary i rr nformation with respect to KPMG LLP’s fees for services provided in 2021 and 2020. Type of Fees Audit Fees Audit-Related Fees Tax Fees Other Fees Total 4 AGCO Corp. 2021 2020 (in thousands) $ 7,211 $ 6,831 41 — — 65 — — $ 7,252 $ 6,896 Table of Contents Information Regarding the Annual Meeting Proposal 1 Election of Directors Board of Directors and Corporate Governance Proposal 2 Non-Binding Advisory Resolution to Approve the Compensation of the Company’s NEOs Proposal 3 Ratification of Company’s Independent Registered Public Accounting Firm for 2022 Other Business Principal Holders of Common Stock Executive Officers Letter from our Talent and Compensation Committee Compensation Discussion and Analysis Summary of 2021 Compensation 2021 Summary Compensation Table 2021 Grants of Plan-Based Awards Outstanding Equity Awards at Year-End 2021 SSAR Exercises and Stock Vested in 2021 Pension Benefits 2021 Pension Benefits Table Other Potential Post-Employment Payments 2021 CEO Pay Ratio Talent and Compensation Committee Report Audit Committee Report Certain Relationships and Related Party Transactions Annual Report to Stockholders Annual Report on Form 10-K Independent Registered Public Accounting Firm Stockholders’ Proposals Reconciliation of Non-GAAP Measures 6 8 13 23 25 25 26 28 30 32 50 51 53 54 56 57 59 60 63 64 65 67 68 68 68 68 69 2022 Proxy Statement 5 Information Regarding the Annual Meeting INFORMATION REGARDING PROXIES This proxy solicitation is made by the Board of Directors of AGCO Corporation, which has its principal executive offices at 4205 River Green Parkway, Duluth, Georgia 30096. By signing and returning the enclosed proxy card, you authorize the persons named as proxies on the proxy card to represent you at the meeting and vote your shares. If you attend the meeting, you may vote by ballot. If you do not attend the meeting, your shares can be voted only when represented by a proxy either pursuant to the enclosed proxy card or otherwise. You also may vote over the telephone or electronically via the internet as described on the proxy card provided to you. You may indicate a vote on the enclosed proxy card in connection with any of the listed proposals, and your shares will be voted accordingly. If you indicate a preference to abstain from voting, no vote will be cast. You may revoke your proxy card before balloting begins by notifying the Corporate Secretary in writing at 4205 River Green Parkway, Duluth, Georgia 30096. In addition, you may revoke your proxy card before it is voted by signing and delivering prior to the voting a proxy card bearing a later date or by attending the meeting and voting in person. If you return a signed proxy card that does not indicate your voting preferences, the persons named as proxies on the proxy card will vote your shares (i) in favor of all of the ten director nominees described below; (ii) in favor of the non-binding advisory r (“NEOs”); (iii) in favor of ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2022; and (iv) in their best judgment with respect to any other business brought before the Annual Meeting. rr esolution to approve the compensation of the Company’s Named Executive Officers The enclosed proxy card is solicited by the Board, and the cost of solicitation of proxy cards will be borne by the Company. The Company may retain an outside firm to aid in the solicitation of proxy cards, the cost of which the Company expects would not exceed $25,000. Proxy solicitation also may be made personally or by telephone by directors, officff ers or employees of the Company, without added compensation. The Company will reimburse brokers, custodians and nominees for their customary expenses in forwarding proxy material to beneficial owners. This proxy statement and the enclosed proxy card are first being sent to stockholders on or about March 28, 2022. The Company’s 2021 Annual Report or forthrr n Form 10-K is also enclosed and should be read in conjunction with the matters set herein. INFORMATION REGARDING VOTING Only stockholders of record as of the close of business on March 18, 2022, are entitled to notice of and to vote at the Annual Meeting. On March 18, 2022, the Company had outstanding 74,541,513 shares of common stock, each of which is entitled to one vote on each matter coming before the meeting. No cumulative voting rights exist, and dissenters’ rights for stockholders are not applicable to the matters being proposed. For directions to the offices of the Company where the Annual Meeting will be held, you may contact our corporate office at (770) 813-9200. QUORUM REQUIREMENT A quorum of the Company’s stockholders is necessary to hold a valid meeting. The Company’s By-Laws quorum is present if a majority of the outstanding shares of common stock of the Company entitled to vote at the meeting are present in person or represented by proxy. Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspector of elections appointed for the meeting, who will also determine whether a quorum is present for the transaction of business. Abstentions and “broker non-votes” will be treated as shares that are present and entitled to vote for purposes of determining whether a quorum is present. A broker non-vote occurs on an item when a broker or other nominee is not permitted to vote on that item without instruction from the beneficial owner of the shares and the beneficial owner did not give instruction. provide that a yy 6 AGCO Corp. INFORMATION REGARDING THE ANNUAL MEETING VOTE NECESSARY FOR THE ELECTION OF DIRECTORS Directors are elected by a majority of the votes cast in person or by proxy at the Annual Meeting. See “Proposal 1 — Election of Directors” in this proxy statement for a more detailed description of the majority voting procedures in our By-Laws. Under the New York Stock Exchange (“NYSE”) rules, if your broker holds your shares in its name, your broker is not permitted to vote your shares with respect to the election of directors if your broker does not receive voting instructions from you. Abstentions and broker non-votes will not affect the election outcome. VOTE NECESSARY TO ADOPT THE NON-BINDING ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NEOs Adoption of the non-binding advisory r affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting. Because the stockholder vote on this proposal is advisory or Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation as the Talent and Compensation Committee deems appropriate. nly, it will not be binding on the Company or the Board. However, the Talent and rr esolution to approve the compensation of the Company’s NEOs requires the Under the NYSE rules, if your broker holds your shares in its name, your broker is not permitted to vote your shares with respect to the non-binding advisory resolution to approve the compensation of the Company’s NEOs if your broker does not receive voting instructions from you. Abstentions and broker non-votes will not affecff t the vote on this proposal. VOTE NECESSARY TO RATIFY THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2022 requires the affirff mative vote of a majority of the votes cast in person or by proxy at the Annual Meeting. Under the NYSE rules, if your broker holds your shares in its name, your broker is permitted to vote your shares with respect to the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2022 even if your broker does not receive voting instructions from you. Abstentions and broker non-votes will not affect the vote on this proposal. OTHER MATTERS With respect to any other matter that may properly come before the Annual Meeting for stockholder consideration, a matter generally will be approved by the affirmative vote of a majority of the votes cast in person or by proxy at the Annual Meeting unless the question is one upon which a different vote is required by express provision of the laws of Delaware, federal law, the Company’s Certificate of Incorporation or the Company’s By-Lyy aws or, to the extent permitted by the laws of Delaware, the Board has expressly provided that some other vote shall be required, in which case such express provisions shall govern. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS As required by rules adopted by the United Stated Securities and Exchange Commission, the Company is making this proxy statement and its annual report available to stockholders electronically via the Internet. The proxy statement and annual report trr o stockholders are available at www.agcocorp.com Filings” in our website’s “Investors” section located under “Company,” and the annual report to stockholders is available under the heading “Annual Reports” in our “Investors” section. . The proxy statement is available under the heading “SEC p g We intend to hold our annual meeting in person. However, we are actively monitoring the COVID-19 pandemic, and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our annual meeting website at www.envisionreports.com/AGCO p website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting. for updated information. If you are planning to attend our meeting, please check the / 2022 Proxy Statement 7 PROPOSAL 1 ELECTION OF DIRECTORS The Board recommends a vote “FOR” the nominees The Company’s By-Laws provide for a “majority voting” standard for the election of directors in uncontested elections. If an incumbent director does not receive the requisite majority vote, he or she would continue as a “carry or ver” director, but is required to tender his or her resignation. In that event, the Governance Committee will determine whether to accept the director’s resignation and will submit its recommendation to the Board. In deciding whether to accept a director’s also yy resignation, our Governance Committee and the Board may consider any factors that they deem relevant. Our By-Laws provide that the director whose resignation is under consideration will abstain from the deliberation process with respect to his or her resignation. In the event that a stockholder proposes a nominee to stand for election with nominees selected by the Board, and the stockholder does not withdraw the nomination prior to the tenth day preceding our mailing the notice of the stockholders meeting (i.e., a “contested election“), then our By-Laws For this year’s Annual Meeting, the Governance Committee has recommended, and the Board has nominated, the ten individuals named below to serverr as directors until the Annual Meeting in 2023 or until their successors have been duly elected and qualified. The following is a brief description of the business experience, qualifications and skills of each of the nominees: provide that directors will be elected by a plurality vote. yy MICHAEL C. ARNOLD Age: 65 Director since October 2013 Lead Director since January 2021 • Former President and Chief Executive Officer of Ryerson Inc. • Various senior management positions with The Timken Company from 1979 to 2010 including Executive Vice President; President, Bearings and Power Transmission Group; President, Industrial Group; Vice President, Bearings and Business Process Advancement; Director, Bearings and Business Process Advancement; Director, Manufacturing and Technology, Europe, Africa and West Asia (Europe) • Member of the Board of Directors of Kaiser Aluminum Corporation where he serves on the Compensation Committee • Former member of the Board of Directors of Gardner Denver, Inc. SONDRA L. BARBOUR Age: 59 Director since April 2019 • Former Executive Vice President, Leidos Holdings, Inc. from August 2016 to January 2017 • Former Executive Vice President, Information Systems & Global Solutions, Lockheed Martin Corporation from April 2013 to August 2016 • Various leadership positions at Lockheed Martin Corporation from 1986 to 2013, including Chief Information Officff er, Vice President of Corporate Internal Audit, Business Area Chief Information Officer and Vice President of Operations • Member of the Board of Directors of Nisource, Inc. • Member of the Board of Directors of Perspecta Inc., on the Audit and Nominating and where she servesrr Corporate Governance Committees • Former member of the Board of Directors of 3M Company • Member of the Fox School of Business Management Information Systems Advisory Board Qualifications and Skills: As CEO of Ryerson, Mr. Arnold led the transformation of the business under private equity ownership into a leader in its industry, and then through its successful initial public offering in 2014. At Ryerson and previously Timken, Mr. Arnold was a supplier to the agricultural industry, and at both developed extensive manufacturing and distribution expertise. independent director at Gardner Denver, he had an integral role in the sale of Gardner Denver to KKR. Mr. Arnold brings public company board and management, M&A, capital allocation, manufacturing, supply chain, strategy and technology expertise to the Board. In addition, Mr. Arnold has significant international experience, having been responsible for global businesses with facilities worldwide. As an r 8 AGCO Corp. retiring r Qualifications and Skills: During her 30-year career with Lockheed Martin, as Executive Vice President of Information Systems & Global Solutions, Ms. Barbour oversaw one of the largest and most sophisticated information technology functions in the world, involving not just the routine IT functions of a 110,000+ employee business, but also supporting the design and manufacturing of fighter jets and other complex defense hardware and the provision of a broad range of technical, scientific, logistics, system integration and cybersecurity servicrr customers. She also managed Lockheed’s internal audit function. Ms. Barbour brings to the Board substantial information technology, internal control and international experience. es to SUZANNE P. CLARK Age: 54 Director since April 2017 PROPOSAL 1 ELECTION OF DIRECTORS BOB De LANGE Age: 52 Director since January 2021 • Chief Executive Officer of the U.S. Chamber of • Group President, Servicrr es, Distribution and Digital of Commerce since March 2021 • President of the U.S. Chamber of Commerce since June 2019 • Former Senior Executive Vice President and former Chief Operating Officer of the U.S. Chamber of Commerce • Led a prominent financial information boutique - Potomac Research Group (PRG) from 2010 through September 2014 • Formerly with the Atlantic Media Company as President of the National Journal Group, a premier provider of information, news and analysis for Washington’s policy and political communities • Member of the Board of So Others Might Eat, a Washington, D.C. support srr ystem for the homeless • Former President of International Women’s Forum (Washington Chapter), a global group of leading women in business, law, government, technology and the arts • Member of the Board of Directors and Audit Committee of TransUnion Qualifications and Skills: As Chief Executive Officer of the U.S. Chamber of Commerce, Ms. Clark has unequaled insight into nd commerce as well as the American industry ar international interests of the Chamber’s 300,000 members. Ms. Clark brings to the Board the ability to provide real-time guidance on many of the critical issues being considered in Washington and elsewhere, which could affect AGCO’s strategy and operations including sustainability, government regulation and trade and commerce. Caterpillar Inc., responsible for management of the Caterpillar brand and distribution network. • Various leadership positions since joining Caterpillar Inc. in 1993, including Group President of Construction Industries, Vice President, Excavation Division, and Worldwide Product Manager, Earthmoving Division. yy Qualifications and Skills: As a senior executive at Caterpillar, Mr. De Lange has unique experience from working at an international business that bears many similarities to AGCO in the issues that it faces as a result of its manufacture and distribution of highly-engineer ed equipment through a global manufacturing base and a broad network of distributors. Mr. De Lange brings to the Board direct experience and expertise in digitalization and the development of dealer capability against a background of the product design, supply chain, manufacturing and distribution issues experienced by AGCO. Mr. De Lange’s global experience includes world-wide product management responsibilities with significant work assignments in Europe and Asia. 2022 Proxy Statement 9 PROPOSAL 1 ELECTION OF DIRECTORS ERIC P. HANSOTIA Age: 53 GEORGE E. MINNICH Director since October 2020 Age: 72 Director since January 2008 • Chairman, President and Chief Executive Officer since January 1rr , 2021 • Former Senior Vice President and Chief Financial Officer of ITT Corporation from 2005 to 2007 • Senior Vice President — Chief Operating Officff er of • Several senior finance positions at United Technologies Corporation, including Vice President and Chief Financial Officer of Otis Elevator from 2001 to 2005 and Vice President and Chief Financial Officff er of Carrier Corporation from 1996 to 2001 • Various positions within Price Waterhouse (now PricewaterhouseCoopers LLP) from 1971 to 1993, serving as an audit partner from 1984 to 1993 rr • Member of the Boards of Directors and Audit Committees of Belden Inc. and Kaman Corporation and Chair of the Audit Committee for Belden Inc. e as the Chief Financial Officer of a Qualifications and Skills: Through his servicrr leading corporation and a former audit partner, Mr. Minnich has broad experience in a range of important issues that face every public company, including capital structure and allocation, accounting, internal control environment and risk management. Mr. Minnich also has had substantial experience on the audit committees of three publicly-traded companies, having chaired two of them. Mr. Minnich brings to the Board expertiserr different critical functions. that enables the Board to fulfill several AGCO from January 2019 to December 2020; Senior Vice President, Global Crop Cycle and Fuse Connected Services, from 2015 to January 2rr 019; and Senior Vice President, Global Harvesting and Advanced Technology Solutions, from 2013 to 2015. • Prior to joining AGCO, Mr. Hansotia held several positions within John Deere including Senior Vice President, Global Harvesting, from 2012 to 2013, and Vice President, Global Crop Care based in Mannheim, Germany from 2009 to 2012. Prior positions with John Deere included General Manager, Harvester Works from 2005 to 2009; Vice President, Global Forestry from 2004 to 2005; and various roles at John Deere from 1993 to 2004. • Member of the Board of Directors of Toro Co. including working in Europe, Qualifications and Skills: With almost 30 years of experience in the agricultural equipment industry,rr Mr. Hansotia has direct and extensive experience in almost every aspect of our business and has broad industry knowledge in order to be able to address the needs of farmers throughout the world. Mr. Hansotia has extensive experience in the agricultural equipment industry in the areas of engineering, quality, advanced technology, manufacturing and product management. More recently, he has led AGCO’s growing focus on precision agriculture, which we view as critical to the success of our farmers and the long-term sustainability of our food supply. Mr. Hansotia brings to the Board a strong strategic view on the future trends in global agriculture, proven global leadership experience as well as valuable subject matter expertise. 10 AGCO Corp. NIELS PÖRKSEN Age: 58 Director since October 2021 PROPOSAL 1 ELECTION OF DIRECTORS DAVID SAGEHORN Age: 58 Director since March 2022 • Chief Executive Officer at Südzucker AG since 2020; Südzucker AG (SZU: GR Xetra) is based in Germany and is one of the world’s largest sugar producers. • Former Group Executive of Portfolio Solutions at Nufarm, a leading agricultural chemical company based in Australia. • Former Executive Vice President and Chief Financial Officer of Oshkosh Corporation. • Various other management positions with Oshkosh Corporation from 2000 to 2007, including Vice President and Treasurer, Vice President, Business Development, and Vice President, Defense Segment. • Former member of the Executive Board of Nordzucker. • Certified Public Accountant • Former Chairman of the Board of Industrieverbrand ssociation. Agrar, a European agriculture industry arr • Various leadership positions with BASF in Germany including Divisional Head of Global Strategic Marketing, Managing Director for Plant Protection and Head of Product Development, Consulting and Registration. Qualifications and Skills: As a senior executive in the agricultural chemicals and commodities industries for over 20 years, Mr. Pörksen brings first hand experience of many of the issues that farmers face throughout the world. Mr. Pörksen has deep strategy experience combined with operational expertiserr in engineering, quality, manufacturing, sales, marketing and product management. He also brings a wealth of knowledge and involvement in international agricultural and commodity markets, especially in EME, from which almost 56% of AGCO’s sales are derived.” e for 13 years as the Chief Financial Qualifications and Skills: Through his servicrr Officer of a large, multi-national manufacturer of construction, defense and other heavy equipment, Mr. Sagehorn has first-hand experience with many of the finance and accounting issues faced by AGCO, as well as with the global compliance environment. His prior experience in business development adds value as AGCO continues to consider expansion through acquisitions, particularly in the precision farming area. His expertiser also adds depth to the Board’s expertise with audit, public-company disclosure and related functions. 2022 Proxy Statement 11 PROPOSAL 1 ELECTION OF DIRECTORS MALLIKA SRINIVASAN Age: 62 Director since July 2011 • Chairman and Managing Director of Tractors and Farm Equipment Limited, the second largest agricultural tractor manufacturer in India, since December 2019 and previously held various progressing positions at TAFE since 1986 • Director and Chair, Nomination and Renumeration Committee, Tata Steel Limited (India) • Member of the Global Board of the U.S. India Business Council and the U.S-India CEO Forum • Former member of the Board of Directors of Tata Consumer Products Limited (India) • Former President of the Tractor Manufacturers Association of India • Former member of the Board of Governors of the Indian Institute of Technology, Madras, and the Indian Institute of Management, Tiruchirappalli Qualifications and Skills: As the leader of India’s second largest tractor manufacturer, Ms. Srinivasan has over 35 years of first- hand experience in the agricultural farm machineryrr industry i rr n India, emerging markets, and several of other markets served by AGCO. Ms. Srinivasan also has experience as a Director of one of the leading global steel manufacturers, where she serves as Chair of Nomination and Remuneration Committee. Ms. Srinivasan brings to the Board both agricultural equipment and distribution knowledge and expertise together with public company board service. MATTHEW TSIEN Age: 61 Director since January 2021 • Former Executive Vice President and Chief Technology Officer, General Motors • Former President, General Motors Ventures, 2020 to 2021 • Former President of General Motors China 2014 to 2020 • Various other leadership positions since joining General Motors in 1976, including Executive Vice President and President of GM China; Vice President Planning, Program Management and Strategic Alliances, China; Executive Vice President, SAIC-GM- Wuling Automotive; Executive Director, Global Technology Engineering; Executive Director, Vehicle Systems, North America Product Development; Chief Technology Officff er and Director, Business Planning, GM China Qualifications and Skills: Through his 40-year career with General Motors prior to his recent retirement, including in his roles as Executive Vice President and Chief Technology Officer, Mr. Tsien helped lead one of the largest manufacturers in the U.S. evolve through successive generations of technology and performance requirements. He also has exceptional international experience, including his service as President of GM China, where he held profit and loss responsibility and led 50,000 workers producing automobiles for both the Chinese market and export.rr Mr. Tsien brings to the Board years of experience in engineering, electrification, connectivity, manufacturing, supply chain management and product design. Mr. Tsien has significant expertiserr management of, and investment in, evolving technologies. in the RETIRING DIRECTOR One of our directors is not standing for reelection. Mr. George Benson will retire as a result of our mandatory retirement age for directors and after 17 years of servirr ce on the Board. The Board thanks Mr. Benson for his dedicated and excellent service. DIRECTOR RECRUITMENT On an ongoing basis, we actively are seeking potential director candidates. Our Governance Committee, working with its independent advisors, identifies the skills that are desirable in light of the skills of our existing directors, particrr ularly those who are expected to retire in the near-trr erm, and regularly interviews potential candidates. As an example, Niels Pörksen, who joined the Board in 2021, brought experience in leadership of a European-based business and had substantial experience in the agricultural industry,r both of which were skills that the Governance Committee identified as being important for a future director. 12 AGCO Corp. Board of Directors and Corporate Governance DIRECTOR INDEPENDENCE In accordance with the rules of the NYSE, the Board has adopted categorical standards to assist it in making determinations of its directors’ independence. The Board has determined that in order to be considered independent, a director must not: • be an employee of the Company or have an “immediate family member,” as that term is defined in the General Commentary t preceding three years; r o Section 303A.02(b) of the NYSE rules, who is an executive officff er of the Company at any time during the • receive or have an immediate family member who receives or solely own any business that receives during any twelve-month period within the preceding three years direct compensation from the Company or any subsidiary orr affiliate in excess of $120,000, other than for director and committee fees and pension or other forms of deferred compensation for prior servirr ce to the Company or, solely in the case of an immediate family member, compensation for services to the Company as a non-executive employee; r other • be a current partner or current employee of a firm that is the internal or external auditor of the Company or any subsidiary or firm who personally works on an audit of the Company or any subsidiary orr r other affiliate, or have an immediate family member that is a current partner or current employee of such a r other affiliate; • have been or have an immediate family member who was at any time during the preceding three years a partner r or employee of such an auditing firm who personally worked on an audit of the Company or any subsidiary orr within that time; r other affiliaff te • be employed or have an immediate family member that is employed either currently or at any time within the preceding three years as an executive officer of another company in which any present executive officers of the Company or any subsidiary or Committee; or at the same time on the other company’s Talent and Compensation r other affiliate serverr or servedrr • be a current employee or have an immediate family member that is a current executive officer of a company that has made payments to or received payments from the Company or any subsidiary orr an amount which, in any of the preceding three years of such other company, exceeds (or in the current year of such other company is likely to exceed) the greater of $1.0 million or two percent of the other company’s consolidated gross revenues for that respective year. r other affiliate for property or servicrr es in In addition, in order to be independent for purposes of serving on the Audit Committee, a director may not: • accept any consulting, advisory or other compensatory f rr ee from the Company or any subsidiary;rr or • be an “affili ff ated person,” as that term is used in Section 10A(m)(3)(B)(ii) of the Securities Exchange Act of 1934 (the “Exchange Act”), of the Company or any of its subsidiaries. Finally, in order to be independent for purposes of serving on the Talent and Compensation Committee, a director may not: • be a current or former employee or former officer of the Company or an affilff iate or receive any compensation from the Company other than for services as a director; • receive remuneration from the Company or an affilff iate, either directly or indirectly, in any capacity other than as a “director,” as that term is defined in Section 162(m) of the Internal Revenue Code; or • have an interest in a transaction required under SEC rules to be described in the Company’s proxy statement. These standards are consistent with the standards set forth in the NYSE rules, the Internal Revenue Code and the Exchange Act. In applying these standards, the Company takes into account the interpretations of, and the other guidance atively determining the independence of any director who will serve on the Talent and available from, the NYSE. In affirmff Compensation Committee, the Board of Directors considers all factors specifically relevant to determining whether such director has a relationship to the Company which is material to that director’s ability to be independent from management in connection with the duties of the Talent and Compensation Committee member, including the independence factors set forthrr in the NYSE rules. 2022 Proxy Statement 13 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE Based upon the foregoing standards, the Board has determined that all of its directors are independent in accordance with these standards except for Mr. Hansotia and Ms. Srinivasan, and that none of the independent directors has any material relationship with the Company, other than as a director or stockholder of the Company. The Company and Tractors and Farm Equipment Limited (“TAFE”) are parties to a Letter Agreement, dated April 24, 2019, regarding the current and future accumulation by TAFE of shares of the Company’s common stock and certai n governance matters, including the Company’s nomination of a director candidate selected by TAFE. TAFE’s proposed director candidate for 2022 is Ms. Srinivasan, TAFE’s Chairman and Managing Director, and Ms. Srinivasan will be nominated for election by the Company’s Board of Directors. The Company and TAFE have several commercial relationships that are material to TAFE. See “Certain Relationships and Related Party Transactions” below for additional information. rr COMMITTEES OF THE BOARD OF DIRECTORS The Board has delegated certain functions to five standing committees: an Executive Committee, an Audit Committee, a Talent and Compensation Committee, a Finance Committee, and a Governance Committee. Each of the committees has a written charter. The Board has determined that each member of the Audit, Compensation and Governance Committees is an independent director under the applicable rules of the IRC, NYSE and SEC with respect to such committees. The following is a summary or f the principal responsibilities and other information regarding each of the committees: rr EXECUTIVE COMMITTEE AUDIT COMMITTEE Chair: Eric P. Hansotia Other Members: Michael C. Arnold Sondra L. Barbour Suzanne P. Clark George E. Minnich Chair: Sondra L. Barbour Other Members: P. George Benson George E. Minnich Matthew Tsien Principal Responsibilities Principal Responsibilities ff • Is authorized, between meetings of the Board, to take such actions in the management of the s of the Company which, in the business and affair opinion of the Executive Committee, should not be postponed until the next scheduled meeting of the Board, except as limited by the General Corporation Law of the State of Delaware, the rules of the NYSE, the Company’s Certifr icate of Incorporation or By-Laws or other applicable laws or regulations. • Assists the Board in its oversight of the integrity of the Company’s consolidated financial statements, the Company’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence and the performance of the Company’s internal audit function and independent registered public accounting firm. • Reviews the Company’s internal accounting and financial controls, considers other matters relating to the financial reporting process and safeguards of the Company’s assets and produces an annual report orr f the Audit Committee for inclusion in the Company’s proxy statement. • Reviews with management the Company’s risk assessment and risk management framework as well as relevant mitigation strategies. • Reviews information technology system controls and cybersecurity risks, along with measures to mitigate these risks. • The Board has determined that Ms. Barbour and r Mr. Minnich are “audit committee financial experts,” as that term is defined under regulations of the SEC. • The report of the Audit Committee for 2021 is set under the caption “Audit Committee Report.r ” forthrr 14 AGCO Corp. BOARD OF DIRECTORS AND CORPORATE GOVERNANCE TALENT AND COMPENSATION COMMITTEE FINANCE COMMITTEE Chair: Suzanne P. Clark Other Members: Sondra L. Barbour P. George Benson Niels Pörksen Matthew Tsien Chair: George E. Minnich Other Members: Sondra L. Barbour Bob De Lange Principal Responsibilities Principal Responsibilities • Assists the Board with respect to the Company’s compensation programs and compensation of the Company’s executives. • Responsible for the succession process for the Chief Executive Officer and other executive officers, including assisting the Board with respect to selecting, developing, evaluating, and retaining the Chief Executive Officer, other executive officers and key talent. • Has retained Korn Ferry t rr o advise on current trends and best practices in compensation. • The report of the Talent and Compensation Committee for 2021 is set forthrr “Talent and Compensation Committee Report.”r under the caption • Assists the Board in the oversight of the financial management of the Company including: • the capital structure of the Company; • the Company’s global financing strategies, objectives and plans; • the Company’s credit profile and ratings; • capital expenditure and investment programs of the Company; • the Company’s interests in finance joint ventures; and • the Company’s annual budget process and review. GOVERNANCE COMMITTEE Chair: Michael C. Arnold Other Members: Bob De Lange George E. Minnich Niels Pörksen Principal Responsibilities • Assists the Board in fulfilling its responsibilities to stockholders by: • identifying and screening individuals qualified to become directors of the Company, consistent with independence, diversity and other criteria approved by the Board, and recommending candidates to the Board for all directorships and for servicrr e on the committees of the Board; • developing and recommending to the Board a set of corporate governance principles and guidelines applicable to the Company; • overseeing the evaluation of the Board; and • overseeing and providing input to management on the Company’s identification, assessment and management of risks associated with sustainability issues, including, but not limited to, climate-related risks. 2022 Proxy Statement 15 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE COMMITTEE COMPOSITION AND MEETINGS The following table shows the current membership of each committee and the number of meetings held by each committee during 2021. The Company will determine the composition and chair positions of the respective committees for 2022 following the Annual Meeting. Director Michael C. Arnold Sondra L. Barbour P. George Benson(1) Suzanne P. Clark Bob De Lange Eric P. Hansotia George E. Minnich Niels Pörksen(2) David gSagehorn(3)(3) Mallika Srinivasan Matthew Tsien(4) Total meetings in 2021 Executive Audit Talent and Compensation5 Finance Governance ● ● ● ● ● 2 ● ● ● ● 14 ● ● ● ● ● 6 ● ● ● 6 ● ● ● ● 7 ● Committee Chair (1) Mr. Benson will not stand for re-election as of April 28, 2022. (2) Mr. Pörksen joined the Board on October 21, 2021. ● Member (3) Mr. Sagehorn joined the Board on March 15, 2022. (4) Mr. Tsien joined the Board on January 22, 2021. (5) During 2021, the role of the former Succession Planning Committee was added to the roles of the Talent and Compensation Committee. There were no Succession Planning Committee meetings in 2021. During 2021, the Board held ten meetings and each director attended at least 75% of the aggregate number of meetings of the Board and respective committees on which he or she served while a member thereof. IDENTIFICATION AND EVALUATION OF DIRECTOR NOMINEES The Governance Committee has an ongoing process in place to identify potential Board candidates who possess the skills and personal characteristics that will allow the Board and its committees to best fulfill their responsibilities. As part of this process, the Governance Committee develops specific candidate profiles to guide Board refreshment as needs arise. It has retained a leading global search firm to assist in identifying candidates where appropriate. Since 2017, the Board has added seven independent directors who each possess the desired expertise and meet the candidate profiles developed by the Committee. In addition to the specific profiles established for individual searches, there are a number of factors that the Committee generally views as relevant and is likely to consider to ensure the entire Board, collectively, embraces a wide variety of characteristics. These include: • career experience, partirr cularly experience that is germane to the Company’s business, such as with agricultural products and services, international operations, technology, distribution, product development and worldwide product management, sales, marketing, sustainability, legal, human resources and finance experience; • experience serving rr on other boards of directors or in the senior management of companies that have faced issues generally of the level of sophistication that the Company faces; • contribution to diversity of the Board and a commitment to further rr ing diversity; • integrity and reputation; • wisdom and judgment; 16 AGCO Corp. BOARD OF DIRECTORS AND CORPORATE GOVERNANCE • independence; • willingness and ability to partir cipate fully in the work of the Board and to attend meetings in person; and • current membership on the Company’s Board — our Board values continuity (but not entrenchment). The Governance Committee does not assign a particular weight to these individual factors. Similarly, the Committee does not expect to see all (or even more than a few) of these factors in any individual candidate. Rather, the Committee looks for a mix of factors that, when considered along with the experience and credentials of the other candidates and existing directors, will provide stockholders with a diverse and experienced Board. The Committee strives to recommend candidates who bring a unique perspective to the Board in order to contribute to the collective diversity of the Board. The Board believes that a diversity of experience, gender, race, ethnicity (national origin), age and other factors contributes to effecff stockholders. The Governance Committee reviews potential Board candidates against the criteria it has established, develops a short list of candidates to recommend to the Board, obtains Board input on the candidates, arranges interviews, and ultimately makes final recommendations to the Board for consideration. The Committee closely monitors the size and composition of the Board and makes recommendations as to the pace of Board refreshment so that it has the benefit of both fresh perspectives and the knowledge that tenure and experience with the Company provide. s of the Company for the benefit of its tive governance over the affair ff The Governance Committee welcomes recommendations for nominations from the Company’s stockholders and evaluates stockholder nominees in the same manner that it evaluates a candidate recommended by other means. In order to make a recommendation, the Committee requires that a stockholder send the Committee: • a resume for the candidate detailing the candidate’s work experience and academic credentials; • written confirmation from the candidate that he or she (i) would like to be considered as a candidate and would serve if nominated and elected, (ii) consents to the disclosure of his or her name, (iii) has read the Company’s Global Code of Conduct (the “Code”) and that during the prior three years has not engaged in any conduct that, had he or she been a director, would have violated the Code or required a waiver, (iv) is, or is not, “independent” as that term is defined in the committee’s charter , and (v) has no plans to change or influence the control of the Company; rr • the name of the recommending stockholder as it appears in the Company’s books, the number of shares of common stock that are owned by the stockholder and written confirmation that the stockholder consents to the disclosure of his or her name. (If the recommending person is not a stockholder of record, he or she should provide proof of share ownership); • personal and professional references for the candidate, including contact information; and • any other information relating to the candidate required to be disclosed in solicitations of proxies for election of directors or as otherwise required, in each case, pursuant to Regulation 14A of the Exchange Act. The foregoing information should be sent to the Governance Committee, c/o Corporate Secretary,r AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096, who will forward it to the chairperson of the Committee. The advance notice provisions of the Company’s By-Laws provide that for a proposal to be properly brought before a meeting by a stockholder, such stockholder must disclose certain information and give the Company timely notice of such proposal in written form meeting the requirements of the Company’s By-Laws anniversary drr respond directly to a submitting stockholder regarding recommendations. ate of the immediately preceding Annual Meeting of stockholders. The Committee does not necessarily no later than 60 days and no earlier than 90 days prior to the yy 2022 Proxy Statement 17 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE STOCKHOLDER OUTREACH AND GOVERNANCE UPDATE STOCKHOLDER OUTREACH During 2022 we continued an active stockholder outreach process. The outreach was broad: • We contacted our largest stockholders representing approximately 73% of our shares, and requested the opportunity to discuss AGCO with them. • We held discussions with stockholders representing approximately one-half of our shares, including seven of the largest ten. Our Lead Director, our Chief Executive Officer and our Chief Financial Officer participated in these discussions. • Some large stockholders are passive investment funds that do not generally meet with stockholders. The discussions were candid, and the feedback was supportivr e. The principal topics of discussion, other than AGCO’s performance generally, were: • Board refreshment, Board diversity and Board governance. • The redesigned 2021 executive compensation program. • Our increased focus on sustainability. Specific feedback included: • Positive and supportiverr feedback for the governance and compensation changes. • Encouragement to include non-financial goals within our compensation approach to further align with our key stakeholders. • Encouragement to include director tenure and diversity information in a more readily available form. Our 2022 incentive compensation metrics will include two new qualitative metrics: (1) an assessment of “Customer Satisfaction” that focuses on measuring progress that drives improved positive customer experiences, and (2) an overall “Employee Engagement” assessment of employee satisfaction and trends in our employees’ experience. Both metrics have baseline levels established in 2022. In addition, there will be a modifier element to these two new nonfinancial metrics based upon progress on achieving our strategic initiatives. The second page of the Summary sr shareholders to assess diversity on their own. ection of this proxy statement contains a chart that emphasizes tenure and enables The feedback was shared with our Governance Committee, our Talent and Compensation Committee, and our Board, and reflected in our approach to these issues. The topics raised by shareholders are addressed below and elsewhere in this Proxy Statement, with sustainability and human capital addressed in our Annual Report orr n Form 10-K. GOVERNANCE UPDATE In the summer of 2020, our Governance Committee began a systematic and comprehensive review of governance practices with the objective being to consider topics at each meeting and, over a reasonable time, to update our practices where the Committee concluded that there were alternative or additional practices that are in the best interests of our stockholders. To assist it in this process, the independent directors identified and retained a recognized independent expert.rr Subsequently, the Governance Committee considered in depth various governance topics, including: • Committee Chair Rotation. The Governance Committee implemented a term limit of five years for the Chairs of the Audit, Governance and Talent and Compensation Committees. While many companies do not have term limits for committee chairs – less than 20% of the S&P 500 have a policy on this – for those that do, almost 60% apply a five-year limit. We believe that the limit will better assure fresh perspectives in each committee’s consideration of appropriate topics. We believe that a The two chairs who had servedrr five-year limit is a best practice. more than five years as committee chairs were replaced at year-end. rr • Committee Structure arr rr nd Refreshment . We reviewed the board committee structure and considered the suggestion of Ms. Srinivasan that there be a separate Strategy Committee. That suggestion was not adopted based on the strong belief of our directors that strategy is the responsibility of all directors and should not be delegated. We also reviewed board committee membership and rotated committee members to enhance Board knowledge and continue to bring fresh perspectives. In 2021, the Succession Planning Committee was terminated, and its succession planning and talent development roles were moved to the Talent and Compensation Committee. • Lead Director Duties. When the Lead Director role initially was implemented, the Company adopted broad duties for the Lead Director consistent with those of other large publicly-tryy aded companies and the views at the time of the largest proxy advisors. The Governance Committee expanded those duties to reflect evolving practice in the area. The expanded 18 AGCO Corp. BOARD OF DIRECTORS AND CORPORATE GOVERNANCE duties include, among other things, a clearer role in overseeing meetings of non-management and independent directors, authority to implement decisions and recommendations of independent directors, authority to retain advisors and consultants with respect to all board functions (and not just with respect to compensation and recruiting), and a broader role in reviewing the performance of the Board. We believe that our revised Lead Director duties provide a robust role and reflect best practices. • Lead Director Rotation. Consistent with the discussion above of committee chair rotation, the Governance Committee implemented a limit for the Lead Director role, in the absence of exceptional circumstances, of five years. Almost no data is available with respect to practices elsewhere, but we believe that this is a prudent practice. • Share Ownership rr Requirements. The Governance Committee reviewed the share ownership requirements for directors at 17 peer companies. The requirement generally ranged from 3-times to 8-times a director’s cash retainer, with 11 companies applying a 5-times requirement and, the next most common, four companies applying a 3-times requirement. Based upon this review, the Governance Committee increased the requirement for our directors from 4-times to 5-times. At the same time, consistent with data on share ownership policies with respect to executive officers, the Governance Committee increased the share ownership requirement for our CEO from 5-times to 6-times base compensation. We believe that the revised ownership requirements reflect best practices. • Board Sizeii and Composition. Consistent with its annual practice, the Governance Committee reviewed the Board’s size and structure and considered it relative to the extensive ongoing Board refresh process the Board is pursuing. The Board has added seven new independent members since 2017 and believes that the refreshment process should proceed in a manner that gives new Board members the benefit of interacting with those having longer tenure. In addition, with the assistance of a third-partyr advisor, we completed a comprehensive refreshment of our strategy that was reviewed and adopted by the full Board. The Governance Committee determined that the specific expertise it had identified for its ongoing Board search was consistent with the strategic plan and would best serve the Company. • Hedging and Pledging. While we already had a policy prohibiting hedging and limiting pledging, the Governance Committee concluded that a stronger prohibition on pledging was appropriate. Previously, the policy prohibited only the pledging of a “significant” number of shares, which was defined as the lesser of 1% of the Company’s outstanding equity securities and 50% of the equity securities of the Company owned by the officer or director. As revised, the policy now prohibits all pledging. At the request of Ms. Srinivasan, as a result of her role at TAFE, the policy was narrowed to cover only securities where the director or officff er directly or indirectly controls a majority of the equity securities of the owner of the AGCO securities or otherwise directly controls the equity securities of the Company. We believe that these prohibitions are best practices and, with the exception of the narrowing requested by Ms. Srinivasan, are the most stringent possible. ff Independent of the systematic process of considering governance updates, the Governance Committee also considered the separation of the Chairman and CEO roles in connection with the retirement of Mr. Richenhagen as Chairman and CEO effective December 31, 2020. Although the Committee considers the Board and executive leadership structure regularly, in this instance, the specific consideration of the combination/separation of the Chairman and CEO roles took place at no ent Committee meetings over ten months, as well as at executive sessions, full-Board meetings and fewer than six differ meetings of the independent directors only. We also solicited input of stockholders with respect to retaining the combined role, and more stockholders were supportive of retaining the combined role than not. The Committee, and ultimately the full Board, considered an extensive range of issues and factors and unanimously concluded, other than Ms. Srinivasan, that it was in the best interests of stockholders to continue with a robust Lead Director structure. The process followed with respect to whether to separate the CEO and Chairman roles was careful, well-considered, and lengthy, with all directors having numerous opportunities to join meetings and share their views. The Governance Committee will continue to review this topic on an annual basis. As time permits at future meetings the Governance Committee will continue its review of governance practices, including director term limits, director mandatory retirement age, stockholder requirements for calling special meetings, stockholder ability to act by written consent, clawbacks, limitations on other board servicrr appropriate topics that are brought to the Committee’s attention. e (overboarding), proxy access, and other BOARD LEADERSHIP STRUCTURE Mr. Hansotia, who is also the Chief Executive Officer of the Company, serves as Chairman of the Board, Mr. Arnold servesrr as Lead Director of the Board. The Company holds executive sessions of its non-management directors at each regular meeting of its Board. The Lead Director presides over executive sessions and at all meetings of the Board in the absence of the Chairman, provides input to the Chairman on setting Board agendas, generally approves information sent to the Board (including meeting schedules to assure sufficient discussion time for all agenda items), ensures that he is available for consultation and direct communication at the request of majora stockholders, leads the performance evaluation process of the Chief Executive Officer and has the authority to call meetings of the independent directors. 2022 Proxy Statement 19 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE The Board reviews the Company’s board leadership structure annually. As part orr structures used by peer companies, alternative structures and the effectiveness of the Company’s current structure. The Board believes that having the Chief Executive Officer serverr Board’s intent that the Chief Executive Officer function as the Company’s overall leader, while the Lead Director provides independent leadership to the directors and serves as an intermediary between the independent directors and the Chairman. The resulting structure sends a message to our employees, customers and stockholders that we believe in having strong, unifying well-defined role provides an appropriate level of independent oversight and an effective channel for communications when needed. leadership at the highest levels of management. At the same time, having a Lead Director with a as Chairman is important because it best reflects the f this process, the Board considered the ff RISK OVERSIGHT The Company’s management maintains a risk assessment process that considers the risks that face the Company that management has identified as the most significant. The risk assessment process also considers appropriate strategies to mitigate those risks. Management periodically meets with the Company’s Audit Committee and reviews such risks and relevant strategies. CORPORATE GOVERNANCE PRINCIPLES, COMMITTEE CHARTERS AND GLOBAL CODE OF CONDUCT The Company provides various corporate governance and other information on its website. This information, which is also available in printed form to any stockholder of the Company upon request to the Corporate Secretary,rr following: includes the • our corporate governance principles and charters for the Audit, Talent and Compensation, Executive, Finance, and Governance Committees of the Board, which are available under the headings “Governance Principles” and “Charters of the Committees of the Board,” respectively, in the “Corporate Governance” section of our website located under “Investors;” and • the Company’s Global Code of Conduct, which is available under the heading “Global Code of Conduct” in the “Corporate Governance” section of our website located under “Investors.” In the event of any waivers of the Global Code of Conduct with respect to certain executive officers, those waivers will be available in the “Corporate Governance” section of our website. In addition, the Board also has agreed-upon “Roles, Responsibilities and Expectations” designed to provide for a uniform understanding of the operation and functioning of the Board and its collegial operations. TALENT AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2021, Messrs. Armes, Benson, Pörksen and Tsien and Mses. Barbour and Clark (Chair) served as members of the Talent and Compensation Committee. No member of the Talent and Compensation Committee was an officer or employee of the Company or any of its subsidiaries during 2021. None of the Company’s executive officers serve on the board of directors of any company of which any director of the Company servesrr as one of approximately 109 directors of the U.S. Chamber of Commerce, but is not on its compensation committee. as executive officer, except that Mr. Hansotia serves 20 AGCO Corp. BOARD OF DIRECTORS AND CORPORATE GOVERNANCE DIRECTOR COMPENSATION The following table provides information concerning the compensation of the members of the Board for the most recently completed year. As reflected in the table, each non-employee director received an annual base retainer of $120,000 plus $150,000 in restricted shares of the Company’s common stock for Board service. Committee chairmen received an additional annual retainer of $15,000 (or $25,000 for the chairman of the Audit Committee and $20,000 for the chairman of the Talent and Compensation Committee). Mr. Arnold, who was the Lead Director in 2021, also received an additional annual $30,000 Lead Director’s fee. Each non-employee director received an additional annual retainer of $6,000 if they served on three or more board committees. The Company does not have any consulting arrangements with any of its directors. Commencing with 2022, and consistent with the advice of its independent compensation advisors, the Company increased the annual restricted stock award to $165,000 and annual Lead Director’s fee to $40,000. 2021 DIRECTOR COMPENSATION Name(1) Roy V. Armes(3) Michael C. Arnold Sondra L. Barbour P. George Benson Suzanne P. Clark Bob De Lange Wolfgang Deml(4) Wolfgang Kirsch(5) George E. Minnich Niels Pörksen Gerald L. Shaheen(6) Mallika Srinivasan Matthew Tsien Total Fees Earned or Paid in Cash ($) Stock Awards(2) ($) All Other Compensation ($) Total ($) 96,848 165,000 149,850 120,000 140,000 120,000 41,909 37,253 141,000 23,478 37,354 120,000 113,000 150,000 150,000 150,000 150,000 150,000 150,000 — 150,000 150,000 — — 150,000 150,000 1,305,692 1,500,000 — — — — — — — — — — — — — — 246,848 315,000 299,850 270,000 290,000 270,000 41,909 187,253 291,000 23,478 37,354 270,000 263,000 2,805,692 (1) Mr. Hansotia, as an employee of the Company, was not compensated for his servicrr e on the Board. Mr. Pörksen joined the Board effective October 21, 2021. (2) The Long-Term Incentive Plan provides for annual restricted stock grants of the Company’s common stock to all non-employee directors. For 2021, each non-employee director was granted $150,000 in restricted stock. All restricted stock grants are restricted as to transferability for a period of one year following the award. In the event a director departs from the Board, the non-transferability period expires immediately. The 2021 annual grant occurred on April 22, 2021. The total grant on April 22, 2021 was 9,117 shares, or 1,013 shares per director. The amounts above reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation-Stock Compensation” (“ASC 718”). After shares were withheld for income tax purposes, each director held the following shares as of December 31, 2021 related to this grant: Mr. Armes — 1,013 shares; Mr. Arnold — 759 shares; Ms. Barbour — 1,013 shares; Mr. Benson — 607 shares; Ms. Clark — 1,013 shares; Mr. De Lange — 1,013 shares; Mr. Minnich — 759 shares; and Ms. Srinivasan — 709 shares; Mr. Tsien — 1,013 shares. (3) Mr. Armes resigned from the Board effective October 21, 2021. (4) Mr. Deml retired from the Board upon the expiration of his term on April 22, 2021. (5) Mr. Kirsch retired from the Board upon the expiration of his term on April 22, 2021. (6) Mr. Shaheen retired from the Board upon the expiration of his term on April 22, 2021. 2022 Proxy Statement 21 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE DIRECTOR ATTENDANCE AT THE ANNUAL MEETING The Board has adopted a policy that all directors on the Board are expected to attend Annual Meetings of the Company’s stockholders. Given the public health and travel concerns associated with the COVID-19 pandemic, all of the incumbent directors on the Board, except for Mr. Hansotia who attended in person, attended the Company’s Annual Meeting held in April 2021 virtually. STOCKHOLDER COMMUNICATION WITH THE BOARD OF DIRECTORS The Company encourages stockholders and other interested persons to communicate with members of the Board. Any person who wishes to communicate with a particr ular director or the Board as a whole, including the Lead Director or any other independent director, may write to those directors in care of Corporate Secretary,rr AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096. The correspondence should indicate the writer’s interest in the Company and clearly specify wff The Corporate Secretary wrr hether it is intended to be forwarded to the entire Board or to one or more particrr ular directors. ill forward all correspondence satisfying these criteria. 22 AGCO Corp. PROPOSAL 2 NON-BINDING ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NEOs Board recommends a vote “FOR” the non-binding advisory r rr esolution to approve the compensation of the Company’s NEOs. The Board is submitting a “say-on-pay” proposal for stockholder consideration. While the vote on executive compensation is non-binding and solely advisory i r n nature, the Board and the Talent and Compensation Committee will review the voting results and seek to determine the causes of any negative voting result to better understand any issues and concerns that our stockholders may have. We intend to hold annual say-on-pay votes. Stockholders who want to communicate with the Board or management regarding compensation-related matters should refer to “Stockholder Communication with the Board of Directors” in this proxy statement for additional information. Our compensation philosophy, program design and application, and the substantive changes that we made during 2021 are described under “Compensation Discussion and Analysis” and the letter from our Talent and Compensation Committee that precedes that discussion. COMPENSATION PHILOSOPHY AND PROGRAM DESIGN The Company’s compensation philosophy and program design is intended to support the Company’s business strategy and align executives’ interests with those of stockholders and employees (i.e., pay for performance). A significant portion of the y is related to factors that directly and indirectly influence stockholder value. Company’s executive compensation opportunit The Company believes that as an executive’s responsibilities increase, so should the proportion of his or her total pay comprised of annual incentive cash bonuses and long-term incentive (“LTI”) compensation, which supports and reinforces the Company’s pay for performance philosophy. r BEST PRACTICES IN EXECUTIVE COMPENSATION The Talent and Compensation Committee regularly reviews best practices related to executive compensation to ensure alignment with the Company’s compensation philosophy, business strategy and stockholder focus. The Company’s executive compensation programs consist of the following, several features of which were added in response to stockholder feedback: • A formal compensation philosophy approved by the Talent and Compensation Committee that targets executive’s total compensation levels (including NEOs) at the median (or 50th percentile) of the market and provides opportunity for upside compensation levels for excellent performance; • A well-defined peer group of similar and reasonably-sized industrial and manufacturing companies to benchmark NEO and other officer compensation; • An annual incentive compensation plan (“IC Plan”) that, for 2021 included targets that were 50% based upon adjusted operating margin and 50% based on return on net assets (“RONA”), both of which are adjusted on a sliding scale to address agricultural equipment industry crr yclicality; for 2022 the targets have been updated to be based 40% upon adjusted operating margin, 40% on RONA, 10% on “employee engagement,” and 10% on “Customer Satisfaction”; • A balanced long-term incentive plan (“LTI Plan”) consisting of (i) a performance share plan, which comprises approximately 60% of an NEO’s target LTI award and (ii) restricted stock units, which comprise approximately 40% of an NEO’s target LTI award. The performance share plan, as revised in 2021, includes targets that are 50% based upon three-year revenue growth relative to industry and 50% based upon three-year RONA, both subject to a Total Shareholder Return (“TSR”) modifier; • Awards under the LTI Plan include a so-called “double trigger” equity vesting in the event of change of control; • A clawback policy, which allows the Company to take remedial action against an executive if the Board determines that an executive’s misconduct contributed to the Company having to restate its financial statements; • Stock ownership requirements that encourage executives to own a specified level of stock, which emphasizes the alignment of their interests with those of stockholders; • Modest perquisites for executives (including NEOs); • A plan design that mitigates the possibility of excessive risk that could harm long-term stockholder value; 2022 Proxy Statement 23 PROPOSAL 2 NON-BINDING ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NEOs • For new executive employment agreements beginning in 2017 (including Mr. Hansotia’s 2021 employment agreement), no gross-ups for excise taxes on severance payments due to a change of control; and • A conservative approach to share usage associated with our stock compensation plans. When the Talent and Compensation Committee considers exceptions from these practices it does so only after deliberation and input from its compensation consultant. Ultimately, the Talent and Compensation Committee has and will continue to take action to structure the Company’s executive compensation practices in a manner that is consistent with its compensation philosophy, business strategy and stockholder focus. careful ff We are asking our stockholders to indicate their support frr or the Company’s NEO compensation as described in this proxy statement. This proposal gives our stockholders the opportunity to express their views on the Company’s NEO compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s NEOs and the philosophy, policies and practices thereof described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the Company’s stockholders approve, on an advisory br named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2021 Summary Compensation Table and the other related tables and accompanying narrative set forth in this Proxy Statement.” asis, the compensation of the Company’s 24 AGCO Corp. PROPOSAL 3 RATIFICATION OF COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022 The Board recommends a vote “FOR” the ratification of the Company’s independent registered public accounting firm for 2022 The Company’s independent registered public accounting firm is appointed annually by the Audit Committee. The Audit Committee examined a number of factors when selecting KPMG LLP, including qualifications, staffing independence and quality controls. The Audit Committee has appointed KPMG LLP as the Company’s independent registered public accounting firm for 2022. KPMG LLP served as the Company’s independent registered public accounting firm for 2021 and is considered to be well-qualified. considerations, and ff In view of the diffiff culty and expense involved in changing independent registered public accounting firms on short nr otice, should the stockholders not ratify the selection of KPMG LLP as the Company’s independent registered public accounting firm for 2022 under this proposal, it is contemplated that the appointment of KPMG LLP for 2022 will be permitted to stand unless the Board finds other compelling reasons for making a change. Disapproval by the stockholders will be considered a recommendation that the Board select another independent registered public accounting firm for the following year. A representative of KPMG LLP is expected to be present at the Annual Meeting and will be given the opportunity to make a statement, if they desire, and to respond to appropriate questions. Other Business The Board does not know of any matters to be presented for action at the Annual Meeting other than the election of directors, the non-binding advisory r r esolution to approve the compensation of the Company’s NEOs, and the ratification of the Company’s independent registered public accounting firm for 2022. If any other business should properly come before the Annual Meeting, the persons named in the accompanying proxy card intend to vote thereon in accordance with their best judgment. 2022 Proxy Statement 25 PRINCIPAL HOLDERS OF COMMON STOCK Principal Holders of Common Stock The following table sets forth certain who are, or may be deemed to be, the beneficial owner of more than five percent of the Company’s common stock. This information is based upon SEC filings by the individual and entities listed below, and the percentage given is based on 74,541,513 shares outstanding. information as of March 18, 2022 regarding persons or groups known to the Company rr Name and Address of Beneficial Owner Mallika Srinivasan Old No. 35, New No. 77, Nungambakkam High Road Chennai 600 034, India Tractor and Farm Equipment Limited Old No. 35, New No. 77, Nungambakkam High Road Chennai 600 034, India The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 BlackRock, Inc. 55 East 52nd Street New York, NY 10022 Shares of Common Stock 12,170,920 (1) Percent of Class 16.3 % 12,150,152 16.3 % 6,347,044 (2) 5,677,333 (3) 8.5 % 7.6 % (1) Includes shares held individually (20,768 shares) and through TAFE (8,886,831 shares) and TAFE Motors and Tractors Limited (3,263,321 shares). (2) The Vanguard Group has sole voting power with respect to none of its shares, shared voting power with respect to 32,403 of its shares, sole dispositive power with respect to 6,259,592 shares and shared dispositive power with respect to 87,452 of its shares. (3) BlackRock, Inc. has sole voting power with respect to 5,489,385 shares and sole dispositive power with respect to 5,677,333 shares. 26 AGCO Corp. The following table sets forth information regarding beneficial ownership of the Company’s common stock by the Company’s directors, the director nominees, the Chief Executive Officer of the Company, the Chief Financial Officer of the Company, the other NEOs and all executive officers and directors as a group, all as of March 18, 2022. Except as otherwise indicated, each such individual has sole voting and investment power with respect to the shares set forthrr table. in the PRINCIPAL HOLDERS OF COMMON STOCK Name of Beneficial Owner Michael C. Arnold Sondra L. Barbour P. George Benson(2) Suzanne P. Clark Bob De Lange(3) George E. Minnich Niels Pörksen(4) David Sagehorn(5) Mallika Srinivasan(6) Matthew Tsien(7) Andrew H. Beck Robert B. Crain Torsten R.W. Dehner Eric P. Hansotia Hans-Bernd Veltmaat All executive officff ers and directors as a group (22 persons) Shares of Common Stock(1) Shares That May be Acquired Within 60 Days Percent of Class 14,985 3,851 14,878 5,845 1,013 21,763 — — 12,170,920 1,013 92,280 42,966 7,556 69,652 101,342 12,606,721 — — — — — — — — — — — — — — — — * * * * * * * * 16.3 % * * * * * * 16.9 % * Less than one percent (1) Includes the following number of restricted shares of the Company’s common stock as a result of restricted stock grants under the Company’s incentive plans by the following individuals: Mr. Arnold — 759; Ms. Barbour — 1,013; Mr. Benson — 607; Ms. Clark — 1,013; Mr. De Lange — 1,013; Mr. Minnich — 759; Mr. Pörksen — 0; Ms. Srinivasan — 709; Mr. Tsien — 1,013; All directors as a group — 6,986. (2) Mr. Benson is not standing for re-election. (3) Mr. De Lange joined the Board on January 1, 2021. (4) Mr. Pörksen joined the Board on October 21, 2021. (5) Mr. Sagehorn joined the Board on March 15, 2022. (6) Includes shares held individually (20,768 shares) and through TAFE (8,886,831 shares) and TAFE Motors and Tractors Limited (3,263,321 shares). Ms. Srinivasan is the Chairman and Managing Director of TAFE and the Company owns a 20.7% interest in TAFE. (7) Mr. Tsien joined the Board on January 22, 2021. 2022 Proxy Statement 27 Executive Officers The following table sets forth information as of March 18, 2022, with respect to each person who is an executive of the Company. Name Eric P. Hansotia Bradley C. Arnold Roger N. Batkin Andrew H. Beck Kelvin Bennett Stefan Caspari Robert B. Crain Seth H. Crawford Torsten R.W. Dehner Luis F.S. Felli Ivory M. Harris Josip T. Tomasevic Hans-Bernd Veltmaat Age Positions 53 52 53 58 54 44 62 50 55 56 48 54 67 Chairman of the Board, President and Chief Executive Officer Senior Vice President and General Manager, Precision AGCO Senior Vice President — General Counsel, Chief ESG Officer and Corporate Secretary Senior Vice President — Chief Financial Officer Senior Vice President — Engineering Senior Vice President and General Manager, Grain and Protein Senior Vice President — Customer Experience Senior Vice President and General Manager, Precision Ag and Digital Senior Vice President and General Manager, Fendt/Valt t ra Senior Vice President and General Manager, Massey Ferguson Senior Vice President — Chief Human Resources Offiff cer Senior Vice President — Chief Procurement Officer Senior Vice President — Chief Supply Chain Officer Bradley C. Arnold has been Senior Vice President and General Manager, Precision AGCO since February 2r was Senior Vice President — Product Management from January 2021 to February 2rr President — Global Crop Cycle and Fuse Connected Servicrr Crop Cycle and Fuse from January 2r 2019, Commercial Services Director from 2012 to 2014 and Director of International Business Development from 2009 to 2012. Prior to joining Precision Planting LLC, Mr. Arnold held various leadership positions at Caterpillar Inc. es from January 2020 to January 2rr 019 to December 2019, General Manager of Precision Planting LLC from 2014 to 022. Mr. Arnold was Senior Vice 021, Vice President, Global 022. Mr. Arnold 022. Mr. Batkin was Senior Vice President — General Counsel and Corporate Secretary from January 2r 022. From 2013 to 2017, Mr. Batkin was Vice President, General Counsel and Corporate Secretary. Mr. Batkin Roger N. Batkin has been Senior Vice President — General Counsel, Chief ESG Officer and Corporate Secretary since January 2rr January 2rr was Vice President, Legal Services and Chief Compliance Officer for Europe/Africa/Middle East and Asia/Pacific from 2010 to 2013. Mr. Batkin was also Director of AGCO’s U.K. Operations between 2009 and 2013. Prior to joining AGCO, Mr. Batkin was an attorney with an international law firm. 018 to Andrew H. Beck has been Senior Vice President — Chief Financial Officer since June 2002. Mr. Beck was Vice President, Chief Accounting Officer from January 2002 to June 2002, Vice President and Controller from 2000 to 2002, Corporate Controller from 1996 to 2000, Assistant Treasurer from 1995 to 1996 and Controller, International Operations from 1994 to 1995. Kelvin Bennett has been Senior Vice President — Engineering since January 2021. Mr. Bennett was Vice President, Engineering from 2013 to December 2020, Director of Engineering from 2011 to 2013, Chief Engineer from 2009 to 2011, and Engineering Manager from 2007 to 2009. Prior to joining AGCO, Mr. Bennett held various engineering supervisor and managerial position at Clarke (currently Nilfisk Advance) from 2005 to 2007, Dixon (currently Husqvuarna) from 2004 to 2005, and CNH Global N.V. and its predecessors from 1994 to 2004. Stefan Caspari has been Senior Vice President and General Manager, Grain and Protein since January 2020. Mr. Caspari was Vice President and General Manager, Grain and Protein from April 2019 to December 2019, Vice President, Fuse Connected Services and Technology from 2017 to April 2019, Vice President, Global Strategy and Integration from 2015 to 2017 and Director, Strategy and Integration for Europe/Middle East from 2014 to 2016. Prior to joining AGCO, Mr. Caspari held several leadership positions at Zurich Insurance Group Ltd. and Arthur D. Little consulting firm. Robert B. Crairr n has been Senior Vice President — Customer Experience since January 2022. Mr. Crain was Senior Vice President and General Manager, North America from January 2rr 022, Senior Vice President and General Manager, Americas from 2015 to December 2019, and Senior Vice President and General Manager, North America from 2006 to 2014. Mr. Crain held several positions within CNH Global N.V. and its predecessors, including Vice President of America Agricultural Business, from 2004 to 2005, Vice President of CNH Marketing North America New Holland’s Northr Agricultural business, from 2003 to 2004 and Vice President and General Manager of Worldwide Operations for the Crop 020 to January 2rr 28 AGCO Corp. Harvesting Division of CNH Global N.V. from 1999 to 2002. Mr. Crain is also Vice Chairman of the Association of Equipment Manufacturers and serves on the Board of Directors of Pacific Ag Rentals. EXECUTIVE OFFICERS has been Senior Vice President and General Manager, Precision Ag and Digital since January 2021. Seth H. Crawfordff Mr. Crawford joined AGCO in 2019 as Vice President, FUSE Connected Services and Technology. Prior to joining AGCO, Mr. Crawford held several positions within John Deere from 1997 to 2019, including Director, Global Customer and Product Support, as well as various senior marketing roles including Worldwide Marketing Director, Construction and Forestry Division, and Marketing Director-Agrr & Turf Division, Europe, Russia, Northr Africa and the Middle East. Torsten R.W. Dehner has been Senior Vice President and General Manager, Fendt/Valt was Senior Vice President and General Manager, Europe/Middle East from January 2rr Global Parts and Europe/Middle East Partsrr Materials, Europe/Middle East - Commodity Director Powertrain & Perifery from 2015 to 2018, and Vice President, Purchasing and Materials, Europe/Middle East from 2010 to 2015. Prior to joining AGCO, Mr. Dehner held a number of leadership positions at Behr GmbH & Co. KG. es from 2018 to December 2019, Vice President, Purchasing and ra since January 2022. Mr. Dehner 020 to January 2022, Vice President, and Servicrr t .S.FF Felli has been Senior Vice President and General Manager, Massey Ferguson since January 2022. Mr. Felli was 022. Mr. Felli joined AGCO in Luis Fii Senior Vice President and General Manager, South America from January 2020 to January 2rr 2018 as President, AGCO, South America. Prior to joining AGCO, Mr. Felli held several leadership positions including General Director of Unipar Indupa S.A.I.C. from February 2rr Eldorado Brasil Celulose S.A. from 2013 to 2017, Operations Vice President for Atvos Agroindustrial Investimentos S.A. from 2008 to 2013, and Executive Vice President for Braskem S.A. from 2006 to 2008. Mr. Felli began his career at FMC Corporation. 017 to November 2017, Commercial Operations Director for ii Ivory M. Harris-Brown has been Senior Vice President — Chief Human Resources Officer since May 2021. Prior to joining AGCO, Ms. Harris spent 17 years with BASF, where she held HR leadership roles of increasing scope and responsibility throughout her tenure. Her most recent role was Vice President, People Service, US. Previous roles included Vice President, Total Rewards & Corporate HR Solutions, Northr Research. Ms. Harris also previously held a Senior Project Expert, International Delegation role that was based in Ludwigshafen, Germany. America and Global Director, Human Resources, Bioscience Josip T. Tomasevic has been Senior Vice President — Chief Procurement Officer since January 2019. From 2011 to 2018, Mr. Tomasevic was Vice President — Global Purchasing Materials. Prior to joining AGCO, Mr. Tomasevic was Head of Corporate Purchasing at Claas KGaA mbH. xecutive Advisory Br Hans-Bernd Veltmaat has been Senior Vice President — Chief Supply Chain Officer since January 2012. Mr. Veltmaat serves on the Industry Err Federal Institute of Technology Zurich. Mr. Veltmaat was Senior Vice President — Manufacturing & Quality from 2008 to 2011. Mr. Veltmaat was Group Executive Vice President of Recycling Plants at Alba AG from 2007 to 2008. From 1996 to 2007, Mr. Veltmaat held various positions with Claas KGaA mbH in Germany, including Group Executive Vice President, a member of the Claas Group Executive Board and Chief Executive Officer of Claas Fertigungstechnik GmbH. oard for the Executive MBA in Supply Chain Management Program at the Swiss 2022 Proxy Statement 29 Letter from our Talent and Compensation Committee HIGHLIGHTS FROM 2021: • First year of implementation of new executive compensation plan developed in 2020 • Modified short-term metrics for 2022 to add Customer Satisfaction and Employee Engagement to further align goals with strategic objectives • Continuation of investor outreach focusing on pay for performance and other prior input Dear Fellow Stockholders, Attracting and retaining the right leadership for AGCO is one of the Board’s most important responsibilities. As the Talent and Compensation Committee, we are committed to ensuring that AGCO’s leadership team is incented to perform by compensation programs aligned to both our strategy and the creation of long-term stockholder value. With this as our foundation, we have taken a number of actions this year to refine our compensation philosophy and address more comprehensively the impact of cyclicality on setting effective targets. FRESH PERSPECTIVES. In 2020 we determined that to support ar needed to bring new views and ideas. In support or Chair in 2020. In addition, after as our new compensation consultant in 2020. To date, the Committee, with management support ar consultation, has made several key changes to revise our compensation programs to reflect the refined philosophy and input from our stockholders. f this, the Board appointed a new Talent and Compensation Committee a thorough selection process, and consideration of several firms, we engaged Korn Ferry n enhanced approach to executive compensation, we nd Korn Ferryrr ff STOCKHOLDER ENGAGEMENT AND FEEDBACK. Stockholders’ support of our compensation program at our 2021 annual meeting increased significantly over 2020, with 92% voting in favor of our “say-on-pay” proposal. Despite this favorable feedback and improvement, we seek continued improvement through further understanding of our stockholders’ views. After contacting stockholders representing approximately 73% of our outstanding shares, we held discussions with stockholders representing approximately half of our shares, including seven of the ten largest. We received positive and supportive feedback for the compensation changes made for 2021 and encouragement to include non-financial goals within our compensation approach to provide further alignment with our key stakeholders. This valuable feedback will shape our ongoing approach to compensation practices. r KEY COMPENSATION PROGRAM CHANGES. Effecff tive for 2021, we: • Changed our performance metrics for short-term and long-term incentive awards • Introduced a sliding scale approach to adjust annual performance targets to cyclical changes in industry conditions • Adopted a new relative Total Shareholder Return (TSR) modifier applicable to Performance Shares (PSUs) • Froze the Executive Nonqualified Pension Plan (ENPP), with a transition to a defined contribution plan consistent with current market practices For 2022 awards, we revised the performance metrics for short-term incentive awards to include “Employee Engagement” and “Customer Satisfaction,” with the possibility of a modification to the awards for these new nonfinancial metrics based corporate strategy. We made these changes because we concluded that upon the implementation of our recently-updated these particular factors aligned closely with our strategy and warranted special focus by our management team. yy As we continue to review and evolve our compensation programs, we remain committed to gathering and incorporating stockholder feedback and welcome your input. We are confident that the changes we have implemented will support AGCO’s attraction and retention of key talent and drive robust business results and stockholder value. 30 AGCO Corp. LETTER FROM OUR COMPENSATION COMMITTEE DELIVERING RESULTS. AGCO’S results for 2021 were significantly improved over 2020 with regards to net sales, operating margins and earnings per share, which were all records for the Company. In a year where industry crr improved significantly over the course of 2021, we believe our new compensation program structure worked as intended. Rather than easily outperforming a fixed goal, our sliding scale approach to target setting resulted in targets that remained appropriately challenging to achieve. As a result, we believe that the compensation awarded to executives for their 2021 performance fairly rewards our executives and their respective teams for their achievements, as discussed in detail in our Compensation Discussion and Analysis. onditions The Talent and Compensation Committee looks forward to refining our compensation program and obtaining further stockholder feedback during 2022. TALENT AND COMPENSATION COMMITTEE Suzanne P. Clark (Chair) Sondra L. Barbour P. George Benson Matthew Tsien Niels Pörksen 2022 Proxy Statement 31 Compensation Discussion & Analysis NAMED EXECUTIVE OFFICERS (NEOs) Andrew H. Beck Senior Vice President, Chief Financial Officff er Robert B. Crain Senior Vice President, Customer Experience Torsten R.W. Dehner Senior Vice President and General Manager, ra t Fendt/Valt Eric P. Hansotia Chairman, President and Chief Executive Officer Hans-Bernd Veltmaat Senior Vice President, Chief Supply Chain Officer EXECUTIVE SUMMARY OUR 2021 BUSINESS PERFORMANCE AND FINANCIAL HIGHLIGHTS NET SALES ($ BILLIONS) ADJUSTED OPERATING MARGIN (%) ADJUSTED EPS ($) $11.1 $9.4 $9.0 $9.1 $8.3 9.1% 7.0% 5.9% 5.4% 5.0% $10.38 $5.61 $4.44 $3.89 $3.02 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 32 AGCO Corp. COMPENSATION DISCUSSION & ANALYSIS MARKET CONDITIONS Elevated soft commodity prices supported improved farm income in 2021 despite significantly higher farm input costs. These favorable farm fundamentals resulted in improved demand for agricultural equipment as farmers looked to upgrade their fleets. Global industry retail sales of farm equipment in 2021 were higher across AGCO’s key markets. Future demand for agricultural equipment will be influenced by farm income and farm land values, which largely are the function of commodity and protein prices, general economic conditions, crop yields, weather conditions and government policies and subsidies. FINANCIAL PERFORMANCE AGCO delivered record 2021 results highlighted by significantly higher net sales and margins compared to 2020. The performance was fueled by improved global industry demand and focused execution despite considerable supply chain challenges. Net sales for 2021 were approximately $11.1 billion, or 21.7% higher than 2020. Excluding favorable currency translation impacts of approximately 2.2%, net sales for the full year increased approximately 19.6% compared to 2020. Reported income from operations was approximately $1.0 billion in 2021 compared to $599.7 million in 2020. Adjusted operating margins reached 9.1% of net sales in 2021 as compared to 7.0% in 2020. The increase in income from operations in 2021 was primarily the result of improved margins, which benefited from positive pricing impacts and a favorable sales mix that offset substantial inflationary cr adjusted net income, excluding restructuring expenses and the reversal of valuation allowances previously established against the Company’s deferred tax assets in the United States and Brazil, was $10.38 per share. These results compare to reportedr restructuring expenses and a gain on sale of an investment, of $5.61 per share for 2020. net income of $5.65 per share and adjusted net income, which excludes a non-cash impairment charge, ost pressures. Reported net income was $11.85 per share, and Free cash flow, which is defined as net cash provided by operating activities less purchases of property, plant and equipment, was approximately $390.4 million during 2021, as compared to approximately $626.6 million during 2020. Additional working capital requirements caused by higher inventory l 2021 versus the same period in 2020. r evels resulted in lower free cash flow for the full year of Adjusted operating margin, adjusted EPS, free cash flow and net sales excluding the impact of currency translation are all non-GAAP measures and we provide reconciliations to the closest GAAP measures in the appendix at the end of this proxy statement. OVERVIEW Given the significant challenges created from the COVID-19 pandemic, including considerable supply-cyy hain disruptions, the Talent and Compensation Committee considers our performance during 2021 to be outstanding, supportedrr improvement in adjusted operating margins and earnings per share. As designed under the new compensation program implemented in 2021, the performance targets for both the short-term IC plan and the LTI plan significantly increased up a “sliding scale” as industry conditions improved throughout 2021. As a result, the performance targets remained appropriately challenging for management to achieve in contrast to fixed targets that would have been easily met given the improvement in industry conditions. In addition, and as further discussed below, the Committee determined it was appropriate to adjust the results of the short-tr erm incentive compensation performance metrics for 2021. After careful consideration and advice from its independent compensation consultants, this judgment was made in order to equitably account for the unforeseen impact of specifically-identified issues caused by the unprecedented supply chain disruptions experienced in 2021. The Committee considers the incentive compensation awards earned by executive management during 2021 to be well aligned with our operational performance. by 2022 Proxy Statement 33 COMPENSATION DISCUSSION & ANALYSIS 2020 AND 2021 STOCKHOLDER ENGAGEMENT RESPONSIVENESS TO STOCKHOLDER FEEDBACK AGCO undertook a broad outreach to stockholders, contacting holders of approximately 75% of our outstanding shares in 2020 and 73% of our outstanding shares in 2021. Our lead independent director, our Chief Executive Officer, our Chief Financial Officff er and, in 2020, the Chair of the Talent and Compensation Committee participated in some or all of these meetings. The full Board had robust discussions and thoughtfully considered our stockholders’ feedback. In response to their feedback, the Compensation Committee took a number of actions: WHAT WE WERE TOLD RESPONSE More closely tie compensation plans to performance and business strategy Align compensation to reduce the impact of industry volatility Ensure compensation programs are within market levels Disclose compensation plan targets Adjusted metrics for the annual incentive and selected new metrics for the long-term incentive (LTI) emphasizing relative performance Performance share unit grants under the LTI include relative TSR as a payout modifier Established performance targets for both short-ter m and long-term incentives based on a new sliding scale model to account for business cyclicality rr Froze the executive defined benefit retirement plan (plan was closed in August 2015 to new entrants) with a transition to an executive defined contribution plan Enhanced disclosure includes annual incentive (STI) threshold and maximum targets 2022 INCENTIVE PROGRAM OVERVIEW In light of the changes to our short-term and long-term incentive programs for 2021, there were only modest structural changes for 2022. Short-Term Incentive (STI) Program Compensation Vehicle Annual Incentives Measurement Period One year Metric Adjusted Operating Margin (40%) (previously 50%) (sliding scale relative to industry) Link to Performance and Strategy Aligns pay with performance and uses sliding scale approach for performance targets to manage cyclicality Return on Net Assets (RONA) (40%) (previously 50%) (sliding scale relative to industry) Margin improvement and sound asset management are key to improving financial performance Employee Engagement (10%) (new) Customer Satisfaction (10%) (new) Employee engagement supports employee retention and is critical to our ability to successfully implement our strategy Improved customer experience leads to better customer retention and improved sales 34 AGCO Corp. In addition, the Talent and Compensation Committee may modify the non-financial target awards based upon progress in the implementation of our recently-updated corporate strategy. COMPENSATION DISCUSSION & ANALYSIS Long-Term Incentive (LTI) Program Compensation Vehicle Performance Share Plan (PSP) Measurement Period Three years Metric 3-year Revenue growth (50%) (sliding scale relative to industry)rr Mix 3-year Return on Net Assets (RONA) (50%) (sliding scale relative to industry) 60% Both subject to relative TSR modifier (+/- 20%) Link to Performance and Strategy Aligns pay with performance and uses sliding scale approach for performance targets to manage cyclicality Revenue and RONA metrics balance between growth and asset return discipline Relative Revenue target and TSR modifier creates stronger pay-for-rr performance alignment Restricted Stock Units (RSUs) Three years 3-year ratable vesting period 40% Promotes retention of key talent The principal changes between 2020 and 2021 were (i) changes in the core metrics in order to utilize metrics that better erformance, thereby align with our business objectives, (ii) the utilization of targets that are adjusted to reflect industry prr adjusting automatically to reflect industry cyclicality, and (iii) the application of a TSR modifier to LTI awards in order to better tie incentives to shareholder performance. In addition, we discontinued the use of Stock Settled Stock Appreciation Rights (SSARs) in order to amplify the overall design. For 2022, the two existing metrics for the STI program were reduced from 50% each to 40% each and two new metrics were added for “Employee Engagement” and “Customer Satisfaction.” “Employee Engagement” is based upon the qualitative and quantitative results of AGCO-wide survey satisfaction and other feedback that are critical to employee retention, happiness and productivity. “Customer Satisfaction” assesses survey the Committee may modify the non-financial metrics based on its assessment of the implementation of AGCO’s yy recently-updated results of customers designed to measure their overall experience with AGCO. In addition, s with employees designed to identify t corporate strategy. rends in employee rr rr ff RELATIONSHIP BETWEEN COMPENSATION METRICS AND FINANCIAL PERFORMANCE DRIVERS OF OPERATING MARGIN (SHORT-TERM INCENTIVE) DRIVERS OF RETURN ON NET ASSETS (SHORT-TERM AND LONG-TERM INCENTIVES) DRIVERS OF 3-YEAR REVENUE GROWTH VS. INDUSTRY (LONG- TERM INCENTIVE, PSUS) • Focus on profitability • Cost control/expense management • Streamline operations • Near-term business execution returns • Working capital efficiency • Accountability for acquisition • Focus on profitability • Market share • Efficient use of long-term assets • Successful execution of business strategy • Focus on customer trends and requirements 2022 Proxy Statement 35 COMPENSATION DISCUSSION & ANALYSIS FINANCIAL PERFORMANCE AND COMPENSATION METRICS – IMPACT OF CYCLICALITY NET SALES AND ADJUSTED EPS 12 10 8 6 4 2 0 $10.8B $6.01 Net Sales Adj. EPS $11.1B $$10.388 $9.1B $5.61 2011 2013 2019 2020 2021 Our success depends in large part on the strength of the agricultural equipment industry.rr Historically, demand for agricultural equipment has been cyclical and generally reflected the economic health of the agricultural industry,rr which is impacted by a variety of economic and other factors such as commodity prices, farm income and government support. Accordingly, our financial results, including net sales, margins, earnings and cash flows, are heavily dependent on industry conditions in a given year. As reflected above, the global agricultural equipment cycle peaked in 2013, declined significantly starting mid-cycle levels driven largely by increases in commodity prices. in 2014 and began improving in 2017. In 2021, industry conditions improved appreciably to above rr Establishing appropriate performance targets is partir cularly challenging due to the cyclicality of our industry – a cyclicality that oftenff does not reflect the performance of the overall economy. Our objective is to provide targets that, with appropriate performance, are challenging but reasonable within the expected industry conditions over the duration of a performance period. Since industry crr significantly, largely due to unforeseen changes in conditions. onditions are difficult to forecast, our compensation payouts historically have varied The compensation structure for 2021 was redesigned to better address industry cyclicality, with the targets for both operating margins and RONA being on a sliding scale tied to the 10-year average sales data for the agricultural equipment d ments are based upon comparing the current fiscal year’s industry sales to the 10-year average. industry. The target adjust In periods where the industry experiences an increase in sales (such as in 2021), our targets will shift uff pward to account for the industry improvement. In periods where the industry experiences a decrease in sales, our targets will shiftff downward to account for industry drr ycle, the targets remain demanding but reasonable regardless of industry conditions, rewarding management for good decisions that take advantage of improving demand, and controlling costs and working capital when demand declines. By normalizing targets for cyclical industry conditions, executives will be rewarded for operational performance and quick response to changing demand. ecline. By adjusting targets to changes in the industry crr 36 AGCO Corp. ADJUSTING FOR CYCLICALITY IN GOAL-SETTING HOW SLIDING SCALE GOALS WORK As an example of how our sliding scale will work in practice, below are visual representations of both the Operating Margin and RONA goals as they will adjust along the 10-year industry sales average axis. COMPENSATION DISCUSSION & ANALYSIS I N G R A M G N T A R E P O I Maximum Target Threshold A N O R Maximum Target Threshold 80% Trough 90% 100% Mid-Cycle 110% 120% Peak 80% Trough 90% 100% Mid-Cycle 110% 120% Peak Industry level - % of 10-year industry average Industry level - % of 10-year industry average 2021 PERFORMANCE EVALUATION AND COMPENSATION AGCO entered 2021 having met and overcome many of the challenges that it encountered in 2020 following the onset of COVID-19. It had quickly established robust safety protocols for frontline workers, enabling production to continue, and successfully dealt with the steady flow of other issues that arose as a result of the pandemic. As a result, our key measures of performance improved in 2020 compared to 2019. For 2021, we experienced further improvement, with sales increasing by 21.7%, RONA improving by 940 basis points, and adjusted operating margins improving by 210 basis points, these being three of the metrics that are reflected in our new incentive compensation approach. Despite these improvements, 2021 had unexpected challenges of its own, particularly with respect to our supply chain. As the year progressed, key components periodically became unavailable, and we had to incur additional costs to minimize the disruption that this caused to our production and to provide much-needed equipment to farmers. In the evaluation of our 2021 performance targets, we identified and quantified the impacts of the supply chain difficulties in several different areas, and we considered whether adjustments to any of the performance metrics were warranted. In the view of our Talent and Compensation Committee, adjustments are appropriate only where the underlying cause was not reasonably foreseeable, the impact was significant despite the best efforts of our management and other employees, and it would be inequitable to our employees not to make an adjustment. Based upon this standard, the Committee determined that certain rr when the Talent and Compensation Committee determined that no adjustments were appropriate. adjustments to the 2021 results were warranted as more fully discussed below. Note that this contrasts with 2020 r Our business performance results were reflected in the 2021 pay decisions made by the Talent and Compensation Committee as summarized below: Base Salary 021 and May 2021, the base salaries for Messrs. Dehner and Beck were increased In January 2rr by 5% and 7%, respectively. Mr. Hansotia previously received an increase in base salary in connection with his promotion. Otherwise, no increases were made to base salary orr Executive Officers during 2021. f Named Short-Term Incentive Annual incentive awards for 2021 were paid out at 156.5% of target. Long-Term Incentive 2021 grant was made at target levels of performance for NEOs based on midpoint of range for each respective role. 2022 Proxy Statement 37 COMPENSATION DISCUSSION & ANALYSIS COMPONENTS OF 2021 EXECUTIVE COMPENSATION Short-Term Base Salary Cash Mid-Term Variable Incentive Compensation (IC) Plan Cash Long-Term Performance Share Plan (“PSP”) Stock Restricted Stock Units (“RSUs”) Stock 20% 21% 35% 24% Purpose rr eflecting Market-competitive base salary r contribution, background, knowledge, skills and performance Performance Period N/A Performance Measures N/A Annual cash incentive based on achievements of key financial targets Based on AGCO’s performance vs. pre- established goals aligned with generating stockholder value over the long-term Employee Retention 1 year 3 years 3-year cliff vesting Adjusted Operating Margin as a % of Net Sales (50%) Return on Net Assets (50%) Revenue Growth (50%) Return on Net Assets (50%) Subject to a TSR modifier relative to an agribusiness index Stock Price Appreciation We believe that as an executive’s responsibilities increase, so should the portion incentive compensation. As illustrated below, in 2021, on average, over 70% of our NEO compensation was variable or “at risk” and tied to AGCO’s performance, with the greatest portion associated with long-term incentives: of his or her total pay comprised of rr CHIEF EXECUTIVE OFFICER OTHER NEOs 46% Target LTILL 13% Base Salary 16% Target Bonus 72% At-Risk Pay* 28% Base Salary 26% Target Bonus 71% Target LTILL 87% At-Risk Pay* 38 AGCO Corp. COMPENSATION DISCUSSION & ANALYSIS 2021 BASE SALARY Base salary for NEOs establishes the foundation of total compensation and supports attraction and retention of qualified executives. Each NEO’s base salary is generally targeted at median levels of executives with similar roles and responsibilities at other industrial companies of similar revenue and complexity. Base salary increases are primarily performance driven, but adjustments may be made to recognize additional responsibilities or market inequities. As previously discussed, Mr. Hansotia did receive a raise at the beginning of 2021 in connection with his promotion, and Messrs. Beck and Dehner received raises during 2021 to align their compensation with similar positions consistent with our policy. Mr. Beck Mr. Crain Mr. Dehner(1) Mr. Hansotia Mr. Veltmaat 2020 2021 % Change $ $ $ $ $ 660,539 $ 605,986 $ 511,824 $ 691,364 605,986 551,599 727,100 $ 1,150,000 616,177 $ 616,177 5 % — % 8 % 58 % — % (1) Mr. Dehner’s base salary was 504,000 Swiss francs in 2021 as compared to 480,000 Swiss francs in 2020, for a change in local currency of 5%. 2021 ANNUAL INCENTIVE Annual incentives are intended to facilitate alignment of management with corporate objectives in order to achieve outstanding performance and to meet specific AGCO financial targets. Incentive plan performance measures and targets are evaluated annually to ensure they support orr ur strategic business objectives. Incentive compensation is based on our performance, as well as the contribution of executive officers through the leadership of their respective regional or functional areas. For 2021, incentive compensation awards for all NEO’s and senior vice presidents were based 100% on corporate goals for global alignment purposes. Incentive compensation opportunities are expressed as a percentage of each executive officer’s base salary. The annual award opportunities for the NEOs in 2021 were: 2021 ANNUAL INCENTIVE OPPORTUNITIES Name Mr. Beck Mr. Crain Mr. Hansotia Mr. Dehner Mr. Veltmaat Opportunity as a Percentage of Base Salary Minimum Award Target Award Maximum Award 50 % 45 % 63 % 45 % 45 % 100 % 90 % 125 % 90 % 90 % 200 % 180 % 250 % 180 % 180 % The corporate objectives and targets are set at the beginning of each year and approved by the Talent and Compensation Committee based upon the prior year results as well as a budget approved by the Finance Committee. Unless determined otherwise, the Talent and Compensation Committee excludes restructuring and certain other items from the calculation of adjusted operating margin as a percentage of net sales and return on net assets in order to ensure the calculations are equitable and reflect normalized operating results. In addition, the Talent and Compensation Committee has the ability to make adjustments based upon other appropriate circumstances. The charts below summarize the performance measures, weightings, and results that the Talent and Compensation Committee approved for the 2021 annual incentive. 2022 Proxy Statement 39 COMPENSATION DISCUSSION & ANALYSIS DESCRIPTION OF PERFORMANCE MEASURES PERFORMANCE MEASURE DEFINITION RATIONALE Adjusted Operating Margin as a Percentage of Net Sales Return on Net Assets Adjusted income from operations divided by net sales. This measure excludes restructuring expenses and certain rr Talent and Compensation Committee. other items approved by the Adjusted income from operations divided by net assets. This measure excludes restructuring expenses and certain rr Talent and Compensation Committee. other items approved by the Margin improvement links to earnings and is key to increasing company performance and stockholder value. Return on net assets promotes improving returns through an efficient use of capital and is an important indicator of stockholder value. 2021 ANNUAL INCENTIVE PAYOUTS yclicality. As a result, the performance targets increased significantly as industryrr As described previously, the targets for the annual incentive plan are adjusted on a sliding scale relative to actual industry conditions in order to address industry crr conditions improved throughout 2021. Consequently, the performance targets remained appropriately challenging for management to achieve in contrast to fixed targets that would have been easily met given the improvement in industry conditions. In addition, during 2021, AGCO experienced several significant and unexpected challenges, caused by disruptions in the global supply chain. In particular, parts and components were not delivered timely, thereby disrupting production flow. These challenges impacted our costs and results as we took extraordinary measures to complete production in order to deliver equipment to farmers. These impacts included re-assembly of equipment after receipt of missing partsrr in travel and sales promotion activities achieved due to COVID-19 restrictions. as well as additional logistics costs to expedite components to meet production schedules offset by savings With the assistance of its independent compensation consultants, the Talent and Compensation Committee assessed these and other factors in order to determine whether an adjustment should be made to the 2021 performance metrics. The Committee considered whether and to what extent the underlying causes were reasonably foreseeable and whether the impact was significant despite the best efforts of management and other employees. It also considered ancillary f such as the Committee’s decision not to make an adjustment to 2020 performance metrics, as well as the competitiveness of the labor market. In addition, the Committee reviewed AGCO’s overall 2021 financial performance in comparison to the challenging sliding scale targets. After allowances for the purposes of calculating the performance metrics. careful review, the Committee determined to make certain rr actors ff As a result of the overall performance of the agricultural equipment industry,rr net assets were increased on a sliding scale by approximately 140 basis points and 700 basis points, respectively, in order to reflect the industry’sr operating margin by approximately 50 basis points and return on assets by approximately 150 basis points to take into account the unusual factors that impacted results as discussed above. cyclical status in 2021. In addition, the Committee approved allowances to increase adjusted the targets for operating margin and return on Accordingly, the Talent and Compensation Committee determined that AGCO performed at 156.5% of the established short-term incentive target for 2021. 2021 ANNUAL INCENTIVE PERFORMANCE MEASURES AND RESULTS Measure Weight Bonus Objective Adjusted Operating Margin as a Percentage of Net Sales 50% Threshold Maximum Performance 9.6% 6.7% 8.7% Target 9.7% Threshold Maximum Performance 31.6% Percent Achieved Earned Award 190% 95% Return on Net Assets 50% 123% 61.5% 23.0% 30.0% Target 37.0% 40 AGCO Corp. Comparison between 2021 payouts and prior year payouts are difficult given the significant changes in compensation structure for 2021 relative to prior years. However, as a general proposition the payouts for 2021 were less than they would have been under the compensation structure that was in place in 2020. For 2022, the goals have been increased from the goals for 2021 and new factors have been added to the short-term performance metrics. The short-term incentive payouts in 2021 were as follows: COMPENSATION DISCUSSION & ANALYSIS Name Mr. Beck Mr. Crain Mr. Hansotia Mr. Dehner Mr. Veltmaat As a % of Salary Actual Amount 157 % $ 1,081,639 141 % $ 853,259 196 % $ 2,248,969 141 % $ 762,598 141 % $ 867,608 LONG-TERM INCENTIVE LTI is intended to engage executives in achieving longer-trr erm performance goals and to make decisions in the best interest of the stockholders. LTI performance goals are reviewed annually to ensure they are appropriately aligned with stockholder interests and the strategic business objectives of AGCO. In January 2r participants. The target award levels for each award type were set at median level of market competitiveness. 021, the Talent and Compensation Committee approved long-term incentive awards for 2021 eligible plan The following table summarizes the mix and performance measurements for each form of equity awarded to our NEOs for 2021 under our LTI Plan: AWARD TYPE MEASUREMENT RATIONALE Performance Share Plan (“PSP”): 60% • 50% 3-year Revenue Growth • 50% 3-year Return on Net Assets (“RONA”) Both metrics are meaningful measures of our performance and have a strong correlation to generating stockholder value over the long-term Restricted Stock Units (“RSUs”): 40% • Stock price appreciation Alignment with long-term stockholder value 2019 – 2021 PERFORMANCE SHARE PLAN Targets set for the 2019-2021 Performance Share plan were set at the beginning of the three-year period. At the conclusion of the cycle, the Talent and Compensation Committee determined that, based on the Company’s performance, we achieved “target” with respect to operating margin for 2019 and 2020 and above “target,” but not outstanding in 2021, and above “target” with respect to Return on Net Assets for 2019 and “outstanding” for 2020 and 2021. The Committee made no adjustments to operating income for 2021 for PSP awards. • As the goals were established during a lower point in the global agricultural market and we performed above expected levels, we generally outperformed the Company’s “expected results” level performance goals for EPS and ROIC. • The weighted average performance for the 2019-2021 three-year PSP performance cycle was 157% for the three years. 2022 Proxy Statement 41 COMPENSATION DISCUSSION & ANALYSIS The target award and actual number of shares received by the NEOs for the three-year PSP performance cycle (2019-2021) are shown below: Name Mr. Beck Mr. Crain Mr. Hansotia Mr. Dehner Mr. Veltmaat Three-Year Performance Cycle (2019-2021) Target Award (100%) Actual Award (157%) 12,600 10,100 12,900 700 10,100 19,821 15,889 20,295 1,100 15,889 2021-2023 PERFORMANCE SHARE PLAN (PSP) Targets for the 2021-2023 performance cycle were set based upon the following: • For RONA, the target was set on a relative industry srr liding scale above the target set for RONA in the short trr erm IC plan for 2021 to reflect an expectation of improvement for a three-year compared to a one-year target. • For Revenue Growth, the target was set based on achieving revenue above the relative industry performance for the three-year period. We consider the specific target goals for PSP awards for uncompleted cycles to be confidential due to competitive harm. The Talent and Compensation Committee believes it is important to establish incentive targets that incorporate stretch performance expectations and reward for exceeding defined performance and results. Disclosures of these goals prematurely may mislead investors as they may not fully appreciate the “stretch” nature of the goals. MATRIX OF AWARD OPPORTUNITIES FOR AWARDS GRANTED IN 2021 Outstanding Target Threshold Below Threshold Below Threshold Threshold Target Outstanding Return on Net Assets 100.0% 50.0% 16.5% 0% 116.5% 66.6% 33.3% 16.5% 150.0% 100.0% 66.6% 50.0% 200.0% 150.0% 116.5% 100.0% If the actual performance of the goal falls in between the established goals for threshold, target and outstanding performance, the associated payout factor will be calculated using a straight-line interpolation between the two goals. In addition, the shares earned are subject to a TSR modifier that is determined at the end of the three-year performance cycle, that could result in an increase or a reduction of shares earned by 20%, dependent on the quartir le of performance relative to an agribusiness index. Unless determined otherwise, the Talent and Compensation Committee excludes restructuring and certain other items from the calculations of Return on Net Assets in order to ensure the calculations are equitable and reflect normalized operating results and actions are not discouraged by their projected impact on the awards (this approach also applies to annual incentive compensation calculation of margin). THE TALENT AND COMPENSATION COMMITTEE The Talent and Compensation Committee approves all compensation for executive officers, including the structure and design of the compensation programs. We perform competitive market analysis with respect to cash compensation, long-term equity incentives and executive retirement programs in order to enable the Committee to review, monitor and establish appropriate and competitive compensation guidelines, determine the appropriate mix of compensation programs and establish the specific compensation levels for our executives. The Talent and Compensation Committee also exercises its judgment as to what is in the best interests of the Company and its stockholders. 42 AGCO Corp. COMPENSATION DISCUSSION & ANALYSIS The process for compensation decisions made by the Talent and Compensation Committee involves: • Reviewing the prior year say-on-pay yy voting results, • Considering feedback received from stockholders throughout the year, • Obtaining recommendations and market data from our independent compensation consultant, • Assessing business climate and industry factors, • Receiving input from our CEO and other senior members of management, • Evaluating NEO performance in alignment with Company goals, and • Overseeing succession planning. PAY GOVERNANCE AND PAY FOR PERFORMANCE PHILOSOPHY rr The compensation provided to our senior leaders is guided by pay-for -perf yy ormance and the following principles: Philosophy Approach Align with Stockholders Interests Compensation paid should align directly with the long-term interests of our stockholders, and our executives should share with them in the performance and value of our common stock. Support Business Strategy Compensation should be based on challenging Company performance and strategic goals, which are within our executive’s control and reward performance aligned with AGCO’s strategy, values, and desired behaviors. Pay for Performance Target compensation should have an appropriate mix of short-trr erm and long-term pay elements. In general, compensation is highly weighted - on average, over 70% - to variable or “at risk” compensation. Encourage Executive Stock Ownership Competitive Compensation - Attract and Retain Quality Management WHAT WE DO: Executives should meet minimum requirements for share ownership. Executive pay is market competitive, but also performance-based and structured so that it addresses retention, recruitment, market scarcity and other business concerns. Talent and Compensation Committee composed entirely of independent directors who are advised by an independent compensation consultant Talent and Compensation Committee annually reviews financial performance objectives in our annual and long-term incentive plans Annual and long-term incentive plans with performance objectives aligned to business goals Long-term vesting period for equity awards Compensation programs support a conservative approach to share usage Double-trigger equity vesting in the event of change-in-control Require substantial stock ownership for all executive officers Clawback provisions in plans WHAT WE DON’T DO: No tax gross-ups on change-in-control benefits (for all employment contracts since 2017 including the new CEO contract) Encourage excessive or unnecessary risk-taking Reprice equity awards without shareholder approval Allow directors or executives to engage in hedging or pledging of AGCO’s securities 2022 Proxy Statement 43 COMPENSATION DISCUSSION & ANALYSIS COMPENSATION CONSIDERATIONS The Talent and Compensation Committee reviews recommendations from management, and with input from its independent compensation consultant, considers various factors when making executive compensation decisions, including: • The cyclical nature of the business • Agricultural equipment industry outlook • Performance relative to peers and competitors • Current competitive market conditions • Key areas management can influence results over the short-rr and long-term • Development and retention of top talent CEO EMPLOYMENT AGREEMENT In connection with his promotion to Chairman, President and Chief Executive Officer, effective January 1r entered into an amended and restated employment agreement with Mr. Hansotia. The agreement generally is consistent with Mr. Hansotia’s prior employment agreement, and, among other things, provides for: , 2021, AGCO • An increase in his annual base salary t rr o $1,150,000 (from $727,100) • Participation in annual and long-term incentive programs • Severance benefits of two years (three years in the event of a change in control) in the event of a termination without “cause” or by Mr. Hansotia for “good reason” • Enhanced severance benefits in the event of a termination in the event of a change of control – a so-called “double trigger” • Retirement benefits per the Executive Non-qualified Pension Plan (ENPP) • A company car and reimbursement for customary expenses • Reimbursement of the cost of one club membership • Term life insurance equal in value to six-times his base salaryr • The lesser of $100,000 of use or up to 50 hours of flight time annually for personal use of the Company-pryy ovided aircraft based on any incremental cost to the Company as determined under Securities and Exchange Commission disclosure rules. We subsequently eliminated the $100,000 limit as it was substantially duplicative of the hour limitation and difficult to compute on a real-time basis prior to year-end. The agreement also contains customary non-compete, non-solicitation and confidentiality provisions. In connection with the amendment and restatement of his contract, Mr. Hansotia’s prior right to a tax gross-up was deleted. In negotiating Mr. Hansotia’s agreement, the Talent and Compensation Committee was assisted by its independent compensation consultant and believes that the final agreement is consistent with market practices. In addition, the Talent and Compensation Committee took into account Mr. Hansotia’s permitted use of the Company-provided aircraft in establishing his compensation. BENCHMARKING COMPENSATION TO PEERS The Talent and Compensation Committee’s goal is to provide base salary, target total cash compensation (base salary plus target bonus opportunity) and target total direct compensation (target total cash plus target LTI opportunit NEO that is competitive with the median levels of other industrial companies of similar size and complexity. y) for each rr 44 AGCO Corp. The Talent and Compensation Committee annually reviews the peer group for compensation comparisons and makes updates as needed to ensure that the included companies are appropriate comparators for determining whether total compensation for NEOs aligns with market. In determining the appropriate peer group, the Talent and Compensation Committee considers the attributes of company size as well as similarity of industry arr nd business, as outlined in the table below. COMPENSATION DISCUSSION & ANALYSIS PEER GROUP – SELECTION PROCESS REVIEW OF CURRENT COMPENSATION PEER GROUP REVIEW CRITERIA Our assessment of potential peer companies involved a series of key guidelines and parameters along with sound judgment to arrive at an appropriate compensation peer group. Note that not all compensation peer companies match all criteria, and not all criteria are of equal importance. Review Items Review Criteria Consideration Size • Revenue falls within a range of ~0.3x to ~3x AGCO’s FY20 annual revenues Similar Industry Compete within the following similar industries: • Machinery Industry • Building Products Industryrr • Automobile Manufacturer/Parts & Equipment • Aerospace and Defense • For most companies, revenue is a proxy for business complexity and has the highest correlation to executive pay opportunity • Market cap is also a useful reference (when combined with revenue). We typically consider potential peers that fall within a wider range of ~0.2x to ~5x of the Company market cap • Industry serves as a good reference for a company’s competition for business, capital, and talent • For AGCO, there are a limited number of public Ag/Farm Machinery cr ompanies, so we expanded our search to include other machinery ar companies nd equipment Business Similarity • Manufacturer of heavy-duty yy equipment and/or partsrr • These factors may impact the • International sales of more than 30% of total sales • Digitalization as a key initiative • Does not rely on one single dealer or distributor (sales no more than 10% of total sales) Company’s organization structure, market risk, KPls, sales forces, and other factors, which will eventually impact the Company’s pay program design With the assistance of its independent consultants, the Talent and Compensation Committee reviewed our peer group in July 2021 and decided not to make any changes. The composition of the current peer group (17 companies) is shown below. (Previously the Talent and Compensation Committee had eliminated Terex Corporation, which had been used as a peer in 2020.) BorgWarner Inc. Cummins, Inc. Dana Incorporated Dover Corporation Wabtec Corporation Xylem Inc. Thor Industries Rockwell Automation, Inc. Navistar International Corporation Stanley Black & Decker Oshkosh Corporation Trane Technologies PLC. Flowserve Corporation PACCAR Inc. Textron Inc. Illinois Tool Works Inc. Parker Hannifin Corporation 2022 Proxy Statement 45 COMPENSATION DISCUSSION & ANALYSIS EXECUTIVE COMPENSATION AND RISK MANAGEMENT The Talent and Compensation Committee regularly reviews compensation plans and practices to ensure they are appropriately structured and aligned with business objectives, and not designed to encourage executives to take unwarranted risks. Specifically, the overall design of the compensation philosophy and plans mitigate risks because: • the financial performance objectives of the short- and long-term incentive plans are reviewed and approved annually by the Board; • the plans consist of multiple performance objectives, thus lessening the focus on any one in particular; • short- and long-term incentive payouts are capped for all particr ipants; and • the Company has in place a clawback provision that can require the return of incentive compensation. STOCK OWNERSHIP REQUIREMENTS The Company requires its directors and officers to own AGCO shares as it emphasizes the alignment of their interests with those of stockholders. The Board reviewed and updated the requirements effective 2021. The ownership program covers all directors and executive officers. The requirements are as follows: • Chief Executive Officer to own common stock, or other equity equivalents, equal in value to six times annual salaryr • Other Executive Officers to own common stock, or other equity equivalents, equal in value to three times their respective annual salaries • Non-employee directors to own common stock, or other equity equivalents, equal in value to five times the value of the annual retainer Any person becoming a director or executive officer has five years from his or her election or promotion, or from an increase in the requirement, to comply with the stock ownership requirements. A person is considered to be in compliance once the minimum ownership level is reached (if he or she continues to hold at least the number of shares that initially was required regardless of the change in market value of the underlying equity securities). Our directors and executive officers all met the requirements that were applicable as of December 31, 2021. OTHER COMPENSATION, BENEFITS AND CONSIDERATIONS POST-TERMINATION AND CHANGE IN CONTROL BENEFITS Employment agreements with the executives provide severance benefits when the termination is without “cause” or for termination with “good reason.” The size of the severance benefits depends on whether the termination involved a change of control. SEVERANCE BENEFITS WITHOUT A CHANGE OF CONTROL For terminations by the Company without “cause” or by an executive for “good reason” that do not involve a change of control, the severance benefit includes: • The executive will receive his or her base salary f r or a period of one or two years and a pro rata portion r of the annual incentive to which the executive would have been entitled for the year of termination had the executive remained employed for the entire year. • Specifically, for the NEOs, Messrs. Crain, Dehner and Veltmaat will receive their respective base salaries and annual incentives for one year upon termination, and Messrs. Hansotia and Beck will receive their respective base salaries and annual incentives for two years upon termination. • A terminated executive also is entitled to receive any vested benefits under the ENPP payable beginning at age 65. 46 AGCO Corp. COMPENSATION DISCUSSION & ANALYSIS SEVERANCE BENEFITS TRIGGERED ON TERMINATION FOLLOWING A CHANGE OF CONTROL For terminations by the Company without “cause” or by an executive for “good reason” that follow a change of control the severance benefit includes: • For Mr. Hansotia, three times, and for the other NEOs two times their respective base salaries in effect at the time of termination. • For all NEOs, a pro-rata portion of their respective annual incentives earned for the year of termination. • For Mr. Hansotia three times, and for the other NEOs two times, the three-year average of their respective annual incentives received during the prior two completed years and the current year’s trend. In addition to the cash severance payments, certain vesting benefits exist: • All unvested equity awards include a “double-trigger” provision that states that vesting is contingent on a change in control and either termination of employment or failure of the acquiring company to assume outstanding equity grants or provide particr ipants with the value equal to that of the unvested equity grants. • All benefits under the ENPP that have been earned based on years of service also become vested upon a change of control. Executives with employment agreements prior to 2017 are entitled to receive a gross-up for excise taxes due on any of the change of control payments described above, other than ordinary i control. Based upon discussions with stockholders, we eliminated the gross-up for excise taxes on severance payments due to a change in control for any executive receiving an employment agreement in 2017 and beyond. Under the provision of Mr. Hansotia’s new employment contract, there is no excise tax gross-up for severance payments. r ncome taxes associated with payouts from a change of For purposes of these benefits, a “change of control” occurs, in general, when either (i) one or more persons acquire common stock of the Company that, together with other stock owned by the acquirers, amounts to more than 50% of the total fair market value or total voting power of the stock, (ii) one or more persons acquire during a 12-month period stock of the Company that amounts to 30% or more of the total voting power of the stock, (iii) a majority of the members of our Board of Directors are replaced in any 12-month period by directors who are not endorsed by a majority of the directors then in officff e, or (iv) with some exceptions, one or more persons acquire assets from the Company that have a total fair market value equal to or greater than 40% of the aggregate fair market value of all of our assets. 2022 Proxy Statement 47 COMPENSATION DISCUSSION & ANALYSIS RETIREMENT AND OTHER BENEFITS Executive officers participate in our various employee benefit plans designed to provide retirement income. Our qualified and nonqualified pension plans provide a retirement income base, and our qualified and nonqualified 401(k) plans permit additional retirement savings. To encourage retirement savings under the qualified and nonqualified 401(k) plans, we provide an employer matching contribution (as noted below). PLAN TYPE DESCRIPTION AGCO 401(k) Plan For the Company’s 401(k) plan, we generally contributed approximately $13,050 to each eligible executive’s 401(k) account during 2021, which was the maximum contribution match allowable under the Company’s 401(k) plan. STATUS Active Executive Nonqualified Pension Plan (ENPP) The ENPP provides the Company’s eligible US-based executives with retirement income for a period of 15 years based on a percentage of their final average compensation, including base salary and annual incentive bonus, reduced by the executive’s social security benefits and 401(k) plan benefits attributable to employer matching contributions. In addition, one executive will have his benefits continue as a lifetime annuity after the 15-year certain age 80). period ends (i.e., at rr ENPP frozen to future salaryrr benefit accruals as of December 31, 2024 Lifetime Annuity eliminated (for participants i age 65 subsequent to December 31, 2022) reaching Executive Defined Contribution (DC) The DC plan provides deferred compensation to a select group of US-based executives. The Company annually accrues 10% of the executive officer’s salary arr compensation, less any matching contributions we made during the year with respect to the executive’s contributions to the Company’s 401(k) plan. Executives who currently participate in the ENPP are transitioning to the DC plan in connection with the freeze of the ENPP. nd incentive Active Executives also particrr include medical, dental and disability insurance coverage. ipate in our other benefit plans on the same general terms as other employees. These plans may In response to stockholder feedback and benchmarking of retirement plan offerings within our relative peer group, effective March 10, 2021, the lifetime annuity offer participants reaching age 65 subsequent to December 31, 2022. ing of the Executive Nonqualified Pension Plan (ENPP), was eliminated for any ff In addition, the ENPP will be frozen to future salary br executive retirement benefit for compensation or service changes will be made after remaining participants will be transitioned to our Executive Defined Contribution plan. ff enefit accruals as of December 31, 2024. No further r that date. As of January 1r accruals to the , 2025, any LIMITED PERQUISITES We believe that cash and incentive compensation should be the primary f should be modest. rr ocus of compensation and that perquisites • The primary prr erquisites available to executives are the use of a leased automobile and the reimbursement of dues associated with a social or athletic club. • Supplemental life and disability insurance is also provided for executives. The life insurance generally provides for a death benefit of six times the executive officer’s base salary.r • For executives on international assignments, certain additional expatriate and relocation benefits are provided. • Mr. Hansotia is allowed limited use of our leased aircraft f ff or personal use. The cost of this use was considered as part of the establishment of Mr. Hansotia’s compensation. No other executives are allowed personal use. 48 AGCO Corp. COMPENSATION DISCUSSION & ANALYSIS CLAWBACK POLICY We have a Compensation Adjustment and Recovery Prr olicy. Pursuant to the policy, If the Board learns of any misconduct by an officff er or AGCO or one of its subsidiaries that contributed to our having to restate our published financial statements, it shall take, or direct management to take, such action as the Board deems reasonably necessary to remedy the misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, take remedial action against the individual in violation of the policy. In determining whether to remedial action is appropriate, the Board will take into account such factors as it deems relevant, including whether the misconduct reflected negligence, recklessness, or intentional wrongdoing. Remedial action may include dismissal and initiating legal action against the officer. In addition, the Board will, to the full extent permitted by governing law, in all appropriate cases, direct management to seek reimbursement of any bonus or incentive compensation awarded to an officff er, or effect restricted or deferred equity awards previously granted to an officer, if: (i) the amount of the bonus or incentive compensation was calculated based upon the achievement of financial results that were subsequently reduced as part orr f a restatement; (ii) the officer engaged in intentional wrongdoing that contributed to the restatement; or (iii) the amount of the award would have been lower had the financial results been properly reported. the cancellation of unvested, ff In determining what action to take or to require management to take, the Board may consider, among other things, penalties or punishments imposed by third parties, such as law enforcement agencies, regulators or other authorities, the impact upon us in any related proceeding or investigation of taking remedial action against an officer, and the cost and likely outcome of taking remedial action. The Board’s power to determine the appropriate remedial action is in addition to, and not in replacement of, remedies imposed by or available under applicable law. Without by implication limiting the foregoing, following a restatement of the Company’s financial statements, we also shall be entitled to recover any compensation received by the Chief Executive Officer and Chief Financial Officer that is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002. rr The policy further thereof. In addition, this policy will be evaluated after forthrr ff in the Dodd-Frank Wall Street Reform and Consumer Protection Act. specifies that the authority vested in the Board under the policy may be exercised by any committee the SEC issues final rules implementing the clawback provisions set HEDGING AND PLEDGING POLICY Our Hedging and Pledging Policy prohibits Board members and officers from directly or indirectly, pledging with respect to any equity securities of the Company, or hedging with respect to any equity securities of the Company. For these purposes, “pledging” includes the intentional creation of any form of pledge, security interest, deposit, lien or other hypothecation, including the holding of shares in a margin account, that entitles a third-partyrr to foreclose against, or otherwise sell, any equity securities, whether with or without notice, consent, default or otherwise, but does not include either the involuntary imposition of liens, such as tax liens or liens arising from legal proceedings, or customary purchase and sale agreements, such as Rule 10b5-1 plans, and “hedging” includes any instrument or transaction, including put options and forward-sale contracts, through which the Insider offsets or reduces exposure to the risk of price fluctuations in a corresponding equity security. For these purposes, “equity securities” include the Company’s common stock, preferred stock and options and other securities exercisable for, or convertible into, settled in, or measured by reference to, any other equity security determined on an as-exercised and as-convertedr these purposes shall include equity securities attributable to the board member or officff er under either Section 13 or Section 16 of the Exchange Act, provided that equity securities owned by entities shall be included only if the board member or officff er directly or indirectly controls a majority of the equity securities of the entity or otherwise directly controls those equity securities of the Company. Pledges of equity securities made by board members or officers prior to December 3, 2020 (each a “Grandfathered Pledge”) in compliance with the Company’s prior pledging policy may remain pledged until such time when the Grandfathered Pledges are terminated. Equity securities that are pledged shall not be counted toward the ownership requirements under other policies of the Company. basis. The equity securities attributable to a board member or officer for ff 2022 Proxy Statement 49 Summary of 2021 Compensation The following table provides information concerning the compensation of the NEOs for the Company’s three most recently completed years ended December 31, 2019, 2020 and 2021. In the column “Salary,rr ” we disclose the amount of base salary paid to the NEO during the year. In the columns “Stock Awards” and “SSAR Awards,” we disclose the award of stock, SSARs or RSUs measured in dollars and calculated in accordance with ASC 718. For SSARs, the ASC 718 aggregate grant date fair value per share is based on certain assumptions that the Company explains in Note 10 to our Consolidated Financial Statements, which are included in rr our Annual Report on Form 10-K for the year ended December 31, 2021. For awards of stock, the ASC 718 aggregate grant date fair value per share is equal to the closing price of our common stock on the date of grant decreased by the present value of the future dividends estimated to be distributed. For the 2021 PSP awards that included a market condition, the company measured the fair value using a Monte Carlo simulation. The amounts disclosed as the aggregate grant date fair value of the stock awards granted under the PSP are computed at the probable outcome of the performance conditions, or “target” level. The actual amounts that will be earned are dependent upon the achievement of pre-established performance goals. Please also refer to the table below under the caption “2021 Grants of Plan-Based Awards.” In the column “Non-Equity Incentive Plan Compensation,” we disclose amounts earned under our IC Plan. The amounts included with respect to any particular year are dependent on whether the achievement of the relevant performance measure was satisfied during the year. In the column “Change in Pension Value and Non-Qualified Earnings,” we disclose the aggregate change in the actuarial present value of the NEO’s accumulated benefit under all defined benefit and actuarial benefit plans (including supplemental plans) in 2021. In the column “All Other Compensation,” we disclose the sum of the dollar value of all perquisites and other personal , unless the aggregate amount of such compensation is less than $10,000. benefits, or propertyr The Company currently has employment agreements with Messrs. Beck, Crain, Dehner, Hansotia and Veltmaat. The employment agreements provide for current base salaries at the following annualized rates per annum: Mr. Beck — $691,364; Mr. Crain — $605,986; Mr. Dehner - $551,599; Mr. Hansotia — $1,150,000 for 2021, and Mr. Veltmaat — $616,177. Messrs. Beck, Crain, Hansotia and Veltmaat’s employment agreements continue in effect until terminated in accordance with their terms. Actual amounts paid in the year vary slightly due to timing of pay periods. In addition to the specified base salary,rr ipate in benefit plans and other arrangements generally available to senior executive officers of the Company. the employment agreements provide that each executive officer shall be entitled to particrr 50 AGCO Corp. 2021 Summary Compensation Table Name and Principle Position Year Salary ($) Bonus ($) Stock Awards(1) ($) SSAR Awards(2) ($) Non-Equity Incentive Plan Compensation(3) ($) Change in Pension Value and Non- Qualified Earnings(4) ($) All Other Compensation(5) ($) Total ($) Andrew H. Beck Senior Vice President — Chief Financial Officer Robert B. Crain Senior Vice President — Customer Experience Torsten R.W. Dehner Senior Vice President and General Manager, Fendt and Valtra Eric P. Hansotia Chairman, President and Chief Executive Officeff r Hans-Bernd Veltmaat Senior Vice President — Chief Supply Chain Officer ff (1) Stock Awards for 2019 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 655,729 — 1,030,093 206,388 852,448 2,073,667 42,098 4,860,423 660,539 — 861,779 156,337 1,193,924 2,215,920 40,663 5,129,162 691,364 — 1,223,802 — 1,081,639 — 45,106 3,041,911 603,016 605,986 605,986 422,612 511,824 551,599 — — — — — — 827,784 165,564 705,528 1,884,396 53,670 4,239,958 690,841 125,562 985,788 1,915,155 48,901 4,372,233 979,018 254,290 — — 853,259 — 53,405 2,491,668 248,124 138,109 22,014 1,085,149 690,841 125,562 839,637 290,945 25,933 2,484,742 979,018 — 772,675 — 23,364 2,326,656 710,575 — 1,054,619 210,924 923,747 667,792 47,840 3,615,497 727,100 — 890,269 160,030 1,314,233 1,341,879 55,813 4,489,324 2021 1,150,000 — 6,978,345 — 2,248,969 652,962 151,472 11,181,748 2019 2020 2021 611,690 616,177 616,177 — — — 827,784 165,564 715,678 1,540,452 49,895 3,911,063 690,841 125,562 1,002,366 1,010,333 64,249 3,509,528 979,018 — 867,608 1,035,211 71,938 3,569,952 In 2019, awards were granted under the 2019-2021 three-year performance cycle under the PSP, where the awards earned are based on the average of each year in the three-year performance cycle, and RSUs that vested in equal installments over three years from the date of grant. The amounts above reflect the aggregate grant date fair value computed in accordance with ASC 718 in relation to the 2019-2021 three-year performance cycle at the probable outcome of the performance conditions, or “target” level, at the date of grant, and the grant date fair value of RSUs. The values of the awards on the date of grant at the actual achieved level of performance are as follows: Mr. Beck — $1,209,437; Mr. Crain — $969,469; Mr. Dehner — $67,191; Mr. Hansotia — $1,238,233; and Mr. Veltmaat — $969,469. The pre-established performance goals for three-year performance cycle under the PSP were achieved at 157% or above “target.” The following were the value of the RSUs on the date of grant: Mr. Beck — $261,367; Mr. Crain — $211,583; Mr. Dehner - $211,583; Mr. Hansotia — $267,590; and Mr. Veltmaat —$211,583. Stock Awards for 2020 ff In 2020, awards were granted under the 2020-2022 three-year performance cycle under the PSP, where the awards earned are based on the average of each year in the three-year performance cycle, and RSUs, where the awards were granted with a three-year cliff-vest defined peer group. The amounts above reflect the aggregate grant date fair value computed in accordance with ASC 718 in relation to the 2020-2022 three-year performance cycle at the probable outcome of the performance conditions, or “target” level, at the date of grant, and the grant date fair value of RSUs. ing period beginning on the date of grant, subject to adjustment based on a performance metric relative to the Company’s Assuming the maximum level of performance, the following would be the values of the award on the date of grant: Mr. Beck — $1,289,834; Mr. Crain — $1,034,702; Mr. Dehner - $1,034,702; Mr. Hansotia — $1,332,356; and Mr. Veltmaat — $1,034,702. The pre-established performance goals for the first and second year of the three-year performance cycle under the PSP were achieved at 175% and 200%, respectively, or above “target” but are not yet vested. The following were the value of the RSUs on the date of grant: Mr. Beck — $216,862; Mr. Crain — $173,490; Mr. Dehner - $173,490; Mr. Hansotia — $224,091; and Mr. Veltmaat —$173,490. Stock Awards for 2021 In 2021, awards were granted under the 2021-2023 three-year performance cycle under the PSP, where the awards earned are based on the average of each year in the three-year performance cycle subject to a total shareholder return modifier, and RSU’s that vest in equal installments over three years from the date of grant. The amounts above reflect the aggregate grant date fair value computed in accordance with ASC 718 in relation to the 2021-2023 three-year performance cycle at the probable outcome of the performance conditions, or “target” level, at the date of grant, and the grant date fair value of RSUs. 2022 Proxy Statement 51 2021 SUMMARY COMPENSATION TABLE Assuming the maximum level of performance, the following would be the values of the award on the date of grant: Mr. Beck — $1,516,098; Mr. Crain — $1,212,878; Mr. Dehner - $1,212,878; Mr. Hansotia — $8,644,224; and Mr. Veltmaat — $1,212,878. The pre-established performance goals for the first year of the three-year performance cycle under the PSP were achieved at 43.2%, or below “target” but are not yet vested. The following were the value of the RSUs on the date of grant: Mr. Beck — $465,753; Mr. Crain — $372,579; Mr. Dehner - $372,579; Mr. Hansotia — $2,656,233; and Mr. Veltmaat —$372,579. (2) SSARs were awarded on January 22, 2019 and January 22, 2020. There were no SSARs awarded in 2021. The SSARs vest over four years from the date of grant, or 25% per year. The amounts above reflect the aggregate grant date fair value computed in accordance with ASC 718. (3) All annual incentive awards were performance-based. Payments were earned based upon the performance in the year of the award and paid the following February or March of each respective year. (4) The change in each officer’s pension value is the change in the Company’s obligation to provide pension benefits (at a future retirement date) from the beginning of the year to the end of the year. The obligation shown in the “2021 Pension Benefits Table” presented below is the value today of a benefit that will be paid at the offiff cer’s normal retirement age, based on the benefit formula and his or her current salary and servicrr obligation since the prior year. e. The values shown in the Summary Compensation Table represent the change in the pension Change in pension values during the year may be due to various sources such as: • Service accruals: The benefits payable from the pension plans increase as participants earn additional years of service. Therefore, as each executive officer earns an additional year of service during the year, the benefit payable at retirement increases. Each of the NEOs who participate in a pension plan earned an additional year of benefit service during 2021 except for Mr. Beck who has already earned the maximum benefit servicrr e allowed under the plan. • Compensation increases/decreas The benefits payable from the pension plans are related to salary.r As executive officers’ salaries increase (decrease), then the expected benefits payable from the pension plans will increase (decrease) as well. es since prior year: s y • Aging: The amounts shown above are changes in the present values of retirement benefits that will be paid in the future. As the officers approach retirement, the present value of the liability increases due to the fact that the executive officer to retirement than he was at the prior measurement date. ff is one year closer • Changes in assumptions: The amounts shown above are changes in the present values of retirement benefits that will be paid in the future. The discount rate used to determine the present value is updated each year based on current economic conditions. This assumption does not impact the actual benefits paid to participants. The discount rate increased from 2020 to 2021, which contributed to a decrease in the present value of the officer variables discussed above, such as discount rates, that are not related to Company performance. s’ benefits. The change in pension value is subject to many external ff • Plan amendments: The Company periodically amends its retirement programs in order to remain competitive locally and/or align with our global benefits strategy. During 2021, the Company amended the ENPP to freeze future salary benefit accruals as of December 31, 2024, and to eliminate a lifetime annuity feature for participants reaching age 65 subsequent to December 31, 2022. This resulted in a decrease in the present value of benefits for Messrs. Beck, Crain and Hansotia. While the pension annuity values for Messrs. Beck and Crain increased due to service and compensation changes, the plan amendment (as described above under “Plan Amendments”) resulted in a net decrease in the present value of benefits of $1,952,381 for Mr. Beck and $996,545 for Mr. Crain. Similarly, for Mr. Dehner, while the total account balance under the BVG plan increased, changes in assumptions resulted in a net decrease in the present value of benefits of $69,186. As a result, the change in present value of their pension benefits were reported as $0 during 2021. The pension benefits and assumptions used to calculate these values are described in more detail under the caption “Pension Benefits.” (5) The amount shown as “All Other Compensation” includes the following perquisites and personal benefits for the year ended December 31, 2021: Name Andrew H. Beck Robert B. Crain Torsten R.W. Dehner Eric P. Hansotia Hans-Bernd Veltmaat Club Membership ($) 10,088 13,644 — 10,446 9,000 Defined Contribution Match ( )( ) ($) 13,050 13,050 — 13,050 13,050 Life Insurance(a) ($) Car Lease and Maintenance(b) ($) Other(c) ($) 9,206 9,798 — 8,346 18,273 12,762 16,168 23,364 19,630 26,562 Total ($) 45,106 53,405 23,364 — 745 — 100,000 151,472 5,053 71,938 (a) These amounts represent the value of the benefit to the executive officer for life insurance policies funded by the Company. (b) These amounts represent car lease payments made by the Company for cars used by executives and/or their family members, as well as payments for related gas and maintenance costs. (c) In 2021, in accordance with his employment contract, Mr. Hansotia used the corporate aircraft for personal use for an aggregate of approximately 41 hours for an aggregate incremental cost of $100,000, net of certain amounts that Mr. Hansotia reimbursed the Company. Incremental cost for corporate aircraft i ff ncludes, calculated on a per hour basis, (1) fuel, oil, and catering, (2) travel, lodging and other crew expenses, (3) landing, parking, flight planning, customs and similar fees, (4) deadhead and positioning costs, (5) catering costs, (6) maintenance (when not considered a fixed cost), and (7) other similar costs. Since our aircraft is used predominately for business travel, incremental costs exclude fixed costs such as depreciation, crew compensation, hangar rent and insurance. The amount for Mr. Crain includes commercial airfare related to attendance by Mr. Crain’s wife at a business-related event — $745. Mr. Crain’s wife also accompanied Mr. Crain when the Company’s corporate aircraft was used for attendance at corporate functions at no incremental cost. The amount for Mr. Veltmaat includes commercial airfare-related costs related to attendance by Mr. Veltmaat’s wife at a business-related event — $5,053. 52 AGCO Corp. 2021 Grants of Plan-Based Awards In this table, we provide information concerning each grant of an award made to an NEO in the most recently completed year. This includes the awards under the Company’s IC Plan, as well as PSP awards and RSUs under the LTI Plan, each of which is discussed in greater detail under the caption “Compensation Discussion and Analysis.” The “Threshold,” “Target” and “Maximum” columns reflect the range of estimated payouts under the IC Plan and the range of number of shares to be awarded under the PSP. In the second-to-last column, we report the number of shares of common stock underlying RSUs granted in the year. In all cases, the exercise price was equal to the closing market price of the Company’s common stock on the date of grant. In the last column, we report the aggregate ASC 718 grant date fair value of all stock awards made in 2021. Stock awards include the annual PSP award and the RSU award. Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) Name Andrew H. Beck Award Type IC Plan Grant Date Threshold ($) Target ($) Maximum ($) 345,682 691,364 1,382,728 PSP 1/20/21 RSU 1/20/21 Robert B. Crain IC Plan 272,694 545,387 1,090,775 PSP 1/20/21 RSU 1/20/21 Torsten R.W. Dehner IC Plan 248,219 496,439 992,877 PSP 1/20/21 RSU 1/20/21 Eric P. Hansotia IC Plan 718,750 1,437,500 2,875,000 PSP 1/20/21 RSU 1/20/21 Estimated Future Payouts Under Equity Incentive Plan Awards(2) Target (# of shares) Threshold (# of shares) Maximum (# of shares) 2,050 6,150 12,300 1,640 4,920 9,840 1,640 4,920 9,840 All Other Stock Awards: Number of Shares of Stock or Units (#) 4,099 3,279 3,279 Grant Date Fair Value of Stock Awards ($) 758,049 465,753 606,439 372,579 606,439 372,579 11,688 35,065 70,130 4,322,112 Hans-Bernd Veltmaat IC Plan 277,280 554,559 1,109,119 PSP 1/20/21 RSU 1/20/21 1,640 4,920 9,840 23,377 2,656,233 3,279 606,439 372,579 (1) Amounts included in the table above represent the potential payout levels related to corporate objectives for the fiscal year 2021 under the Company’s IC Plan. The payment for these awards already have been determined and were paid on February 28, 2022 to the NEOs with the exception of Mr. Dehner, who will be paid on March 31, 2022. Refer to Note 3 of the 2021 Summary Crr ompensation Table. (2) The amounts shown represent the number of shares the executive would receive if the “Threshold,” “Target” and “Maximum” levels of performance are reached. 2022 Proxy Statement 53 Outstanding Equity Awards at Year- End 2021 The following table provides information concerning unexercised SSARs and stock (including RSUs) that has not been earned or vested for each NEO outstanding as of the end of the Company’s most recently completed year. Each outstanding award is represented by a separate row that indicates the number of securities underlying the award. For SSAR awards, the table discloses the exercise price and the expiration date. For stock awards, the table provides the total number of shares of stock that have not vested (or have not been earned) and the aggregate market value of shares of stock that have not vested (or have not been earned). SSAR Awards Stock Awards Number of Securities Underlying Unexercised SSARs Exercisable (#) Number of Securities Underlying Unexercised SSARs Unexercisable(1) (#) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned SSARs (#) SSAR Exercise Price ($) SSAR Expiration Date Number of Shares or Units of Stock That Have Not Vested(2)(3) (#) Market Value of Shares or Units of Stock That Have Not Vested(4) ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) Equity Incentive Plan Awards: Value Realized on Vesting(6) ($) 10,050 9,100 3,175 — — — — — — — — — — — 8,025 7,300 2,550 — 3,350 9,100 9,525 — 2,675 7,300 7,650 — 7,650 — 1,250 9,300 9,750 — 2,675 7,300 7,650 — — 73.14 1/23/2025 — — — 62.85 1/22/2026 1,428 110,313 — — — — — 72.74 1/22/2027 12,666 1,305,736 3,033 312,671 — — — — 5,761 668,391 4,100 475,682 — 73.14 1/23/2025 — — — 62.85 1/22/2026 1,156 89,301 — — — — — 72.74 1/22/2027 10,154 1,046,776 2,433 250,818 — — — 4,608 170 534,620 13,133 3,280 380,546 — — — 72.74 1/22/2027 10,154 1,178,067 2,433 250,818 — — — — 73.14 1/23/2025 — — — 62.85 1/22/2026 1,462 112,940 4,608 435,620 3,280 380,546 — 72.74 1/22/2027 13,085 1,348,933 3,133 322,981 — — — — 73.14 1/23/2025 — — — 62.85 1/22/2026 1,156 89,301 32,853 3,811,605 23,376 2,712,084 — 72.74 1/22/2027 10,154 1,046,776 2,433 250,818 — — — 4,608 534,620 3,280 380,546 — — — — — — — — Name Andrew H. Beck Robert B. Crain Torsten R.W. Dehner Eric P. Hansotia Hans-Bernd Veltmaat (1) SSAR awards vest ratably, or 25% annually, over four years beginning from the date of grant, which was January 23, 2018 for the 2018 grants, January 22, 2019 for the 2019 grants, and January 2r 2, 2020 for the 2020 grants. There were no SSARs awarded in 2021. (2) The 2020 RSU awards were granted with a three-year cliff vff esting period beginning on the date of grant, January 22, 2020 subject to adjustment based on a total shareholders return metric relative to the Company's defined peer group. The 2019 and 2021 RSU awards vest in equal installments over three years beginning from the dates of grants, which were January 22, 2019 and January 2r respectively. 0, 2021, (3) The pre-established performance goals of certain one-year performance cycles under the PSP related to the 2020 and 2021 PSP grants were achieved above and under the “target” level of performance, respectively; however, the award is subject to further vesting periods and future actual levels of performance achieved for unearned one-year performance cycles with the ultimate award that is earned determined based upon the average of the three annual percentages. The 2021 grant of performance award shares is subject to a total shareholder return modifier at the end of the three-year performance cycle. The number of shares included above are reflected using the weighted average of the actual level of performance achieved for one-year performance cycles under the PSP that have been earned, and at “target” level of performance for one-year performance cycles under the PSP that have not been earned. 54 AGCO Corp. OUTSTANDING EQUITY AWARDS AT YEAR-END 2021 (4) The market value of RSU awards that have not vested is based on the closing price of the Company’s common stock on December 31, 2021, December 31, 2020 and December 31, 2019, which was $116.02, $103.09 and $77.25, respectively. The market value of the awards earned under the three one-year performance cycles under the PSP are based on the closing price of the Company’s common stock on December 31, 2021 and December 31, 2020, which was $116.02 and $103.09, respectively. (5) The amounts shown represent the number of shares awarded but unearned at “target” level of performance under the PSP in Januaryrr 021, respectively. The actual amounts that will be earned under the PSP are dependent upon the achievement of 2020 and January 2rr pre-established performance goals during the respective performance cycles. (6) Based on the closing price of the Company’s common stock on December 31, 2021 and December 31, 2020, which was $116.02 and $103.09, respectively. 2022 Proxy Statement 55 SSAR Exercises and Stock Vested in 2021 The following table provides information concerning exercises of SSARs and similar instruments, and vesting of stock awards including restricted stock and similar instruments, during the most recently completed year for each of the NEOs. The table reports the number of securities acquired upon exercise of SSARs; the aggregate dollar value realized upon exercise of SSARs; the number of shares of stock that have vested; and the aggregate dollar value realized upon vesting. Name Andrew H. Beck Robert B. Crain Torsten R.W. Dehner Eric P. Hansotia Hans-Bernd Veltmaat SSAR Awards Stock Awards Number of Shares Acquired on Exercise(1) (#) Value Realized on Exercise(2) ($) Number of Shares Acquired on Vesting (#) Value Realized on Vesting(3) ($) 9,635 6,782 1,191 12,986 7,210 1,469,820 1,032,071 145,026 2,033,001 1,008,612 22,405 17,963 1,474 22,199 17,963 2,898,898 2,324,145 188,975 2,877,843 2,324,145 (1) The number of shares acquired on exercise of SSARs is computed by dividing the value realized on exercise by the market price of the underlying securities at exercise. The number of shares acquired upon exercise includes the following shares withheld for income tax purposes: Mr. Beck — 4,346 shares, Mr. Crain — 3,063 shares, Mr Dehner - 406 shares, Mr. Hansotia — 5,114 shares, and Mr. Veltmaat — 3,252 shares. (2) The dollar amount realized upon exercise is computed by multiplying the number of shares times the differ ff ence between the market price of the underlying securities at exercise and the exercise price of the SSARs. (3) Shares withheld for income tax purposes related to stock vested were as follows: Mr. Beck — 10,102 shares, Mr. Crain — 8,099 shares, Mr. Dehner - 501 shares, Mr. Hansotia — 8,451 shares, and Mr. Veltmaat — 6,947 shares. 56 AGCO Corp. Pension Benefits The “2021 Pension Benefits Table” provides further details regarding the executive officers’ defined benefit retirement plan benefits. Because the pension amounts shown in the “2021 Summary Compensation Table” and the “2021 Pension Benefits Table” are projections of future retirement benefits, numerous assumptions must be applied. In general, the assumptions should be the same as those used to calculate the pension liabilities in accordance with ASC Topic 715, “Compensation – Retirement Benefits,” on the measurement date, although the SEC specifies certain exceptions, as noted in the table below. EXECUTIVE NONQUALIFIED PENSION PLAN Only executives promoted or hired prior to August 1, 2015 particrr after August 1, 2015 participate in a nonqualified defined contribution plan. During 2021, the ENPP was “frozen” and further rr terminated for all participants other than for two executives who will have reached age 65 prior to or in 2021. Subsequent to December 31, 2024, the remaining participants in the ENPP will transition to the nonqualified defined contribution plan. salary benefit accruals under the ENPP will end on December 31, 2024. In addition, the lifetime annuity feature was ipate in the ENPP, and executives promoted or hired on or The ENPP provides the Company’s eligible executives with retirement income for a period of 15 years based on a percentage of their final average compensation, including base salary and annual incentive bonus, reduced by the executive’s social security benefits and savings plan benefits attributable to employer matching contributions. In addition, executives who remain with AGCO until age 65 will have their benefits continue as a lifetime annuity after the 15-year rr certain period ends (i.e., at age 80). The key provisions of the ENPP are as follows: Monthly Benefit. Senior executives with a vested benefit will be eligible to receive the following retirement benefits each month for 15 years beginning on their normal retirement date (age 65): 3% of final average monthly compensation times years of service up to 20 years, reduced by each of (i) the senior executive’s U.S. social security benefit or similar government retirement program to which the senior executive is eligible, (ii) the benefits payable from the AGCO Savings Plan (payable as a life annuity) attributable to the Company’s matching contributions (at the maximum level) and earnings thereon, and (iii) the benefits payable from any retirement plan sponsored by the Company in any foreign countryrr attributable to the Company’s contributions. Monthly Compensation. The final average monthly compensation is the average of the three years of base nd annual incentive payments under the IC Plan paid to the executive during the three years in which such sum was Final Averagerr salary ar the highest from among the ten years prior to his or her death, termination or retirement. Vesting. Participants become vested after meeting all three of the following requirements: (i) turn age 50; (ii) completing ten years of service with the Company; and (iii) achieving five years of participation in the ENPP. An executive must remain with the Company until age 65 (and must reach age 65 by December 31, 2022) with at least ten years of service (five years must include tenure as an executive officer) to vest in the life annuity portir on of this benefit that begins at age 80. Alternatively, all participants will become vested in the plan in the event of a change of control. Early Retirement Benefits. Participants do not receive benefits under the ENPP prior to normal retirement age. NONQUALIFIED DEFINED CONTRIBUTION PLAN For executive officers promoted or hired after August 1, 2015, we annually contribute 10% (15% in the case of Mr. Hansotia) of the executive officer’s salary prr during the year with respect to the AGCO 401(k) plan. As discussed above, particrr December 31, 2024 will transition into this plan. lus their annual incentive compensation, less any contributions made ipants in the ENPP as of 2022 Proxy Statement 57 PENSION BENEFITS SWISS LIFE COLLECTIVE “BVG” FOUNDATION The Swiss Life Collective “BVG” Foundation (“BVG”) operates a pension fund in Switzerland, for which Mr. Dehner is a participant. The BVG ensures the plan meets at least the mandated requirements for minimum pension benefits. This plan is a cash balance formula, with contributions made both by the Company and Mr. Dehner. Mr. Dehner’s total account balance represents contributions and interest made by the Company, as well as from his prior employers. The amounts shown in the tables throughout this proxy reflect the portion of account balance attributable to contributions made while employed by the Company. The key provisions of the BVG plan are as follows: rr benefit. Upon retirement, participants will receive the value of their cash balance account. They may elect to Retirement receive their benefit as a lump sum or as an annuity. The cash balance account grows each year with pay credits (payable by the employee and the employer) and interest. Pay credits. Each year, a particr (varies by age): ipant’s cash balance account is credited with the following percentage of pensionable pay Age 25-34 35-44 45-54 55-65 Credit as a percentage of pay (paid by the Company Credit (category “SVP & above”) as a percentage of pay (paid by employee) 5.5% 7.5% 11.5% 13.5% 2.5% 3.5% 4.5% 5.5% Pensionable pay. Payable at the annual rate of base pay and bonus. Normal retirement age. Age 65 for males; age 64 for females (as in accordance with Swiss law). Early retirement benefits. Participants may elect to retire from the age of 58. Annuity benefits are convertedrr actuarial equivalence conversion factors. using reduced Vesting. 100% vested (i.e., should Mr. Dehner leave the Company, he will receive the amount accumulated in the capital plan at that time). 58 AGCO Corp. 2021 Pension Benefits Table Name Andrew H. Beck Robert B. Crain Plan Name AGCO Executive Nonqualified Pension Plan AGCO Executive Nonqualified Pension Plan Torsten R.W. Dehner Swiss Life Collective “BVG” Foundation Eric P. Hansotia AGCO Executive Nonqualified Pension Plan Hans-Bernd Veltmaat AGCO Executive Nonqualified Pension Plan Number of Years of Credited Service (#) Present Value of Accumulated Benefit(1) ($) Payments During Last Year ($) 20.00 16.00 11.08 8.50 13.50 9,000,473 7,228,437 1,037,576 3,311,920 8,679,732 — — — — — (1) Based on plan provisions in effect ff as of December 31, 2021. The executive officers’ pension plan will provide a monthly annuity benefit upon retirement. The values shown in this column are the estimated lump sum value today of the monthly benefits they will receive in the future (based on their current salary arr nd service, as well as the assumptions and methods prescribed by the SEC). These values are not the monthly or annual benefits that they would receive. Pension values may fluctuate significantly from year to year depending on a number of factors, including age, years of service, average annual earnings, changes in plan provisions and the assumptions used to determine the present value, such as the discount rate. For 2021, the discount rate assumption used to determine the actuarial present value of accumulated pension benefits was higher than in 2020. The Company cautions that the values reportedrr Pension Value and Nonqualified Deferred Compensation Earnings column in the Summary Compensation Table, as well as the amounts above in the Present Value of Accumulated Benefit column, are theoretical as those amounts are calculated pursuant to SEC requirements and are based on assumptions used in preparing the Company’s audited financial statements for the applicable fiscal years. The Company’s retirement plans utilize a different method of calculating actuarial present value for the purpose of determining a lump sum payment, if any. The change in pension value from year to year as reported in the table is subject to market volatility and may not represent the value that an NEO will actually accrue or receive under the Company’s retirement plans during any given year. in the Change in 2022 Proxy Statement 59 Other Potential Post-Employment Payments Each NEO’s employment agreement with the Company includes provisions for post-employment compensation related r to certain employment termination events. All unvested equity awards became subject to a “double trigger” whereby accelerated vesting is contingent on a change in control and either termination of employment or failure of the acquiring company to assume outstanding equity grants or provide particr accelerated vesting of equity under other employment termination events. The table below and its accompanying footnotes provide specific detail on the post-employment compensation each NEO is entitled to in the event of certain employment termination events assuming termination on the last day of the prior year (December 31, 2021). ipants with the value equal to that of the unvested equity grants. The LTI Plan does not provide for Severance Bonus Accelerated Vesting of Equity Benefits Retirement Benefits Death Benefit Disability Benefit 280G Tax Gross-Up Estimated Total $ 3,498,894 $1,081,639 $ 4,890,228 $152,164 $ 9,336,820 (9) 920,969 (9) — $ — $ — $ — $ $ $ — $ — $ $ 176,694 $1,081,639 $ $ $ — $1,081,639 $ — $ — $ $ 1,413,553 $1,081,639 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — 920,969 (9) 920,969 (9) 920,969 (9) 920,969 (9) $ $ $ — $ — $ — $ $4,240,662 $ — $ — $ — $ — $ — $18,959,745 — $ 920,969 — $ — — $ 6,419,964 $ $ $ — $1,192,200 $ — $ 3,194,808 — $ — $ — $ — $ — $ 920,969 — $ 3,416,161 $ 2,908,355 $ 853,259 $ 3,920,332 $153,168 $ 7,543,222 (10) $ 644,497 (10) $ — $ — $ — $ — $ $ — $ — $ $ — $ — $ $ 151,497 $ 853,259 $ $ $ — $ 853,259 $ — $ — $ $ 605,986 $ 853,259 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ 644,497 (10) $3,635,916 $ 644,497 (10) $ 644,497 (10) $ 644,497 (10) $ — $ — $ — $1,014,000 $ — $ — $ — $ — $ — $ — $ — $15,378,336 — $ 644,497 — $ — — $ 5,285,169 — $ 2,511,756 — $ 644,497 — $ 2,103,742 Executive / Termination Scenario(1) Andrew H. Beck Change in Control(2)(3)(4) ermination Voluntary Tr Without Good Reason Retirement(5) Death(6) Disability(7) Involuntary With Cause Involuntary Without Cause or Good Reason Resignation(8) Robert B. Crain Change in Control(2)(3)(4) Voluntary Tr ermination Without Good Reason Retirement(5) Death(6) Disability(7) Involuntary With Cause Involuntary Without Cause or Good Reason Resignation(8) 60 AGCO Corp. OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS Severance Bonus Accelerated Vesting of Equity Benefits Retirement Benefits Death Benefit Disability Benefit 280G Tax Gross-Up Estimated Total $ 2,364,123 $ 776,720 $ 3,303,091 $ $ $ — $ — $ — $ — $ $ 183,876 $ 776,720 $ $ $ — $ 776,720 $ — $ — $ $ 551,628 $ 776,720 $ — $ — $ — $ — $ — $ — $ — $ — $ 903,170 (11) $ 903,170 (11) $ — — $ — $ $ — $ 3,004,610 (11) $ 315,216 (11) $ 903,170 (11) $ 903,170 (11) $ — $ — $ $10,196,906 $2,248,969 $11,597,507 $140,349 $ 3,407,175 (12) $ — $ — $ — $ — $ $ $ — $ — $ $ 287,500 $2,248,969 $ $ $ — $2,248,969 $ — $ — $ $ 5,291,299 $2,248,969 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ $ $ $6,900,000 $ — — — — — — — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — — $ — $ — $ — $ — $ — $ — $ 7,347,104 — $ 903,170 — $ — — $ 3,965,206 $ 1,091,936 — $ 903,170 — $ 2,231,518 — $27,590,906 — $ — $ — — — $ 9,436,469 $ $ $ — $1,668,600 $ — $ 3,917,569 — $ — $ — $ — $ — $ — — $ 7,540,268 $ 2,956,122 $ 867,608 $ 3,920,332 $155,570 $ 8,903,455 (13) $ 553,329 (13) $ — $ — $ — $ — $ $ — $ — $ $ — $ — $ $ 154,044 $ 867,608 $ $ $ $ — $ 867,608 $ — $ — $ — $ 867,608 $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ 553,329 $ — $ 553,329 (13) $3,697,062 $ 553,329 (13) $ 553,329 (13) $ 553,329 (13) $ — $ — $ — $1,034,400 $ — $ — $ — $ — $ — $ — $ — $16,803,087 — $ 553,329 — $ 553,329 — $ 5,272,043 — $ 2,455,337 — $ 553,329 — $ 1,420,937 Executive / Termination Scenario(1) Torsten R.W. Dehner Change in Control(2)(3)(4) ermination Voluntary Tr Retirement(5) Death(6) Disability(7) Involuntary With Cause Involuntary Without Cause or Good Reason Resignation(8) Eric P. Hansotia Change in Control(2)(3)(4) Voluntary Tr ermination Without Good Reason Retirement(5) Death(6) Disability(7) Involuntary With Cause Involuntary Without Cause or Good Reason Resignation(8) Hans-Bernd Veltmaat Change in Control(2)(3)(4) Voluntary Tr ermination Without Good Reason Retirement(5) Death(6) Disability(7) Involuntary With Cause Involuntary Without Cause or Good Reason Resignation(8) (1) All termination scenarios assume termination occurred on December 31, 2021, and a stock price of $116.02, which was the closing price of the Company’s common stock on the last trading day of the Company’s year ended December 31, 2021. The employment agreements with executives generally contain certain restrictive covenants that continue for a period of two years after termination of employment, including a non-competition covenant, a non-solicitation of customers covenant and a non-recruitment of employees covenant. (2) Upon termination within two years following a change of control, the following provisions apply to each of the NEOs: • Mr. Hansotia receives a lump sum payment equal to (i) three times his base salary i rr n effect at the time of termination, (ii) a pro-rata portion of his bonus or other incentive compensation earned for the year of termination and (iii) a bonus equal to three times the amount earned in the most recently completed fiscal year. He continues to receive life insurance and health benefits during a three- year period. Mr. Hansotia does not have an excise tax gross-up. • Messrs. Beck, Crain, Dehner and Veltmaat receive payment equal to (i) two times base salary in effect at the time of termination, (ii) a pro-rata portion of bonus or other incentive compensation earned for the year of termination and (iii) a bonus equal to two times the three-year average of the NEO’s awards received during the prior two completed years and the current year’s trend. Each of the NEOs continues to receive life insurance, disability and healthcare benefits during a two-year period. In the case of Messrs. Beck, Crain and Veltmaat, the payment shall be made in a lump sum. In the case of Mr. Dehner, the portion attributable to base salary will be paid in three installments and the remainder will be paid in a lump sum. • Messrs. Beck, Crain, Hansotia and Veltmaat will receive their ENPP retirement benefit payable as a lump sum. This lump sum is calculated in a similar fashion as values disclosed in the Pension Benefits Table, except it is determined based on the plan’s actuarial equivalence definition rather than the SEC prescribed assumptions. There is no enhancement to their pension benefit amount in the event of a change in control other than immediate vesting of the benefit. (3) All outstanding unvested equity awards are subject to a “double trigger” whereby accelerated vesting is contingent on a change in control and either termination of employment or failure of the acquiring company to assume outstanding equity grants or provide participants with the value equal to that of the unvested equity grants. 2022 Proxy Statement 61 OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS (4) In the case of a change of control, the retirement benefits are payable as a lump sum six months after termination of employment or, if such termination occurs more than twenty-four months after e between the “Retirement Benefits” values shown in the table above from the ENPP and the value shown in the “2021 The differenc ff Pension Benefits Table” is due to the fact that the interest and mortalit y assumptions prescribed by the plan in the event of a change rr of control are different from the assumptions used in the actuarial valuation. There is no enhancement to the benefit amount under a change of control other than immediate vesting of the benefit. the change in control, in accordance with the terms of the ENPP. ff (5) As of December 31, 2021, Mr. Veltmaat is eligible for retirement benefits. Messrs. Beck and Crain are vested in their ENPP benefit, but are not eligible to commence their benefits. Mr. Hansotia is not vested in his ENPP benefits. (6) Upon death, the following provisions apply to each of the NEOs: • The estate receives the executive’s base salary i r n effect at the time of death for a period of three months. The estate is also of entitled to all sums payable to the executive through the end of the month in which death occurs, including the pro-rata portion his bonus earned at this time. The “Death Benefit” amount represents the value of the insurance proceeds payable upon death. r (7) Upon disability, the following provisions apply to each of the NEOs: • Each of the NEOs receives all sums otherwise payable to them by the Company through the date of disability, including the pro-rata portion of the bonus earned. The “Disability Benefit” amount represents the annual value of the insurance proceeds payable to the executive on a monthly basis upon disability. (8) Unless such termination occurs within two years following a change of control, if employment is terminated without cause or if the executive voluntarily resigns with good reason, the following provisions apply to each of the NEOs: • For Mr. Veltmaat, he does not receive cash severance because he is over age 65. All employment agreements stipulate that no cash severance is paid when they reach the age of 65. He receives a pro-rata portion of his bonus earned for the year of termination, which is payable at the time incentive compensation is generally payable by the Company. • For Mr. Beck, he receives his base salary in effect at the time of termination for a two-year severance period, paid at the same intervals rr termination, which is payable at the time incentive compensation is generally payable by the Company. as if he had remained employed with the Company. He also receives a pro-rata portion of his bonus earned for the year of • For Messrs. Crain and Dehner, each of the NEOs receive their base salary i r n effect at the time of termination for a one-year severance period, paid at the same intervals as if they had remained employed with the Company. Each NEO also receives a pro- rata portion of their bonus earned for the year of termination, which is payable at the time incentive compensation is generally payable by the Company. • For Mr. Hansotia, he receives his base salary in effect at the time of termination for a two-year severance period, paid at the same as if he had remained employed with the Company, and a bonus equal to two times the three-year average of his awards intervals rr received during the prior two completed years and the current year’s trend. (9) Mr. Beck is currently vested in his ENPP retirement benefit. In the event of Mr. Beck’s termination due to a c receive a $a 9,336,820 lump sum payment. In the event annuity for 15 years beginning at age 65. The present value of this annuity equals the benefit disclosed in the Pension Benefits Table, based on the assumptions and methods defined by the SEC. In other words, there is no enhancement that would be added to his pension benefit if he had been terminated on December 31, 2021. hange fof control, he will fof his termination due to any other cause, he will receive a $a 920,969 nnual a g (10) Mr. Crain is currently vested in his ENPP retirement benefit. In the event of Mr. Crain’s termination due to a change of control, he will receive a $7,543,222 lump sum payment. In the event of his termination due to any other cause, he will receive a $644,497 annual annuity for 15 years beginning at age 65. The present value of this annuity equals the benefits disclosed in the Pension Benefits Table, based on the assumptions and methods defined by the SEC. In other words, there is no enhancement that would be added to his pension benefit if he had been terminated on December 31, 2021. (11) In the event of Mr. Dehner’s termination due to a change of control, he will receive a $903,170 lump sum payment from his retirement plan. In the event of his termination due to death, he will receive a $3,004,610 lump sum payment. In the event of his termination due to disability, he will receive a $315,216 annual annuity until age 65. In the event of his termination due to any other cause, he will receive a lump sum payment of $903,170, which corresponds to his vested benefits as per December 31, 2021. (12) Mr. Hansotia is not currently vested in his ENPP retirement benefit. In the event of Mr. Hansotia’s termination due to a change of control, he will receive a $3,407,175 lump sum payment. In the event of his termination due to any other cause on December 31, 2021, he would not receive an ENPP retirement benefit. (13) Mr. Veltmaat is currently vested in his ENPP retirement benefit. In the event of Mr. Veltmaat’s termination due to a change of control, he will receive a $8,903,455 lump sum payment. In the event of his termination due to any other cause, he will receive $553,329 annually as a 15-year certain and life annuity beginning at termination. The present value of this annuity plus the value of the life annuity beginning 15 years later equals the benefit disclosed in the Pension Benefits Table, based on the assumptions and methods defined by the SEC. In other words, there is no enhancement that would be added to his pension benefit if he had been terminated on December 31, 2021. 62 AGCO Corp. 2021 CEO Pay Ratio Our analysis began by determining that we had approximately 23,700 employees as of a November 30, 2021 determination date. Although permitted by the SEC, we did not use the 5% de Minimis rule to exclude or eliminate any employee group. Based on our consistently applied compensation measure of actual total cash compensation, we identified the median employee. The median employee’s total 2021 compensation, as determined in a manner consistent with our Summary Compensation Table, was $53,354. Based on this methodology, we estimate the ratio of CEO pay to median employee pay is 210:1. In 2020, the CEO pay to median employee pay ratio was 270:1. THE FOLLOWING REPORTS OF THE TALENT AND COMPENSATION COMMITTEE AND THE AUDIT COMMITTEE SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR TO BE INCORPORATED BY REFERENCE IN ANY PREVIOUS OR FUTURE DOCUMENTS FILED BY THE COMPANY WITH THE SEC UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY EXPRESSLY INCORPORATES SAID REPORTS BY REFERENCE IN ANY SUCH DOCUMENT. 2022 Proxy Statement 63 Talent and Compensation Committee Report The Talent and Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on such review and discussion, the Talent and Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC. Commencing in 2020, the Talent and Compensation Committee engaged Korn Ferry to serve as its independent compensation adviser to advise management and the Talent and Compensation Committee with respect to the Company’s compensation programs and to undertake various related studies and projects. During 2021, the Talent and Compensation Committee evaluated Korn Ferry’rr s independence pursuant to SEC and NYSE requirements and determined that no conflicts of interest arose from the work to be performed by Korn Ferry. r or consulting services rendered to the Talent and Compensation Committee The aggregate fees billed by Korn Ferry f between June 2021 – December 2021 related to the recommendation of the amount or form of executive and director compensation were approximately $330,200. The total amount of fees paid by the Company to Korn Ferry i other servicrr primarily related to executive search fees and job pricing effor and approved the provision of these additional services to the Company by Korn Ferry.rr es, excluding Talent and Compensation Committee services, was approximately $38,284. These other services ts. The Talent and Compensation Committee recommended rr n 2021 for all ff The foregoing report is submitted by the Talent and Compensation Committee of the Board. Suzanne P. Clark, Chair Sondra L. Barbour George Benson Matthew Tsien Niels Pörksen 64 AGCO Corp. Audit Committee Report To the Board of Directors: The Audit Committee consists of the following members of the Board: Sondra L. Barbour (Chair), P. George Benson, George E. Minnich and Matthew Tsien. Each of the members is “independent” as defined by the NYSE and SEC. Management is responsible for the Company’s internal controls, financial reportirr ng process and compliance with the laws and regulations and ethical business standards. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and an audit of the effecff tiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue reports thereon. The Audit Committee’s responsibility is to monitor and ts findings to the Board. The Audit Committee members are not professional oversee these processes and to report irr accountants or auditors, and their functions are not intended to duplicate or to certify t independent registered public accounting firm, nor can the Audit Committee certify that the independent registered public accounting firm is “independent” under applicable rules. The Audit Committee servesrr a board-level oversight role, in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors and the experience of the Audit Committee’s members in business, financial and accounting matters. ff he activities of management and the We have reviewed and discussed with management the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021 and management’s assessment of the effectiveness of the Company’s internal control over financial reportirr ng and KPMG LLP’s audit of the Company’s internal control over financial reporting December 31, 2021. as of r We have discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (United States) and the U.S. Securities and Exchange Commission. We have received and reviewed the written disclosures from KPMG LLP required by NYSE listing standards and the applicable requirements of the Public Company Accounting Oversight Board (United States) regarding the independent registered public accounting firm’s communications with the Audit Committee and have discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. We also have considered whether the professional services provided by KPMG LLP, not related to the audit of the consolidated financial statements and internal control over financial reporting referred to above or to the reviews of the interim consolidated financial statements included in the Company’s Forms 10-Q for the quarters June 30, 2021, and September 30, 2021, is compatible with maintaining KPMG LLP’s independence. ended March 31, 2021, rr Based on the reviews and discussions referred to above, we recommended to the Board that the consolidated financial statements referred to above be included in the Company’s Annual Report or December 31, 2021. n Form 10-K for the year ended The foregoing report has been furnished by the Audit Committee of the Board. Sondra L. Barbour, Chair P. George Benson George E. Minnich Matthew Tsien 2022 Proxy Statement 65 AUDIT COMMITTEE REPORT AUDIT FEES The aggregate fees billed by KPMG LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements for 2021 and 2020, the audit of the Company’s internal control over financial reporting for 2021 and 2020, subsidiary srr filings on Form 10-K, Form 10-Q and Form 8-K during such years were approximately $7,211,000 and $6,831,000, respectively. tatutory audits and the reviews of the financial statements included in the Company’s SEC AUDIT-RELATED FEES The aggregate fees billed by KPMG LLP for professional services rendered for 2021 and 2020 for audit-related fees were approximately $41,000 and $65,000, respectively. The amounts for 2021 and 2020 primarily represent fees for audits of employee benefit plans and required auditor certifications for various matters required in certain foreign jurisdictions. TAX FEES KPMG LLP did not provide any professional tax servicrr es during 2021 or 2020. FINANCIAL AND OPERATIONAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES KPMG LLP did not provide any information technology servirr ces related to financial and operational information systems design and implementation to the Company or its subsidiaries during 2021 or 2020. ALL OTHER FEES OF KPMG LLP KPMG LLP did not provide any other services during 2021 or 2020. A representative of KPMG LLP is expected to be present at the Annual Meeting with the opportunity to make a statement and will be available to respond to appropriate questions. All of KPMG’s services and fees for services, whether audit or non-audit, are preapproved by the Audit Committee. In some instances services and fees initially are preapproved by the Chair of the Audit Committee and then re-approved subsequently by the Audit Committee. All services performed by KPMG LLP for 2021 were approved by the Chair of the Audit Committee and the Audit Committee. The Audit Committee has appointed KPMG LLP as the Company’s independent registered public accounting firm for 2022, subject to stockholder ratification. KPMG LLP has servedrr independent registered public accounting firm since 2002. as the Company’s 66 AGCO Corp. Certain Relationships and Related Party Transactions The Company has a written related partyr appropriate committee must approve transactions that exceed $120,000 in amount in which any director, executive officer, significant stockholder or certain other persons has or have a material interest. transaction policy pursuant to which a majority of the independent directors of an Ms. Srinivasan, who is currently a member of the Company’s Board of Directors, is the Chairman and Managing Director of TAFE. The Company owns approximately 21% of TAFE’s outstanding shares. Through TAFE and TAFE Motors and Tractors Limited, Ms. Srinivasan is the beneficial owner of 12,150,152 shares of the Company’s common stock, not including shares of the Company’s common stock received by Ms. Srinivasan for service as a director. The Company received dividends of approximately $2.0 million from TAFE during 2021. Pursuant to various arrangements that are terminable upon notice, TAFE manufactures and sells Massey Ferguson branded equipment (primarily in India) and also supplies tractors and components to AGCO for sale in other markets. During 2021, the Company purchased approximately $137.6 million of tractors and components from TAFE and sold approximately $1.4 million of parts to TAFE. r adjustments; (ii) subject to its rights to make a non-public offer to acquire all or a part orr The Company and TAFE are parties to a Letter Agreement regarding the current and future accumulation by TAFE of shares of our common stock and certain governance matters. The Letter Agreement expires on April 24, 2024. Pursuant to the Letter Agreement, TAFE has agreed not to (i) purchase in excess of 12,150,152 shares of our common stock, subject to f the Company (or propose rr certain another transaction that would result in a change of control of the Company), form or act as part of a group with respect to the ownership or voting of our common stock or to otherwise grant a third-party a proxy or other voting rights with respect to our common stock owned by TAFE or its affiliates (other than to or at the request of the Company), provided that TAFE and its affiliates are expressly permitted to act as a group; or (iii) publicly announce its intention to commence, or commence, ff an offer to acquire all or part of our common stock. Pursuant to the Letter Agreement, the Company has agreed to: (i) nominate a candidate proposed by TAFE for election to our Board of Directors at each annual meeting, as long as the collective beneficial ownership by TAFE and its affiliates is 5% or more of the then outstanding common stock of the Company, subject to certain adjustments and restrictions; and (ii) provide customary arr determines to dispose of any shares of our common stock in a public distribution. ssistance to TAFE in selling its shares, including filing a registration statement with the SEC, if TAFE The foregoing description of the Letter Agreement is qualified in its entirety by reference to the Letter Agreement, a copy of which was included as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 25, 2019. 2022 Proxy Statement 67 Annual Report to Stockholders The Company’s 2021 Annual Report trr o its stockholders and Annual Report on Form 10-K for the year ended December 31, 2021, including consolidated financial statements and schedule thereto, but excluding other exhibits, is being furnished with this proxy statement to stockholders of record as of March 18, 2022. Annual Report on Form 10-K We will provide without charge a copy of our Annual Report filed on Form 10-K for the year ended December 31, 2021, including the consolidated financial statements and schedule thereto, on the written request of the beneficial owner of any shares of our common stock on March 18, 2022. The written request should be directed to: Corporate Secretary, AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096. Independent Registered Public Accounting Firm A representative of KPMG LLP, our independent registered public accounting firm for 2021, is expected to attend the Annual Meeting and will have the opportunit will be available to respond to appropriate questions from stockholders. The Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for 2022, subject to stockholder ratification. y to make a statement if he or she desires to do so. The representative also r Stockholders’ Proposals Any stockholder of the Company who wishes to present a proposal at the 2023 Annual Meeting of stockholders of the Company, and who wishes to have such proposal included in the Company’s proxy statement and form of proxy for that meeting, must deliver a copy of such proposal to the Company at its principal executive offices at 4205 River Green Parkway, Duluth, Georgia 30096, Attention: Corporate Secretary,r no later than November 28, 2022; however, if next year’s Annual Meeting of stockholders is held on a date more than 30 days before or afteff Annual Meeting, any stockholder who wishes to have a proposal included in our proxy statement for that meeting must deliver a copy of the proposal to the Company at a reasonable time before the proxy solicitation is made. We reserve the right to decline to include in our proxy statement any stockholder’s proposal which does not comply with the advance notice provisions of our By-Laws or the rules of the SEC for inclusion therein. r the corresponding date of the 2022 Any stockholder of the Company who wishes to present a proposal at the 2023 Annual Meeting of stockholders of the Company, but not have such proposal included in our proxy statement and form of proxy for that meeting, must deliver a copy of such proposal to the Company at its principal executive offices at 4205 River Green Parkway, Duluth, Georgia 30096, Attention: Corporate Secretary no later than February 2rr 8, 2023 and otherwise in accordance with the advance notice provisions of our By-Lyy aws or the persons appointed as proxies may exercise their discretionary vr proposal is considered at the meeting. The advance notice provisions of our By-Laws properly brought before a meeting by a stockholder, such stockholder must disclose certain given the Company notice of such proposal in written form meeting the requirements of our By-Laws no later than 60 days and no earlier than 90 days prior to the anniversary drr ate of the immediately preceding Annual Meeting of stockholders. provide that for a proposal to be information and must have oting authority if the yy r 68 AGCO Corp. Reconciliation of Non-GAAP Measures The following is a reconciliation of reportedr income from operations, net income and net income per share to adjusted income from operations, net income and net income per share for the years ended December 31, 2021, 2020, 2019, 2018 and 2017 (in millions, except per share data). Years Ended December 31, 2021 2020 2019 Income from Operations Net Income(1) Net Income per Share(1) Income from Operations Net Income(1)(2) Net Income per Share(1) Income from Operations Net Income(1)(2) Net Income per Share(1)(2) $ 1,001.4 $ 897.0 $ 11.85 $ 599.7 $ 427.1 $ 5.65 $ 348.1 $ 125.2 $ 1.63 — — — 20.0 10.0 0.13 176.6 176.6 2.29 15.3 11.8 0.16 19.7 19.5 0.26 9.0 8.3 0.11 — — — — — (123.4) — (1.63) — — — — (32.5) (0.43) — — — — — — — — — 5.61 $ 533.7 $ 341.9 $ 53.7 (21.8) 0.70 (0.28) 4.44 $ 1,016.7 $ 785.4 $ 10.38 $ 639.4 $ 424.2 $ As reported Impairment charges Restructuring expenses Gain on sale of investment in affiliate Deferred income tax adjustments Swiss tax reform As adjusted As reported Restructuring expenses Non-cash expense related to waived stock compensation Tax (benefit) provision associated with U.S. tax reform Extinguishment of debt As adjusted 2018 Income from Operations $ 489.0 $ 285.5 $ Net Income(1) 12.0 — — — 8.7 — (8.5) 24.5 $ 501.0 $ 310.2 $ Years Ended December 31, Net Income per Share(1) 2017 Income from Operations Net Income(1) 3.58 $ 404.4 $ 186.4 $ 0.11 11.2 8.8 Net Income per Share(1)(2) 2.32 0.11 — 4.8 4.8 0.06 — (0.11) — 0.31 3.89 $ 420.4 $ 242.0 $ 42.0 — 0.52 — 3.02 (1) Net income and net income per share amounts are after tax. (2) Rounding may impact summation of amounts. The following is a reconciliation of net cash provided by operating activities to free cash flow for the years ended December 31, 2021 and 2020 (in millions): Net cash provided by operating activities Less: Capital expenditures Free cash flow 2021 2020 660.2 $ 896.5 (269.8) 390.4 $ (269.9) 626.6 $ $ The following table sets forth, for the year ended December 31, 2021, the impact to net sales of currency translation (in millions, except percentages): Years ended December 31, Change due to currency translation 2021 2020 % change from 2020 $ % $ 11,138.3 $ 9,149.7 21.7 % $ 199.7 2.2 % 2022 Proxy Statement 69 Annual Report on Form 10-K [THIS PAGE INTENTIONALLY LEFT BLANK] UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 001-12930 AGCO CORPORATION (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 4205 River Green Parkway Duluth, Georgia (Address of principal executive offices) 58-1960019 (I.R.S. Employer Identification No.) 30096 (Zip Code) (770) 813-9200 (Registrants telephone number, including area code) Title of Class Common stock Securities registered pursuant to Section 12(b) of the Act: Trading Symbol AGCO Name of exchange on which registered New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer as defined in RulRR e 405 of the Securities Act. Yes ☒ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act such reports), and (2) has been subject to such of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to fileff filing requirements for the past 90 days. Yes ☒ No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): ☒ Large accelerated filer If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with o Accelerated filer o Non-accelerated filer ☐ ☐ ff ff Smaller reporting company Emerging growth company any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ ee Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of AGCO Corporation’s Common Stock (based upon the closing sales price quoted on the New York Stock Exchange) held by non-affiliates as of June 30, 2021 was approximately $8.2 billion. For this purpose, directors and officers and the entities that they control have been assumed to be affiliates. As of February 22, 2022, 74,536,804 shares of AGCO Corporation’s Common Stock were outstanding. Documents Incorporated by Reference Portions of AGCO Corporation’s Proxy Statement for the 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K. [THIS PAGE INTENTIONALLY LEFT BLANK] Item 1. Business PART I AGCO Corporation was incorporated in Delaware in 1991. Unless otherwise indicated, all references in this Form 10-K to “AGCO,” “we,” “us” or the “Company” m General include AGCO Corporat rr ion and its subsidiaries. We are a leading manufacturer and distributor of agricultural tt equipment and related replacement parts throughout the world. Our purpose is to provide farmer-focused solutions to sustainably feeff d our world. We sell a fulff equipment, including tractors, combinem implements, and grain storage and protein production systems. Our products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brands, including: Challenger®, Fendt®, GSI®, Massey Ferguson® and Valtra®, supported by our Fuse® precision agriculturet solutions. We distribute most of our products through approximately 3,200 independent dealers and distributors in approximately 140 countries. We also provide retail and wholesale financing through our finance joint ventures s, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, with Coöperatieve Rabobank U.A., which we refer to as “Rabobank.” l range of agricultural t t Products The following tabla e sets forth ff a description of the Company’s more significant products and their percentage of net sales: Product Tractors Replacement Parts Product Description • High horsepower tractors (140 to 650 horsepower); typically used on large acreage farms, primarily for row crop production, soil cultivation, planting, land leveling, seeding and commercial hay operations • Utility tractors (40 to 130 horsepower); typically used on small- and medium-sized farms and in specialty agricultural industries, including dairy, livestock, orchards and vineyards • Compact tractors (under 40 horsepower); typically used on small farms and specialty agricultural industries, as well as for landscaping, equestrian and residential uses • Replacement parts for all of the products we sell, including products no longer in production. Most of our products can be economically maintained with parts and service for a period of ten to 20 years. Our parts inventories are maintained and distributed through a network of master and regional warehouses throughout North America, South America, Europe, Africa, China and Australia in order to provide timely response to customer demand for replacement parts Grain Storage and Protein Production Systems • Grain storage bins and related drying and handling equipment systems; seed-processing systems; swine and poultry feed storage and delivery, ventilation and watering systems; and egg production systems and broiler production equipment Hay Tools and Forage Equipment, Planters, Implements & Other Equipment • Round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners; used for the harvesting and packaging of vegetative feeds used in the cattle, dairy, horse and renewable fuel industries • Planters and other planting equipment (including retrofit equipment); used to plant seeds and apply fertilizer in the field, typically used for row crops, including planting technologies that cover the areas of monitoring and measurement, liquid control and delivery, meter accuracy and seed delivery • Implements, including disc harrows, which cut through crop residue, leveling seed beds and mixing chemicals with the soils; heavy tillage, which break up soil and mix crop residue into topsoil, with or without prior discing; field cultivators, which prepare a smooth seed bed and destroy weeds; and drills, which are primarily used for small grain seeding • Other equipment, including loaders; used for a variety of tasks, including lifting and transporting hay crops Percentage of Net Sales 2021(1) 57 % 2020 57 % 2019(1) 57 % 15 % 16 % 15 % 10 % 10 % 11 % 12 % 11 % 10 % Combines • Combines, sold with a variety of threshing technologies and complemented by a variety of crop- harvesting heads; typically used in harvesting grain crops such as corn, wheat, soybeans and rice 4 % 3 % 3 % Application Equipment • Self-propelled, three- and four-wheeled vehicles and related equipment; for use in the application 3 % 3 % 3 % of liquid and dry fertilizers and crop protection chemicals both prior to planting crops (“pre- emergence”) and after crops emerge from the ground (“post-emergence”) ____________________________________ (1) The summation of these individual percentages does not total due to rounding. 1 Precision Agriculture We offer solutions to the farmer to optimize farming performance, while improving ease of use. We provide telemetry- m ers improve based fleet management tools, including remote monitoring and diagnostics, which help farmff yield optimization, mixed fleff et optimization and decision support, with critical data privacy choices and convenient mobile tools that offer access to data and information. These products ultimately result in reduced waste and increased profitabila the farmer as well as help to enable sustainable farff ming. In addition, our precision agriculture solutions are based on connectivity, automation and digitalization and include satellite-based steering, field data collection, product self-adjustment and yield-mapping. a their planting, liquid appl agriculture solutions support our products, brands and the aftermarket with a comprehensive and customizablea solutions, enabling farmers to make individual, data-based decisions in order to reducedd and profitabila products. We believe that these products and related devices are highly valued by professional farmers globally and are integral to the current and futurett Our Precision Planting® brand provides retrofit solutions to upgrade farmer's existing equipment to improve ication and harvest operations, resulting in yield and cost optimization. Our Fuse® and other precision a ity. These technologies are both developed internally or sourced from third parties and integrated into our growth of our equipment sales and revenues. costs and maximize efficiency, yields uptime, machine and suite of ity forff m Market Conditions Demand for agricultural equipment is cyclical, influenced by, among other things, farm income, farm land values, crop yields, weather conditions, the demand for agricultural conditions, and government policies and subsidie volatility in the global economy, including employment disruptions, supply chain constraints and logistics interruptions. Elevated agricultural commodity prices have supported favorable farff m economics resulting in farmers upgrading and replacing aging fleets. These improved conditions generated growth in industry equipment demand across all the majora markets in 2021. Futurett chain and logistics disruptions, farmer economics are healthy and continue to bolster market demand. t s. The COVID-19 pandemic and other economic factors continue to create demand for agricultural equipment will be influenced by the factors noted above commodities, commodity and protein prices and general economic equipment . Despite global supply u a 2021 Compared to 2020 Financial Highlights Net income attributablea to AGCO Corporat rr ion and subsidiaries forff 2021 was $897.0 million, or $11.85 per diluted share, compared to $427.1 million, or $5.65 per diluted share for 2020. Net sales for 2021 were approximately $11,138.3 million, or 21.7% higher than 2020, primarily dued to improved m market demand. Net sales were impacted by extended COVID-related production shutdowns in both Europe and South America during the firff st half of 2020. Income fromff The increase in income fromff positive pricing impacts and a favff orable sales mix that offset substantial inflationary cost pressures. Net income per diluted share was also favorably impacted by the reversal of valuation allowances previously establia shed against our deferred tax assets in both the United States and Brazil during 2021. See “Financial Highlights” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for additional information. operations was $1,001.4 million in 2021 compared to $599.7 million in 2020. operations in 2021 was primarily the result of improved margins, which benefited fromff m Competition The agricultural tt industry is highly competitive. We compete with several large national and international fulff l-line with differing manufacturing and marketing methods. suppliers, as well as numerous short-line and specialty manufacturers Our two principal competm itors on a worldwide basis are Deere & Company and CNH Industrial N.V. We have regional competm itors around the world that have significant market share in a single country or a group of countries. t We believe several key factors influence a buyer’s choice of farff m equipment, including the strength and quality of a company’s dealers, the quality and pricing of products, dealer or brand loyalty,t product availability, terms of financing and customer service. See “Marketing and Distribution” for additional information. Marketing and Distribution Dealers and Distributors ii We distribute products primarily through a network of independent dealers and distributors. Our dealers are responsible for retail sales of equipment to end users and after-sales service and support. Our distributors may sell our product through networks of dealers supported by the distributors, and our distributors also may directly market our products 2 and provide customer service support. Our sales are not dependent on any specific dealer, distributor or group of dealers. In some countries, we utilize associates and licensees to provide a distribution channel for our products and a source of low-cost production for certain products. Geographical Region Europe .................................................................................................. North America...................................................................................... South America...................................................................................... Rest of World (2).................................................................................... ____________________________________ (1) The summation of these individual percentages may not total due to rounding. (2) Consists of approximately 60 countries in Africa, the Middle East, Australia and Asia. Dealer Support and Supervision Independent Dealers and Distributors 2021 725 1,810 250 415 Percent of Net Sales(1) 2019 2020 2021 54 % 24 % 12 % 10 % 57 % 24 % 9 % 10 % 58 % 24 % 9 % 9 % We believe that one of the most important criteria affecting a farmff er’s decision to purchase a particular brand of equipment is the quality of the dealer who sells and services the equipment. We support quality of our dealer network. We monitor each dealer’s performance and profitability and establia continuous dealer improvement. Our dealers generally have sales territories for which they are responsible. our dealers in order to improve the sh programs that focff us on u We believe that our ability to offer our dealers a fulff l product line of agricultural equipment and related replacement parts, as well as our digital tools to support and increase the competitiveness of our dealer network. We also maintain dealer advisory groups to obtain dealer feedback on our operations. the dealer's sales, marketing, warranty and servicing efforts, helps ensure the vitality u We provide our dealers with volume sales incentives, demonstration programs and other advertising support sales. We design our sales programs, including retail financing incentives, and our policies for maintaining parts and service availability with extensive product warranties to enhance our dealers’ competitive position. to assist u Resources Manufacturingii and Assemblyll We manufacture and assemble our products in 42 locations worldwide, including four locations where we operate joint Our locations are intended to optimize capac ventures. t manufacturing resources with externally-sourced machinery, components and/or replacement parts to enablea costs, inventory levels and our supply needs for the foreseeablea future. Refer to Item 2, “Properties,” for a listing of our principal manufacturing ity, technology and local costs. Furthermore, we continue to balance our us to better control of components. We believe that our manufacturing facilities are sufficient to meet our locations. u a tt Our AGCO Power division produces diesel engines, gears and generating sets. The diesel engines are manufactured for use in a portion of our tractors, combines and sprayers, and also are sold to third parties. AGCO Power specializes in the manufacturing of off-road engines in the 75 to 600 horsepower range. Components and Third-PartyPP Supplie u rs We externally source some of our machinery, components m and replacement parts from third-party suppliers. Our production strategy is intended to optimize our research and development and capia tal investment requirements and to allow us greater flexibility to respond to changes in market conditions. We purchase some fulff tractors from Tractors and Farm Equipment Limited (“TAFE”), Carraro S.p.A. and Iseki & Company, Limited. We also purchase other tractors, implem ments and hay and forage equipment from various third- party suppliers. Refer to Note 14 of our Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” for further discussion of our relationship with TAFE. ly-manufactured tt 3 In addition to the purchase of machinery, third-party suppliers supply us with significant component m s used in our manufacturing operations. We select third-party suppliers that we believe are low cost and high quality and possess the most appropriate technology. We also assist in the development of these products or component m parts based upon u our own design requirements. Our past experience with outside suppli disruptions for several key component m u s such as the global semiconductor shortage. ers generally has been favorable, although in 2021, we experienced supply chain Intellell ctual Property We own and have licenses to the rights under a numberm of domestic and foreign patents, trademarks, trade names and brand names relating to our products and businesses. We defend our patent, trademark and trade and brand name rights primarily by monitoring competitors’ machines and industry publications and conducting other investigative work. We consider our intellectual businesses. However, we do not believe we are dependent on any single patent or group of patents, although several of our trade and brand names are internationally recognized and are vital to our operations. We intend to maintain the separate strengths and identities of our core brand names and product lines. property rights, including our right to use our trade and brand names, important in the operation of our t Engine n ering an nd Research We make significant expenditures forff engineering and applied research to improve the quality at nd performance of our products, to develop new products and to complym with government safety at nd engine emissions regulations. Wholesale Financing,n Sales Terms and Accounts Receivable Sll aleSS s Aee greement Primarily in the United States and Canada, we engage in the standard industry practice of providing dealers with floor equipment for extended periods, generally through our AGCO Finance joint The terms of our wholesale finff ance agreements with our dealers vary by region and product line, with fixeff plan payment terms for their inventories of farmff t ventures. schedules on all sales, generally ranging from one to 12 months. In the United States and Canada, dealers typically are not required to make an initial down payment, and our terms allow for an interest-free period generally ranging from one to 12 months, depending on the product. Amounts due from sales to dealers in the United States and Canada are immediately dued upon a retail sale of the underlying equipment by the dealer, with the exception of sales of grain storage and protein production systems, as discussed furthe r below. If not previously paid by the dealer, installment payments generally are required beginning after the interest-free period with the remaining outstanding equipment balance generally due within 12 months after shipment. In limited circumstances, we provide sales terms, and in some cases, interest-free periods that are longer than 12 months for certain products. These typically are specified programs, predominantly in the United States and Canada, where interest is the preceding r a period of up to 24 months, depending on various factors including dealers' sales volumes during charged afteff year. We also provide financing to dealers on used equipment accepted in trade. We generally obtain a security interest in the new and used equipment we finance. d payment d ff Typically, sales terms outside the United States and Canada are of a shorter duration, generally ranging from 30 to 180 days. In many cases, we retain a security interest in the equipment sold on extended terms. In certain international markets, our sales often are backed by letters of credit or credit insurance. Sales of grain storage and protein production systems both in the United States and in other countries generally are within 30 days of shipment. In certain countries, sales of such systems forff which we are responsible for construction or payablea installation may be contingent upon customer acceptance. Payment terms vary by market and product, with fixeff schedules on all sales. When we are responsible for installation services, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance. d payment We have accounts receivablea sales agreements that permit transferring, on an ongoing basis, a majoa rity of our s in North America, Europe and Brazil to our AGCO Finance joint ventures wholesale receivablea Europe and Brazil. Upon transfer, the wholesale receivables maintain standard payment terms, including required regular principal payments on amounts outstanding and interest charges at market rates. Qualified dealers may obtain additional financing through our U.S., Canadian, European and Brazilian finaff In addition, our AGCO Finance joint ventures Australia. We also sell certain trade receivables under factoring arrangements to other third-party financial instituti the world, and we account for the sale of such receivablea may provide wholesale finff ancing directly to dealers in Europe, Brazil and nce joint ventures at the joint ventures’ s as off-balance sheet transactions. discretion. tt tt tt tt in the United States, Canada, ons around 4 Retail Financingii Our AGCO Finance joint ventures overall profitability, the AGCO Finance joint ventures prevailing market conditions. Our finaff Australia and are owned by AGCO and by a wholly-owned subsidiary of Rabobank. Refer to “Finance Joint Ventures” within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for further information. offer financing to most of the end users of our products. Besides contributing to our enhance our sales efforts by tailoring retail finance programs to nce joint ventures are located in the United States, Canada, Europe, Brazil, Argentina and tt tt In addition, Rabobank a is the primary lender with respect to our credit facff ility and our senior term loan, as are more fully described in “Liquidity and Capital Resources” within Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical relationship with Rabobank has been strong, and we anticipate its continued long-term support of our business. Seasonality Generally, retail sales by dealers to farmers are highly seasonal and largely are a func ff tion of the timing of the planting and harvesting seasons. To the extent possible, we attemptm to ship products to our dealers and distributors on a level basis throughout the year to reducedd the effect of seasonal retail demands on our manufacturing operations and to minimize our investment in inventory. Our financing requirements are subject to variations due to seasonal changes in working capia tal levels, which typically increase in the first half of the year and then decrease in the second half of the year. The fourt typically a period for higher retail sales because of our customers’ year-end tax planning considerations, the increase in the availability of funds from completed harvests and the timing of dealer incentives. h quarter is also ff Environmental Matters and Regulation We are subjeb ct to environmental laws and regulations concerning emissions to the air, discharges of processed or other types of wastewater, and the generation, handling, storage, transportation, treatment and disposal of waste materials. These laws and regulations are constantly changing, and the effects that they may have on us in the futurett predict. We attempt to comply with all appl expense or liability we may incur in connection with noncomplim ance with laws or regulations or the cleanup of any of our properties will not have a materially adverse effect on us. icable environmental, health and safety laws and regulations. We believe that any are impossible to accurately a The engines manufactured t by our AGCO Power division, which specializes in the manufacturing of non-road engines ff emissions requirements through the introduction of new technology to our engines and in the 75 to 600 horsepower range, currently complym with emissions standards and related requirements set by European, Brazilian and U.S. regulatory authorities, including both the United States Environmental Protection Agency and various state authorities. We expect to meet future exhaust after-treatment systems, as necessary. In some markets, such as the United States, we must obtain governmental environmental approval may not be obtainablea ct to air quality standards, and production at our facilities and sales of our products could be impaired if AGCO Power and these suppli unable to timely respond to any changes in environmental laws and regulations affecting engine emissions, including the emissions of greenhouse gases (“GHG”). Compliance with environmental and safety regulations has added, and will continue to add, to the cost of our products and increase the capital-intensive nature of our business. s in order to import our products, and these approvals can be difficult or time-consuming to obtain or at all. For example, our AGCO Power division and our engine suppliers are subjeu ers are u a 5 Cybersecurity t d and governed around the National Institute of Standards and Technology (“NIST”) sh a Cybersecurity Council comprised of members of our senior management team h to cybersecurity. Our formal As part of its risk oversight role, our Audit Committee oversees cyber risk, information security and technology risk, including management’s actions to identify, assess, mitigate and remediate material cybersecurity issues and risks. The Audit Committee receives two formal reports during each fiscal year from our Chief Information Security Officer as well as our Chief Information Officer on our technology and cyber risk profile, enterprise cybersecurity program and key enterprise cybersecurity activities. During 2022, we plan to establia who will be regularly briefed on cybersecurity matters and provide input to our overall approac cybersecurity program is structured Cybersecurity Framework, as well as other global standards and best practices. We have a cybersecurity incident response plan in place that provides a documented framework for handling high severity security incidents and includes faci coordination across multiple func lities with respect to cybersecurity. We routinely perform and government forums to strive to improve our overall capabi reviews of threat intelligence and vulnerabila ities, while performing simulations and drills at both technical and management levels. We incorporate external expertise in all aspects of our program utilizing best practice guidance from third-party cybersecurity advisors to provide objective assessments of our capabila ities. We maintain a cyber and internet security and privacy liabia lity insurance coverage. We also ensure that we have policies and practices in place to address data privacy regulations. Our cybersecurity program is reviewed and assessed by external information security specialists or by our internal audit group at least annually, with forma l reporting of such assessments provided to the Audit Committee. Last, we conduct annual cybersecurity awareness training for employees and targeted training for high-risk functions of the Company. We also conduct phishing exercises and correlated educad tions of the Company. We invest in threat intelligence and are active participants in industry tion with our employees. ity management capaa bila litated a a ff ff ff Regulation and Government Policy Domestic and foreign political developments and government regulations and policies directly affect the agricultural industry and both directly and indirectly affecff The application, modification or adoption of laws, regulations or policies could have an adverse effect on our business. equipment business in the United States and abroad. t the agricultural t We have manufacturing facilities or other physical presence in approxi approximately 140 countries. This subjects us to a range of trade, product, forei and regulations, in addition to the environmental regulations discussed previously, in a significant number of jurisdictions. ive Many jurisdictions and a variety of laws regulate the contractual relationships with our dealers. These laws impose substant standards on the relationships between us and our dealers, including events of default, grounds for termination, non-renewal of dealer contracts and equipment repurchase requirements. Such laws could adversely affect our ability to terminate our dealers. mately 32 countries and sell our products in gn exchange, employment, tax and other laws u a ff In addition, each of the jurisdictions within which we operate or sell products has an important interest in the success of its agricultural active political involvement in the agricultural industry and the consistency of the availabila t t ity of reasonably priced food ff sources. These interests result in industry, which, in turn, can impact our business in a variety of ways. Sustainability Our products span the entire crop cycle, from seeding to storage. We support our farmer customers with high-quality, ity is smart tools and exceptional customer experience to grow their operations profitably and sustainably. Corporate sustainabila a core business imperative that underpins our strategy to build a more valuable enterprise through long-term economic, social u and environmental sustainabila provide farmer-focused solutions to sustainablya feed our world. We see opportunities in every aspect of our agricultural value chain to address many of today’s most significff ant challenges, including food security, farmer livelihood and resource effiff ciency. AGCO succeeds when our farmers succeed, and ensuring the sustainabila their long-term productivity. of our key stakeholders and communities. This aligns with our purpose to ers’ operations is essential to ity initiatives in support f farmff ity ot We are committed to accelerating progress in integrating sustainabila ity into the design, manufacturing and distribution solutions across all of our brands and geographic a al regions. There are many ways we can contribute to of smart agricultural sustainabila t ity in agriculture, tt as well as inside our own operations, as further highlighted below. Our Planet Farming is deeply vulnerablea drought in some regions and flooding in others, rising average temperatures, and other challenges. Climate change affecff where we work and live, fueled by GHGs, particularly carbon dioxide. Farmers can play a vital role in the critical challenge of to the effects of climate change, which can include extreme weather events such as ts 6 reducing GHGs. More than a fifff thff usage is attributable to agriculture and the foodff industries. of the world’s emissions come from the foodff sector, and almost a third of the world’s energy Climate Change Climate change is a significant topic of discussion and will generate regulatory responses in the U.S. and around the world. It is impracticable to predict with any certainty the impact on our business of climate change or the regulatory responses to it, although we recognize that they are likely to be significant. It is too soon for us to predict with any certainty the ultimate impact of additional regulation, either directionally or quantitatively, on our overall business, results of operations or financial condition. During 2021, we assessed climate risks related to AGCO by conducting our first scenario analysis based on guidance set forth in the recommendations from the Task Force on Climate-Related Financial Disclosures (“TCFD”), as well as other published frameworks. We believe the TCFD recommended disclosures are an important component program efforts, given the increasing focus by our shareholders, our executive leadership and employees, as well as our customers on climate change and its impacts. We therefore have begun to incorporate the framework into our sustainability program and are working towards addressing the recommendations within the framework that most materially impacts us, while increasing our preparedness for potential physical and transitional impacts associated with climate change risks. in our sustainability m In order to enhance our sustainability efforts, ff we began benchmarking ourselves against our industry peers, by gathering stakeholders and subject matter experts across various functions within our company, in order to compile a list of potential and prioritized climate change risks and opportunities. We then conducted a scenario analysis using two scenarios to qualitatively and quantitatively assess the strategic and financial impacts of such risks, as well as their potential likelihood. After risks and opportunities were ranked with respect to risk exposure, we held further discussions with subject matter experts within our company to determine preparedness and mitigation steps for such prioritized risks, as well as strategies with respect to potential business opportunities. Risks identified included, but were not limited to, market demand forff technological innovation (i.e. lower carbon, energy efficff Identified possible opportunities ranged fromff services, development of new emerging markets and partnerships and resilience planning. ient solutions), reputation, and government policy and legal constraints. iency, energy source alternatives, development of new products and resource efficff our products, We anticipate climate-related physical risks affecting our customers to drive the highest impacts to our future business, including ultimate potential impact to our revenue growth and business operations overall. With our farmer-first strategy, we aim to drive success in partnership with our farmer customers, given they are affected first hand by climate change impacts. The agricultural industry is currently responsible for a large proportion of global GHG emissions. Farmers can potentially play greenhouse gas emissions through carbon sequestration. In pursuit of identified potential a pivotal role in reducing agricultural opportunities, our existing and future investments in precision agricultural technologies, on-site renewable energy, energy efficient projects, as well as research and development (“R&D”) activities focused on automation, robotics, electrification and future alternative fuels provide significant prospects to capitalize on climate-related opportunit approximately 4% of our net sales with respect to R&D activities, and we are prioritizing and advancing those projects that target these specific areas as further discussed below. ies. We currently spend ff ff t t We believe the objectives resulting from our 2021 assessment provide us with a better understanding on how to position AGCO to build resilience to changing climate conditions, but to emerge as a strong partner to our customers and stakeholders in creating futurett combat climate-related impacts. Please also refer to “Environmental Risks” within Item 1A, “Risk Factors” for further information. We also publish further reporting on our corporate website at www.agcocorp.com under the heading “Our Commitment” with respect to climate risks and other sustainability program efforts. value for our business and farmer customers, while also contributing towards global efforts to Decarbonizing our Operations and Productstt Our current product offerings of tractors and implem ments reduce fossi ff l fueff l consumption and GHG emissions ient, or that provides alternative routes to low or zero-emission farming. Our aspiration is zero compared to equipment of the past. The most direct and immediate way to support farmers in reducing GHGs is to provide equipment that is more fuel efficff carbr on emissions. Solutions are being developed to provide an all-electric tractor, which is in the advanced pilot stage and commercial launch in the next few years. This tractor has the potential to be especially useful in the livestock, targeted forff specialty crop and municipality at ications. Our engineering teams also are developing a prototype a free, hydrogen-based fuel cell technology as well as experimenting and researching tractors that runrr d emission fuels. Our product development has been focuse gas, which are carbon-neutral or reduced tractor powered by carbon- on biomethane and natural d on reducing tractor fuel ppl ff t tt 7 consumption without compromising performance, such as through the efficiency of our continuously variable transmissions (“CVT”s). We also are researching ways to limit the emission of nitrogen oxides (“NOx”), gases that at high levels can be harmful to the environment and human health. We are committed in the near term to improve the efficiency of vehicles that rely on internal combustion engines. Our AGCO engines are Tier 4 compliant in the United States and Stage V compliant in Europe. We were one of the first in our industry to adopt Selective Catalytic Reduction (“SCR”) technology SCR systems are highly efficient at treating engine-out exhaust and significantly reduce NOx emissions as well as carbon release. Building a more circular economy is a win-win for farmers and the environment. It saves farmers money by repurposing and extending the life cycle of their existing equipment, but also reduces the use of precious resources and raw materials in manufacturing. move farms towards a circular economy, through our remanufactured product lines. Remanufacturing preserving practices with energy, emission and waste savings. Across our brands many of our components in our tractors, from t electronics to engines to hydraulics, are availablea The reuse of manufactured items is a cornerstone of sustainability. We have been active in helping items with warranties. promotes resource- as remanufactured t t We are committed to achieving highly sustainable manufacturing t renewable electricity through regional and market-specific opportunit photovoltaic systems at a number of our facilities and are adding them to other locations. We also are increasing the use of biodiesel in our processes, applying energy and heat recovery technologies, and using biomass-based heating solutions, among other efforts. operations by working to increase the use of ies, such as green supply contracts. We have on-site solar t We also are integrating sustainability into the way we manage our procurement processes. We are working closely through the use of sustainability audits and sharing practices. ers to assess and advance joint sustainability efforts ff u with suppli We encourage innovation and collaborative efforts ff suppliers and have also established a supplier sustainability and resiliency awards program. by hosting workshops that focus on the topic of sustainability with our Our Farmersrr Advancing Soil Health att nd Soil-carbon Sequestration t Everything we do revolves around what we can do for farmers, and we are committed to be an innovation leader in Improving soil health using practices such as cover crops, no-till farming, controlled traffic farming, sustainable agriculture. residue management and managing soil compaction all contribute positively to mitigating climate change. Sequestering carbon into agricultural soils and boosting crop yields is a naturat l positive outcome for both the farff mer and the environment. We aim to provide smart products that allow for reduced inputs while supporting carbon sequestration. Over the past several years we have invested in both demonstration farms and agronomy research to test and demonstrate the latest technologies that support core agronomy principles. We are expanding these initiatives towards more sustainability trials including crop covering, herbicide reduction by mechanical weed control and variablea ff agriculture solutions sold through our FUSE® and Precision Planting® brands that support soil health and reduction of the use of chemical inputs. Our FUSE® solutions help to deliver connectivity across an entire fleet of equipment to enablea precision agriculture; tt machine optimization to favorablya elements of the planting cycle with products with products that optimize soil preparation, seed placement, fertilization and weeding. Precision Planting® products help to minimize soil disturbance and maximize germination, while optimizing feed and organic matter and moisture, fertilizer rates. Farmers are able to monitor soil conditions in real time, including levels of carbon, as well as integrate satellite data and advance soil modeling tools to make informed and better planting decisions. and accelerate specifically, by optimizing nutrient and pest control use efficiency, as well as managing compaction and impact yields and the environment. Our Precision Planting® technologies address all ilization. We have new products that feaff rate nitrogen fert ture precision r Smarter interconnected equipment and the abila ng sustainabila and improved profitability. Our FUSE® technologies allow for integration of data coming in from sensors on our equipment which can be integrated into networks that monitor how the equipment is functioning as well as crop and field conditions. Changing climate, legal requirements and labor shortages are significant challenges forff solution provides software tools forff equipment performance, so that managers can adjust the equipment and processes in real time to optimize workflow and correct problems. farmers worldwide. Our FendtONE® planning and optimizing farm work processes. On-board diagnostics provide insights into ity to gather, analyze and leverage data enables farmi ityt ff 8 Animal Welfareff in Food Production As farmers look for ways to productively raise more animals to meet rising global demands for animal protein, they . AGCO actively participates in ers also want to ensure they are raising healthy animals and doing more to protect animal welfareff efforts to advance industry standards and academic research in animal welfare. We offer a range of products that help farmff monitor, control and accurately report environmental conditions around animals, facilitating practices that reducedd discomfort and disease, and promoting good nutrition and normal animal behavior. Our products include aviary climate-control, housing, biosecurity, feeding and watering systems aimed at protecting animal welfare for poultry and egg production farms. These systems provide hens and chicks the freedom of movement along with automated watering, feeding, egg collection, ventilation and cleaning capabil throughout the barn measuring temperature, welfare and other problems. Digitalization of the farff m not only provides valuable insight to inform product and service evolution to the farff mer, but it also provides food animal welfare seeks to align with the fivff e domains of animal welfare, covering nutrition, environment, health, behavior and the mental and emotional state of the animal. We continue to develop our future strategies around the design, engineering and manufacturing of industry-leading protein solutions, building upon our advanced aviary systems, precision-feeding systems and organic sheds. a robot that moves air quality, light and noise, enlisting artificial intelligence to spot potential health, ities. We also recently acquired a company that develops and manufactures transparencies that consumers care about. The foundati on to our approach to stress, a ff ff tt t Our People all nd our Communitiii es We foster a culture centered around a simplem , clear purpose: farmer-focused solutions to sustainably feeff d our world. Our goal is for every AGCO employee to feel connected to that purpose, as well as to each other, and to act in accordance with our core values of transparency, respect, accountabila feel rewarding, meaningful, supportive and safe – and that if it does, the results will translate to positive outcomes for farmers, our planet and our success. ity, integrity and team spirit. We believe that working at AGCO should As a farmff er-focused, purpose-driven company, we keenly feeff l the value of community, and we look for ways to contribute to the many communities in which we operate. We launched the AGCO Agriculture Foundation (“AAF”) during 2018, as a reaffirmation of our dedication to support farmers as they strive to feed the world. The AAF also demonstrates our support of specific United Nations Sustainable Development Goals aimed at preventing and relieving global hunger, and providing farmer-centric support to farming communities. AAF supports non-profit organizations with projects that contribute to zero hunger, help to build agricultural communities. and provide development programs for farmers and their farming infrastructure, d tt tt shed a sustainability council, which is an executive-level group charged with driving We believe that a successful sustainability strategy is possible only if supported by sound corporate governance. We are working to further integrate sustainability oversight across our organization as well as management processes and systems. During 2021, we establia implem mentation of sustainability policies and initiatives across significff ant businesses, locations and functions. The council monitors sustainability-related operational risks, opportunit ies and progress and assists with the removal of any barriers of integrating sustainability into our business. The council is supported by a global sustainability core team who ensure implem mentation of the council’s decisions and who execute initiatives and programs. “Green leaders” within the core team champion sustainability, drive knowledge and encourage the sharing of best practices throughout the business, providing expertise to sustainability workstreams and day-to-day operations. t Employee Health,tt Safety and Well-Being Safety is a top priority at AGCO, and we want to ensure that all of our workplaces protect the health and safety of our es, as well as prevent long-term occupational health risks. We conduct occupational risk assessments regularly, employe m leveraging our long-term shop floor experience, and are targeting improvement in our accident incident rates in our facilities. During 2021, we refreshed and started to embed a new enterprise-wide model to advance our culturett upon the success of our current health and safety program that was launched in 2014. of health and safety, built For additional information on our sustainabila ity efforts and reporting, refer to the “Sustainabila ity” section on our website located under “Our Commitment.” Human Capital We have approximately 23,300 employees worldwide, who are guided by our Company’s clear purpose – Farmer- focused solutions to sustainably feedff our world. We are committed to foste ff ring a diverse and inclusive workplace that attracts 9 and retains exceptional talent. Through ongoing talent development, comprehe health, safety and employee well-being, we strive to help our employe work. m m nsive compensat m ion and benefits, and a focus es in all aspects of their lives so they can do their best ff on ees are further guided by our global Code of Conduct, which builds on the foundation of our embedded core Employm values: Integrity, Trust, mechanism for the receipt, retention and treatment of complaints or concerns regarding accounting or other possible violations of our global Code of Conduct. ity. We also maintain a global and anonymous reporting Respect, Team Spirit and Accountabila rr tt While fluff ctuat ions may occur within our workforce from time to time, we track and attempt to manage our attrition rates, while also ensuring that key positions critical to our performance our appropriately staffed. We also analyze employee departure data so that we can continually improve upon the employe e experience. During 2021, our employee turnover rate m related to voluntary terminations was approximately 7.7% as comparem d to 5.3% in 2020. Unions, Collective ll ii Bargaining Agreements and Work Councils Of our worldwide employees, approximately 5,000 are located in the United States and Canada. Many of our global manufacturing employees, and some other employees, are represented by unions and works councils, and a significant number of our employe m renegotiated in connection with renewals. We currently do not expect any significant difficulties in renewing these agreements. es are subject to collective bargaining agreements that typically are for terms of three to fiveff years and are Some examples of key programs and initiatives that we are focused on to enable us to attract, retain and develop our diverse workforce are described below: ll Talent To facilitate talent attraction and retention, we strive to make AGCO an inclusive and safe workplace, with opportunities for our employe and wellness programs, and by platforms that build connections between our employees and their communities. es to grow and develop in their careers, supported by strong compensation, benefits and health m Over the past year, our employees have complem ted online, self-directed instructor-led courses across a broad range of categories – leadership, inclusion and diversity, professional skills, technical competm encies and complim ance. Compliance training includes education in AGCO's culture and values and compliance with our global Code of Conduct, which, in turn, includes compliance with anti-bribery/corruption laws and policies, complim ance with data privacy and cybersecurity protocols, conflicts of interest, discrimination and workplace harassment policies and sexual harassment policies. We are deeply committed to identifying and developing the next generation of top-tier leadership with a special focff us on diverse and technologically innovative talent. We conduct annual in-depth talent and succession reviews with our senior leadership team that focff us on accelerating talent development, strengthening succession pipelines, and advancing diversity r epresentation for our most critical roles. This analysis will be reviewed by our Board's Talent and Compensation Committee in 2022. Furthermore, we have a performance management process that includes annual goal setting, mid-year reviews and annual performance apprai a culturett sals. Both employees and managers play an active part in our performance management process, promoting rs employee development. of accountabila ity that foste a ff tt Rewardsdd We regularly review surveys of market rates for jobs to ensure our compensation practices are competitive. We continue to strive to offer a variety of working arrangements, including flexible schedules, telecommuting and job sharing, to help employees manage work and life balance. m We are committed to providing total rewards that are market-competitive and performance-based, driving innovation ion programs, practices, and policies reflect our commitment to reward short- and and operational excellence. Our compensat long-term performance that aligns with, and drives stockholder value. Total direct compensat a competitive range of the market median, with differentiation based on tenure, skills, proficiency, and performance to attract and retain key talent. In addition to salaries, our compensation programs include annual incentive bonuses, stock awards, and participation in various retirement savings plans, dependent upon the position and level of employee, and the countries in which we operate. We also invest in talent development initiatives to support u including learning management and leadership programs targeted towards female and minority populations. the ongoing career development of all employees, ion is generally positioned within m 10 Health, WellnWW ess and SafSS etff ytt We are also committed to the health, safety and wellness of our employees, striving to “work safe, every day, every way.” As previously discussed, our health and safety program focff uses on risk reduction and safetff y management systems that promote preventative measures. In addition, in response to the COVID-19 pandemic, we have implem mented and continue to implem ment significant changes that we have determined were in the best interest of our employees, as well as the communities employees in which we operate, and which comply with government regulations. Safety ptt who are required to work onsite, including partitioning screens in factories and enhanced cleaning and sanitation practices. For employees that can work from home, we have deployed new technologies to strengthen virtual connectivity across the globe. rotocols continue to be in place forff tt Diversity We believe that our employe m es’ unique and diverse capaa bila ities positively impact our success. While durid ng 2021 we faced numerous external and internal challenges in light of the global pandemic, we were ablea Diversity, Equity and Inclusion (“DE&I”) initiatives. We demonstrated our commitment in this regard by creating the role of global director of DE&I. This role’s exclusive responsibility is to serve as the catalyst that drives our progressive DE&I footprint and best-in-class performance. During 2021, we also developed and implemented training resources to ensure consistency in inclusion awareness and anti-bias principles from our executive team to the shop floor. tively advance our to effecff Our commitment to diversity att nd inclusion starts at the top with a highly skilled and diverse board. Three of our ten board members are women. Women represent approximately 12% of our full-time executive positions at the senior vice president and vice president levels, and approximately 18% of our overall fulff been nationally recognized in the United States as a femff percentage of female representation in our full time management-level employee group and our overall global employe as well as to further initiatives for compensat m incorporating DE&I initiatives into our everyday business practices enhances innovation and enablea es. We have ale-friendly employer of choice. We are committed to increasing the e engagement, development and inclusion. We believe that l-time management-level employe s diversity of thought. ion equity, employe m m m e base, Building upon our core values, our employees value learning from different perspectives and welcome the opportunity to work with those of diverse backgrounds. Through our global DE&I initiatives, employees take part in robust training, such as creating an inclusive environment and cultural training. We also provide our employees with employee resource groups (“ERG's”), such as AGCO’s Global Women’s Network and AGCO’s Black Employee Network, to help foster a diverse and inclusive workplace as well as provide for the growth and development of underrepresented groups. Through our DE&I initiatives, we encourage employees to become involved in their communities, contributing time and talent forff of the communities in which they live and work. the improvement During 2021, we initiated a global employee engagement and experience survey for our office employees to establia sh an employee engagement baseline and seek feeff dback on the employee experience. Sixty-two participated in the survey. This survey will recur on an annual basis and will include all of our employe m tt percent of this workforce es in 2022. Human Rights Policll yc We are committed to respecting human rights in all aspects of our global operations under our global Human Rights Policy. We believe that we have a responsibility to ensure that human rights are understood and observed in every region in which we operate. We strive to foster safe, inclusive and respectful workplaces wherever we do business, including prohibiting human trafficking, slavery, child labor or any other form of forced or involuntary labor. Our commitment to human rights also includes improving agricultural prosperity and supporting marginalized farmers and vulnerable populations in developing countries where our activities contribute to addressing adverse human rights impacts. Through our AGCO Agriculture Foundation, as well as our brand and regional engagement activities, we support a variety of non-profit organizations and local community-based groups. a 11 Available Information Our Internet address is www.agcocorp.com g p . We make the following reports filed by us available, free of charge, on our website under the heading “SEC Filings” in our website’s “Investors” section: • • • • • annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; proxy statements forff reports on Form SD. the annual meetings of stockholders; and These reports are made availablea on our website as soon as practicable after they are filed with the Securities and Exchange Commission (“SEC”). The SEC also maintains a website (www.sec.govg ) that contains our reports and other information filed with the SEC. We also provide corporate governance and other information on our website. This information includes: • • charters for the standing committees of our board of directors, which are availablea the Committees of the Board” in the “Governance, Committees, & Charters” section of the “Corporate Governance” section of our website located under “Investors,” and our Global Code of Conduct, which is availablea Governance” section of our website located under “Investors.” under the heading “Global Code of Conduct” in the “Corporate under the heading “Charters of In addition, in the event of any waivers of our Global Code of Conduct, those waivers will be availablea under the heading “Corporate Governance” of our website. None of these materials, including the other materials availablea on our website, is incorporated by reference into this Form 10-K unless expressly provided. 12 Item 1A. Riskii Factors tt We make forward-looki ff ng statements in this report, in other materials we file with the SEC, on our website, and in t materials that we otherwise release to the public. In addition, our senior management makes forward-looking statements orally to analysts, investors, the media and others. Statements, including the statements contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” concerning our futurett facilities, legal proceedings, financial condition, financial performance (including growth strategies, products, manufacturing and earnings) and demand for our products and services, as well as other statements of our beliefs or expectations of net sales, industry conditions, currency translation impacts, market demand, supply chain and logistics disruptions, farm incomes, weather conditions, commodity and protein prices, general economic conditions, availabila ncing, working capita capita development, compliance with finaff income tax provisions, funding forward-looking statements. The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks and other facff forward-looking statements. These facff with the SEC. There also are other facff material, or likely to become material, that could cause actual results to differ materially from our expectations. tors include, among others, those set forth below and in the other documents that we file tors that we may not describe, generally because we currently do not perceive them to be debt service requirements, margins, production volumes, cost reduction initiatives, investments in product ncial covenants, support from lenders, recovery of amounts under guarantee, uncertain of our pension and postretirement benefit plans, or realization of net deferre tors that could cause actual results to differ materially fromff those suggested by the operations, prospects, al expenditures, d tax assets, are ity of finaff al, ff ff t These risks could impact our business in a numberm of ways, including by negatively impacting our future results of operations, cash flows on our “performance.” ff and finaff ncial condition. For simplicity,t below we collectively refer to these potential impacts as impacts We expressly disclaim any obligation to update or revise any forward-looki ff ng statements, whether as a result of new information, futuret events or otherwise, except as required by law. Risks Related to the COVID-19 Pandemic Our business has been materiallyll ii continue tt mpac ii s to i t our supply chain, labor force and demand for our products. impactm edtt II by COVID-19, and the impacm ts are likeii ly to continue ii for as long as COVID-19 CC COVID-19 has negatively impacted our business, initially through closures, higher absa entee rates, and reduced u ity of some of our suppli production at both our plants and the plants that supply us with parts and components, and more recently through supply chain challenges, including the inabila ers to meet demand and logistics and transportation-related companies to deliver products in a timely manner. In addition, we have had to incur various costs related to preventing the spread of ng remote work. We expect COVID-19, including changes to our factories and other facilities and those related to enablia COVID-19 to continue to impact our business, although the manner and extent to which it impacts us will depend on future developments, including the durad mutations of the virus that are more contagious or resistant to current vaccines. Measures taken by governments around the world, as well as businesses, including us, and the general public in order to limit the spread of COVID-19 will impact our business as well. These measures have included travel bans and restrictions, quarantines, shelter in place orders, curfews, business and government office closures, increased border controls or closures, port closures and transportation restrictions. m The impacts tion of the pandemic, the timing, distribution and impact of vaccinations, and possible of COVID-19 and such measures could include, but are not limited to, the folff lowing: • • • • tt d -related operations have been deemed “essential” the firff st half of 2020 and could be impacted products negatively impacts demand for our Overall demand for our products could decline. While most farmff throughout the pandemic and are working to relatively normal levels, the consumption of grain for food, fuel (including ethanol) and livestock feed was negatively impacted during again. As discussed below, generally decreased demand for agricultural products as well. To the extents that factory closures, increased absentee rates, or reduced production, whether on our part or the part of our suppliers, or the failure of our suppliers to meet demand or of shipping companies to timely deliver products, reduces our production of completed products, our sales will be less than they otherwise would have been. In addition, decreases in sales have and can result in increased inventory and related costs. Supply chain issues of particular concern include a wide range of parts and component the global semiconductor shortage. We may continue to face supplier bottlenecks and delays in all regions, as well as continued challenges with freight logistics, and we continue to work to mitigate the impact of these issues in order to meet end-market demand. Adverse fluctuat tt market foreign currencies, would negatively impact performance. ions in foreign currency rates, particularly an increase in the value of the U.S. dollar against key s with a portion arising from m 13 • We could incur additional costs due to the adherence to cleaning requirements and social distancing guidelines and increased costs of labor, a parts and components and shipping. • We have severely limited travel by our employees, which to the extent that the limitations continue at current levels, • • • • t ff r value. t the value our pension plan assets, requirements related to our pension o efficiently manage our business, including our ability to participate in trade shows and could impact our ability t effectively market our products. Declines in the general economy as a result of COVID-19 could negatively affecff and, if this occurs, it likely will result in increased pension expenses and funding plan assets and their faiff Declines in performance as a result of COVID-19 could require us to record significant impairment charges with respect to certain noncurrent assets (such as goodwill and other intangible assets) and equity method investments. We also may be required to write-down inventory that is deemed obsolete due to decreased sales and rising costs that we may not be able to pass on to our customers. Should farm economies decline, we could experience slower collections and larger write-offs of accounts receivable. In addition, our AGCO Finance joint ventures receivable as well, which would result in reduced earnings, if not losses, for us from our investments in our AGCO Finance joint ventures. Although we currently believe we have sufficient availablea the COVID-19 pandemic could impact our financial condition. This, in turn, could affect our credit ratings and borrowing costs. funding to support our business, the severity and length of also may experience slower collections and larger write-offs of accounts tt tt Market, Economic and Geopolitical Risks p , Our financial resultsll depend ee industry gr includingii enerally,ll and lower commodityii and protein pii entirely ii declinell rices, adversely rr affect us. upon the agricultural industry, and factors that adversely general economy,m increases in farm inputn ii hett s in t rr affect thett agricultural costs, unfavorable weather conditions tt industry has been t also are cyclical and Our success depends entirely on the vitality of the agricultural t industry. Historically, the agricultural tt t t industry is affected by tors. Sales of agricultural equipment, in turn, industry. The economic health of the agricultural cyclical and subject to a variety of economic and other facff generally reflect the economic health of the agricultural numerous factors, including farm income, farm input costs, farm land values and debt levels, all of which are influenced by levels of commodity and protein prices, acreage planted, crop yields, agricultural product demand (including crops used as renewable energy sources), government policies and government subsidies. The economic health also is influeff economic conditions, interest rate and exchange rate levels, and the availabila government financing subsidies to farmff “Risk Factors” section. Trends in the agricultural market. In addition, weather conditions, such as floods ff farmers’ buying decisions. Downturns result in decreases in demand for agricultural equipment, which would adversely affect our performance. Moreover, the unpredictable naturet of many of these factors and the resulting volatility in demand make it difficult forff sales and optimize production. This, in turn, can result in higher costs, including inventory carrying costs and underutilized manufacturing capac ity. During previous downturns in the agricultural industry, we experienced significant and prolonged declines in our performance, and we expect our business to remain subject to similar market fluctuations in the future. ers, which can be significant in countries such as Brazil, as discussed elsewhere in this equipment t , heat waves or droughts, and pervasive livestock or crop diseases affecff in the agricultural industry due to these or other facff industry, such as farm consolidations, may affecff ncing for retail customers, including t the agricultural nced by general tors, which could vary by market, can us to accurately predict ity of finaff a t tt t The agricultural equipment industry is highly sll easonal, and seasonal fluctuations significff antly impactm our performance. The agricultural tt equipment business is highly seasonal, which causes our quarterly results and our cash flow to fluctuate during the year. Farmers generally purchase agricultural majora planting and harvesting seasons. In addition, the fourt year-end tax planning considerations, the increase in availabila incentives. Our net sales and income fromff subsequent quarters as dealers anticipate increased retail sales in subsequent quarters. ff ity of funds ff tt equipment in the Spring and Fall in conjunction with the h quarter typically is a significant period for retail sales because of from complem ted harvests, and the timing of dealer operations historically have been the lowest in the firff st quarter and have increased in Most of our sales depend on the availabi financing, whether due to economic dowdd f ro eceivablesll tt collell ctabil itll y ott ii liii tyii of financ ff tt nturns or otherw tt ing to retail custome ise, willii rs, and any disruptiontt bilityii result in the sale of feff wer products by us. In aII to obtaintt ddition, the inff ancing, is critictt al to our business. in their aii as well as from such retail fii that are created fromff our sales, ll Most retail sales of our products are financed, either by our AGCO Finance joint ventures tt or by a bank or other private lender. The AGCO Finance joint ventures, as well, finaff tt nce approximately 40% to 50% of the retail sales of our tractors and combinem which are controlled by Rabobank and are dependent upon Raboba a s in the markets where the joint nk for financing 14 operate. Any difficulty by Rabobank in continuing to provide that financing, or any business decision by Raboba ventures t the controlling member not to fund the business or particular aspects of it (for examplem , a particular country or region), would to find other sources of financing (which may be difficult to obtain) or would require us to find other require the joint ventures sources of financing for our dealers and their retail customers. nk as a t If we are unable to obtain other sources of financ other retail finff ancing providers, which may or may not be availablea capita not availablea ff al equipment purchases generally would become more difficult or more expensive to obtain. To the extent that finff ancing is , or available only at unattractive prices, our performance would be negatively impacted. ing, our dealers and their retail customers would be required to utilize . In an economic downturn, we expect that finff ancing for Both AGCO and our AGCO Finance joint ventures t have substantial accounts receivable fromff dealers and retail customers, and we both are adversely impacted when collectabila ity depends upon the financial strength of the agricultural industry, which in turn depends upon the factors discussed elsewhere in this “Risk Factors” section. The finff ance joint ventures by lower pricing for used equipment and higher than expected returns at lease maturity. To the extent that expectations caused defaults and losses are higher than expected, our equity in the net earnings of the finance joint ventures would be less, or there could be losses, which could materially impact our performance. lease equipment as well and also may experience residual value losses that exceed ity is less than optimal. Overall collectabila a tt to foreign laws,w taxes, es A majorityi of our sales and manufacturingii relatedtt policies as well as U.S. laws governingii who we sell tll o att al operations. ii realization ll conomic conditions, of value from our intertt nation take place rr tt outsideii the UniUU teii d StateSS labor supply and relations, ii nd how we conduct business. tt ii to risks s, and, as a result, we are exposed politll ictt al conditions and governmental xx These risks may da eldd ayll or reduce our A majority of our sales are derived from sales outside the United States. The foreign countries in which our sales are the greatest are Germany, France, Brazil, the United Kingdom, Finland and Canada. We have significant manufacturing operations in France, Germany, Brazil, Italy and Finland, and we have established manufacturing operations in emerging markets, such as China. Many of our sales involve products that are manufactured in one country and sold in a differe country, and, therefore, our performance can be adversely affected by adverse changes, in either the country of origin or the country of destination, in the factors discussed elsewhere in this “Risk Factors” section, particularly the factors that impact the delivered cost of our products. Our business practices in these foreign countries must comply with not just local law, but also U.S. law, including limitations on where and to whom we may sell products and the Foreign Corrupt Practices Act (“FCPA”). We have a compliance program in place designed to reduce the likelihood of violations of these laws, but it is difficult to identify and prevent violations. Significant violations could subjeu complim ance costs. Some of our international operations also are, or might become, subject to various risks that are not present in domestic operations, including restrictions on dividends and the repatriation of funds. Foreign emerging markets may present special risks, such as unavailability of financing, inflation, slow economic growth, price controls and difficulties in complying with U.S. regulations. ct us to fines and other penalties as well as increased nt ff t Domestic and foreign political developments and government regulations and policies directly affect the international t ff a ts the demand for agricultural equipment. Declines in demand for agricultural ication, modification or adoption of laws, regulations, trade agreements or policies, can adversely affecff agricultural industry, which affecff adversely affect our performance. As discussed previously in “Risks Related to the COVID -19 Pandemic,” the pandemic has caused a global recession and increased economic and demand uncertainty. The COVID-19 impacts, in addition to related or unrelated appl agricultural industry, including the imposition of import and export duties and quotas, expropriation and potentially burdensome taxation, could have an adverse effect or modification of existing trade agreements, negotiation of new trade agreements, and imposition of new (and retaliatory) tariffs against certain countries or covering certain products, could limit our ability to capita opportunities in the international markets in which we operate and impair our ability t technologies, products and services. These changes also can impact the cost of the products we manufacture, including the cost of steel. These trade restrictions and changes in, or uncertainty surrounding, global trade policy may affect our competm itive position. growth alize on current and futurett o expand our business by offering new on our performance. Trade restrictions, including potential withdrawal fromff equipment t the ff t t As previously discussed, the health of the agricultural tt industry and the ability ot f our international dealers and retail customers to operate their businesses, in general, are affected by domestic and foreign government programs that provide economic support to farmers. As a result, farm income levels and the ability ot other protections would be reduced to the extent that any such programs are curtailed or eliminated. Any such reductions likely would result in a decrease in demand for agricultural protections for commodities or of subsidy payments or financing rate subsidies forff equipment. For example, a decrease or elimination of current price farmers in the European Union, the United ers to obtain advantageous financing and f farmff tt 15 States or elsewhere would negatively impact the operations of farmers in those regions, and, as a result, our sales may decline if these farmers delay, reduce or cancel purchases of our products. In emerging markets, some of these (and other) risks can be or by others is greater than they might be elsewhere. In addition, the finff ancing provided by the AGCO Finance joint ventures supported by a government subsidy or guarantee in some markets, including financing rate subsidies. The programs under which those subsidies and guarantees are provided generally are of limited duration and subject to renewal and contain various capsa and other limitations. In some markets, for example Brazil, this support is quite significant. In the event the governments that provide this support elect not to renew these programs, and were financing not available on reasonable terms, whether through our joint ventures or otherwise, our performance would be negatively impacted. tt tt As of December 31, 2021, we had approximately 48 employees in Ukraine, and in 2021, we had net sales of approximately $86 million in Ukraine. As of December 31, 2021, we had less than $10 million in assets in Ukraine. It is unclear what impact the hostilities in Ukraine will have on our net sales or assets, although we assume that our net sales will decline, possibly significantly. We will assess the fair value of our assets in Ukraine for potential impairment on a periodic basis as warranted. As a result of the multinational naturet of our business and the acquisitions that we have made over time, our corporate es. As a and tax structures are complex, with a significant portion of our operations being held through foreign holding companim result, we are subject to taxation from multiple tax jurisdictions, and it can be inefficient, from a tax perspective, forff repatriate or otherwise transfer funds. In addition, we must comply with a greater level of tax-related regulation and reviews by multiple governmental units than do companies with a more simplified structure. Our foreign and U.S. operations also routinely sell products to, and license technology to other operations of ours. The pricing of these intra-company transactions is subject to regulation and review as well. While we make every effort governmental units could result in our being required to pay additional taxes, interest and penalties. tax laws, audits and other reviews by to complym with all applicablea us to ff We face significi manufacturers, we willii ant competm ittt ion, ll lose dealers and, if we are unable t ompetm e stt uccessful and their retail cii ustomers and our performance willii decline. ll o ctt ee tt ll lyll against other agricultural equipment tt The agricultural equipment business is highly competitive, particularly in our majoa r markets. Our two key competm itors, Deere & Company and CNH Industrial N.V., are substantially larger than we are and have greater finaff ncial and other resources. In addition, in some markets, we competm e with smaller regional competitors with significant market share in a single country or group of countries. Our competitors may substantially increase the resources devoted to the development and marketing, including discounting, of products that compete with our products, which would necessitate our making similar expenditures. In addition, competm itive pressures in the agricultural equipment business may affecff equipment, which, in turn, may adversely affecff t the market prices of new and used t our performance. We maintain an independent dealer and distribution network in the markets where we sell products. The financial and lities of our dealers and distributors are critical to our ability to competm e in these markets. In addition, a operational capabi we competm e with other manufacturers of agricultural other agricultural equipment manufacturers, tt tt tt equipment for dealers. If we are unable to competm e successfully against we could lose dealers and their retail customers and performance may decline. Our expanxx sion plans in emerging markets entail sii ignificant risks. ii Our long-term strategy includes establishing a greater manufacturing and supply-chain and/or marketing presence in al and other resources and entail various risks. These include risks attendant to obtaining necessary governmental emerging markets such as India, China and Africa. As we progress with these efforts, capita approvals and the construction of facilities in a timely manner and within cost estimates, the establishment of supply channels, ient manufacturing operations, and, ultimately, the acceptance of the products by retail customers. the commencement of efficff While we expect the expansion to be successful, should we encounter difficulties involving these or similar facff tors, it may not be as successful as we anticipate. it will involve a significant investment of ff Brexit and politictt al uncertainty affect our performance. tt in the UniUU teii d KinKK gdomn dd and the European Union could dll isrupt our operations and adversely We have significant operations in the United Kingdom and the European Union. The United Kingdom withdrew from the European Union, in a process known as “Brexit”, effect European Union have agreed that there will be no taxes on goods or limits on the amount that can be traded between the two jurisdictions, new documentation requirements, safety checks and procedures at ports and new documentation requirements could lead to disruptions in trade. ive December 31, 2020. While the United Kingdom and the ff 16 Over the longer term, changes in the regulatory environment likely will increase our compliance costs. We may finff d it more difficult to conduct business in the United Kingdom and the European Union, as Brexit likely will result in increased regulatory complem xity and increased restrictions and costs on the movement of capita relocate or otherwise alter certain of our European or United Kingdom operations to respond to the new business, legal, regulatory, tax and trade environments. Brexit may adversely affect our relationships with our dealers and their retail customers, suppliers and employees, which could materially adversely affect our performance. al, goods and personnel. We may decide to There could be a risk that other countries may leave the European Union, leaving uncertainty regarding debt burden of certain Eurozone countries and their ability to meet futff urett stability of the Euro as a single common currency. These uncertainties and implications could materially adversely impact the financial markets in Europe and globally, as well as our customers, suppliers and lenders. financial obligations, as well as uncertainty over the long-term Inflation can impacm t our costs and sales. ll During 2021, we experienced significant inflation in a range of costs, including for parts and components, transportation, logistics, and energy. While we have been ablea can be no assurance that we will be abla e to continue to do so. If we are not, it will impact our performance and results of operations. to pass along most of those costs through increased prices, there g Manufacturing and Operations p f Our success depends on the introduction of new products, which requires i substantiali xx expendit ures. Our long-term results depend upon our ability t t o introduce and market new products successfully. The success of our new products will depend on a number of factors, including: • • • • innovation; customer acceptance; iency of our suppliers in providing component parts and of our manufacturing the efficff products; and the performance and quality of our products relative to those of our competm itors. tt facilities in producing final As both we and our competitors continuously introduce new products or refine versions of existing products, we cannot predict the level of market acceptance or the amount of market share our new products will achieve. We have experienced delays in the introduction of new products in the past, and we may experience delays in the futff ure. other problems with our new product launches will adversely affecff result in decreases in revenues fromff our existing products. t our performance. In addition, introducing new products can Any delays or tt Consistent with our strategy of offering new products and product refinements, we expect to make substantial investments in product development and refinement. We may need more funding for product development and refinement than is readily available, which could adversely affecff t our business. If we are unable to delivll er precision affect our performance. ii agriculture and high-tech solutions to ott tt ur custome rs, it could materiallyll adversely profitabila Our precision technology products include both hardware and software component s that relate to guidance, telemetry, automation, autonomy and connectivity solutions. We have to be able to successfully develop and introduce new solutions that ity and result in sustainable farff ming techniques in order to remain competitive. We expect to make significant m improve investments in research and development expenses, acquisitions of businesses, collaborative arrangements and other sources of technology to drive these outcomes. Such investments may not produce attractive solutions for our customers. We also may have to depend on third parties to supply u products. Our dealers ability to support such solutions also may impactm products. certain hardware or software components or data services in our precision technology our customers, acceptance and demand of such m 17 Rationalization or restructuring of manufacturing facilitll iett s, and plant expansions manufacturing facilitll iett s, may cause production capacityii constraints att xx and systeyy m upgru tt nd inventory fluctuations. ades at our t tt The rationalization of our manufacturing facilities has at times resulted in, and similar rationalizations or restructurings (including relocating production from one facility to another) in the future may result in, temporary constraints upon our ability to produce the quantity of products necessary to fill orders and thereby complem te sales in a timely manner. In addition, system facilities that impact ordering, production scheduling, manufacturing and other related processes upgrades at our manufacturing are complem x, and could impact or delay production. A prolonged delay in our ability to filff l orders on a timely basis could affect customer demand for our products and increase the size of our product inventories, causing manufacturing schedules and adversely affecting our performance. Moreover, our continuous development and production of city tt new products often involve the retooling of existing manufacturing at certain times in the future, t our performance. In addition, the expansion and reconfiguration of existing manufacturing Russia, could increase the risk of production delays, as well as require significant investments. t facilities, as well as new or expanded manufacturing facilities. This retooling may limit our production capaa operations in emerging markets, such as China and which could adversely affecff future reductions in our a tt tt We depend on suppliers for components, parts att provide products as needed, or by us to promptly all efficiently mll our manufacturi s fll orff ii tt aw material anufacture and sell products. We also are subject to rtt ddress supplier issue nd raw material costs.tt ngii ff tt our products, and any failure by our suppliell rs to ly and ely impact our abilityii dd price fluctuations, which can adversely affect s, willii advers to timeii Our products include components and parts manufactured by others. As a result, our ability to timely and efficiently of products from one facility to another manufacture existing products, to introduce new products, and to shift manufacturing depends on the quality of these components and parts and the timeliness of their delivery to our facilities. During 2021, we experienced significant supply chain interruptions, including delays in timely deliveries of components. At any particular time, we depend on numerous suppliers, and the failure by one or more of our suppliers to perform as needed will result in fewer products being manufactured, required and we do not recognize that faiff The timely supply of component parts for our products also depends on our ability to manage our relationships with suppliers, to identify and replace suppliers that faiff accurately project our needs. The shift from our existing suppli also may impact the quality at shipped and sold. If the quality of the components or parts provided by our suppli l to meet our schedules or quality standards, and to monitor the floff w of components and lure prior to the shipment of our products, we will incur higher warranty ct ers to new suppliers, including suppliers in emerging markets, ities, as well as warranty costs. iency of our manufacturing ers is less than nd efficff capaa bila osts. u tt u tt tt Changes in the availability and prices of certain raw materials, components and parts could result in production m disruptions or increased costs and lower profits on the sale of our products. Changes in the availability and price of these raw materials, component economic volatility,t This, in turn, could have a material negative effect on performance, particularly if, due to pricing considerations or other factors, we are unable to recover the increased costs through pricing from our dealers. ed significantly in the past and are more likely to fluff ctuat r change in tariffs, can significantly increase the costs of production. s and parts, which have fluctuat tt ity ot as well as regulatory instabila e during d tt times of ii We may encounter difficultiett s in i strategice ff reasonable t ii ntegr e frame ee , ee xpe ctedtt imtt ll atingii businesses we acquire and may not full expecxx objectivtt es and other ff tt ted benefitsii of the acquisitiii ons. y all chieve, or achieve withintt a From time-to-time we seek to expand through acquisitions of other businesses. We expect to realize strategic and other benefits as a result of our acquisitions, including, among other things, the opportunit y to extend our reach in the agricultural industry and provide our dealers and their retail customers with an even wider range of products and services. However, it is impossible to predict with certainty wt integrate acquired businesses in a timely and effecff hether, or to what extent, these benefits will be realized or whether we will be ablea tive manner. For examplem : to tt • • • the costs of integrating acquired businesses and their operations may be higher than we expect and may require significant attention from our management; the businesses we acquire may have undisclosed liabilities, such as environmental liabila violations of laws, such as the FCPA, that we did not expect; ities or liabia lities for our ability to successfully carry out our growth strategies forff other things, our ability to maintain and enhance our relationships with their existing customers, our ability t provide additional product distribution opportunit in the spending patterns and preferences of customers and potential customers, fluctuating economic and competitive conditions and our ability to retain their key personnel; and ies to them through our existing distribution channels, changes acquired businesses often will be affecff ted by, among o t t 18 • our approach and strategies with respect to the development and introduction of new precision technology ity forff solutions to improve tt obtain through acquisitions, investments and joint ventures our farmer customers, including technologies we , may not provide the desired results for our customers. ity and sustainabila the profitabila m Our ability to address these issues will determine the extent to which we are able to successfully integrate, develop and grow acquired businesses and to realize the expected benefits of these transactions. Our failure to do so could have a material adverse effect on our performance. ll Our business routinel y i s sii ubjecb tt t to ctt laims and legal actions, tt some of wo .ll hich could be material tt We routinely are a party to claims and legal actions incidental to our business. These include claims for personal injuries by users of farm equipment, disputes with distributors, vendors and others with respect to commercial matters, and disputes with taxing and other governmental authorities regarding the conduct of our business, including environmental matters. While these matters generally are not material to our business, it is entirely possible that a matter will arise that is material. In addition, we use a broad range of technology in our products. We developed some of this technology, we license some of this technology from others, and some of the technology is embedded in the components and parts that we purchase from suppliers. From time-to-time, third parties make claims that the technology that we use violates their patent rights. While to date none of these claims have been significant, we cannot provide any assurances that there will not be significant or that currently existing claims will not prove to be more significant than anticipated. claims in the futff urett Financial Risks We can experience substantialii adversely affect our reported results ott and sustained volati liii tyii withii ll respect to currency exchange rates and intertt est ratestt , ws hich can f oo peo rations and the competitiveness of our products. local currencies into United States dollars. Similarly, changes in interest We conduct operations in a variety of currencies. Our production costs, profit margins and competitive position are or purchase goods relative to the strength of the ct to currency exchange rate risk to the extent that our affected by the strength of the currencies in countries where we manufacturett currencies in countries where our products are sold. We also are subjeu costs are denominated in currencies other than those in which we denominate sales, and to risks associated with translating the financial statements of our foreign subsidiaries fromff rates affect us by increasing or decreasing borrowing costs and finaff currency exposures are the Euro, the Brazilian real and the Canadian dollar in relation to the United States dollar, and the Euro in relation to the British pound. Where naturally offsetting currency positions do not occur, we attempt to manage these risks by economically hedging some, but not necessarily all, of our exposures through the use of foreign currency forward exchange or exchange option contracts. As with all hedging instruments, there are risks associated with the use of foreign currency forward or option contracts, interest rate swap aa instruments provides us with protection for a finff ite period of time from certain fluctuat rates, when we hedge we forego part or all the benefits that might result from favorablea interest rates. In addition, any default by the counterparties to these transactions could adversely affecff economic hedging transactions, currency exchange rate or interest rate fluctuations may adversely affect our performance. ions in currency exchange and interest fluctuations in currency exchange and t us. Despite our use of greements and other risk management contracts. While the use of such hedging nce income. Our most significant transactional foreign ff t In July 2017, the Financial Conduct Authority in the UK, the governing body responsible for regulating the London r 2021. This decision is expected to result in the end of the use of LIBOR as a refereff Interbank Offered Rate (“LIBOR”), announced that it no longer will compel or persuade financial instituti to make LIBOR submissions afteff for commercial loans and other indebtedness. We have both LIBOR-denominated and EURIBOR-denominated indebtedness or derivative instruments. The transition to alternatives to LIBOR could be modestly disruptive to the credit markets, and while we do not believe that the impact would be material to us, it is impossi ce as to how to replace LIBOR. In the event that LIBOR is no longer given the absence of clear agreement in the marketplatt published, interest on our credit facility will be calculated based upon the Secured Overnight Financing Rate (“SOFR”) or a base rate, as defined in the facility agreement, whichever we believe will be the most cost effective. Our credit facility also provides forff an expedited amendment process once a replacement for LIBOR is establia ons and panel banks nce rate all of the possible consequences ble at this time to foresee shed. m ff tt 19 gg cant pension and retireeii We have signifi for other purposes may be adversely affected in t unfunded or underfunded. Declinell increased pension expense in future periods. healthcar tt ii hett s in t e obligat tt ions ll tt event that withii respect to our employe ll payments became due under any pension plans that are es, as nd our cash flow available ll ii hett market value of the securitiett s used to fund these obligati i ons will rll esult in A portion of our active and retired employees participate in defined benefit pension and retiree healthcare plans under ff ll our obligations either as they become due or over some shorter funding which we are obligated to provide prescribed levels of benefits regardless of the value of the underlying assets, if any, of the applicable plans. To the extent that our obligations are unfunded or underfunded, we will have to use cash flow from operations and other sources to fulfi period. In addition, since the assets that we already have provided to fund these obligations are invested in debt instruments and other securities, the value of ions have been significant and sometimes adverse, and there t these assets varies due to market factors. Historically, these fluctuat can be no assurances that they will not be significant or adverse in the future. Similarly the amount of our obligations varies depending upon mortality assumptions, discount rates, salary growth, retirement rates and ages, inflation, changes in health care costs and similar factors, which generally are not in our control. We also are subject to laws and regulations governing the administration of our plans in certain countries, and the specific provisions, benefit formulas and related interpretations of such laws, regulations and provisions can be complex. Failure to properly administer the provisions of our plans and complym with applicable laws and regulations could have an adverse impact to our results of operations. We have substantial unfunded or underfunded obligations related to our pension and other postretirement health care benefits. See the notes to our Consolidated Financial Statements contained in Item 8, “Financial Statements and Supple mentary Data,” for more information regarding our unfunded or underfunded obligations. u ff We have a substantial i obligati tt ons that may adversely affect our abiliii tyii to operate and expand ee our business. ii amount of indebtednes tt s, and, as a result, wtt e are subject to ctt ertain restrict ivtt e covenants and payment tt Our credit facility and certain other debt agreements have various financial and other covenants that require us to maintain certain total debt to EBITDA and interest coverage ratios. In addition, the credit facility and certain other debt agreements contain other restrictive covenants, such as ones that limit the incurrence of indebtedness and the making of certain payments, including dividends, and are subject to acceleration in the event of default. If we fail to comply with these covenants and are unablea to obtain a waiver or amendment, an event of default would result. If any event of default were to occur, our lenders could, among other things, declare outstanding amounts dued and , and our cash may become restricted. In addition, an event of default or declaration of acceleration under our credit payablea facility or certain other debt agreements also could result in an event of default under our other financing agreements. Our substantial indebtedness could have other important adverse consequences such as: • • • • • • requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which would reduce the availability of our cash flow to fund futuret acquisitions and other general corporate purposes; working capia tal, capia tal expenditures, increasing our vulnerabila ity to general adverse economic and industry conditions; limiting our flexibility in planning for, or reacting to, changes in our business and the agricultural industry; restricting us from being able to introduce new products or pursuing business opportunities; placing us at a competitive disadvantage compared to our competm itors that may have less indebtedness; and limiting, along with the finff ancial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds, transactions. repurchase shares, pay cash dividends or engage in or enter into certain ff Changes to United StateSS ii financial tt conditions, tt s tax, markets att // tariff, trade and import/ export nd our business. m tt regulat ions e may ha ave a negative effect on global economic m s that are either produced in our foreign locations or are purchased from foreign suppliers, and also have substant There have been ongoing discussions and significant changes to United States trade policies, treaties, tariffs and taxes. Although the levels change from period to period, we generally have substantial imports into the United States of products and component ial exports of products and components that we manufacturett in the United States. The impacm t of any changes to current trade, tariffff or tax policies relating to imports and exports of goods is dependent on factors such as the treatment of exports as a credit to imports, and the introduction of any tariffs or taxes relating to imports fromff specific countries. The most significant changes have been the impositi from China and the imposition by China of tariffs on imports on of tariffs by the United States on imports m m u 20 from the United States. These trade restrictions include withdrawal from or modification of existing trade agreements, negotiation of new trade agreements, or tariffs on the importm commodities into China, which are critical to our customers. Policies impacting exchange rates and commodity and protein prices or limiting the export of commodities could have a material adverse impacm t on the international floff w of agricultural corresponding negative impact on the demand for agricultural m impacte d by such policies because farm income strongly influences sales of such equipment globally. equipment across the world. Our sales could be negatively and other commodities that may result in a of agricultural tt t t In the past, we have had moderate amounts of imports into the U.S. from China. To date, the impact of U.S. import tariffs on China-sourced equipment has not been material to us because we have been able to redirect production and employ sourcing alternatives for products previously imported into the U.S. from our China manufacturing facility. In addition, we do not export significant amounts from the United States into China. It is unclear what other changes might be considered or implem mented and what response to any such changes may be by the governments of other countries. Any changes that increase the cost of international trade or otherwise impact the global economy, including through the increase in domestic prices forff raw materials, could have a material adverse effect on our performance. We have joint ventures in the Netherlands and Russia with an entity that currently is operating under a time-limited general license from the U.S. Department of Treasury authorizing the maintenance or wind-down of operations and existing contracts. In the event that the license expires without further relief being granted or without other authorization from the U.S. Department of the Treasury, we may no longer be ablea commercial operations, and we would be required to assess the fair value of certain assets related to the joint ventures forff preliminary assessment indicated that impairment, if any, would not be material. tt potential impairment. Our most recent to continue the joint ventures' Environmental Risks We increasingly are subject to rtt the transitiontt rr er-carbon to a lowll future performance and operations. isks attendant tt economy, ayy nd risks relatedtt to climll ate change. Failure to understand rr and prepare for the risks ii related to to the physical impacm ts of climll ate change could impacm t our t hat we will not become as resource-efficient in our operations as we need to, including the indirect impacts of It is widely recognized that global climate change is occurring. We are unable to predict with any certainty the impacts upon our business of climate change, although we recognize that they are likely to be significant. Among the risks that we face are (i) increased governmental regulation of both our manufacturing t possibility t supply chain disruptions, (iii) that climate change will reduce demand forff our products, (iv) that we will not be able to develop new and improved products that help our farmer customers address climate-related changes and opportunities and that keep our products competitive with the products of others, and (v) the impacts on our physical facff ilities, including from increased severe weather condition risks. Addressing each of these risks is likely to entail the incurrence of significant costs by us, and we may not be able to address these risks effectively and efficff increasingly are assessing their investments and investment opportunit change. Any failure by us to satisfy their assessments could impact the desirabila price of our common stock. For a discussion of some of the actions that we have taken, see Item 1, “Business”, above. u how businesses are addressing climate ity of an investment in AGCO and the share iently, which would impact our performance. In addition, investors operations and the equipment that we produce, (ii) the ies based upon m tt ii ve environmental We are subject to ett with,tt standards, and our compliance ll tt production of our products or otherw tt xtee ensi or our failure ise adversely affect our business. to comply wll ith,tt ii ii laws aw nd regulati e ons, including increasingly stringent e or future laws aw nd regulati existingii ii engine emissions ii ons could delayll We are subjeb ct to increasingly stringent environmental laws and regulations in the countries in which we operate. environmental regulations may be significant. For examplem , several These regulations govern, among other things, emissions into the air, discharges into water, the use, handling and disposal of hazardous substances, waste disposal and the prevention and remediation of soil and groundwater contamination. Our costs of complyim ng with these or any other current or futurett countries have adopted more stringent environmental regulations regarding emissions into the air, and it is possible that new emissions-related legislation or regulations will be adopted in connection with concerns regarding GHG. The regulation of GHG emissions from certain stationary or mobile sources could result in additional costs to us in the formff allowances, facilities improvements and energy costs, which would increase our operating costs through higher utility and transportation expenses and costs of materials. Increased input costs, such as fuel and fertilizer, and compliance-related costs also could impact retail customer operations and demand for our equipment. Because the impact of any futurett regulatory or product standard requirements on our global businesses and products is dependent on the timing and design of mandates or standards, we are unable to predict its potential impact at this time. of taxes or emission GHG legislative, 21 We also may be subjecb t to liability in connection with properties and businesses that we no longer own or operate. We may be adversely impacted by costs, liabilities or claims with respect to our operations under existing laws or those that may be adopted in the futuret and regulations, we may be subjecb and, therefore, it could adversely affect our performance. t to governmental or judicial finff es or sanctions, or we may not be able to sell our products and prior conduct. If we fail to comply with existing or future laws y to both future that could appl a ff In addition, the products that we manufacture or sell, particularly engines, are subjecb t to increasingly stringent environmental regulations, including those that limit GHG emissions. As a result, on an ongoing basis we incur significant engineering expenses and capia tal expenditures to modify our products to comply with these regulations. Further, we may experience production delays if we or our suppliers are unablea complym with environmental standards. For instance, as we are required to meet more stringent engine emission reduction standards that are applicable to engines we manufacture or incorporate into our products, we expect to meet these requirements through the introduction of new technology to our products, engines and exhaust afteff Failure to meet applicable requirements could materially affect our performance. r-treatment systems, as necessary. components for our products that to design and manufacturett We are subject to SEC disclosure obligations relating to “conflict minerals” (columbite-tantalite, cassiterite (tin), wolframite (tungsten) and gold) that are sourced from the Democratic Republic of Congo or adjacent countries. Complying with these requirements has and will require us to incur additional costs, including the costs to determine the sources of any conflict minerals used in our products and to modify our processes or products, if required. As a result, we may choose to modify the sourcing, supply if the information that we receive from our suppliers is inaccurate or inadequate, or our process for obtaining that information does not fulfill the SEC’s requirements. We have a formff al policy with respect to the use of conflict minerals in our products that is intended to minimize, if not eliminate, conflict minerals sourced from the covered countries to the extent that we are unable to document that they have been obtained from conflict-free sources. and pricing of materials in our products. In addition, we may facff e reputational and regulatory risks u p Human Capital Risks Our labor force is heavilyii unionized, and our obligati to the risks of work interrupt iontt i tt or stoppage and could cause our costs to be higher.rr ons under collecll tive bargaining agreements and labor laws sw ubject us Most of our employe m es, most notablya at our manufacturing tt facilities, are subject to collective bargaining agreements and union contracts with terms that expire on varying dates. Several of our collective bargaining agreements and union contracts are of limited duration and, therefore, must be re-negotiated frequently. As a result, we are at greater risk of work interruptions or stoppages than non-unionized companim volume of products we have availablea may impair our ability to streamline existing manufacturing facilities, restructurett costs because of limitations on personnel and salary changes and similar restrictions. laws a our business or otherwise reduce our labor for sale. In addition, collective bargaining agreements, union contracts and labor es, and any work interruption or stoppage could significantly impact the a Our abilityii to recruit,ii develop, train and retain qii ualifi ll ed and skillell d employees could i ll mpii act our abilityii to execute strate giee tt s. Our success is dependent, in part, on our ability to recruit, develop, train and retain qualified employees with the tion, background and experience. Equally we must be able to retain such skilled employees through our efforts to relevant educadd develop, train, compensate and engage them. Failure to do so could impair our ability t could ultimately impact our performance. t o execute our business strategies and Data Security, Privacy and Cybersecurity Risks y, y y y Our business incr tt regulations ll easingly i we could be subject to stt s sii ubject to rtt ions tt egulatll ii ignificant claill ms, ii penaltiett s and damages. relatingtt to privacy and data protection, tt and if we violatell any of those Increasingly, the United States, the European Union, Brazil and other governmental entities are imposing regulations designed to protect the collection, maintenance and transfer of personal information. For examplem , the European Union adopted stringent data protection requirements and greater penalties the General Data Protection Regulation (the “GDPR”) that imposed for non-compliance beginning in May 2018. The GDPR also protects a broader set of personal information than traditionally has been protected in the United States and provides for a right of “erasure.” Other regulations govern the collection and transfer of financial data and data security generally. These regulations generally impose penalties in the event of violations, and private lawsuits in the event of a release of personal information are common. While we attempt to comply with all m 22 applicablea and claims for damages from regulators and the impacm ted parties. privacy regulations, their implementation is complex, and, if we are not successful, we may be subjecb t to penalties y btt Cybersecurit rr operations and could compromise confidentialii ee reputat to suffer. iontt reaches and other disruptions to our inforff marr tion technology infrastructure could interfere withii our n informati on, exposing us to liabiliii tyii that could cause our business ii and We rely uponu information technology networks and systems, some of which are managed by third parties, to process, u a variety of business processes and activities, including transmit and store electronic information, and to manage or support supply chain, manufacturing, distribution, invoicing and collection of payments from dealers or other purchasers of our equipment. We also use information technology systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements. Additionally, we collect and store sensitive data, including intellectual property and proprietary business information, in data centers and on information technology networks. The secure operation of these information technology networks and the processing and maintenance of this information is critical to our business operations and strategy. Despite security measures and business continuity plans, our information technology networks and infrastructurett shutdowns due to attacks by cyber criminals or breaches dued process of upgrading or replacing computem utility failures, terrorist acts or, natural disasters or other catastrophic events. The occurrence of any of these events could our networks, and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such compromise access, disclosure or other loss of inforff mation could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, and could disrupt our operations and damage our reputation, which could adversely affecff sophistication, we increasingly are needing to invest additional resources to protect the security of our systems and likely will need to invest even more in the future. t our performance. In addition, as security threats continue to evolve and increase in frequency and r software or hardware, power outages, computer viruses, telecommunication or sance or other disruptions during the to employee error or malfeaff to damage, disruptions or are vulnerablea m Item 1B. Unresolved StaffSS Comments Not applicable. 23 Item 2. Properties Our principal manufacturing tt locations and/or properties as of January 31, 2022, were as follows: Location United States: Description of Property Leased (Sq. Ft.) Owned (Sq. Ft.) Assumption, Illinois .......................................... Manufacturing/Sales and Administrative Office Batavia, Illinois ................................................. Parts Distribution Duluth, Georgia................................................. Corporate Headquarters Hesston, Kansas ................................................ Manufacturing Jackson, Minnesota ........................................... Manufacturing International: Beauvais, France(1)............................................. Manufacturing Breganze, Italy .................................................. Manufacturing Ennery, France .................................................. Parts Distribution Linnavuori, Finland........................................... Manufacturing Hohenmölsen, Germany.................................... Manufacturing Marktoberdorf, Germany .................................. Manufacturing Wolfenbüttel, Germany..................................... Manufacturing Stockerau, Austria ............................................. Manufacturing Thisted, Denmark .............................................. Manufacturing Suolahti, Finland ............................................... Manufacturing/Parts Distribution Canoas, Brazil ................................................... Regional Headquarters/Manufacturing Mogi das Cruzes, Brazil .................................... Manufacturing Santa Rosa, Brazil ............................................. Manufacturing Changzhou, China ............................................. Manufacturing _______________________________________ (1) Includes our joint venture, GIMA, in which we own a 50% interest. — 522,900 158,900 6,300 31,400 933,900 — — 1,469,100 1,006,400 — 2,231,300 1,562,000 360,300 471,900 437,100 1,523,600 546,700 160,700 295,300 740,600 1,138,700 748,700 515,300 767,000 11,800 931,100 15,900 — 270,300 — 26,400 92,400 96,100 23,000 — — 78,900 We consider each of our facilities to be in good condition and adequate forff requirements. ity to meet our current and anticipated manufacturing tt sufficient capac a its present use. We believe that we have 24 Item 3. e Legal Proceedings In August 2008, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of our Brazilian operations and the related transfer of certain assets to our Brazilian subsidiaries. The amount of the tax disallowance through December 31, 2021, not including interest and penalties, was approxim ultimately in dispute will be significantly greater because of interest and penalties that will continue to increase as time progresses. We have been advised by our legal and tax advisors that our position with respect to the deductdd under the tax laws of Brazil. We are contesting the disallowance and believe that it is not likely that the assessment, interest or penalties will be required to be paid. However, the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which could take several years. ately 131.5 million Brazilian reais (or approximately $23.6 million). The amount ions is allowable a During 2017, we purchased Precision Planting, which provides precision agricultural t technology solutions. In 2018, Deere & Company filed separate complaints in the U.S. District Court of Delaware against us and our Precision Planting subsidiary alleging that certain products of those entities infringe certain patents of Deere. The two complam ints subsequently were consolidated into a single case, Case No. 1:18-cv-00827-CFC, that currently is scheduled for trial in July 2022. It is our position that no patents have been, or are continuing to be, infringed, and we are vigorously contesting the allegations in the complam int. We have an indemnity right under the purchase agreement related to the acquisition of Precision Planting from its previous owner. Pursuant to that right, the previous owner of Precision Planting currently is responsible for the litigation costs associated with the complaint and is obligated to reimburse AGCO for some or all of the damages in the event of an adverse outcome in the litigation. In the event of an adverse outcome, we estimate that the range of possible damages, based upon the advice of third-party specialists, would be up to approximately $7.0 million. Deere & Company has provided an estimate of its damages that is significantly higher than our estimate and that we believe does not have merit. u We are a party to various other legal claims and actions incidental to our business. We believe that none of these claims or actions, either individually or in the aggregate, is material to our business or financial statements as a whole, including our results of operations and financial condition. Item 4. Mine Safety Disclosures . Not Applicablea 25 PART II Item 5. Market for Registrant’s Common Equity,tt Related StocSS Securitiett s kholder Matters and Issuer Purchases of Equitytt Our common stock is listed on the New York Stock Exchange and trades under the symbol AGCO. As of the close of business on February 22, 2022, the closing stock price was $122.34, and there were 408 stockholders of record (this number does not include stockholders who hold their stock through brokers, banks and other nominees). Performance Graph The following presentation is a line graph of our cumulative total shareholder returntt on our common stock on an indexed basis as compared to the cumulative total returnt for the five years ended December 31, 2021. Our total returns of the S&P Mid-Cap 400 Index, the MVIS Global Agribusiness Index performance. tt in the graph are not necessarily indicative of futurett $250 $200 $150 $100 $50 $0 2016 COMPARISON OF CUMULATIVE TOTAL RETURN AGCO Corporation S&P MidCap 400 Index MVIS Global Agribusiness Index (MVMOOTR) 2017 2018 2019 2020 2021 AGCO Corporation ..................................................... $ 100.00 $ 124.50 $ 97.98 $ 137.20 $ 184.90 $ 214.72 S&P Midcap 400 Index............................................... MVIS Global Agribusiness Index............................... 100.00 100.00 116.24 121.73 103.36 114.31 130.44 139.46 148.26 159.96 184.97 199.16 Cumulative Total Return forff the Years Ended December 31, 2016 2017 2018 2019 2020 2021 The total returntt assumes that dividends were reinvested and is based on a $100 investment on December 31, 2016. 26 Issuer Purchases of Equity Securities The tabla e below sets forth informa during the three months ended December 31, 2021: ff tion with respect to purchases of our common stock made by or on behalf of us Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(2) — $ — — $ 393,733 $ 121.91 393,733 $ — $ 393,733 $ — 121.91 — $ 393,733 $ 170.0 110.0 110.0 110.0 Period October 1, 2021 through October 31, 2021 .............................. November 1, 2021 through November 30, 2021(1) ....................... December 1, 2021 through December 31, 2021........................... Total..................................................... ___________________________________ (1) In November 2021, we entered into an ASR agreement with a third-party financial institution to repurchase $60.0 million of our common stock. The ASR agreement resulted in the initial delivery of 393,733 shares of our common stock, representing approximately 80% of the shares expected to be repurchased in connection with the transaction. In January 2022, the remaining 113,824 shares under the ASR agreement were delivered. The average price paid per share related to the ASR agreement reflected in the table above was derived using the fair market value of the shares on the date the initial 393,733 shares were delivered. The amount that may yet be purchased under our share repurchase programs, as presented in the above table, was reduced by the entire $60.0 million payment related to the ASR agreement. Refer to Note 9 to our Condensed Consolidated Financial Statements for a further (2) The remaining authorized amount to be repurchased is $110.0 million, which has no expiration date. discussion of this matter. ff Item 6. Reserved The information required by Item 301 and Item 302 of Regulation S-K has been omitted as we have elected to adopt the changes to Item 301 and Item 302 of Regulation S-K contained in SEC Release No. 33-10890. Item 7. Management’s Discussion and Analysisyy ii of Financi alii Conditiontt and Results ott OO f Oo perations We are a leading manufacturer and distributor of agricultural equipment and related replacement parts throughout the tt l range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage world. We sell a fulff equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. Our products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brand names, including: Challenger®, Fendt®, GSI®, Massey Ferguson® and Valtra®, supported by our Fuse® precision agriculturett solutions. We distribute most of our products through a combination of approximately 3,200 dealers and distributors as well as associates and licensees. In addition, we provide retail and wholesale financing through our finance joint ventures a with Raboba nk. t The COVID-19 pandemic and other economic factors continue to create volatility in the global economy, initially through government-mandated facility closures, higher absentee rates, and reduced production at both our factories and the factories that supply us with parts and components; and, more recently, through supply chain disruptions. In addition, we have had to incur various costs related to preventing the spread of COVID-19, including changes to our factories and other facilities ng remote work. We expect COVID-19 to continue to impact our business, although the manner and and those related to enablia extent to which it impacts us will depend on future developments, including the durad distribution and impact of vaccinations, and possible mutations of the virus that are more contagious or resistant to current vaccines. Measures taken by governments around the world, as well as businesses, including us, and the general public in order to limit the spread of COVID-19 will impact our business as well. These factors, along with increasing industrial demand, could negatively affect production levels, particularly caused by delays in the receipts of parts and component of particular concern include a wide range of parts and components with a portion arising from the global semiconductor shortage. We may continue to face supplier bottlenecks and delays in all regions as well as challenges with freight logistics, and we continue to work to mitigate the impactm of these issues in order to meet increased end-market demand. tion of the pandemic, the timing, s. Supply chain issues m Financial Highlights We sell our equipment and replacement parts to our independent dealers, distributors and other customers. A large ty of our sales are to independent dealers and distributors that sell our products to end users. To the extent practicable, a majori we attempt to sell products to our dealers and distributors on a level basis throughout the year to reduce the effect of seasonal 27 demands on our manufacturing operations and to minimize our investment in inventories. However, retail sales by dealers to farmers are highly seasonal and are a function of the timing the planting and harvesting seasons. In certain markets, particularly in North America, there is often a time lag, which varies based on the timing and level of retail demand, between our sale of the equipment to the dealer and the dealer’s sale to a retail customer. The following tabla e sets forth, ff for the periods indicated, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations: Net sales ................................................................................................................................... Cost of goods sold.................................................................................................................... Gross profit .............................................................................................................................. Selling, general and administrative expenses........................................................................ Engineering expenses............................................................................................................ Amortization of intangibles................................................................................................... Impairment charges ............................................................................................................... Restructuring expenses ......................................................................................................... Bad debt expense................................................................................................................... operations ........................................................................................................... Income fromff Interest expense, net .............................................................................................................. Other expense, net ................................................................................................................. income taxes and equity in net earnings of affiliates....................................... Income beforeff Income tax provision............................................................................................................. equity in net earnings of affiliates.................................................................... Income beforeff Equity in net earnings of affiliates ........................................................................................ Net income ............................................................................................................................... Net (income) loss attributable to noncontrolling interests ....................................................... Net income attributable to AGCO Corporat rr ion and subsidiaries ............................................ Years Ended December 31, 2019(1) 2020(1) 2021(1) 100.0 % 100.0 % 100.0 % 77.5 22.5 10.9 76.9 23.1 9.8 78.1 21.9 11.5 3.6 0.5 — 0.1 — 9.0 0.1 0.5 8.5 1.0 7.5 0.6 8.1 — 3.7 0.7 0.2 0.2 0.2 6.6 0.2 0.2 6.1 2.1 4.1 0.5 4.6 0.1 3.8 0.7 2.0 0.1 0.1 3.9 0.2 0.7 2.9 2.0 0.9 0.5 1.4 — 8.1 % 4.7 % 1.4 % ___________________________________ (1) Rounding may impact summation of amounts. 2021 Compared m to 2020 Net income attributablea to AGCO Corporation and subsidiaries forff 2021 was $897.0 million, or $11.85 per diluted share, compared to $427.1 million, or $5.65 per diluted share, for 2020. operations was approximately $1,001.4 million in 2021 compared to approxim d by extended COVID-related production shutdowns in both Europe and South America durid Net sales for 2021 were approximately $11,138.3 million, or 21.7% higher than 2020, primarily due to improved market demand. Regionally, net sales were higher in all regions during 2021 compared to 2020. Net sales were negatively m impacte Income fromff The increase in income fromff improved m material and freight cost pressures along with higher manufacturing costs. Net income per diluted share was favora by the reversal of valuation allowances previously establia Brazil during 2021. In addition, our 2020 income fromff impaim rment charge during the second quarter of 2020 related to a tillage and seeding equipment joint venture in which we formerly owned a 50% interest in our North American (“NA”) region. operations during 2021 was primarily the result of higher net sales and production volumes and margins, which benefited from positive pricing impacts and a favff orable sales mix that offset substantial inflationary shed against our deferred tax assets in both the United States and operations included approximately $20.0 million of a non-cash goodwill ately $599.7 million in 2020. ng the first half of 2020. impacted blya m a ff Regionally, income fromff $170.1 million in 2021 compared positive pricing realization, which offset higher material costs and engineering expenses. In our North American region, income by approximately $44.4 million compared to the prior year. Higher net sales and production levels, a from operations improved operations in our Europe/Middle East (“EME”) region increased by approximately to 2020, driven primarily by higher net sales and increased production volumes as well as m m 28 pricing impacts contributed to the improvement in the region and helped to offset material cost richer product mix and favorablea inflation. In South America, income fromff The increase reflects increased net sales and production volumes, a better sales mix and favora increasing material costs. Income from operations in our Asia/Pacific/African (“APA”) region increased approximately $51.8 million in 2021 comparem d to 2020, primarily due to higher net sales and an improved product mix. operations increased approximately $102.9 million in 2021 compared price realization, offsff etting to 2020. blea m ff Industry Market Conditi CC ons Elevated agricultural tt commodity prices continue to support favorablea farm economics resulting in farmers upgrading and replacing aging fleets. These improved conditions generated industry growth across all the majora 2021. Future demand for agricultural equipment will be influenced by farm income, which is a funct protein prices, crop yields and government support. ff equipment markets during ion of commodity and In North America, industry unit retail sales of utility and high horsepower tractors increased approximately 14% in 2021 compared to 2020. Industry unit retail sales of combines increased approximately 24% in 2021 compared to 2020. Retail sales growth was strongest for high horsepower tractors in 2021 as compared commodity prices stimulated demand. to 2020 where an extended fleet age and favorablea m In Western Europe, industry unit retail sales of tractors for 2021 increased approximately 16% compared to 2020. Industry unit retail sales of combines all major markets compared to 2020. Higher wheat, dairy and livestock prices, combined with improved levels of crop production, generated positive farm economics and farmer sentiment. for 2021 increased approximately 3% compared to 2020. Industry sales increased across m m In South America, industry unit retail sales of tractors for 2021 increased approximately 22% compared to 2020. Industry unit retail sales of combines for 2021 increased approximately 20% compared primarily in the large markets of Brazil and Argentina, as well as in smaller South American markets. Healthy crop production as well as favorablea equipment. exchange rates supported positive economic conditions for farmers who continue to replace aged to 2020. The improved demand was m m Resultsll of Operations tt Net sales for 2021 were $11,138.3 million compared market demand. The folff lowing tabla e sets forth, translation by geographical segment (in millions, except percentages): m ff to $9,149.7 million forff 2020, primarily as a result of improved for the year ended December 31, 2021, the impact to net sales of currency Change Change due to Currency Translation North America .................................................. $ 2,659.2 2021 2020 $ 2,175.0 $ South America .................................................. 1,307.7 873.8 $ 484.2 433.9 EME .................................................................. APA .................................................................. 6,221.7 949.7 $ 11,138.3 5,366.9 734.0 $ 9,149.7 854.8 215.7 $ 1,988.6 % 22.3 % $ 49.7 % 15.9 % 29.4 % 21.7 % $ $ 32.4 (40.5) 155.7 52.1 199.7 % 1.5 % (4.6)% 2.9 % 7.1 % 2.2 % Regionally, net sales in North America increased in 2021 compared to 2020, with growth in sales of tractors and to 2020, primarily due to Precision Planting equipment. In the EME region, net sales were higher during 2021 compared increased sales in all major markets, with the largest increases contributed by growth in tractors, combines and replacement parts. Net sales increased in South America in 2021 compared to 2020, primarily due to higher net sales of tractors, combines, planting equipment, parts as well as grain and protein equipment. In the APA region, net sales increased in 2021 compared to 2020, primarily due to net sales increases in China and Australia, as well as recovery in Africa. We estimate that worldwide average price increases were approximately 6.6% and 1.6% in 2021 and 2020, respectively. Consolidated net sales of tractors and combines, which comprised approximately 61.1% of our net sales in 2021, increased approximately 23.0% in 2021 compared to 2020. Unit sales of tractors and combines increased approximately 16.7% during 2021 compared to 2020. The difference between the unit sales change and the change in net sales was primarily the result of foreign currency translation, pricing and sales mix changes. m m 29 The folff lowing tabla e sets forth, ff for the years ended December 31, 2021 and 2020, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations (in millions, except percentages): 2021 2020 $ % of Net Sales(1) $ % of Net Sales Gross profit ............................................................................................... $ 2,572.3 1,088.2 405.8 Selling, general and administrative expenses......................................... Engineering expenses ............................................................................. Amortization of intangibles.................................................................... Impairment charge.................................................................................. 61.1 — Restructuring expenses........................................................................... Bad debt expense.................................................................................... 15.3 0.5 operations ............................................................................ $ 1,001.4 Income fromff 23.1 % $ 2,057.5 1,001.5 9.8 % 342.6 3.6 % 0.5 % — % 0.1 % — % 9.0 % $ 59.5 20.0 19.7 14.5 599.7 22.5 % 10.9 % 3.7 % 0.7 % 0.2 % 0.2 % 0.2 % 6.6 % ____________________________________ (1) Rounding may impact summation of amounts. Gross profit as a percentage of net sales increased during 2021 compared to 2020 primarily due to the benefit of higher net sales and production levels, as well as positive pricing, which was partially offset by the impact of material cost inflation. Production hours increased across all regions during 2021. Overall, global production hours increased approximately 25% on a global basis during 2021 compared to 2020, primarily as a result of stronger market demand during 2021. Our production facilities continue to face supply chain and logistics disruptions as well as material and frei impact our ability to produce and ship units, as well as contribute to labor inefficiencies, and result in carrying higher than anticipated raw material and work in process inventory levels. We expect these conditions to continue, which may impactm production levels and net sales and margins in future periods. ght cost inflation. These disruptions a ff Selling, general and administrative expenses (“SG&A expenses”) and engineering expenses, as a percentage of net sales, were lower during 2021 compared to 2020, primarily driven by the increases in net sales. The absolute level of SG&A expenses increased during 2021 following prior year actions to lower expenses while operations were suspended, such as reduced field sales and marketing activities and lower travel expenses. We recorded stock compensation expense of approximately $26.6 million and $36.8 million during explained in Notes 1 and 10 of our Consolidated Financial Statements. 2021 and 2020, respectively, within SG&A expenses, as is more fully dd During 2020, we recorded a non-cash goodwill impairment charge of approximately $20.0 million related to a tillage and seeding equipment joint venture in which we formerly owned a 50% interest. The impairment charge was recorded as “Impairment charges” within our Consolidated Statements of Operations, with an offsetting benefit of approxim $10.0 million included within “Net (income) loss attributable to noncontrolling interests.” ately a t We recorded restruct uri rr ng expenses of approximately $15.3 million and $19.7 million during 2021 and 2020, respectively. The restructuring expenses primarily related to severance and other related costs associated with the rationalization of employee m States, Europe and South America durid production systems operations. See Note 3 of our Consolidated Financial Statements. headcount at various manufacturing facilities and administrative offices located in the United ng 2021 and 2020, as well as the rationalization of our grain storage and protein Interest expense, net was $6.7 million for 2021 compared to $15.0 million for 2020 resulting primarily from higher information on our available to 2020. See “Liquidity and Capital Resources” for further ff interest income in 2021 as compared funding. m Other expense, net was $50.4 million in 2021 compared to $22.7 million in 2020. We have a minority equity interest in Tractors and Farm Equipment Limited (“TAFE”). During 2020, TAFE repurchased a portion of its common stock from us resulting in a gain of approximately $32.5 million recorded within “Other expense, net.” See Note 14 of our Consolidated Financial Statements for additional information. In addition, losses on sales of receivablea receivablea $24.5 million and $24.1 million in 2021 and 2020, respectively. sales agreements with our finance joint ventures in North America, Europe and Brazil, were approximately s, primarily related to our accounts 30 We recorded an income tax provision of $108.4 million in 2021 compared to $187.7 million in 2020. Our tax provision tive tax rate are impacted by the differing tax rates of the various tax jurisdictions in which we operate, permanent and effecff differences for items treated differently for financial accounting and income tax purposes, losses in jurisdictions where no income tax benefit is recorded, and provisions for unrecognized income tax benefits related to uncertain tax positions. At December 31, 2021 and 2020, we had gross deferred tax assets of $291.8 million and $360.9 million, respectively, including $69.5 million and $62.9 million, respectively, related to net operating loss carryforwards. At December 31, 2021, we had total valuation allowances as an offset to our gross deferred tax assets of approximately $47.4 million. This valuation allowance included allowances against deferred tax assets (including net operating loss carryforwards) in the U.S. and certain foreign jurisdictions. As of December 31, 2021, our income tax provision included the benefit of reversals of approxim $67.8 million and $55.6 million related to valuation allowances previously establia assets in the United States and Brazil, respectively. Improvements in income in the United States and Brazil during 2020 and 2021, along with updated future At December 31, 2020, we had total valuation allowances as an offset to the gross deferred tax assets of approximately $181.0 million. This valuation allowance included allowances against deferred tax assets (including net operating loss carryforwards) in the United States and certain forei December 31, 2021 will depend on generating sufficient taxablea liabilities. We believe it is more likely than not that the remaining net deferred tax assets should be ablea Note 6 of our Consolidated Financial Statements for further information. projected income levels, supported the reversal of both of the valuation allowances. gn jurisdictions. Realization of the net deferred tax assets as of shed against the Company’s net deferred tax periods, net of reversing deferred tax to be realized. Refer to income in futurett ately a ff ff tt Equity i n net earnings of affiliates, which is primarily comprised of income fromff our AGCO Finance joint ventures, was $65.6 million in 2021 compared to $45.5 million in 2020, primarily due to higher net earnings from our AGCO Finance joint ventures. See “Finance Joint Ventures” for further information regarding our finance joint ventures and their results of operations and Note 5 of our Consolidated Financial Statements for further information. t 2020 Compared to 2019 A comparim son of the results of operations for 2020 versus that of 2019 was included in our Annual Report on Form 10-K for the year ended December 31, 2020. AGCO Finance Joint Ventures Our AGCO Finance joint ventures tt provide both retail financing and wholesale financing to our dealers in the United a States, Canada, Europe, Brazil, Argentina and Australia. The joint ventures are owned by AGCO and by a wholly-owned of the assets of the finance joint ventures consist of finance receivables. The majori subsidiary of Rabobank. The majority interest. Under the various joint venture agreements, Rabob the liabilities consist of notes payablea and accruedrr affiliates provide financing to the finff ance joint ventures, tt obligations of the joint ventures. In the United States and Canada, we guarantee certain minimum residual values to those joint ventures tt Off-Balance Sheet Arrangements” and Note 12 to our Consolidated Financial Statements for additional information. ank or its primarily through lines of credit. We do not guarantee the debt upon expiration of certain eligible leases between the finff ance joint ventures and end users. See “Commitments and ty of a a tt As of December 31, 2021, our capita al investment in the finance joint ventures, which is included in “Investments in a a ately $359.2 million compared to approximately $395.3 million as AGCO dealers as of December 31, 2021 and 2020, respectively. The wholesale receivables either mately $9.2 billion and $8.8 billion, respectively, of retail receivables and $1.7 billion and $1.9 billion of affiliates” on our Consolidated Balance Sheets, was approxim of December 31, 2020. The total finance portfolio in our finance joint ventures was approximately $10.9 billion and $10.7 billion as of December 31, 2021 and 2020, respectively. The total finff ance portfolio as of December 31, 2021 and 2020 included approxi wholesale receivables fromff were sold directly to AGCO Finance without recourse from our operating companim directly to the dealers. During 2021, we did not make additional investments in our finance joint ventures, and we received certain of our finance joint ventures. During 2020, we made approximately dividends of approximately $84.4 million fromff $1.9 million of additional investments in our finance joint ventures, and there were no dividends paid fromff our finance joint ventures. tt banking regulations. Our share in the earnings of the finance joint ventures, included in “Equity in net earnings of affiliates” within our Consolidated Statements of Operations, was approxim December 31, 2021 and 2020, respectively, with the increase in earnings ventures in the U.S., Canada and France during ately $64.4 million and $45.0 million for the years ended r to higher income in our finance joint 2021 as compared to 2020. Our finance joint ventures paying dividends to us during 2020 as a result of COVID-19 pandemic es, or AGCO Finance provided the finff ancing were restricted fromff primarily dued dd a t 31 Outlook Our operations are subject u among other things, changes in net cash farm income, farmff commodities, commodity and protein prices and general economic conditions. to the cyclical naturett of the agricultural t industry. Sales of our equipment are affected by, land values, weather conditions, the demand forff agricultural Global industry demand for farm equipment is expected to be higher across all majora markets during 2022. Our net sales are expected to increase in 2022 comparem negative foreign currency translation. Gross and operating margins are expected to improve from 2021 levels, reflecting the impactm of higher net sales and production volumes as well as pricing initiatives to offset material cost inflation. Engineering expenses and other technology investments are expected to increase in 2022 compared to 2021 to support our product development plans as well as our precision agriculturet d to 2021, resulting from improved sales volumes and pricing, partially offset by and digital initiatives. Our outlook is also based on current estimates of supplier component m deliveries, and the ability of the Company's s on schedule is currently difficult to predict. If supply chain performance worsens, supply chain to deliver parts and component our results of operations will be adversely impacted. Refer to “Risk Factors” for further discussion of the COVID-19 pandemic and other factors. m 32 Liquidity and Capital Resources Our financing requirements are subject u to variations due to seasonal changes in inventory and receivablea levels. In addition, unusual events such as the recent supply chain disruptions can result in increases in inventories and, consequentially, our financing requirements. Internally generated funds sources, primarily our credit facff together with availablea expenditures cash and internally generated funds, will be sufficient to support our working capital, capita and debt service requirements for the foreseeablea ility and accounts receivablea future (in millions): are suppleme u ff t nted when necessary from external sales agreement facilities. We believe that the following facilities, al 2025(1)............................................................................................................ 1.002% Senior term loan duedd Senior term loans due between 2023 and 2028(1) ......................................................................................... 0.800% Senior Notes Due 2028(1)................................................................................................................. Other long-term debt ..................................................................................................................................... ____________________________________ (1) The amounts above are gross of debt issuance costs of an aggregate amount of approximately $4.8 million. December 31, 2021 283.7 445.9 680.8 7.7 On October 6, 2021, we issued €600.0 million (or approximately $680.8 million as of December 31, 2021) of senior notes at an issue price of 99.993%. The notes mature on October 6, 2028, and interest is payable annually, in arrears, at 0.800%. The senior notes contain covenants restricting, among other things, the incurrence of certain secured indebtedness. The senior notes are subjeu ct to both optional and mandatory redemption in certain events. During October 2021, we used the proceeds received from the senior notes to repay our €150.0 million (or approximately $173.4 million as of October 8, 2021) senior term loan dued revolving credit facff €192.0 million (or approximately $223.8 million as of October 19, 2021). In August 2021, prior to the issuance of the senior notes, we repaid two of our 2018 senior term loans due August 2021 with an aggregate amount of €72.0 million (or approximately $85.5 million as of August 1, 2021). ility, and two of our 2016 senior term loans due October 2021 with an aggregate amount outstanding of 2022, $370.0 million related to our multi-currency rr In October 2018, we entered into a multi-currency revolving credit facff ility of $800.0 million. The credit facility on amounts outstanding under the credit facility, at our option, at either (1) matures on October 17, 2023. Interest accrues LIBOR plus a margin ranging from 0.875% to 1.875% based on our credit rating, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, and (iii) one-month LIBOR for loans denominated in U.S. dollars plus 1.0%, plus a margin ranging from 0.0% to 0.875% based on our credit rating. As mentioned previously, on October 15, 2021, we repaid $370.0 million of our multicurrency revolving credit facility as a result of the issuance of our 0.800% senior notes due 2028. As of December 31, 2021, we had no outstanding borrowings under the revolving credit facff ility, and the ability to borrow was approximately $800.0 million under the revolving credit facility. On April 15, 2020, we borrowed €117.5 million and $133.8 million under a term loan facility that had been added to our multi-currency revolving credit facility. While outstanding, the loans bore interest at one-month LIBOR plus a margin of 1.625%. We repaid the two loans on February 16, 2021 (for an aggregate amount of approximately $276.0 million as of that date). Refer to Note 7 of our Consolidated Financial Statements for further information regarding our current facilities. As described above, a our credit facility allows us to select from among various interest rate options. Due to the phase- out of LIBOR, LIBOR-based rates no longer will be available for borrowings denominated in U.S. dollars after December 31, 2022, and for loans denominated in other currencies after December 31, 2021. The interest rates reflected in the our credit facility were designed to accommodate the discontinuation of LIBOR-based rates and a shift to the “Secured Overnight Financing Rate” (“SOFR”) or a base rate, and, as such, we do not believe that moving to the other rates will have a materially adverse effect on our results of operations or financial position. In addition, the credit facility agreement also provides forff add additional interest-rate alternatives. an expedited amendment process once a replacement for LIBOR is establia shed, which we may elect to utilize to On January 25, 2019, we borrowed €250.0 million (or approximately $283.7 million as of December 31, 2021) from the European Investment Bank. The loan matures on January 24, 2025. Interest is payablea annum, payablea semi-annually in arrears. on the term loan at 1.002% per 33 In October 2018, we entered into a term loan agreement with Rabobank in the amount of €150.0 million. Interest was on the term loan quarterly in arrears at an annual rate, equal to the EURIBOR plus a margin ranging from 0.875% to mately payablea 1.875% based on our credit rating. As mentioned previously, during October 2021, we repaid this term loan of approxi $173.4 million as of October 8, 2021 with the proceeds from our 0.800% senior notes due 2028. a In October 2016, we borrowed an aggregate amount of €375.0 million through a group of seven related term loan agreements. These agreements had maturities ranging from October 2019 to October 2026. Of the 2016 term loans, we repaid an aggregate amount of €56.0 million (or approximately $61.1 million) of two of these term loans in October 2019. Additionally, as mentioned previously, we repaid €192.0 million (or approximately $223.8 million as of October 19, 2021) upon maturity of two 2016 senior term loans in October 2021. In August 2018, we borrowed an additional aggregate amount of indebtedness of €338.0 million through a group of another seven related term loan agreements. In August 2021, prior to the issuance of the senior notes due 2028, we repaid two of our 2018 senior term loans upon maturit y with an aggregate amount of €72.0 million (or approximately $85.5 million as of August 1, 2021). On February 1, 2022, we repaid an additional amount of €72.5 million (or approximately $81.7 million) of one of our 2018 senior term loans due August 2023 with existing cash on hand. The provisions of the term loan agreements are substant and maturities. In aggregate, as of December 31, 2021, we had indebtedness of approximately €393.0 million (or approximately $445.9 million as of December 31, 2021) under a total group of eight remaining term loan agreements. As of February 1, 2022, as a result of a furthe r repayment discussed previously, we had indebtedness of €320.5 million (or approxi $361.0 million) through a group of seven remaining term loan agreements. As of December 31, 2021, for the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 0.90% to 2.26% and maturity dates between August 2023 and August 2028. For the term loans with a floaff ting interest rate, interest is payable in arrears on a semi-annual basis, with interest rates based on the EURIBOR plus a margin ranging from 0.90% to 1.25% and maturity dates between August 2023 and August 2025. with the exception of interest rate terms ially identical in naturett mately u a ff tt As of December 31, 2021 and 2020, we had short-term borrowings due within one year of approxi a mately $90.8 million and $33.8 million, respectively. We are in compliance with the finff ancial covenants contained in these facilities and expect to continue to maintain such complim ance. Should we ever encounter difficulties, our historical relationship with our lenders has been strong and we anticipate their continued long-term support of our business. Refer to Note 7 to the Consolidated Financial Statements contained in Item 8, “Financial Statements and Supple the financial covenants contained in each debt instrument. mentary Data,” for additional information regarding our current facilities, including u Our accounts receivablea sales agreements in North America, Europe and Brazil permit the sale, on an ongoing basis, of a majority of our receivables to our U.S., Canadian, European and Brazilian finaff receivablea s are without recourse to us. We do not service the receivablea direct retained interest in the receivables. These agreements are accounted for as off-balance sheet transactions and have the effecff and short-term liabilities by the same amount. As of December 31, 2021 and 2020, the dd t of reducing cash received fromff the years then ended was approxim s sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements forff s after the sales occur, and we do not maintain any ately $1.3 billion and $1.5 billion, respectively. accounts receivablea receivablea nce joint ventures. The sales of all a In addition, the Company sells certain trade receivablea s under factoring arrangements to other financial institutions around the world. As of December 31, 2021 and 2020, the cash received fromff approximately $215.4 million and $199.9 million, respectively. these arrangements for the years then ended was Our finance joint ventures in Europe, Brazil and Australia also provide wholesale financing directly to our dealers. s associated with these arrangements also are without recourse to us. As of December 31, 2021 and 2020, these The receivablea finance joint ventures had approximately $82.1 million and $85.2 million, respectively, of outstanding accounts receivablea associated with these arrangements. These arrangements are accounted for as off-balance sheet transactions. tt In order to efficff iently manage our liquidity, we generally pay vendors in accordance with negotiated terms. To enablea shed programs in certain markets with ons under which the vendors have the option to be paid by the finff ancial institutions earlier than the payment vendors to obtain payment in advance of our payment due dates to them, we have establia financial instituti due dates. When vendors receive early payments they receive discounted amounts and we then pay the financial institutions the face amounts of the invoices on the payment due dates. We do not reimburse vendors for any costs they incur for participation ons are presented as “Accounts payable” in our Consolidated Balance in the programs. Amounts owed to the financial instituti Sheets. Should we not be able to negotiate extended payment terms with our vendors, or should financial instituti ons no longer be willing to participate in early payment programs with us, we would expect to have sufficient liquidity to timely pay our vendors without any material impact on us or our financial position. t tt 34 Our debt to capia talization ratio, which is total indebtedness divided by the sum of total indebtedness and stockholders’ equity, was 29.7% at December 31, 2021 compared to 34.8% at December 31, 2020. Cash Flows ll Cash flows provided by operating activities were approxim a ately $660.2 million during 2021 comparem d to dd approximately $896.5 million during 2020. The decrease during 2021 was primarily dued offset by increases in net income and accounts payable as compared to 2020. Supply chain disruptions resulted in higher raw material and work-in-process inventory levels during d to the prior year. Free cash flow, which is defined as 2021 as comparem “Net cash provided by operating activities” less “Purchases of property,t plant and equipment”, was approximately $390.4 million during 2021, as comparem ely $626.6 million during 2020. to an increase in inventories, partially d to approximat d a Our working capita al requirements are seasonal, with investments in working capia tal typically building in the firff st half of the year and then reducing in the second half of the year. We had $1,559.5 million in working capia tal at December 31, 2021, as comparem December 31, 2021 were approximately $754.8 million higher than at December 31, 2020, primarily dued production levels, as well as the significant impact of supply chain constraints during 2021. d with $1,005.6 million at December 31, 2020. Accounts receivablea and inventories, combined, at to higher net sales and Share Repurchase Program In August and Novemberm 2021, we entered into two accelerated share repurchase (“ASR”) agreements with financial institutions to repurchase an aggregate of $135.0 million of shares of our common stock. We received approxi mately 952,204 shares in these transactions as of December 31, 2021. On January 19, 2022, we received additional 113,824 shares upon final settlement of our November 2021 ASR agreement. In February and March 2020, we entered into two ASR agreements with financial institutions to repurchase an aggregate of $55.0 million of shares of our common stock. We received approxi mately 970,141 shares in these transactions as of December 31, 2020. All shares received under the ASR agreements were retired upon receipt, and the excess of the purchase price over par value per share was recorded to a combination of “Additional paid-in capita al” and “Retained earnings” within the our Consolidated Balance Sheets. a a Contractual Obligatio i ns and Cash Requireii ments Our material cash requirements include the folff lowing contractual tt and other obligations: Indebtedness – As of December 31, 2021, we had approximately $44.4 million of payments due during the year ended December 31, 2022, related to indebtedness and certain short-term obligations, in addition to approximately $15.1 million of interest payments associated with indebtedness we expect to pay during materially year to year. Indebtedness amounts reflect the principal amount of our senior term loan, senior notes, credit facility and certain short-term borrowings, gross of any debt issuance costs. Refer to Note 7 of the Consolidated Financial Statements for additional information regarding our indebtedness. 2022. Interest payments generally do not vary d Capia tal and operating lease obligations – As of December 31, 2021, we had approximately $4.0 million and $45.7 million of payments due during the year ended December 31, 2022, related to capital and operating lease obligations, respectively. Refer to Note 17 of the Consolidated Financial Statements for additional information regarding our lease obligations. Unconditional purchase obligati obligations payablea ons – As of December 31, 2021, we had approximately $131.1 million of outstanding purchase during the year ended December 31, 2022. These obligations generally do not vary materially year to year. i Other short-term and long-term obligations – As of December 31, 2021, we had approximately $40.1 million of income tax liabia lities related to uncertain income tax provisions connected with ongoing income tax audits in various jurisdictions due during the year ended December 31, 2022. Additionally, we had approxim future minimum contribution requirements under our U.S. and non-U.S. defined benefit pension and postretirement plans due during the year ended December 31, 2022. Refer to Notes 6 and 8 of the Consolidated Financial Statements for additional information regarding our uncertain tax positions and pension and postretirement plans, respectively. These obligations comprise a majority of our other short-term and long-term obligations. ately $37.8 million of estimated a 35 Commitments and Off-Balance Sheet SS Arrangements Guarantees We maintain a remarketing agreement with our finance joint venturet in the United States, whereby we are obligated to repurchase up to $6.0 million of repossessed equipment each calendar year. We believe any losses that might be incurred on the resale of this equipment will not materially impact our financial position or results of operations, due to the fact that the repurchase obligations would be equivalent to the fair value of the underlying equipment. At December 31, 2021, we guaranteed indebtedness owed to third parties of approximately $25.2 million, primarily tt ons if dealers or end users default on such loans through 2027. Losses under such related to dealer and end-user financing of equipment. Such guarantees generally obligate us to repay outstanding finance obligations owed to finff ancial instituti guarantees historically have been insignificant. In addition, we generally would expect to be ablea portion of the amounts paid under such guarantees fromff of such equipment is expected to offset a substantial portion of the amounts paid. We also guarantee indebtedness owed to certain of our finance joint ventures if dealers or end users default on loans. Losses under such guarantees historically have been insignificant and the guarantees are not material. We believe the credit risk associated with all of these guarantees is not material to our financial position or results of operations. the sale of the underlying financed farm equipment, as the fair value to recover a significant tt In addition, at December 31, 2021, we had accruedrr approximately $23.3 million of outstanding guarantees of residual values that may be owed to our finance joint ventures operating leases between the finff ance joint ventures guarantee is approxim ately $160.7 million. a tt t in the United States and Canada due upon expiration of certain eligible and end users. The maximum potential amount of futurett payments under the Other At December 31, 2021, we had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $3,681.9 million. The outstanding contracts as of December 31, 2021 range in maturity through October 2022. We also had outstanding designated steel commodity contracts with a gross notional amount of approximately $31.9 million that range in maturity through July 2022. See Note 11 of our Consolidated Financial Statements for additional information. As discussed in “Liquidity and Capital Resources,” we sell a majority of our wholesale accounts receivable in North America, Europe and Brazil to our U.S., Canadian, European and Brazilian finaff receivable under facff should be accounted forff as off-balance sheet transactions. toring arrangements to finaff ncial institutions around the world. We have determined that these facilities nce joint ventures. We also sell certain accounts Contingencies We are party to various claims and lawsuits arising in the normal course of business. We closely monitor these claims and lawsuits and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse effect on our financial position or results of operations and accruerr . and/or disclose loss contingencies as appropriate See Note 12 of our Consolidated Financial Statements for further information. a Related Parties In the ordinary course of business, we engage in transactions with related parties. See Note 14 of our Consolidated Financial Statements for information regarding related party transactions and their impact to our consolidated results of operations and financial position. Foreign Currency Risk Management We have significant manufacturing tt locations in the United States, France, Germany, Finland, Italy, China and Brazil, and we purchase a portion of our tractors, combines and components from third-party foreign suppliers, primarily in various European countries and in Japan. We also sell products in approxi ty of our net sales outside the United States are denominated in the currency of the customer location, with the exception of sales in Middle East, Africa, Asia and parts of South America, where net sales are primarily denominated in British pounds, Euros or the United States dollar. mately 140 countries throughout the world. The majori a a 36 We manage our transactional foreff ign currency exposure by hedging foreign currency cash flowff commitments arising from the anticipated settlement of receivablea Where naturally offsetting currency positions do not occur, we hedge certain, but not all, of our exposures through the use of foreign currency contracts. Our translation exposure resulting from translating the financial statements of foreign subsidiaries into United States dollars may be partially hedged fromff financing local operations with local borrowings. Our hedging policy prohibits use of foreign currency contracts forff trading purposes. time to time. When practical, this translation impact is reduced by s and payables and fromff futurett ff speculative forecasts and purchases and sales. The total notional value of our foreign currency instruments was $3,681.9 million and $3,722.4 million as of December 31, 2021 and 2020, respectively, inclusive of both those instruments that are designated and qualified for hedge accounting and non-designated derivative instruments. We enter into cash flowff of assets or liabilities or forecasted transactions caused foreign currency contracts to economically hedge receivables and payables on our balance sheets that are denominated in foreign currencies other than the functional currency. In addition, we use derivative and non-derivative instruments to hedge a portion of our net investment in foreign operations against adverse movements in exchange rates. See Note 11 of our Consolidated Financial Statements for further information about our hedging transactions and derivative instruments. by fluctuations in foreign currency exchange rates, and we enter into hedges to minimize the variability in cash flows a Assuming a 10% change relative to the currency of the hedge contracts, the fair value of the foreign currency instruments could be negatively impacted by approxi instruments are primarily entered into forff losses and gains on the underlying firm commitment or forecasted transaction. a mately $52.6 million as of December 31, 2021. Due to the facff t that these hedging purposes, the gains or losses on the contracts would largely be offset by Interest Rate Risk Our interest expense is, in part, sensitive to the general level of interest rates. We manage our exposure to interest rate risk through our mix of floff ating rate and fixed rate debt. From time to time, we enter into interest rate swap aa manage our exposure to interest rate fluff ctuat information. ions. See Notes 7 and 11 of our Consolidated Financial Statements for additional greements to tt Based on our floating rate debt and our accounts receivablea sales faci ff lities outstanding at December 31, 2021, a 10% increase in interest rates, would have increased, collectively, “Interest expense, net” and “Other expense, net” for the year ended December 31, 2021 by approximately $2.1 million. Recent Accounting Pronouncements See Note 1 of our Consolidated Financial Statements for information regarding recent accounting pronouncements and their impact to our consolidated results of operations and financial position. 37 Critical Accounting Estimates We prepare our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles. In the preparation of these financial statements, we make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant accounting policies followed in the preparation of the financial statements are detailed in Note 1 of our Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data.” We believe that our application of the policies discussed below involves significant levels of judgment, estimates and complexity. Due to the levels of judgment, complexity and period of time over which many of these items are resolved, actual results could differ from those estimated at the time of preparation of the financial statements. Adjustments to these estimates would impacm t our financial position and future results of operations. ff Discount and Salesll Incentive Allowanc ll es We provide various volume bonus and sales incentive programs with respect to our products. These sales incentive rr (which is generally at the time of retail sale), at s are made on a product or product-line basis and are monitored for adequacy and revised at least programs include reductions in invoice prices, reductions in retail financing rates, dealer commissions and dealer incentive allowances. In most cases, incentive programs are established and communicated to our dealers on a quarterly basis. The incentives are paid either at the time of the cash settlement of the receivablea the time of retail finff ancing, at the time of warrar nty registration, or at a subsequent time based on dealer purchase volumes. The incentive programs are product line specific and generally do not vary by dealer. The cost of sales incentives associated with dealer commissions and dealer incentive allowances is estimated based upon the terms of the programs and historical experience, is based on a percentage of the sales price, and estimates for sales incentives are made and recorded at the time of sale for expected incentive programs using the expected value method. These estimates are reassessed each reporting period and are revised in the event of subsequent modifications to incentive programs, as they are communicated to dealers. The related provisions and accrual quarterly in the event of subsequent modifications to the programs. Interest rate subsidy payments, which are a reduction in retail finff ancing rates, are recorded in the same manner as dealer commissions and dealer incentive allowances. Volume discounts are estimated and recognized based on historical experience, and related reserves are monitored and adjuste actual dealer purchase volumes and the dealers’ progress towards achieving specified cumulative target levels. Estimates of these incentives are based on the terms of the programs and historical experience. All incentive programs are recorded and presented as a reduction of revenue, due to the facff consideration provided. In the United States and Canada, reserves for incentive programs related to accounts receivable not sold to our U.S. and Canadian finaff Balance Sheets due to the fact that the incentives are paid through a reductd Globally, reserves for incentive programs that will be paid in cash or credit memos, as is the case with most of our volume discount programs, as well as sales incentives associated with accounts receivable sold to our finance joint ventures, are recorded within “Accrued expenses” within our Consolidated Balance Sheets. nce joint ventures are recorded as “accounts receivable allowances” within our Consolidated ion of futuret t that we do not receive a distinct good or service in exchange for the . cash settlement of the receivablea d based on d At December 31, 2021, we had recorded an allowance for discounts and sales incentives of approximately $610.3 million that will be paid either through a reduction of future cash settlements of receivablea to our dealers or through reductions in retail financing rates paid to our finance joint ventures. If we were to allow an additional 1% of sales incentives and discounts at the time of retail sale for those sales subject to such discount programs, our reserve would increase by approximately $22.9 million as of December 31, 2021. Conversely, if we were to decrease our sales incentives and discounts by 1% at the time of retail sale, our reserve would decrease by approximately $22.9 million as of December 31, 2021. s and through credit memos Deferred Income Taxes and Uncertaintt Income Tax Positions We recorded an income tax provision of $108.4 million in 2021 compared to $187.7 million in 2020 and $180.8 million in 2019. Our tax provision and effective tax rate are impacted by the differing tax rates of the various tax jurisdictions in which we operate, permanent differences forff financial accounting and income tax purposes, losses in jurisdictions where no income tax benefit is recorded and provisions for unrecognized income tax benefits related to uncertain tax positions. items treated differently forff As of December 31, 2021, our income tax provision included the benefit of reversals of approximately $67.8 million and $55.6 million related to valuation allowances previously establia United States and Brazil, respectively. Improveme shed against the Company’s net deferred tax assets in the nts in income in the United States and Brazil during 2020 and 2021, along m 38 ff projected income levels, supported the reversal of both of the valuation allowances. In addition, we d tax assets in the United States and certain foreign with updated future maintain a valuation allowance to reserve a portion of our net deferre jurisdictions. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets may not be realized. We assessed the likelihood that our deferred tax assets should be recovered from estimated future taxable income and the current economic climate, as well as available tax planning strategies and determined that the adjustment to the valuation allowance was appropriate. We believe it is more likely than not that we should be able to realize our remaining net deferre d tax assets, net of the valuation allowance, in futff urett years. ff ff ff At December 31, 2021 and 2020, we had gross deferred tax assets of $291.8 million and $360.9 million, respectively, including $69.5 million and $62.9 million, respectively, related to net operating loss carryforwards. At December 31, 2021 and 2020, we had total valuation allowances as an offset to our gross deferred tax assets of $47.4 million and $181.0 million, respectively. These valuation allowances are held against deferred tax assets (including net operating loss carryforwards) in the United States and certain forei depends on generating sufficient taxable income in future likely than not that the remaining net deferre gn jurisdictions. Realization of the remaining deferred tax assets as of December 31, 2021 periods, net of reversing deferred tax liabilities. We believe it is more d tax assets should be ablea to be realized. ff ff ff We recognize income tax benefits from uncertain tax positions only when there is a more than 50% likelihood that the tax positions will be sustained upon examination by the taxing authorities based on the technical merits of the positions. As of December 31, 2021 and 2020, we had approxi tax benefits, all of which would impact our effective tax rate if recognized. As of December 31, 2021 and 2020, we had approximately $40.1 million and $57.1 million, respectively, of current accruedrr taxes related to uncertain income tax positions connected with ongoing tax audits in various jurisdictions that we expect to settle or pay in the next 12 months. We recognize interest and penalties related to uncertain income tax positions in income tax expense. As of December 31, 2021 and 2020, we had accruedrr respectively. See Note 6 of our Consolidated Financial Statements for further discussion of our uncertain income tax positions. mately $246.4 million and $227.9 million, respectively, of gross unrecognized interest and penalties related to unrecognized tax benefits of approxim ately $32.7 million and $39.4 million, a a Pensions We sponsor defined benefit pension plans covering certain employees, principally in the United Kingdom, the United States, Germany, Switzerland, Finland, France, Norway and Argentina. Our primary plans cover certain employees in the United States and the United Kingdom. In the United States, we sponsor a funded, ff qualified defined benefit pension plan forff our salaried employees, as well as ff d qualified defined benefit pension plan for our hourly employees. Both plans are closed to new entrants and a separate funde frozen, and we fund at least the minimum contributions required under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code to both plans. In addition, we maintain an unfunded, nonqualified defined benefit pension plan for certain senior executives, which is our Executive Nonqualified Pension Plan (“ENPP”). The ENPP also is closed to new entrants, and, during 2021, we amended the ENPP to freeze future salary benefit accruals as of December 31, 2024 and to eliminate a lifetime annuity featurett for participants reaching age 65 subsequent to December 31, 2022. In the United Kingdom, we sponsor a funded defined benefit pension plan that provides an annuity benefit based on participants’ final average earnings and service. Participation in this plan is limited to certain older, longer service employees and existing retirees. This plan is closed to new participants. ff See Note 8 of our Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” for additional information regarding costs and assumptim ons for employee retirement benefits. Nature of Estimates Required. The measurement date for all of our benefit plans is December 31. The measurement of our pension obligations, costs and liabilities is dependent on a variety of assumptions provided by management and used by our actuaries. These assumptions include estimates of the present value of projected future participants, taking into consideration the likelihood of potential future events such as salary i experience. These assumptions may have an effect on the amount and timing of future pension payments to all plan ncreases and demographic contributions. ff rr ff 39 limited to, the folff Assumptions and Approach lowing key factors: pp ff Used. The assumptions used in developing the required estimates include, but are not • Discount rates • Salaryrr growth • Retirement rates and ages Inflation • • Expected returnt • Mortality rates on plan assets For the years ended December 31, 2021, 2020 and 2019, we used a globally consistent methodology to set the discount rate in the countries where our largest benefit obligations exist. In the United States, the United Kingdom and the Euro Zone, we constructed a hypothetical bond portfolio of high-quality corporate bonds and then appl ied the cash flows of our benefit plans to those bond yields to derive a discount rate. The bond portfolio and plan-specific cash flows vary by country, but the methodology in which the portfolio is constructed is consistent. In the United States, the bond portfolio is large enough to result in taking a “settlement approach” to derive the discount rate, in which high-quality corporate bonds are assumed to be purchased and the resulting coupon payments and maturities are used to satisfy our U.S. pension plans’ projected benefit payments. In the United Kingdom and the Euro Zone, the discount rate is derived using a “yield curve approach,” in which an annual period is developed to discount each future benefit individual spot rate, or zero coupon bond yield, for each futurett payments. We use a spot yield curve to determine the discount payment and, thereby, determine the present value of all future rate appli in the United Kingdom to measure the U.K. pension plan’s service cost and interest cost. Under the settlement a and yield curve approaches, the discount rate is set to equal the single discount rate that produces the same present value of all future payments. cablea a ff • • • • • • The other key assumptim ons and methods were set as follows: Our inflation assumption is based on an evaluation of external market indicators. The salary growth assumptions reflect our long-term actual experience, the near-term outlook and assumed inflation. The expected returntt the views of investment managers, and reflects a projection of the expected arithmetic returns over ten years. on plan asset assumptions reflects asset allocations, investment strategy, historical experience and Determination of retirement rates and ages as well as termination rates, based on actual plan experience, actuarial standards of practice and the manner in which our defined benefit plans are being administered. The mortality rates for the U.K. defined benefit pension plan was updated during 2021 to reflect the latest expected improvements in the life expectancy of the plan participants. The mortality rates for the U.S. defined benefit pension plans were also updated during 2021 to reflect the Society of Actuari The fair value of assets used to determine the expected returntt asset gains and losses. on assets does not reflect any delayed recognition of es’ most recent findings on the topic of mortality. tt The effecff therefore, generally affecff t our recognized expense in such periods. ts of actual results differing from our assumptim ons are accumulated and amortized over futurett periods and, Our U.S. and U.K. defined benefit pension plans, including our ENPP, comprised approximately 85% of our consolidated projected benefit obligation as of December 31, 2021. The effects of a 25 basis point change in certain actuarial assumptim ons on the 2022 net annual pension and ENPP costs and related benefit obligations as of December 31, 2021 would be as follows: Year-end Benefit Obligation 25 basis point 25 basis point decrease increase 2022 Net Annual Pension Cost 25 basis point 25 basis point decrease increase Discount rate: U.S. qualified defined benefit pension plans and ENPP .. $ U.K. defined benefit pension plans .................................. (3.6) $ (22.2) $ 3.8 23.7 (0.2) $ (0.2) 0.2 0.2 Long-term rate of return on plan assets: U.S. qualified defined benefit pension plans and ENPP .......................................................... $ U.K. defined benefit pension plans .......................................................................................... (0.1) $ (1.8) 0.1 1.8 2022 Net Annual Pension Cost 25 basis point 25 basis point decrease increase 40 tt asset returns, discount rate changes, currency exchange rate fluctuations, actual Unrecognized actuarial net losses related to our defined benefit pension plans and ENPP were $291.7 million as of December 31, 2021 compared to $385.1 million as of December 31, 2020. The decrease in unrecognized net actuarial losses between years primarily resulted from higher discount rates at December 31, 2021 comparem a result of the amendment to our ENPP as previously discussed. The unrecognized net actuarial losses will be impacted in future periods by actual experience and certain other facff of the greater of the plan’s liabila basis over the periods discussed as foll ows. For our U.S. salaried, U.S. hourly and U.K. defined benefit pension plans, the population covered is predominantly inactive participants, and losses related to those plans, to the extent they exceed the gain/loss corridor, will be amortized over the average remaining lives of those participants while covered by the respective plan. For our ENPP, the population is predominantly active participants, and losses related to the plan will be amortized over the average future working lifetime of the active participants expected to receive benefits. As of December 31, 2021, the average amortization periods were as follows: tors. For some of our defined benefit pension plans, these losses, to the extent they exceed 10% ities or the fair value of assets (“the gain/loss corridor”), will be amortized on a straight-line d to December 31, 2020, as well as demographic ff tt Average amortization period of losses related to defined benefit pension plans ........ 7 years ENPP U.S. Plans 14 years U.K. Plan 19 years Unrecognized prior service cost related to our defined benefit pension plans was $7.1 million as of December 31, 2021 compared to $20.1 million as of December 31, 2020. The decrease in the unrecognized prior service cost between years is due primarily to the amortization of unrecognized prior service cost related to prior plan amendments, as well as the amendment in 2021 previously discussed related to our ENPP. The 2021 amendment resulted in both a curtailment gain and a net prior service credit. As of December 31, 2021, our unfunded or underfunded obligations related to our defined benefit pension plans and ENPP were approximately $89.2 million, primarily related to our defined benefit pension plans in Europe and the United States. In 2021, we contributed approximately $36.0 million towards those obligations, and we expect to fund $36.3 million in 2022. Future funding is dependent upon complim ance with local laws and regulations and changes to those laws and regulations in the future, as well as the generation of operating cash flows in the future. We currently have an agreement in place with the trustees of the U.K. defined benefit plan that obligates us to fund (or approximately $21.1 million) towards that obligation through December 2022. The fundi the current funded statustt and could change in the future as discount rates, local laws and regulations, and other factors change. approximately £15.6 million per year ng arrangement is based upon approximately ff ff ff See Note 8 of our Consolidated Financial Statements for more information regarding the investment strategy and concentration of risk. Goodwill,ll Other Intangible tt Assets and Long-Lived Assets We test goodwill for impairment, at the reporting unit level, annually and when events or circumstances indicate that fair value of a reporting unit may be below its carrying value. A reporting unit is an operating segment or one level below an operating segment, for example, a component. We combine and aggregate two or more components of an operating segment as a single reporting unit if the components have similar economic characteristics. Our reportablea units. segments are not our reporting Goodwill is evaluated forff impairment annually as of October 1 using a qualitative assessment or a quantitative one- step assessment. If we elect to perform a qualitative assessment and determine the faiff r value of our reporting units more likely than not exceeds their carrying value of net assets, no further evaluation is necessary. For reporting units where we perform a the fair value of each reporting unit to its respective carrying value of net assets, one-step quantitative assessment, we comparem including goodwill. If the fair value of the reporting unit exceeds its carrying value of net assets, the goodwill is not considered impaired. If the carrying value of net assets is higher than the fair value of the reporting unit, an impairment charge is recorded in the amount by which the carrying value exceeds the reporting unit’s fair value. We utilize a combination of valuation techniques, including an income approac a h, whereby the present value of future expected operating net cash flows are calculated using a discount rate; and a guideline public company method, whereby EBITDA and revenue multiples are derived from the market prices of stocks of companim similar lines of business and that are actively traded on a freff e and open market. Assumptions included in these approaches can positively and negatively impact the results of our assessments such as interest rates, sales and margin growth rates, tax rates, cost structures, market share, pricing, capital expenditures, working capita al levels and the use of control premiums. For all es that are engaged in the same or tt 41 reporting units, a 10 percent decrease in the estimated faiff of our annual measurement date on October 1, 2021. r value would have had no effect on the carrying value of goodwill as We review our long-lived assets, which include intangible assets subjecb t to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The evaluation for recoverabila ity is performed at a level where independent cash flows may be attributed to either an asset or asset group. If we cash determine that the carrying amount of an asset or asset group is not recoverablea flows of the asset or asset group, an impaim rment loss is recorded equal to the excess of the carrying amounts over the estimated fair value of the long-lived assets. Estimates of future cash flows are based on many factors, including current operating results, expected market trends and competitive influences. We also evaluate the amortization periods assigned to our intangible assets to determine whether events or changes in circumstances warrant revised estimates of useful lives. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value, less estimated costs to sell. based on the expected undiscounted futurett ff We make various assumptim ons, including assumptions regarding future cash flows, market multiples, growth rates and discount rates, in our assessments of the impairment of goodwill, other indefinite-lived intangible assets and long-lived assets. The assumptions about futurett reporting unit or related to the long-lived assets. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the reporting unit or long-lived assets. These assumptions require significant judgments on our part, and the conclusions that we reach could vary significantly based upon these judgments. cash flows and growth rates are based on the current and long-term business plans of the The results of our goodwill and long-lived assets impaim rment analyses conducted as of October 1, 2021 indicated that no indicators of impaim rment existed and no reduction in the carrying amount of goodwill and long-lived assets was required. The COVID-19 pandemic has adversely impacted the global economy as a whole. Based on macroeconomic conditions throughout 2020, we assessed our goodwill and other intangible assets for indications of impairment as of March 31, 2020, June 30, 2020 and September 30, 2020. As of June 30, 2020, we concluded there were indicators of impairment during the three months ended June 30, 2020 related to one of our smaller reporting units, which was a 50%-owned tillage and seeding equipment joint venture. We consolidated the reporting unit as we were determined to be the primary beneficiary of the joint venture. Deteriorating market conditions for the products the joint venture sold were negatively impacted by the COVID-19 pandemic in the second quarter of 2020, greater than initially expected. As a result, updat ed strategic reviews with revised forecasts indicated an impaim rment of the entire goodwill balance of this reporting unit was necessary as of June 30, 2020. During the three months ended June 30, 2020, an impairment charge of approximately $20.0 million was recorded as “Goodwill impairment charge” within our Consolidated Statements of Operations, with an offsetting benefit of approxim The joint venture was sold during ately $10.0 million included within “Net (income) loss attributable to noncontrolling interests.” 2021. d u a The results of our goodwill and long-lived assets impaim rment analyses conducted as of October 1, 2020 indicated that no other indicators of impaim rment existed and no reduction in the carrying amount of goodwill and long-lived assets was required related to our other reporting units. Our goodwill impairment analysis conducted as of October 1, 2019 indicated that the carrying rr value of the net assets of our grain storage and protein production systems business in Europe/Middle East was in excess of the fair value of the reporting unit, and therefore, we recorded a non-cash impairment charge of approximately $173.6 million within “Impairment charges” in our Consolidated Statements of Operations. This impairment charge was a substantial portion of the reporting unit’s goodwill balance. During the three months ended December 31, 2019, we also recorded a non-cash impairment charge of approximately $3.0 million within “Impairment charges” in our Consolidated Statements of Operations. The impairment charge related to certain long-lived intangible assets associated with our grain storage and protein production systems operations within North America dued to the discontinuation of a certain brand name and related products and customers. Numerous facts and circumstances are considered when evaluating the carrying amount of our goodwill. The fair value of a reporting unit is impacm ted by the reporting unit’s expected financial performance, which is dependent upon the agricultural t industry and other facff general economy, increases in farff m input costs, weather conditions, lower commodity and protein prices and changes in the availability of credit. The estimated fair reasonableness by reviewing a variety of indicators evaluated over a reasonable period of time. value of the individual reporting units is assessed forff industry, including but not limited to, declines in the tors that could adversely affecff t the agricultural ff t 42 As of December 31, 2021, we had approximately $1,280.8 million of goodwill. While our annual impairment testing in 2021 supported the carrying amount of this goodwill, we may be required to re-evaluate the carrying amount in future periods, thus utilizing different assumptim ons that reflect the then current market conditions and expectations, and, therefore, we could conclude that an impairment has occurred. Recoverable Indirect Taxes Our Brazilian operations incur value added taxes (“VAT”) on certain purchases of raw materials, components and services. These taxes are accumulated as tax credits and create assets that are reduced by the VAT collected from our sales in the Brazilian market. We regularly assesses the recoverability of these tax credits, and establishes reserves when necessary against them, through analyses that include, amongst others, the history of realization, the transfer of tax credits to third parties as authorized by the government, anticipated changes in the supply chain and the future expectation of tax debits fromff ongoing operations. We believe that these tax credits, net of established reserves are realizable. Our assessment of realization of these tax assets involves significant judgments on our part, and the conclusions that we reach could vary significantly based upon these judgments. We recorded approxi reserves, as of December 31, 2021 and 2020. mately $114.4 million and $91.2 million, respectively, of VAT tax credits, net of our a Item 7A. Quantittt ati tt ve and Qualitati tt ve Disclosures About Market Risk The Quantitative and Qualitative Disclosures about Market Risk information required by this Item set forth under the ons “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Foreign Currency Risk captia Management” and “Interest Rate Risk” under Item 7 of this Form 10-K are incorporated herein by reference. 43 Item 8. Financial ii Statemtt ents and Supplementarytt Data The following Consolidated Financial Statements of AGCO and its subsidiaries forff each of the years in the three-year period ended December 31, 2021 are included in this Item: Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 Consolidated Balance Sheets as of December 31, 2021 and 2020 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Cash Flows forff the years ended December 31, 2021, 2020 and 2019 Notes to Consolidated Financial Statements Page 45 48 49 50 51 52 53 44 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors AGCO Corporation: Opinion on the Consolidated FinFF ancial Statements We have audited the accompanying consolidated balance sheets of AGCO Corporation and subsidiaries (the m and cash flows for each of the years in the three-year period ended December 31, 2021, and the related as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, Company) stockholders’ equity,t notes and financial statement schedule II — Valuation and Qualifying Accounts (collectively, the consolidated financial statements). In our opinion, the consolidated finaff the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. ncial statements present fairly, in all material respects, the financial position of for each of the years in the ff We also have audited, in accordance with the standards of the Publiu c Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over finaff establia shed in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over finaff ncial reporting as of December 31, 2021, based on criteria ncial reporting. Basis for Opinion These consolidated finaff ncial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rulrr es and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and to error or fraud. Our audits included performing procedures to assess the risks of material perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether dued misstatement of the consolidated financial statements, whether dued those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated finaff ncial statements. We believe that our audits provide a reasonable basis for our opinion. to error or fraud, and performing procedures that respond to Critical Audit MatMM ters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated finaff ncial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Assessment of the reserve and allowance for volume discount and sales incentive programs in certain geographic regie ons As discussed in Note 1 to the consolidated finaff sales incentive programs with respect to its products. As of December 31, 2021, the Company had accruedrr and sales incentives of approxim million. Sales incentive programs include reductions in invoice prices, reductions in retail finff ancial rates, dealer commissions and dealer incentive allowances. Volume discounts and sales incentives are recorded at the time of sale as a reduction of revenue using the expected value method. ately $602.3 million and an allowance for sales incentive discounts of approximately $8.0 ncial statements, the Company provides various volume discount and volume discounts a 45 We identified the assessment of the reserve and allowance for volume discount and sales incentive programs in certain geographic regions as a critical audit matter. Auditor judgment was required to evaluate certain assumptim ons which had a higher a degree of measurement uncertainty. Significant assumptions included estimated incentive rates, which were the estimated rates at which programs were applied to eligible products, and estimated achievement by dealers of specified cumulative targeted purchase levels. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s reserve and allowance forff discount and sales incentive process, including controls related to the development of the significant assumptions. For certain volume discount and sales incentive programs, we comparem d the program details to dealer communications and the significant assumptim ons to historical results for similar programs. We assessed the Company’s historical ability to estimate significant assumptim ons by comparing the prior year estimated amounts to actual discounts and sales incentives realized by the customers. We evaluated the significant assumptions by comparing them to actual results, including the results of transactions occurring after year-end. volume Assessment of gross unrecognizedii income tax benefie ts in certain jurisdictions As discussed in Note 6 to the consolidated finaff ncial statements, the Company has recorded a liabia lity for gross unrecognized income tax benefits of approximately $246.4 million as of December 31, 2021. The Company recognizes income tax benefits from uncertain tax positions only when there is a more than 50% likelihood that the tax positions will be sustained upon examination by the taxing authorities based on the technical merits of the positions. We identified the assessment of gross unrecognized income tax benefits in certain jurisdictions as a critical audit matter. Complex auditor judgment and specialized skills were required in evaluating the Company’s interpretation and application of tax laws and the estimate of the amount of tax benefits expected to be realized. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s gross unrecognized income tax benefit process. This included controls related to the Company’s consideration of information that could affecff measurement of income tax benefits fromff involved tax professionals with specialized skills and knowledge, who assisted in: uncertain tax positions and the interpretation and application of tax laws. We t the recognition or • • evaluating the Company’s interpretation and application of tax laws developing an expectation of the Company’s tax positions and comparing the results to the Company’s assessment Assessment of goodwill impairment for certain report e ing units As discussed in Note 1 to the consolidated finaff ncial statements, the Company evaluates goodwill for impairment annually as of October 1 and when events or circumstances indicate that faiff value. As of December 31, 2021, the Company has $1,280.8 million of goodwill. The Companym impairment analyses using either a qualitative or a quantitative assessment. The faiff based on a combination of valuation techniques, including an income approach and guideline public company method. Based on the Company’s analysis, the Company determined that the fair values of certain reporting units were in excess of the carrying values and therefore did not record any goodwill impairment for these reporting units. r value of a reporting unit may be below its carrying r values of the reporting units are determined performs its goodwill We identified the assessment of goodwill impairment for certain reporting units as a critical audit matter because a high degree of subjective auditor judgment was required to evaluate the fair value of the reporting units. The faiff used the following significant assumptions for which there was limited observablea market information: forecasted revenue growth and discount rates. The determined fair values were sensitive to changes in these significant assumptions. r value model 46 The folff lowing are the primary procedures we performed to address this critical audit matter. We evaluated the design goodwill impairment process, including and tested the operating effectiveness of certain internal controls over the Company’s controls over the significant assumptim ons. We performed sensitivity analyses over the significant assumptions to assess their impact on the Company’s fair value determination. We compared the Company’s valuation model against underlying business strategies and growth plans. We compared the Company’s historical revenue forecasts to actual results to assess the Company’s ability t cast. In addition, we involved valuation professionals with o foreff specialized skills and knowledge who assisted in: forecasted revenue growth used in the m m t • • comparing the Company’s discount rate inputs to publicly available information for comparablea selected discount rate entities to test the recomputing the estimate of fair value for the reporting units using the Company’s significant assumptions and comparing the result to the Company’s fair value estimate /s/ KPMG LLP We have served as the Company’s auditor since 2002. Atlanta, Georgia February 25, 2022 47 AGCO CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Years Ended December 31, 2020 2019 2021 Net sales ...................................................................................................................... $ 11,138.3 8,566.0 Cost of goods sold ....................................................................................................... 2,572.3 Gross profit ............................................................................................................... $ 9,149.7 7,092.2 2,057.5 $ 9,041.4 7,057.1 1,984.3 Operating expenses: Selling, general and administrative expenses ........................................................... Engineering expenses................................................................................................ Amortization of intangibles ...................................................................................... Impairment charges................................................................................................... Restructuring expenses ............................................................................................. Bad debt expense ...................................................................................................... operations............................................................................................... Income fromff Interest expense, net.................................................................................................. Other expense, net..................................................................................................... income taxes and equity in net earnings of affiliates .......................... Income beforeff Income tax provision................................................................................................. equity in net earnings of affiliates ....................................................... Income beforeff Equity in net earnings of affilff iates ............................................................................ Net income .................................................................................................................. to noncontrolling interests .......................................... Net (income) loss attributablea Net income attributablea to AGCO Corporation and subsidiaries................................ $ Net income per common share attributablea to AGCO Corporation and subsidiaries: Basic ......................................................................................................................... $ Diluted ...................................................................................................................... $ Cash dividends declared and paid per common share................................................. $ Weighted average number of common and common equivalent shares outstanding: Basic ......................................................................................................................... Diluted ...................................................................................................................... 1,088.2 405.8 61.1 — 15.3 0.5 1,001.4 6.7 50.4 944.3 108.4 835.9 65.6 901.5 (4.5) 897.0 11.93 11.85 4.74 75.2 75.7 $ $ $ $ See accompanying notes to Consolidated Financial Statements. 1,001.5 342.6 59.5 20.0 19.7 1,040.3 343.4 61.1 176.6 9.0 14.5 599.7 15.0 22.7 562.0 187.7 374.3 45.5 419.8 7.3 427.1 5.69 5.65 0.63 75.0 75.6 $ $ $ $ 5.8 348.1 19.9 67.1 261.1 180.8 80.3 42.5 122.8 2.4 125.2 1.64 1.63 0.63 76.2 77.0 48 AGCO CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) Years Ended December 31, 2020 2019 2021 Net income .................................................................................................................. $ Other comprehe nsive gain (loss), net of reclassification adjust d ments: m 901.5 $ 419.8 $ 122.8 (4.7) 0.6 — (23.3) 1.6 11.8 (2.6) (0.1) (20.6) (37.3) 85.5 (0.1) 85.4 Defined benefit pension plans, net of taxes: Prior service credit (cost) arising during the year.............................................. to settlement................................................................ Net loss recognized dued to curtailment.............................................................. Net loss recognized dued Net actuarial gain (loss) arising during the year ................................................ Amortization of prior service cost included in net periodic pension cost.......... al losses included in net periodic pension cost....... Amortization of net actuari tt Derivative adjust d ments: Net changes in faiff Net gains reclassified from accumulated other comprehensive loss into r value of derivatives............................................................. income........................................................................................................... d ments............................................................... Foreign currency translation adjust Other comprehe m nsive gain (loss), net of reclassification adjust d ments ........................ Comprehe Comprehe m m nsive income ............................................................................................... to noncontrolling interests ....................... nsive (income) loss attributablea 10.0 0.1 6.3 53.6 0.6 12.3 5.1 (3.0) (45.5) 39.5 941.0 (4.1) 0.3 0.3 — (32.7) 2.1 13.1 5.1 (6.3) (201.8) (219.9) 199.9 11.6 Comprehe m nsive income attributablea to AGCO Corporation and subsidiaries............. $ 936.9 $ 211.5 $ See accompanyi m ng notes to Consolidated Financial Statements. 49 AGCO CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) December 31, 2021 December 31, 2020 ASSETS Current Assets: Cash and cash equivalents........................................................................................................ $ Accounts and notes receivable, net .......................................................................................... Inventories, net ......................................................................................................................... Other current assets .................................................................................................................. Total current assets .............................................................................................................. Property, plant and equipment, net ............................................................................................. Right-of-use lease assets ............................................................................................................. Investments in affiliates .............................................................................................................. Deferred tax assets ...................................................................................................................... Other assets ................................................................................................................................. Intangible assets, net ................................................................................................................... Goodwill ..................................................................................................................................... Total assets.................................................................................................................................. $ LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Current portion of long-term debt ............................................................................................ $ Short term borrowings.............................................................................................................. Accounts payable ..................................................................................................................... Accrued expenses..................................................................................................................... Other current liabilities............................................................................................................. Total current liabilities......................................................................................................... Long-term debt, less current portion and debt issuance costs..................................................... Operating lease liabilities............................................................................................................ Pensions and postretirement health care benefits ....................................................................... Deferred tax liabila ities................................................................................................................. Other noncurrent liabilities ......................................................................................................... Total liabilities ..................................................................................................................... Commitments and contingencies (Note 12) Stockholders’ Equity: AGCO Corporation stockholders’ equity:t Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2021 and 2020............................................................................................... Common stock; $0.01 par value, 150,000,000 shares authorized, 74,441,312 and 74,962,231 shares issued and outstanding at December 31, 2021 and 2020, respectively... Additional paid-in capital......................................................................................................... Retained earnings ..................................................................................................................... Accumulated other comprehensive loss ................................................................................... ion stockholders’ equity................................................................... Noncontrolling interests ........................................................................................................... Total stockholders’ equity ................................................................................................... Total liabilities and stockholders’ equity .................................................................................... $ Total AGCO Corporat rr See accompanying notes to Consolidated Financial Statements. 50 $ $ $ 889.1 991.5 2,593.7 539.8 5,014.1 1,464.8 154.1 413.5 169.3 293.3 392.2 1,280.8 9,182.1 2.1 90.8 1,078.3 2,062.2 221.2 3,454.6 1,411.2 115.5 209.0 116.9 431.1 5,738.3 1,119.1 856.0 1,974.4 418.9 4,368.4 1,508.5 165.1 442.7 77.6 179.8 455.6 1,306.5 8,504.2 325.9 33.8 855.1 1,916.7 231.3 3,362.8 1,256.7 125.9 253.4 112.4 375.0 5,486.2 — — 0.7 3.9 5,182.2 (1,770.9) 3,415.9 27.9 3,443.8 9,182.1 $ 0.8 30.9 4,759.1 (1,810.8) 2,980.0 38.0 3,018.0 8,504.2 AGCO CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions, except share amounts) Balance, December 31, 2018................................................................................. 76,536,755 $ 0.8 $ 10.2 $ 4,477.3 $ (282.4) $ (1,274.4) $ 1.4 $ (1,555.4) $ 60.6 $ 2,993.5 Common Stock Shares Amount Additional Paid-in Capital Retained Earnings Defined Benefitff Pension Plans Cumulative Translation Adjustment Deferred Gains (Losses) on Derivatives Accumulated Other Comprehensive Loss Noncontrolling Interests Total Stockholders’ Equity Accumulated Other Comprehensive Loss Net income (loss) .............................................................................................. Payment of dividends to shareholders .............................................................. Issuance of restricted stock ............................................................................... Issuance of stock awards................................................................................... SSARs exercised............................................................................................... Stock compensation .......................................................................................... Investment by noncontrolling interests............................................................. Distribution to noncontrolling interest.............................................................. Changes in noncontrolling interest ................................................................... — — 14,105 608,444 106,514 — — — — Purchases and retirement of common stock...................................................... (1,794,256) Definff ed benefit pension plans, net of taxes: Prior service cost arising during year............................................................. Net loss recognized due to settlement............................................................ Net actuarial loss arising during year............................................................. Amortization of prior service cost included in net periodic pension cost...... Amortization of net actuarial losses included in net periodic pension cost... Deferred gains and losses on derivatives, net ................................................... Change in cumulative translation adjustment ................................................... — — — — — — — — — — — — — — — — — — — — — — — — Balance, December 31, 2019................................................................................. 75,471,562 0.8 Net income (loss) .............................................................................................. Payment of dividends to shareholders .............................................................. Issuance of restricted stock ............................................................................... Issuance of stock awards................................................................................... SSARs exercised............................................................................................... Stock compensation .......................................................................................... Investment by noncontrolling interests............................................................. Distribution to noncontrolling interest.............................................................. Changes in noncontrolling interest ................................................................... — — 19,862 374,212 66,736 — — — — Purchases and retirement of common stock...................................................... (970,141) Defined benefit pension plans, net of taxes: Prior service rr credit arising during year.......................................................... Net loss recognized due to settlement............................................................ Net actuarial loss arising during year............................................................. Amortization of prior service cost included in net periodic pension cost...... Amortization of net actuarial losses included in net periodic pension cost... Deferred gains and losses on derivatives, net ................................................... Change in cumulative translation adjustment ................................................... — — — — — — — Balance, Decemberm 31, 2020................................................................................. 74,962,231 Net income ....................................................................................................... Payment of dividends to shareholders .............................................................. Issuance of restricted stock ............................................................................... Issuance of stock awards................................................................................... SSARs exercised............................................................................................... Stock compensation .......................................................................................... Distribution to noncontrolling interest.............................................................. Sale of noncontrolling interests ........................................................................ — — 8,912 362,034 60,339 — — — — — — — — — — — — — — — — — — — — 0.8 — — — — — — — — — — 1.0 (13.3) (3.1) 40.3 — — — 125.2 (48.0) — (9.7) (1.7) — — — — (30.4) (99.6) — — — — — — — 4.7 — — 1.1 (7.3) (4.1) 39.9 — — — — — — — — — — 427.1 (48.0) — (8.4) (0.1) (3.4) — — — (3.4) (51.6) — — — — — — — — — — — — — — — — 1.3 (29.5) (5.4) 26.1 — — 897.0 (358.5) — — — — — — Purchases and retirement of common stock...................................................... (952,204) (0.1) (19.5) (115.4) Definff ed benefit pension plans, net of taxes: Prior service rr credit arising during year.......................................................... Net loss recognized due to settlement............................................................ Net loss recognized due to curtailment.......................................................... Net actuarial gain arising during year............................................................ Amortization of prior service cost included in net periodic pension cost...... Amortization of net actuarial losses included in net periodic pension cost... Deferred gains and losses on derivatives, net ................................................... Change in cumulative translation adjustment ................................................... — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — (4.7) 0.6 (23.3) 1.6 11.8 — — — — — — — — — — — — — — — — — — (23.1) 4,443.5 (296.4) (1,297.5) — — — — — — — — — — 0.3 0.3 (32.7) 2.1 13.1 — — — — — — — — — — — 10.0 0.1 6.3 53.6 0.6 12.3 — — — — — — — — — — — — — — — — — — (197.5) (1,495.0) — — — — — — — — — — — — — — — — (45.1) 30.9 4,759.1 (313.3) — — — — — — — — — — — — — — — (2.7) — (1.3) — — — — — — — — — — — — — — — (1.2) — (2.5) — — — — — — — — — — — — — — — 2.1 — — — — — — — — — — — (4.7) 0.6 (23.3) 1.6 11.8 (2.7) (23.1) (1,595.2) — — — — — — — — — — 0.3 0.3 (32.7) 2.1 13.1 (1.2) (197.5) (1,810.8) — — — — — — — — — 10.0 0.1 6.3 53.6 0.6 12.3 2.1 (2.4) — — — — — 2.0 (0.4) (9.1) — — — — — — — 2.5 53.2 (7.3) — — — — — 0.2 (3.3) (0.5) — — — — — — — (4.3) 38.0 4.5 — — — — — (3.6) (10.6) — — — — — — — — 122.8 (48.0) 1.0 (23.0) (4.8) 40.3 2.0 (0.4) (9.1) (130.0) (4.7) 0.6 (23.3) 1.6 11.8 (2.7) (20.6) 2,907.0 419.8 (48.0) 1.1 (15.7) (4.2) 36.5 0.2 (3.3) (0.5) (55.0) 0.3 0.3 (32.7) 2.1 13.1 (1.2) (201.8) 3,018.0 901.5 (358.5) 1.3 (29.5) (5.4) 26.1 (3.6) (10.6) (135.0) 10.0 0.1 6.3 53.6 0.6 12.3 2.1 (45.1) (0.4) (45.5) Balance, Decemberm 31, 2021................................................................................. 74,441,312 $ 0.7 $ 3.9 $ 5,182.2 $ (230.4) $ (1,540.1) $ (0.4) $ (1,770.9) $ 27.9 $ 3,443.8 See accompanyi m ng notes to Consolidated Financial Statements. 51 AGCO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Years Ended December 31, 2020 2019 2021 901.5 $ 419.8 $ 122.8 Cash flows from operating activities: Net income................................................................................................................ $ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ......................................................................................................... Impairment charges .............................................................................................. Amortization of intangibles.................................................................................. Stock compensation expense................................................................................ iates, net of cash received ..................................... Equity in net earnings of affilff Deferred income tax (benefit) provision ............................................................. Other..................................................................................................................... Changes in operating assets and liabilities, net of effects from purchase of businesses: Accounts and notes receivable, net.................................................................. Inventories, net ................................................................................................ Other current and noncurrent assets ................................................................ Accounts payable............................................................................................. Accrued expenses ............................................................................................ Other current and noncurrent liabilities ........................................................... Total adjustments .......................................................................................... Net cash provided by operating activities ..................................................... Cash flows from investing activities: Purchases of property, plant and equipment............................................................. Proceeds from sale of property, plant and equipment .............................................. Purchase of businesses, net of cash acquired............................................................ Sale of, distributions from (investments in) unconsolidated affiliates, net .............. Other ......................................................................................................................... Net cash used in investing activities ............................................................. Cash flows from financing activities: 220.7 — 61.1 27.4 (1.9) (117.9) 20.5 (207.7) (762.6) (268.0) 292.2 241.2 253.7 (241.3) 660.2 (269.8) 6.3 (22.6) 13.1 (15.4) (288.4) Proceeds from indebtedness ..................................................................................... Repayments of indebtedness..................................................................................... Purchases and retirement of common stock ............................................................. Payment of dividends to stockholders ...................................................................... Payment of minimum tax withholdings on stock compensa tion .............................. Payment of debt issuance costs................................................................................. (Distributions to) investments by noncontrolling interests, net................................ Net cash (used in) provided by financing activities...................................... Effect of exchange rate changes on cash, cash equivalents and restricted cash.......... (Decrease) increase in cash, cash equivalents and restricted cash .............................. Cash, cash equivalents and restricted cash, beginning of year.................................... Cash, cash equivalents and restricted cash, end of year .............................................. $ m 2,497.6 (2,501.4) (135.0) (358.5) (34.9) (3.8) (3.5) (539.5) (62.3) (230.0) 1,119.1 889.1 $ See accompanyi m ng notes to Consolidated Financial Statements. 52 212.5 20.0 59.5 37.6 (43.7) 3.4 (7.4) (90.5) 119.7 (49.8) (59.1) 185.3 89.2 476.7 896.5 (269.9) 1.9 (2.8) 29.1 — (241.7) 1,195.6 (1,045.6) (55.0) (48.0) (19.8) (1.4) (3.1) 22.7 8.8 686.3 432.8 1,119.1 210.9 176.6 61.1 41.3 — 15.1 6.9 63.8 (216.3) (14.4) 35.7 114.5 77.9 573.1 695.9 (273.4) 4.9 — (3.1) — (271.6) 2,082.7 (2,191.1) (130.0) (48.0) (28.1) (0.5) 1.6 (313.4) (4.2) 106.7 326.1 432.8 $ AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Operations and Summary of Significant Accounting Policies Business AGCO Corporation and subsidiaries (“AGCO” or the “Company”) is a leading manufacturer and distributor of agricultural equipment and related replacement parts throughout the world. The Company sells a full range of agricultural equipment, including tractors, combines, hay tools, sprayers, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. The Company’s products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brand names including: Challenger®, Fendt®, GSI®, Massey Ferguson® and Valtra®. The Company distributes most of its products through a combination of approximately 3,200 independent dealers and distributors as well as the Company utilizes associates and licensees to provide a distribution channel for its products. In addition, the Company provides retail financing through its finaff CoöperatieveRabobank U.A., or “Rabobank.” nce joint ventures with Basis of Presentati tt on and Consolidationtt interest entity (“VIE”) if the Company determines it is the primary beneficiary. es, The Company’s Consolidated Financial Statements represent the consolidation of all wholly-owned companim ty-owned companies and joint ventures in which the Company has been determined to be the primary beneficiary. majori a The Company consolidates a variablea The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that potentially could be significant to the VIE. The Company also consolidates all entities that are not considered VIEs if it is determined that the Company has a controlling voting interest to direct the activities that most significantly impact the joint venturet or entity. The Company records investments in all other affilff influence. Other investments, including those representing an ownership interest of less than 20%, are recorded at cost. All significant intercompany balances and transactions have been eliminated in the Consolidated Financial Statements. es using the equity method of accounting when it has significant iate companim ff Use of Estimtt ates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates made by management primarily relate to accounts and notes receivablea and other identifiablea sales incentives, warranty obligations, product liability and workers’ compensation obligations, and pensions and postretirement benefits. income tax valuation allowances, uncertain tax positions, goodwill liabilities, principally relating to reserves for volume discounts and intangible assets, and certain accruedrr , inventories, deferred ff The Company cannot predict the ongoing impact of the COVID-19 pandemic dued to volatility in global economic and ethod investments, whose fair values may be negatively affecff ent charges in the future with respect to noncurrent assets such as goodwill and other intangible political environments, the cyclicality of market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rate and commodity and protein price volatility and availability ot Company’s net sales, production volumes, costs and overall finff ancial condition and available fundi required to record impairmm assets and equity mt The Company also may be required to write-down obsolete inventory due to decreased customer demand and sales orders. The Company monitors the collection of accounts receivablea the world. In the event economic conditions were to deteriorate, the Company and its finaff accounts receivablea negatively impacting the Company's results of operations and financial condition. The Company also regularly assesses its compm liance with debt covenants, cash flow hedging forecasts as comparem d to actual transactions, the fair value of pension assets, accounting for incentive and stock compensation accruals, revenue recognition and discount reserve setting as well as the realization of deferred tax assets in light of the COVID-19 pandemic. at expected levels, and the operating results of its finff ance joint ventures ncing, and their impact to the may be , as well as the operating results of its finff ance joint ventures nce joint ventures may not collect ted by the COVID-19 pandemic. may be negatively impacted, thus ng. The Companym f finaff ff tt tt around 53 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Foreigni Currency Translationtt The financial statements of the Company’s foreign subsidiaries are translated into United States currency in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters.” Assets and liabilities are translated to United States dollars at period-end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the period. Translation adjustmd ents are included in “Accumulated other comprehensive loss” in stockholders’ equity within the Company’s Consolidated Balance Sheets. Gains and losses, which result from foreign currency transactions, are included in the accompanying Consolidated Statements of Operations. The Company changed the func currency of its wholly-owned subsidia ry from the Argentinian peso to the U.S. dollar effective July 1, 2018. tional u ff Cash, Cash Equivalents ll and Restricted CashCC Cash and cash equivalents reported in the Consolidated Balance Sheets as of December 31, 2021, 2020 and 2019 and cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows for the years ended s (in millions): December 31, 2021, 2020 and 2019 are as follow ff Cash(1) ................................................................................ $ Cash equivalents(2) ............................................................. Restricted cash(3) ................................................................ December 31, 2021 833.0 December 31, 2020 1,022.0 $ December 31, 2019 412.3 $ 49.2 6.9 89.7 7.4 $ 889.1 $ 1,119.1 $ 17.3 3.2 432.8 ____________________________________ (1) Consisted primarily of cash on hand and bank deposits. (2) Consisted primarily of money market deposits, certificates of deposits and overnight investments. The Company considers all investments with an original maturity of three months or less to be cash equivalents. (3) Consisted primarily of cash in escrow or held as guarantee to support specific requirements. Accounts and Notes Receivablell Accounts and notes receivable arise from the sale of equipment and replacement parts to independent dealers, distributors or other customers. In the United States and Canada, amounts due from sales to dealers are immediately due upon a retail sale of the underlying equipment by the dealer with the exception of sales of grain storage and protein production systems as discussed further below. If not previously paid by the dealer in the United States and Canada, installment payments are r the interest-free period with the remaining outstanding equipment balance generally dued required generally beginning afteff within 12 months after shipment or delivery. These interest-free periods vary by product and generally range from one to 12 months. In limited circumstances, the Company provides sales terms, and in some cases, interest-free periods that are longer than 12 months for certain products. These are typically specified programs predominately in the United States and Canada, that allow for interest-free periods and due dates of up to 24 months for certain products depending on the year of the sale and the dealer or distributor’s ordering or sales volume during the preceding year. Interest generally is charged at or above lending rates on the outstanding receivable balances after shipment or delivery and after interest-free periods. Sales terms of some highly seasonal products provide for payment and due dates based on a specified date durid ng the year regardless of the shipment date. Equipment sold to dealers in the United States and Canada is paid in full on average within 12 months of shipment. Sales of replacement parts generally are payablea stock orders generally requiring payment within six months of shipment. Under normal circumstances, equipment may not be returned. obligated to repurchase equipment and replacement parts upon cancellation of a dealer or distributor contract. These obligations are required by national, state or provincial laws and require the Company to repurchase a dealer or distributor’s unsold inventory, including inventories for which the receivablea from dealers or distributors in some countries, such as in the United States described above because the equipment receivablea and Canada, is generally duedd sale of the equipment to a retail customer as discussed above. Receivables can also be paid prior to terms specified in sales agreements. Under normal circumstances, interest is not forgiven and interest-free periods are not extended. In certain regions, with respect to most equipment sales, including the United States and Canada, the Company is already has been paid. Actual interest-free periods are shorter than within 30 days of shipment, with terms for some larger, seasonal immediately upon prime u a tt In other international markets, equipment sales generally are payable in full within 30 days to 180 days of shipment or some highly seasonal products have a specified due date during the year regardless of the shipment delivery. Payment terms forff or delivery date. For sales in most markets outside of the United States and Canada, the Company generally does not charge 54 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) interest on outstanding receivables with its dealers and distributors. Sales of replacement parts generally are payablea 30 days to 90 days of shipment, with terms forff shipment. some larger, seasonal stock orders generally payable within six months of within In certain markets, there is a time lag, which varies based on the timing and level of retail demand, between the date the Company records a sale and when the dealer sells the equipment to a retail customer. Sales of grain storage and protein production systems both in the United States and in other countries generally are within 30 days of shipment. In certain countries, sales of such systems forff which the Company is responsible for payablea construction or installation may be contingent upon customer acceptance. Payment terms vary by market and product, with fixed payment schedules on all sales. When the Company is responsible for installation services, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance. The following summarizes by geographic a region, as a percentage of the Company’s consolidated net sales, amounts with maximum interest-free periods as presented below (in millions): Year Ended December 31, 2021 0 to 6 months .................................... $ North America South America Europe/ Middle East Asia/ Pacific/Africa Consolidated 1,909.7 $ 1,307.7 $ 6,217.6 $ 949.7 $10,384.7 93.2 % 7 to 12 months .................................. 13 to 24 months ................................ 739.7 9.8 — — 4.1 — — — 743.8 9.8 6.7 % 0.1 % $ 2,659.2 $ 1,307.7 $ 6,221.7 $ 949.7 $11,138.3 100.0 % The Company has an agreement to permit transferring, on an ongoing basis, a majority of its wholesale interest- bearing and non-interest bearing accounts receivable in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finaff European and Brazilian finaff nce joint ventures. Qualified dealers may obtain additional financing through the Company’s U.S., Canadian, nce joint ventures at the joint ventures’ discretion. t The Company provides various volume bonus and sales incentive programs with respect to its products. These sales (which is generally at the time ncing, at the time of warranty registration, or at a subsequent time based on dealer expected incentive programs using the expected value method. These estimates are reassessed incentive programs include reductions in invoice prices, reductions in retail financing rates, dealer commissions and dealer incentive allowances. In most cases, incentive programs are established and communicated to the Company’s dealers on a quarterly basis. The incentives are paid either at the time of the cash settlement of the receivablea of retail sale), at the time of retail finaff purchase volumes. The incentive programs are product-line specific and generally do not vary by dealer. The cost of sales incentives associated with dealer commissions and dealer incentive allowances is estimated based upon the terms of the programs and historical experience, is based on a percentage of the sales price, and estimates for sales incentives are made and recorded at the time of sale forff each reporting period and are revised in the event of subsequent modifications to incentive programs, as they are communicated to dealers. The related provisions and accruals are made on a product or product-line basis and are monitored for adequacy and revised at least quarterly in the event of subsequent modifications to the programs. Interest rate subsidy payments, which are a reduction in retail finance rates, are recorded in the same manner as dealer commissions and dealer incentive allowances. Volume discounts are estimated and recognized based on historical experience, and related reserves are monitored and adjuste d d based on actual dealer purchase volumes and the dealer’s progress towards achieving specified cumulative target levels. All incentive programs are recorded and presented as a reduction of revenue, due to the facff a distinct good or service in exchange for the consideration provided. In the United States and Canada, reserves for incentive programs related to accounts receivable not sold to Company’s U.S. and Canadian finaff “accounts receivable allowances” within the Company’s Consolidated Balance Sheets due to the fact that the incentives are paid through a reduction of future cash settlement of the receivablea . Globally, reserves for incentive programs that will be paid in cash or credit memos, as is the case with most of the Company’s volume discount programs, as well as sales with incentives associated with accounts receivable sold to its financ Company’s Consolidated Balance Sheets. are recorded within “Accrued expenses” within the t that the Company does not receive nce joint ventures are recorded as e joint ventures, ff tt 55 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Accounts and notes receivable are shown net of allowances for sales incentive discounts availablea to dealers and for doubtful accounts. Cash flows related to the collection of receivables are reported within “Cash flows within the Company’s December 31, 2021 and 2020 were as follows (in millions): Consolidated Statements of Cash Flows. Accounts and notes receivable allowances at m ff from operating activities” Sales incentive discounts................................................................................................................. $ Doubtful accounts............................................................................................................................ $ 2021 2020 8.0 32.6 40.6 $ $ 12.9 36.4 49.3 The Company accounts for its provision for doubtful accounts in accordance with Accounting Standards Update (“ASU”) 2016-13, “Measurement of Credit Losses on Financial Instruments,” (“ASU 2016-13”). In the United States and Canada, sales incentives can be paid through future cash settlements of receivables and through credit memos to Company’s dealers or through reductions in retail finff ancing rates paid to the Company’s finance joint Outside of the United States and Canada, sales incentives can be paid through cash or credit memos to the Company’s t ventures. finance joint ventures. The Company transfers dealers or through reductions in retail financing rates paid to the Company’s m certain accounts receivable under its accounts receivable sales agreements with its finaff ncial institutions (see Note 4). The Company records such transfers as sales of accounts receivable when it is considered to have surrendered control of such receivables Accounting for Transfers of Financial Assets.” Cash payments made to the Company’s finance joint ventures discounts provided to dealers related to outstanding accounts receivables under the provisions of ASU 2009-16, “Transfers and Servicing (Topic 860): sold are recorded within “Accrued expenses.” nce joint ventures and other finaff for sales incentive a a tt Inventories Inventories are valued at the lower of cost or net realizablea value, using the firff st-in, first-out method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. At December 31, 2021 and 2020, the Company had recorded $202.6 million and $209.2 million, respectively, as an adjustmd within the Company’s Consolidated Balance Sheets. ent for surplus and obsolete inventories. These adjustments are reflected within “Inventories, net” Inventories, net at December 31, 2021 and 2020 were as follows (in millions): Finished goods ............................................................................................................................ $ 718.2 $ Repair and replacement parts...................................................................................................... Work in process .......................................................................................................................... Raw materials.............................................................................................................................. Inventories, net............................................................................................................................ $ 697.8 282.8 894.9 2,593.7 $ 641.3 652.3 175.1 505.7 1,974.4 2021 2020 Cash flows related to the sale of inventories are reported within “Cash flows ff from operating activities” within the Company’s m Consolidated Statements of Cash Flows. Recoverable Indirect Taxes The Company’s Brazilian operations incur value added taxes (“VAT”) on certain purchases of raw materials, m and services. These taxes are accumulated as tax credits and create assets that are reduced by the VAT collected ity of these tax credits, and shes reserves when necessary against them, through analyses that include, amongst others, the history of realization, the components from the Company’s sales in the Brazilian market. The Company regularly assesses the recoverabila establia transfer of tax credits to third parties as authorized by the government, anticipated changes in the supply chain and the futff urett expectation of tax debits fromff establia shed reserves, are realizable. The Company had recorded approxi of VAT tax credits, net of reserves, as of December 31, 2021 and 2020. the Company’s ongoing operations. The Company believes that these tax credits, net of mately $114.4 million and $91.2 million, respectively, a 56 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Property, Pyy laPP nt and Equipment Property, plant and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of two to 40 years for buildings and improvements, three to 15 years for machinery and equipment and three to ten years for furnituret repairs are primarily charged to expense as incurred. for maintenance and Expenditures t and fixt ures. ff tt Property, plant and equipment, net at December 31, 2021 and 2020 consisted of the following (in millions): Land................................................................................................................................................. $ Buildings and improvements........................................................................................................... Machinery and equipment ............................................................................................................... ...................................................................................................................... Furniturett t and fixt ures ff Gross property, plant and equipment............................................................................................... Accumulated depreciation and amortization ................................................................................... Property, plant and equipment, net.................................................................................................. $ 2021 2020 141.0 875.9 2,702.3 171.1 3,890.3 (2,425.5) 1,464.8 $ $ 147.2 899.7 2,772.0 168.0 3,986.9 (2,478.4) 1,508.5 Goodwill,ll Other tt Intangible tt Assets and Long-Lived Assets The Company tests goodwill for impairment, at the reporting unit level, annually and when events or circumstances indicate that fair value of a reporting unit may be below its carrying value. A reporting unit is an operating segment or one level below an operating segment, for examplem , a component. The Company combines and aggregates two or more components of an operating segment as a single reporting unit if the components reportable segments are not its reporting units. have similar economic characteristics. The Company’s m Goodwill is evaluated annually as of October 1 forff impaim rment using a qualitative assessment or a quantitative one- step assessment. If the Company elects to perform a qualitative assessment and determines the fair value of its reporting units more likely than not exceed the carrying value of their net assets, no further evaluation is necessary. For reporting units where the Company performs a one-step quantitative assessment, the Company compares the fair value of each reporting unit, which is determined based on a combination of a discounted cash flowff valuation approach and a market multiple valuation approach, to its respective carrying value of net assets, including goodwill. If the fair value of the reporting unit exceeds its carrying value of net assets, the goodwill is not considered impaired. If the carrying value of net assets is higher than the fair value of the reporting unit, an impairment charge is recorded in the amount by which the carrying value exceeds the reporting unit’s fair value in accordance with ASU 2017-04. m The Company reviews its long-lived assets, which include intangible assets subject to amortization, for impairment ity is performed at a level where independent cash flows may be attributed to either an asset or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The evaluation for recoverabila asset group. If the Company determines that the carrying amount of an asset or asset group is not recoverablea expected undiscounted future carrying amounts over the estimated fair value of the long-lived assets. Estimates of future cash flows are based on many factors, including current operating results, expected market trends and competitive influences. The Company also evaluates the amortization periods assigned to its intangible assets to determine whether events or changes in circumstances warrant revised estimates of useful lives. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value, less estimated costs to sell. cash flows of the asset or asset group, an impairment loss is recorded equal to the excess of the based on the ff The results of our goodwill and long-lived assets impaim rment analyses conducted as of October 1, 2021 indicated that no indicators of impaim rment existed and no reduction in the carrying amount of goodwill and long-lived assets was required. The COVID-19 pandemic has adversely impacted the global economy as a whole since its inception. Based on macroeconomic conditions throughout 2020, the Company assessed its goodwill and other intangible assets forff impairment, and as of June 30, 2020, the Company concluded there were indicators of impaim rment during the three months ended June 30, 2020 related to one of its smaller reporting units, which was a 50%-owned tillage and seeding equipment joint t venture. As a result, the entire goodwill balance of this reporting unit was impaired, and during the three months ended indications of d 57 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) June 30, 2020, the Company recorded a non-cash impairment charge of approximately $20.0 million as “Impaim rment charges” within the Company’s Consolidated Statements of Operations, with an offsetting benefit of approximately $10.0 million included within “Net (income) loss attributable to noncontrolling interests.” During the three months ended June 30, 2021, the Company sold its 50% interest in the joint venture. The Company’s goodwill impairment analysis conducted as of October 1, 2020 indicated that no other indicators of impairment existed and no reduction in the carrying amount of goodwill and long-lived assets was required related to the Company’s other reporting units. The Company’s goodwill impaim rment analysis conducted as of October 1, 2019, indicated that the carrying value of the net assets of the Company’s grain storage and protein production systems operations in Europe/Middle East was in excess of the fair value of the reporting unit, and therefore, the Company recorded a non-cash impairment charge of approximately $173.6 million within “Impairment charges” in the Company’s Consolidated Statements of Operations. During the three months ended December 31, 2019, the Company also recorded a non-cash impaim rment charge of approximately $3.0 million within “Impairment charges” in the Company’s Consolidated Statements of Operations. The impaim rment charge related to certain long-lived assets associated with the Company’s grain storage and protein production systems operations within North America, due to the discontinuation of a certain brand name and related product, and customers. The Company’s accumulated goodwill impairment is approximately $354.1 million related to impairment charges the Company recorded during 2019, 2012 and 2006 pertaining to its grain storage and protein production systems business in Europe/Middle East, its Chinese harvesting reporting unit and its forme grain storage and protein production systems Europe/Middle East reporting unit operates within the Europe/Middle East geographic al reportable segment. The Chinese harvesting business operates within the Asia/Pacific/Africa geographical a reportable segment and the formff er sprayer reporting unit operates within the North American geographic r sprayer reporting unit, respectively. The Company’s al reportable segment. a ff Changes in the carrying amount of goodwill during the years ended December 31, 2021, 2020 and 2019 are summarized as follows (in millions): North America South America Europe/ Middle East Asia/ Pacific/Africa Consolidated Balance as of December 31, 2018..................... $ Impairment charge ............................................ 611.1 $ — 116.7 $ — 649.6 $ (173.6) 118.1 $ — ....................................... Sale of a joint venturet Foreign currency translation ............................. Balance as of December 31, 2019..................... Acquisition........................................................ Impairment charge ............................................ Foreign currency translation ............................. Balance as of December 31, 2020 ..................... Acquisitions ...................................................... Foreign currency translation ............................. (5.1) — 606.0 7.2 (20.0) 0.2 593.4 16.2 — — (4.5) 112.2 — — (24.7) 87.5 — (5.8) — (12.7) 463.3 — — 38.0 501.3 0.6 (32.4) — (1.3) 116.8 — — 7.5 124.3 — (4.3) 1,495.5 (173.6) (5.1) (18.5) 1,298.3 7.2 (20.0) 21.0 1,306.5 16.8 (42.5) Balance as of December 31, 2021..................... $ 609.6 $ 81.7 $ 469.5 $ 120.0 $ 1,280.8 58 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company amortizes certain acquired identifiablea intangible assets primarily on a straight-line basis over their estimated useful lives, which range from five to 50 years. The acquired intangible assets have a weighted average useful life as follows: Intangible Assets Patents and technology ................................................................................................................................. Customer relationships ................................................................................................................................. Trademarks and trade names ........................................................................................................................ Land use rights.............................................................................................................................................. Weighted-Average Useful Life 11 years 13 years 20 years 45 years For the years ended December 31, 2021, 2020 and 2019, acquired intangible asset amortization was $60.9 million, $59.5 million and $61.1 million, respectively. The Company estimates amortization of existing intangible assets will be $57.5 million in 2022, $53.8 million in 2023, $52.5 million in 2024, $48.4 million in 2025, and $19.7 million in 2026. The Company has previously determined that two of its trademarks have an indefinite useful life. The Massey Ferguson trademark has been in existence since 1952 and was formed from the merger of Massey-Harris (establia 1890’s) and Ferguson (established in the 1930’s). The Massey Ferguson brand is currently sold in approximately 110 countries worldwide, making it one of the most widely sold tractor brands in the world. The Company also has identified the Valtra trademark as an indefinite-lived asset. The Valtra trademark has been in existence since the late 1990’s, but is a derivative of the Valmet trademark which has been in existence since 1951. The Valmet name transitioned to the Valtra name over a period of time in the marketplace. The Valtra brand is currently sold in approximately 60 countries around the world. Both the Massey Ferguson brand and the Valtra brand are primary product lines of the Company’s business, and the Company plans to use these trademarks for an indefinite period of time. The Company plans to continue to make investments in product development to enhance the value of these brands into the futff ure. There are no legal, regulatory, contractual, competitive, economic or other factors that the Company is aware of or that the Company believes would limit the useful lives of the trademarks. The Massey Ferguson and Valtra trademark registrations can be renewed at a nominal cost in the countries in which the Company operates. shed in the t 59 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Changes in the carrying amount of acquired intangible assets during 2021 and 2020 are summarized as follows (in millions): Trademarks and Trade Names Customer Relationships Patents and Technology Land Use Rights Total Gross carrying amounts: Balance as of December 31, 2019 .............. $ Foreign currency translation....................... Balance as of December 31, 2020 .............. Acquisitions................................................ Sale of business .......................................... Foreign currency translation....................... Balance as of December 31, 2021 .............. $ 199.3 $ 579.0 $ 151.1 $ 6.7 206.0 0.7 (1.3) (5.5) 199.9 $ 6.4 585.4 3.2 (4.4) (10.8) 573.4 $ 6.9 158.0 6.1 (17.1) (6.3) 140.7 $ 8.5 0.6 9.1 — — 0.2 9.3 Accumulated Amortization Trademarks and Trade Names Customer Relationships Patents and Technology Land Use Rights Balance as of December 31, 2019 ............... $ Amortization expense.................................. Foreign currency translation........................ Balance as of December 31, 2020 ............... Amortization expense.................................. Sale of business ........................................... Foreign currency translation........................ 83.3 10.1 2.0 95.4 10.8 (1.3) (1.7) $ 347.4 $ 88.7 $ 39.9 3.0 390.3 37.4 (4.4) (8.0) 9.4 5.1 103.2 12.5 (15.2) (5.0) Balance as of December 31, 2021 ............... $ 103.2 $ 415.3 $ 95.5 $ 3.1 0.1 0.2 3.4 0.2 — 0.2 3.8 Indefinite-Lived Intangible Assets g $ $ $ $ 937.9 20.6 958.5 10.0 (22.8) (22.4) 923.3 Total 522.5 59.5 10.3 592.3 60.9 (20.9) (14.5) 617.8 Trademarks and Trade Names Balance as of December 31, 2019 ......................................................................................................................... $ Foreign currency translation .................................................................................................................................. Balance as of December 31, 2020 ......................................................................................................................... Foreign currency translation .................................................................................................................................. Balance as of December 31, 2021 ......................................................................................................................... $ 86.3 3.1 89.4 (2.7) 86.7 During the year ended December 31, 2021, the Companym acquired approximately $16.3 million of functional t intellectual property licenses associated with various component technology related to the Company’s products. The Company is amortizing these licenses over a period of five years, and recorded amortization expense of approximately $0.2 million during 2021, resulting in a remaining unamortized amount of approximately $16.1 million as of December 31, 2021, reflected within “Other assets” in the Company's Consolidated Balance Sheets. d 60 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) s Accrued Expense EE Accrued expenses at December 31, 2021 and 2020 consisted of the folff lowing (in millions): Reserve for volume discounts and sales incentives..................................................................... $ Warranty reserves........................................................................................................................ Accrued employee compensation and benefits ........................................................................... Accrued taxes .............................................................................................................................. Other............................................................................................................................................ Balance at the end of the year ..................................................................................................... $ 2021 2020 602.3 492.7 322.3 282.5 362.4 2,062.2 $ $ 582.9 431.6 329.2 249.6 323.4 1,916.7 Warranty Rtt eserves The warranty reserve activity for the years ended December 31, 2021, 2020 and 2019 consisted of the following (in millions): 2021 2020 2019 Balance at beginning of the year ..................................................................... $ Acquisitions ..................................................................................................... Accruals for warrant r ies issued during the year................................................ Settlements made (in cash or in kind) during the year .................................... Foreign currency translation ............................................................................ $ 521.8 — 344.9 (241.8) (32.4) $ 392.8 0.2 310.2 (204.3) 22.9 Balance at the end of the year.......................................................................... $ 592.5 $ 521.8 $ 360.9 — 234.1 (198.7) (3.5) 392.8 m The Company’s agricultural equipment products generally are under warranty against defects in materials and workmanship for a period of one to four years. The Company accrues for future warranty costs at the time of sale based on historical warranty experience. Approximately $99.8 million and $90.2 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively. The Company recognizes recoveries of the costs associated with warranties it provides when the collection is probable. When specifics of the recovery have been agreed upon with the Company’s suppliers through confirmation of liability for the recovery, the Company records the recovery within “Accounts and notes receivable, net.” Estimates of the amount of warrantyt claim recoveries to be received from the Company’s suppliers based upon contractual supplier arrangements are recorded within “Other current assets.” Insurance Reserves Under the Company’s insurance programs, coverage is obtained for significant liability limits as well as those risks required to be insured by law or contract. It is the policy of the Company to self-insure a portion of certain expected losses primarily related to workers’ compensation and comprehensive general liability, product and vehicle liability. Provisions for losses expected under these programs are recorded based on the Company’s estimates of the aggregate liabilities forff incurred. the claims Revenue The Company accounts for revenue recognition pursuant to ASU 2014-09, “Revenue from Contracts with Customers.” Revenue is recognized when the Company satisfies the performance obligation by transferring control over goods or services to a dealer, distributor or other customer. The amount of revenue recognized is measured as the consideration the Company expects to receive in exchange for those goods or services pursuant to a contract with the customer. A contract exists once the Company receives and accepts a purchase order under a dealer sales agreement, or once the Company enters into a contract with an end user. The Company does not recognize revenue in cases where collectabila recognition until collection is probable or payment is received. ity is not probablea , and defers the 61 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company generates revenue from the manufacture and distribution of agricultural equipment and replacement parts. Sales of equipment and replacement parts, which represents a majority of the Company’s net sales, are recorded by the Company at the point in time when title and control have been transferred to an independent dealer, distributor or other customer. Title generally passes to the dealer or distributor upon shipment or specified delivery, and the risk of loss upon damage, theft or destruction of the equipment is the responsibility of the dealer, distributor or designated third-party carrier. The Company believes control passes and the performance obligation is satisfied at the point of the stated shipping or delivery term with respect to such sales. u As previously discussed, the amount of consideration the Company receives and the revenue recognized varies with certain sales incentives the Company offers to dealers and distributors. Estimates for sales incentives are made at the time of sale for expected incentive programs using the expected value method. These estimates are revised in the event of subsequent modification to the incentive program. All incentive programs are recorded and presented as a reduction of revenue, due to the fact that the Company does not receive a distinct good or service in exchange for the consideration provided. Dealers or distributors may not return equipment or replacement parts while its contract with the Company is in force, except for under established promotional and annual replacement parts return programs. At the time of sale, the Company estimates the amount of returns future. based on the terms of promotional and annual returnt programs and anticipated returns in the tt Sales and other related taxes are excluded from the transaction price. Shipping and handling costs associated with freight activities after the customer has obtained control are accounted forff as fulfillment costs and are expensed and accruedrr the time revenue is recognized in “Cost of goods sold” and “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Operations. at As afforded under the practical expedient in ASU 2014-09, the Company does not adjust d the time value of money when the differe the amount of revenue to be ff nce recognized under a contract with a dealer, distributor or other customer forff between the receipt of payment and the recognition of revenue is less than one year. Although, substantially all revenue is recognized at a point in time, a relatively insignificant amount of installation revenue associated with the sale of grain storage and protein production systems is recognized on an “over time” basis as nd maintenance discussed below. The Company also recognizes revenue “over time” with respect to extended warranty at contracts and certain precision technology services. Generally, almost all of the grain storage and protein production systems contracts with customers that relate to “over time” revenue recognition have contract durations of less than 12 months. Extended warranty,t maintenance services contracts and certain precision technology services generally have contract durad of more than 12 months. tions Grain Storage and Protein Production Systemyy l s Install ati II on Revenue. In certain countries, the Company sells grain storage and protein production systems where the Company is responsible for construction and installation, and the sale is contingent upon customer acceptance. Under these conditions, the revenues are recognized over the term of the contract when the Company can objectively determine control has been transferred to the customer in accordance with agreed-upon specifications in the contract. For these contracts, the Company may be entitled to receive an advance payment, which is recognized as a contract liabila costs incurred to date relative to total estimated costs at completion to measure the progress toward satisfaction of the performance obligation. Revenues are recorded proportionally as costs are incurred. Costs include labor, The estimation of the progress toward complem tion is subject to various assumptions. As part of the estimation process, the Company reviews the length of time to complete the performance obligation, the cost of materials and labor significant change in one of the assumptim ons occurs, then the Company will recognize an adjustment under the cumulative catch-up method and the impactm is identified. of the adjustment on the revenue recorded to date is recognized in the period the adjustment the amount in excess of the revenue recognized. The Company uses the input method using material and overhead. productivity. If a ity forff a a CC Extended Warranty Ctt ontract s.tt The Company sells separately priced extended warranty ct ontracts and maintenance contracts, which extends coverage beyond the base warranty period, or covers maintenance over a specified period. Revenue is recognized for the extended warranty contract on a straight-line basis, which the Company believes approximates the costs expected to be incurred in satisfying the obligations, over the extended warranty pt from one to five years. Payment is received or revenue is deferred forff contract or maintenance contract, which is recognized as a contract liability for the amount in excess of the revenue recognized. The revenue associated with the sale of extended warranty contracts is not significant. eriod ranges eriod. The extended warranty pt r free contracts at the inception of the extended warranty 62 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) m Precision TecTT hnology Services Revenue. The Companym is recognized over time as the Company satisfies the futurett sells a combination of precision technology products and services. When the bundled package of technology products and services is sold, the portion of the consideration received related to the services component is recognized for the hardware component when control is transferred to the dealer or distributor. Payment is received or revenue is deferred forff contract liability for the amount in excess of the revenue recognized. The revenue associated with the sale of precision technology services is not significant. The costs of the software directly associated with the installation and functionality of precision technology products and services, including amortization and hosting costs, are refleff cted within "Cost of goods sold" and "Engineering expenses" within the Company's Consolidated Statements of Operations. free subscriptions at inception of the precision technology subscription period, which is recognized as a performance obligation. Revenue See Note 16 for additional information regarding the Company’s sources of revenue and associated contract liabila ities and performance obligations. Stock Incentive Plans ll Stock compensation expense was recorded as foll ff ows (in millions). Refer to Note 10 for additional information regarding the Company’s stock incentive plans during 2021, 2020 and 2019: Years Ended December 31, 2020 2019 2021 Cost of goods sold ............................................................................................................. $ Selling, general and administrative expenses .................................................................... Total stock compensation expense .................................................................................... $ 1.0 26.6 27.6 $ $ 1.1 36.8 37.9 $ $ 1.7 40.0 41.7 s Research and Development Expense xx Research and development expenses are expensed as incurred and are included in “Engineering expenses” in the Company’s m Consolidated Statements of Operations. ii Advertising Costs The Companym expenses all advertising costs as incurred. Cooperative advertising costs normally are expensed at the time the revenue is earned. Advertising expenses for the years ended December 31, 2021, 2020 and 2019 totaled approximately $54.2 million, $45.3 million and $42.3 million, respectively. Shipping and Handlingll s Expense xx All shipping and handling fees charged to customers are included as a component of net sales, and are associated with freight activities after the customer has obtained control. Shipping and handling costs are accounted for as fulfillment costs and are expensed and accruedrr at the time revenue is recognized within “Cost of goods sold,” with the exception of certain handling costs included in “Selling, general and administrative expenses” in the amount of $43.6 million, $38.0 million and $38.9 million for the years ended December 31, 2021, 2020 and 2019, respectively. EE Interest Expense , Ne etNN Interest expense, net forff the years ended December 31, 2021, 2020 and 2019 consisted of the folff lowing (in millions): Interest expense ................................................................................................................. $ Interest income .................................................................................................................. $ 2021 2020 2019 25.4 (18.7) 6.7 $ $ 24.9 (9.9) 15.0 $ $ 28.8 (8.9) 19.9 63 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Income Taxes Income taxes are accounted forff under the asset and liabia lity method. Deferred tax assets and liabia lities are recognized for the future tax consequences attributable to differences between the finff ancial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxablea expected to be recovered or settled. The effect on deferred income in the period that includes the enactment date. See Note 6 forff taxes. tax assets and liabia lities of a change in tax rates is recognized in additional information regarding the Company’s income income in the years in which those temporary differences are ff Net Income Per Common Share SS Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per common share assumes the exercise of outstanding stock-settled stock appreciation rights (“SSARs”) and the vesting of performance share awards and restricted stock units using the treasury stock method when the effects of such assumptim ons are dilutive. A reconciliation of net income attributablea to AGCO Corporation and subsidiaries and weighted average common shares outstanding for purposes of calculating basic and diluted net income per share during the years ended December 31, 2021, 2020 and 2019 is as follows (in millions, except per share data): Basic net income per share: 2021 2020 2019 Net income attributable to AGCO Corporat rr ion and subsidiaries...................................... $ Weighted average number of common shares outstanding............................................... Basic net income per share attributablea ion and subsidiaries ............. $ to AGCO Corporat rr 897.0 75.2 11.93 Diluted net income per share: Net income attributable to AGCO Corporation and subsidiaries ................................... $ 897.0 Weighted average number of common shares outstanding ............................................ Dilutive SSARs, performance share awards and restricted stock units ...................... Weighted average number of common shares and common share equivalents outstanding for purposes of computim ng diluted net income per share ........................ 75.2 0.5 75.7 $ $ $ Diluted net income per share attributable to AGCO Corporation and subsidiaries .......... $ 11.85 $ 427.1 75.0 5.69 427.1 75.0 0.6 75.6 5.65 $ $ $ $ 125.2 76.2 1.64 125.2 76.2 0.8 77.0 1.63 There were no SSARs outstanding for the year ended December 31, 2021 that had an antidilutive impact. m SSARs to purchase approximately 0.3 million shares and 0.2 million shares of the Company’s December 31, 2020 and 2019, respectively, were outstanding but not included in the calculation of weighted average common and common equivalent shares outstanding because they had an antidilutive impact. common stock for the years ended m 64 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Comprehensive Income (Loss) The Companym reports comprehe m nsive income (loss), defined as the total of net income (loss) and all other non-owner changes in equity, and the components thereof in its Consolidated Statements of Stockholders’ Equity and Consolidated Statements of Comprehensive Income. The components of other comprehensive income (loss) and the related tax effects for the years ended December 31, 2021, 2020 and 2019 are as follows (in millions): AGCO Corporation and Subsidiaries 2021 Income Taxes Before-tax Amount Noncontrolling Interests 2021 After-tax Amount After-tax Amount 82.9 Defined benefit pension plans.......................................................... $ 110.1 $ (27.2) $ $ Net gain on derivatives ................................................................... ents ........................................ Foreign currency translation adjustmd 2.5 (45.1) (0.4) — 2.1 (45.1) Total components of other comprehensive income ......................... $ 67.5 $ (27.6) $ 39.9 $ — — (0.4) (0.4) AGCO Corporation and Subsidiaries 2020 Income Taxes Before-tax Amount After-tax Amount Noncontrolling Interests 2020 After-tax Amount Defined benefit pension plans.......................................................... $ Net loss on derivatives .................................................................... Foreign currency translation adjustments ........................................ (19.3) $ (1.5) (197.5) Total components of other comprehensive loss............................... $ (218.3) $ 2.4 0.3 — 2.7 $ (16.9) $ (1.2) (197.5) $ (215.6) $ — — (4.3) (4.3) AGCO Corporation and Subsidiaries Noncontrolling Interests Before-tax Amount 2019 Income Taxes After-tax Amount 2019 After-tax Amount Defined benefit pension plans.......................................................... $ (13.4) $ (0.6) $ (14.0) $ Net loss on derivatives .................................................................... Foreign currency translation adjustments ........................................ (3.1) (23.1) 0.4 — (2.7) (23.1) Total components of other comprehensive loss............................... $ (39.6) $ (0.2) $ (39.8) $ — — 2.5 2.5 Derivatives uses foreign currency contracts to hedge the foreff The Companym s. The contracts are for periods consistent with the exposure being hedged and generally have maturities of one year or payablea less. These contracts are classified as non-designated derivative instruments. The Company also enters into foreign currency contracts designated as cash flowff exchange rate fluctuat hedged. The notional amounts of the foreign currency contracts do not represent amounts exchanged by the parties and, therefore, are not a measure of the Company’s risk. The amounts exchanged are calculated on the basis of the notional amounts and other terms of the contracts. The credit and market risks under these contracts are not considered to be significant. ions because gains and losses on these contracts generally offset losses and gains on the exposure being hedges of expected sales. The Company’s foreign currency contracts mitigate risk due to ign currency exposure of certain receivables and tt The Company’s interest expense is, in part, sensitive to the general level of interest rates, and the Company manages its exposure to interest rate risk through the mix of floating rate and fixed rate debt. From time to time, the Company enters into interest rate swap aa greements in order to manage the Company’s exposure to interest rate fluctuations. The Company uses non-derivative and, periodically, derivative instruments to hedge a portion of the Company’s net investment in foreign operations against adverse movements in exchange rates. 65 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company’s gross profit is sensitive to the cost of steel and other raw materials. From time to time, the Company enters into derivative instruments to hedge a portion of its commodity pt prices. urchases against adverse movements in commodity The Company’s hedging policy prohibits it from entering into any foreign currency contracts for speculative trading purposes. See Note 11 for additional information regarding the Company’s derivative instruments and hedging activities. Recent Accounting Pronouncements a In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reformff (Topic 848).” The amendments in this update provide optional expedients and exceptions for applying Generally Accepted Accounting Principles (“GAAP”) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. only to contracts, hedging relationships, and other transactions that refereff The amendments apply reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. In January 2021, the FASB issued ASU 2021-01, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in these updates are effective for all entities as of March 12, 2020 through December 31, 2022. The Company has adopted this guidance and the adoption did not have a material impact on the Company's results of operations, financial condition and cash flows. nce LIBOR or another ff The Company adopted the folff of operations, financial condition and cash flows. ff lowing pronouncements, none of which had a material impact to the Company’s results • • • ASU 2019-12 – “Simplifying the Accounting for Income Taxes” was adopted as of January 1, 2021. ASU 2020-01 – “Investments—Equity St (Topic 323), and Derivatives and Hedging (Topic 815)” was adopted as of January 1, 2021. ecurities (Topic 321), Investments—Equity Method and Joint Ventures ASU 2020-08 – “Codification Improvements to Subtopi was adopted as of January 1, 2021. u c 310-20, Receivables—Nonrefundable Fees and Other Costs” New Accounting Pronouncements to be Adopted In June 2016, the FASB issued ASU 2016-13, which requires measurement and recognition of expected versus incurred credit losses for financial assets held. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” which delays the effective date of ASU 2016-13 for smaller reporting companies and other non-SEC reporting entities. This appli Company’s equity method finance joint ventures after December 15, 2022 and interim periods within those annual periods. The standard, and its subsequent modification, will likely impact the results of operations and financial condition of the Company’s finance joint ventures. Therefore, adoption of will likely impact the Company’s “Investments in affiliates” and “Equity the standard by the Company’s finance joint ventures in net earnings of affiliates.” The Company’s finance joint ventures are currently evaluating the impact of ASU 2016-13 to their results of operations and financial condition. who are now required to adopt ASU 2016-13 for annual periods beginning es to the a t tt t tt In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosure by Business a Entities about Government Assistance,” which improves the transparency of government assistance received by most business entities by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity's financial statements. This guidance will be effective for annual periods beginning afteff guidance on the Company's results of operations, financial condition and cash flows. r December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of the new ff Additionally, the Company will adopt the following pronouncement, which is not expected to have a material impact the Company's results of operations, financial condition and cash flows. ff • ASU 2021-08 – “Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” 66 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 2. Acquisitions On January 01, 2022 the Company acquired Appareo Systems, LLC (“Appareo”) for approximately $61.4 million, net a mately $0.9 million. Appareo is headquartered in Fargo, North Dakota and specializes in the research, of cash acquired of approximately $0.5 million, as well as indebtedness payable to the Company's former 50% joint venturett with Appareo of approxi development, design, and manufacture of tangible technology focused on communication, monitoring, sensing, tracking and controlling devices and systems used in the agricultural The Company is in the process of determining the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed. and aviation industries as well as other off-road businesses. t On December 01, 2021, the Company acquired Creatives Sites Media, Inc. (“CSM”) forff approximately $5.7 million. CSM is headquartered in Bloomington, Illinois and creates and designs customized mobile-enabled technology applications and websites. The acquired net assets were insignificant. The Company recorded approximately $5.7 million of goodwill associated with the acquisition. The associated goodwill has been included in the Company’s North American geographic segment. al reportable a a On September 10, 2021, the Company acquired Farm Robotics and Automation S.L. (“Faromatics”) for approximately €4.6 million (or approximately $5.5 million) net of approximately €0.1 million (or approximately $0.1 million) of cash and €0.8 million (or approximately $0.9 million) of escrowed cash which could be payablea acquisition date. Faromatics is headquartered in Barcelona, Spain, and manufactures ceiling-suspended robot that monitors broiler chickens and helps farmers increase animal welfare and farmff The Company recorded approximately €4.4 million (or approximately $5.2 million) of technology and approxi €1.8 million (or approximately $2.2 million) of goodwill associated with the acquisition. The associated goodwill has been included in the Company’s North American and Europe/Middle East geographic and sells ChickenBoy®, the world's first productivity. mately al reportable segments. by the Company within 18 months of the a a t On August 13, 2021, the Company acquired Headsight, LLC (“Headsight”) forff approximately $16.8 million. Headsight is headquartered in Bremen, Indiana and manufactures operations. The Company recorded approximately $4.8 million of customer relationship, technology and trademark identifiable intangible assets and approximately $8.9 million of goodwill associated with the acquisition. The associated goodwill has been included in the Company’s North American geographic header height sensors used in corn and grain harvesting al reportable segment. a tt The acquired identifiablea intangible assets of Headsight and Faromatics as of the date of their respective acquisitions during 2021 are summarized in the following tabla e (in millions): Intangible Asset Amount Weighted-Average Useful Life Customer relationships.................................................................................. $ Technology.................................................................................................... Trademarks.................................................................................................... $ 3.2 6.1 0.7 10.0 7 years 10 - 15 years 7 years The Company allocated the purchase price of the assets acquired and liabilities assumed of the CSM, Faromatics and Headsight acquisitions based on estimates of their fair values of their respective acquisition dates. The acquired net assets related to these acquisitions generally consisted of accounts receivable, inventories, lease right-of-use assets and liabilities, property, plant and equipment, accounts payable and accrued expenses. Proforma financial information related to these acquisitions was not material to the Company's results of operations. a On September 10, 2020, the Companym acquired 151 Research, Inc. forff develops intelligent security, remote monitoring and management and enhanced imaging solutions for grain storage operations. The acquired net assets were insignificant. The Company recorded goodwill of approxim ately $7.2 million associated with the acquisition. In addition, the Company agreed to further contingent consideration related to the acquisition and recorded a liability of approximately $4.4 million to reflect estimated achievement of agreed-upon targets as of the acquisition date. During 2021, the Company paid approxi of related agreed-upon targets, resulting in a reversal of approximately $3.3 million of the liabila of contingent consideration as of December 31, 2021, included approxi translation impacts. mately $0.5 million of contingent consideration and updated the estimated achievement ity. The remaining $0.8 million mately $0.2 million of positive foreign currency approximately $2.8 million. 151 Research a a a 67 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 3. Restructuring Expenses The Company has announced and initiated actions over the course of several years to rationalize employee m at various manufacturing facilities and various administrative offices located in Europe, South America, Africff United States, as well as the rationalization of its grain storage and protein production system operations. These rationalizations were taken to reducedd ing global market demand. During 2021, the Company recorded severance and related costs associated with these rationalizations in connection with the termination of approximately 150 employees. headcount a, China and the costs in response to fluctuat tt The components of the restructuring tt expenses are summarized as follows (in millions): Employee Severance Facility Closure Costs Write-down of Property, Plant and Equipment Other Related Closure Costs Loss on Sale of Joint Venture Total Balance as of December 31, 2018 $ 2019 provision ............................. Less: Non-cash expense ............ Cash expense ........................... 2019 provision reversal................ 7.1 $ 5.6 — 5.6 (0.7) 2019 cash activity ........................ Foreign currency translation ........ Balance as of December 31, 2019 2020 provision ............................. Less: Non-cash expense ............ Cash expense ........................... 2020 provision reversal................ 2020 cash activity ........................ Foreign currency translation ........ Balance as of December 31, 2020 2021 provision ............................. Less: Non-cash expense ............ Cash expense ........................... 2021 provision reversal................ 2021 cash activity ........................ Foreign currency translation ........ (6.8) (0.4) 4.8 11.3 — 11.3 (0.4) (4.5) (0.1) 11.1 18.4 — 18.4 (2.2) (12.3) (0.5) — $ 0.5 — 0.5 — (0.5) — — 4.5 — 4.5 — (0.6) — 3.9 — — — — (3.9) — — $ 1.5 (1.5) — — — $ — — — — — $ 2.1 (2.1) — — — — — 2.5 (2.5) — — — — — 0.2 (0.2) — — — — — — — 1.8 — 1.8 — — — 1.8 1.5 — 1.5 (0.1) (2.9) (0.1) — — — — — — — — — — — — — (2.5) 2.5 — Balance as of December 31, 2021 $ 14.5 $ — $ — $ 0.2 $ — $ 7.1 9.7 (3.6) 6.1 (0.7) (7.3) (0.4) 4.8 20.1 (2.5) 17.6 (0.4) (5.1) (0.1) 16.8 20.1 (0.2) 19.9 (4.8) (16.6) (0.6) 14.7 During the three months ended December 31, 2019, the Company exited and sold its 50% interest in its USC, LLC partner for approximately $5.1 million. The operations of the joint venturet joint venture to its joint venturett Company's grain storage and production system operations, and the decision to sell the joint venture was as a result of the overall rationalization of the business. The Company recorded a loss of approximately $2.1 million associated with the sale, which was reflected within “Restructuring expenses” in the Company’s Consolidated Statements of Operations. As a result of the final payments received from the former joint venture partner related to the sale durid ng 2021 the Company recorded a gain of approximately $2.5 million, also reflected within “Restructuring expenses” in the Company’s Condensed Consolidated Statements of Operations. were part of the 68 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 4. Accounts Receivable Sales Agreements The Company has accounts receivablea sales agreements that permit the sale, on an ongoing basis, of a majority of nce joint As of December 31, 2021 and 2020, the cash received from receivables sold under the U.S., Canadian, European s in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finaff its wholesale receivablea t ventures. and Brazilian accounts receivable sales agreements was appr oximately $1.3 billion and $1.5 billion, respectively. a sales agreements in North America, Europe and Brazil, the Company pays Under the terms of the accounts receivablea a sold. The Companym an annual fee related to the servicing of the receivables subsidized interest payment with respect to the accounts receivablea margin on any non-interest bearing accounts receivablea Following the phase out of LIBOR-denominated rates, the Companym charged by Raboba These fees are reflected within losses on the sales of receivables included within “Other expense, net” in the Company’s Consolidated Statements of Operations. The Company does not service the receivables after the sale occurs and does not maintain any direct retained interest in the receivablea agreements and determined that these facilities should be accounted for as off-balance sheet transactions. nk to its affiliate, and such affiliate then lends to the AGCO Finance entities plus an agreed-upon margin. sales agreements, calculated based upon LIBOR plus a expects this funding to be based upon the interest rate outstanding and sold under the accounts receivables s. The Company reviewed its accounting for the accounts receivable sales also pays the respective AGCO Finance entities a sales agreements. a a In addition, the Company sells certain trade receivables a under factoring arrangements to other finaff ncial institutions around the world. As of December 31, 2021 and 2020, the cash received from these arrangements was approximately $215.4 million and $199.9 million, respectively. Losses on sales of receivables a associated with the accounts receivable financing facilities discussed above, reflected within “Other expense, net” in the Company’s Consolidated Statements of Operations, were approximately $24.5 million, $24.1 million and $42.4 million during 2021, 2020 and 2019, respectively. The Company’s finance joint ventures t in Europe, Brazil and Australia also provide wholesale financing directly to the Company’s dealers. The receivables associated with these arrangements are without recourse to the Company. The Company does not service the receivables after the sale occurs and does not maintain any direct retained interest in the receivablea December 31, 2021 and 2020, these finance joint ventures of outstanding accounts receivable associated with these arrangements. The Company reviewed its accounting for these arrangements and determined that these arrangements should be accounted forff had approximately $82.1 million and $85.2 million, respectively, as off-balance sheet transactions. t s. As of 5. Investments in Affiliates Investments in affiliates as of December 31, 2021 and 2020 were as follows (in millions): tt ......................................................................................................... $ Finance joint ventures Manufacturing joint ventures.............................................................................................. iates .................................................................................................................... Other affilff 2021 2020 $ 359.2 31.0 23.3 $ 413.5 $ 395.3 31.8 15.6 442.7 The Company's finance joint ventures t the assets of the Company’s finance joint ventures payablea joint venture companim and accruedrr t provide retail financing and wholesale financing to its dealers. The majoa rity of represent finance receivables. The majoa rity of the liabia lities represent notes interest. Under the various joint venture agreements, Rabobank or its affiliates provide financing to the es. AGCO has a 49% interest in the Company’s finance joint ventures (Note 14). tt The Company’s manufacturing tt (“GIMA”) (a joint venturett equipment in France) and a joint venture with a third-party manufacturer to manufacturett China. The other joint ventures represent investments in farm equipment manufacturers, an electronic and software system manufacturer, precision agriculturett consist of Groupement International De Mecanique Agricole SA t protein production equipment in to purchase, design and manufacture components technology providers, distributors and licensees. with a third-party manufacturer joint ventures tt for agricultural m t 69 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company’s equity in net earnings of affiliates forff the years ended December 31, 2021, 2020 and 2019 were as follows (in millions): Finance joint ventures ......................................................................... $ t Manufacturing and other joint ventures .............................................. $ 2021 2020 2019 64.4 1.2 65.6 $ $ 45.0 0.5 45.5 $ $ 41.5 1.0 42.5 ncial information of the Company’s finance joint ventures 2020 and for the years ended December 31, 2021, 2020 and 2019 were as follows (in millions): Summarized combined finaff tt as of December 31, 2021 and Total assets.......................................................................................................................... $ Total liabilities .................................................................................................................... Partners’ equityt ................................................................................................................... As of December 31, 2021 2020 $ 7,863.6 7,130.5 733.1 8,033.4 7,226.7 806.7 For the Years Ended December 31, 2020 2021 2019 Revenues ............................................................................................. $ Costs .................................................................................................... Income beforeff income taxes................................................................ $ 411.1 228.1 183.0 $ $ 402.2 274.0 128.2 $ $ 417.6 299.9 117.7 At December 31, 2021 and 2020, the Company’s receivables a from affiliates were approximately $55.1 million and $47.5 million, respectively. The receivablea Consolidated Balance Sheets. Company’s m s fromff affiliates are reflected within “Accounts and notes receivable, net” within the The portion of the Company’s retained earnings balance that represents undistributed retained earnings of equityt method investees was approximately $365.6 million and $375.5 million as of December 31, 2021 and 2020, respectively. During 2021, the Companym Approximately $22.7 million of these dividends were a returntt joint venture. received dividends of approximately $84.4 million fromff of investment in excess of earnings related to a certain finance nce joint ventures. certain finaff 70 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 6. Income Taxes The sources of income before income taxes and equity in net earnings of affiliates were as follows forff the years ended December 31, 2021, 2020 and 2019 (in millions): United States...................................................................................................................... $ Foreign............................................................................................................................... Income beforeff income taxes and equity in net earnings of affiliates ................................ $ 46.8 897.5 944.3 $ $ (73.4) $ 635.4 562.0 $ (53.1) 314.2 261.1 2021 2020 2019 The provision for income taxes by location of the taxing jurisdiction for the years ended December 31, 2021, 2020 and 2019 consisted of the folff lowing (in millions): Current: United States................................................................................................................... $ Foreign............................................................................................................................ Deferred: United States................................................................................................................... Foreign............................................................................................................................ $ 2021 2020 2019 3.4 222.9 226.3 (70.0) (47.9) (117.9) 108.4 $ $ 4.1 180.2 184.3 1.3 2.1 3.4 187.7 $ $ (4.4) 170.1 165.7 1.3 13.8 15.1 180.8 The Company’s income tax provision as of December 31, 2021 includes the benefit of the reversals of approximately $67.8 million and $55.6 million related to valuation allowances previously established against the Company’s net deferred tax assets in the United States and Brazil, respectively. The Company recorded the reversal of a portion of the United States valuation allowance during the three months ended June 30, 2021, and the reversal of a portion of its Brazilian valuation allowance durid 2020 and 2021, along with updat those respective periods in 2021. During the three months ended September 30, 2019, the Company recorded a non-cash deferred income tax charge of approximately $53.7 million to establia income tax assets. ents in income in the United States and Brazil during projected income levels, supported the reversal of both valuation allowances during ng the three months ended December 31, 2021. Improvem sh a valuation allowance against its Brazilian net deferred ed futurett m u Swiss tax reformff was enacted during 2019 and eliminated certain preferential tax items as well as implm emented new eral and cantonal levels. During the three months ended December 31, 2019, the Company recognized a tax rates at both the fedff one-time income tax gain of approximately $21.8 million associated with the changing of Swiss federal and cantonal tax rates as well as recognition of a deferred tax asset associated with the estimated value of a tax basis step-up of the Company’s Swiss subsidiary’s assets. 71 AGCO CORPORATION RR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2021, 2020, and 2019) to the provision for income taxes reflected in the Company’s ended December 31, 2021, 2020 and 2019 is as follows (in millions): m Consolidated Statements of Operations for the years 2021 2020 2019 Provision for income taxes at United States federal statutory rate.................................... $ 198.3 $ 118.0 $ ts........................................ State and local income taxes, net of federal income tax effecff Taxes on foreign income which differ from the United States statutory rate ................... Tax effect of permanent differences.................................................................................. Change in valuation allowance.......................................................................................... Change in tax contingency reserves .................................................................................. Research and development tax credits .............................................................................. Impacts related to changes in tax laws .............................................................................. Other.................................................................................................................................. 2.2 16.2 (6.4) (130.8) 36.6 (7.4) — (0.3) 108.4 $ (3.5) 13.9 13.4 16.3 37.2 (9.0) — 1.4 187.7 $ $ 54.8 (2.5) 6.7 63.9 84.6 3.2 (7.1) (21.8) (1.0) 180.8 The significant components m of the deferred tax assets and liabia lities at December 31, 2021 and 2020 were as follows (in millions): Deferred Tax Assets: Net operating loss carryforwards ......................................................................................................... $ Sales incentive discounts...................................................................................................................... Inventory valuation reserves ................................................................................................................ Pensions and postretirement health care benefits................................................................................. Warranty and other reserves................................................................................................................. Research and development tax credits ................................................................................................. Foreign tax credits ................................................................................................................................ Other..................................................................................................................................................... Total gross deferred tax assets............................................................................................................ Valuation allowance ........................................................................................................................... Total deferred tax assets .................................................................................................................. Deferred Tax Liabila ities: Tax over book depreciation and amortization...................................................................................... Investments in affiliates........................................................................................................................ Other..................................................................................................................................................... ities............................................................................................................. Total deferred tax liabila Net deferred tax assets (liabila ities) .............................................................................................. $ Amounts recognized in Consolidated Balance Sheets: Deferred tax assets - noncurrent........................................................................................................... $ Deferred tax liabila ities - noncurrent ..................................................................................................... $ 2021 2020 69.5 40.1 33.6 18.5 102.9 3.8 9.4 14.0 291.8 (47.4) 244.4 159.3 24.4 8.3 192.0 52.4 169.3 (116.9) 52.4 $ $ $ $ 62.9 50.8 35.9 55.8 126.3 12.9 5.9 10.4 360.9 (181.0) 179.9 167.5 33.1 14.1 214.7 (34.8) 77.6 (112.4) (34.8) As reflected in the preceding table, a December 31, 2021 and a net deferred tax liabila against its gross deferred tax assets of approximately $47.4 million and $181.0 million as of December 31, 2021 and 2020, respectively. recorded a net deferred tax asset of $52.4 million as of ity of $34.8 million as of December 31, 2020, and had a valuation allowance the Companym 72 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company maintains a valuation allowance to reserve a portion of its net deferred tax assets in the United States ff gn jurisdictions. A valuation allowance is establia and certain forei shed when it is more likely than not that some portion or all of the deferred tax assets may not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated futuret determined that all adjustments to the valuation allowance were appropriate. The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the valuation allowance, in futff uret taxable income and the current economic climate, as well as available tax planning strategies, and years. The Company had net operating loss carryforwards of $235.6 million as of December 31, 2021, with expiration dates as follows: 2022 - $14.2 million; 2023 - $23.9 million; 2024 and thereafter - $51.0 million and unlimited - $146.5 million. The net operating loss carryforwards of $235.6 million are entirely in tax jurisdictions outside of the United States. The amount of the Company's U.S. state net operating loss carryforwards is not material. The Company paid income taxes of $247.3 million, $181.4 million and $144.4 million forff the years ended December 31, 2021, 2020 and 2019, respectively. The Company recognizes income tax benefits from uncertain tax positions only when there is a more than 50% likelihood that the tax positions will be sustained upon examination by the taxing authorities based on the technical merits of the positions. At December 31, 2021 and 2020, the Company had $246.4 million and $227.9 million, respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. At December 31, 2021 and 2020, the Company had approximately $40.1 million and $57.1 million, respectively, of accruedrr deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months. The Company accrued approximately $4.8 million and $7.1 million of interest and penalties related to unrecognized tax benefits in its provision for income taxes during At December 31, 2021 and 2020, the Company had accruedrr $32.7 million and $39.4 million, respectively. interest and penalties related to unrecognized tax benefits of 2021 and 2020, respectively. or d A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits as of and during the years ended December 31, 2021 and 2020 is as follows (in millions): 2021 2020 Gross unrecognized income tax benefits at the beginning of the year................................................ $ 227.9 $ 210.7 Additions for tax positions of the current year.................................................................................... Additions for tax positions of prior years ........................................................................................... Reductions for tax positions of prior years for: Changes in judgments ...................................................................................................................... Settlements during the year .............................................................................................................. Lapses a of applicablea statutett of limitations ....................................................................................... Foreign currency translation and other............................................................................................. Gross unrecognized income tax benefits at the end of the year.......................................................... $ 43.0 8.4 3.2 (19.1) (0.6) (16.4) 246.4 $ 32.0 9.4 9.1 (52.9) (0.2) 19.8 227.9 The reconciliation of gross unrecognized income tax benefits above for 2021 and 2020 excludes certain indirect effects that relate to other tax jurisdictions of approximately $70.2 million and $64.1 million, respectively. favorablea The change in certain indirect favorablea and reductions for tax positions of current and prior years, changes in judgments and lapses In addition, the gross unrecognized income tax benefits as of December 31, 2021 exclude certain deposits made in a foreff jurisdiction of approximately $6.7 million associated with an ongoing audit. effects between 2021 and 2020 includes approximately $9.9 million related to additions s of limitations. of statutet ign a The Company and its subsidiaries file income tax returns t in the United States and in various state, local and foreign jurisdictions. The Company and its subsidiaries are routinely examined by tax authorities in these jurisdictions. As of December 31, 2021, a number of income tax examinations in foreign jurisdictions, as well as the United States, were ongoing. It is possible that certain of these ongoing examinations may be resolved within 12 months. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized income tax benefits balance may materially change within the next 12 months. In certain foreign jurisdictions, there are either statutory expirations or the Company’s settlement expectations such that approximately tt 73 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) $40.1 million could be concluded within the next 12 months. Although there are ongoing examinations in various fedff state jurisdictions, the 2017 through 2021 tax years generally remain subject to examination in the United States by appli a authorities. In the Company’s Finland and Brazil, the 2016 through 2021 tax years generally remain subju ect to examination by their respective tax authorities. In Brazil, the Company is contesting disallowed deductions related to amortization of certain goodwill amounts (see Note 12). eral and cablea significant foreign jurisdictions, primarily the United Kingdom, France, Germany, Switzerland, m 7. Indebtedness Long-term debt consisted of the following at December 31, 2021 and 2020 (in millions): December 31, 2021 December 31, 2020 Senior term loan due 2022................................................................................................... $ — $ Credit facff ility, expires 2023 ................................................................................................ 1.002% Senior term loan due 2025..................................................................................... Senior term loans due between 2023 and 2028(1) ............................................................... 0.800% Senior Notes Due 2028.......................................................................................... Other long-term debt........................................................................................................... Debt issuance costs .............................................................................................................. — 283.7 445.9 680.8 7.7 (4.8) 184.0 277.9 306.7 806.0 — 10.5 (2.5) 1,413.3 1,582.6 Less: Senior term loans due 2021, net of debt issuance costs .......................................... Current portion of other long-term debt ................................................................... — (2.1) Total long-term indebtedness, less current portion............................................................. $ 1,411.2 $ (323.6) (2.3) 1,256.7 ____________________________________ (1) Maturity dates are reflected as of December 31, 2021. At December 31, 2021, the aggregate scheduled maturiti t es of long-term debt, excluding the current portion of long- term debt, are as foll ff ows (in millions): 2023 .................................................................................................................................................................... $ 2024 .................................................................................................................................................................... 2025 .................................................................................................................................................................... 2026 .................................................................................................................................................................... r............................................................................................................................................................ Thereafteff 281.7 2.3 355.1 59.7 712.4 $ 1,411.2 Cash payments forff interest were approximately $23.8 million, $23.6 million and $26.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. Current Indebtedness 0.800% Senior Notestt Due 2028 On October 6, 2021, the Company issued €600.0 million (or approximately $680.8 million as of December 31, 2021) of senior notes at an issue price of 99.993%. The notes maturet rs, at 0.800%. The senior notes contain covenants restricting, among other things, the incurrence of certain secured indebtedness. The senior notes are subject to both optional and mandatory redemption in certain events. on October 6, 2028, and interest is payable annually, in arrear During October 2021, the Company used the proceeds received froff m the senior notes to repay its €150.0 million (or 2022, $370.0 million related to its multi-currency approximately $173.4 million as of October 8, 2021) senior term loan dued revolving credit facility, and two of its 2016 senior term loans due October 2021 with an aggregate amount outstanding of 74 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) €192.0 million (or approximately $223.8 million as of October 19, 2021). In August 2021, prior to the issuance of the senior notes, the Company repaid two of its 2018 senior term loans due August 2021 with an aggregate amount of €72.0 million (or approximately $85.5 million as of August 1, 2021). Creditii Facilitll ytt In October 2018, the Company entered into a multi-currency revolving credit facility of $800.0 million. The maturity rr on amounts outstanding under the credit facility, at the date of the credit facility is October 17, 2023. Interest accrues Company’s option, at either (1) LIBOR plus a margin ranging from 0.875% to 1.875% based on the Company’s credit rating, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, and (iii) one-month LIBOR for loans denominated in U.S. dollars plus 1.0%, plus a margin ranging from 0.0% to 0.875% based on the Company’s credit rating. The credit facility contains covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends. The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio. As mentioned previously, on October 15, 2021, the Company repaid $370.0 million of its multicurrency revolving credit facility as a result of the issuance of our 0.800% senior notes due 2028. As of December 31, 2021 and 2020, the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow approximately $800.0 million under the facility. On April 9, 2020, the Company entered into an amendment to its $800.0 million multi-currency revolving credit facility to include incremental term loans (“2020 term loans”) that allow the Company to borrow an aggregate principal amount of €235.0 million and $267.5 million, respectively (or an aggregate amount of approximately $534.1 million as of December 31, 2021). Amounts can be drawn incrementally at any time prior to maturity, but must be drawn down proportionately. Amounts drawn must be in a minimum principal amount of $100.0 million and integral multiples of $50.0 million in excess thereof. Once amounts have been repaid, those amounts are not permitted to be re-drawn. The maturity date of the 2020 term loans is April 8, 2022. Interest accrues on amounts outstanding under the 2020 term loans, at the Company’s option, at either (1) LIBOR plus a margin based on the Company’s credit rating ranging from 1.125% to 2.125% until April 8, 2021 and ranging from 1.375% to 2.375% thereafter, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, and (iii) one-month LIBOR for loans denominated in U.S. dollars plus 1.0%, plus a margin based on the Company’s 0.125% to 1.375% until April 8, 2021 and ranging from 0.375% to 1.375% thereafter. The 2020 term loans contain covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends. The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio. On April 15, 2020, the Company borrowed €117.5 million and $133.8 million of 2020 term loans. The Company simultaneously repaid €100.0 million (or approximately $108.7 million) of its revolving credit facility from the borrowings received. There were no other borrowings on the 2020 term loans subsequent to the initial borrowings in April 2020. On February 16, 2021, the Company repaid the 2020 term loans of €117.5 million and $133.8 million (or an aggregate amount of approximately $276.0 million as of February 16, 2021). As of December 31, 2021, the Companym approximately €117.5 million and $133.7 million of 2020 term loans (or an aggregate amount of approximately $267.0 million). credit rating ranging from had the ability to borrow m m As described above, the Company’s m credit facility allows it to select from among various interest rate options. Due to the phase-out of LIBOR, LIBOR-based rates no longer will be availablea December 31, 2022, and for loans denominated in other currencies aftff er Decembem r 31, 2021. The rates reflected in the Company’s credit facility were designed to accommodate the discontinuation of LIBOR-based rates, and a shift to the “Secured Overnight Financing Rate” (“SOFR”) or a base rate, and, as such, the Company does not believe that moving to the other rates will have a materially adverse effecff provides for an expedited amendment process once a replacement for LIBOR is established, which the Companym utilize to add additional interest-rate alternatives. results of operations. In addition, the credit facility agreement also for borrowings denominated in U.S. dollars after t on the Company’s may elect to m 1.002% Senior Term Loan Due 2025 On January 25, 2019, the Companym borrowed €250.0 million (or approximately $283.7 million as of December 31, 2021) from the European Investment Bank. The loan matures on January 24, 2025. The Company is permitted to prepay the term loan before its maturity date. Interest is payable on the term loan at 1.002% per annum, payable semi-annually in arrears. 75 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Senior Term Loans Due Between 2023 and 2028 In October 2016, the Companym borrowed an aggregate amount of €375.0 million through a group of seven related term loan agreements, and in August 2018, the Company borrowed an additional aggregate amount of €338.0 million through a group of another seven related term loan agreements. Of the 2016 term loans, an aggregate amount of €56.0 million (or approximately $61.1 million) was repaid upon maturity of two term loan agreements in October 2019. Additionally, as mentioned previously, the Company repaid €192.0 million (or approximately $223.8 million as of October 19, 2021) upon maturity of two of its 2016 senior term loans in October 2021. In August 2021, prior to the issuance of the senior notes due 2028, the Company repaid two of its 2018 senior term loans upon maturit approximately $85.5 million as of August 1, 2021). On February 1, 2022, the Company repaid €72.5 million (or approximately $81.7 million) of one of its 2018 senior term loans due August 2023 with existing cash on hand. y with an aggregate amount of €72.0 million (or u tt In aggregate, the Company had indebtedness of €393.0 million (or approximately $445.9 million as of December 31, 2021) through a group of eight remaining related term loan agreements. As of February 1, 2022, as a result of a further repayment discussed previously, the Company had indebtedness of €320.5 million (or approximately $361.0 million) through a group of seven remaining related term loan agreements. The provisions of the term loan agreements are substant ially identical, with the exception of interest rate terms and maturities. As of December 31, 2021, for the term loans with a fixeff d interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 0.90% to 2.26% and maturity dates between August 2023 and August 2028. For the term loans with a floaff ting interest rate, interest is payable in arrears on a semi-annual basis, with interest rates based on the EURIBOR plus a margin ranging from 0.90% to 1.25% and maturity dates between August 2023 and August 2025. The term loans contain covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends, and are subject to acceleration in the event of default. u Former Indebtedness Senior Term Lrr oan Due 2022 In October 2018, the Company entered in a term loan agreement with Rabobank in the amount of €150.0 million. t The Company was permitted to prepay the term loan before its maturi term loan quarterly in arrears at an annual rate, equal to the EURIBOR plus a margin ranging from 0.875% to 1.875% based on the Company’s credit rating. The Company had to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio. As mentioned previously, during October 2021, the Company repaid its senior term loan of €150.0 million (or approximately $173.4 million as of October 8, 2021) with the proceeds from its 0.800% senior notes due 2028. ty date of October 28, 2022. Interest was payablea on the Short-Term Borrowings As of December 31, 2021 and 2020, the Company had short-term borrowings due within one year of approxi a mately $90.8 million and $33.8 million, respectively. Standby Letters of Credit and Similar Instruments The Company has arrangements with various banks to issue standby letters of credit or similar instruments, which guarantee the Company’s obligations for the purchase or sale of certain inventories and for potential claims exposure for insurance coverage. At December 31, 2021 and 2020, outstanding letters of credit totaled $14.6 million and $14.4 million, respectively. 8. Employee Benefit Plans The Company sponsors defined benefit pension plans covering certain employees, principally in the United Kingdom, the United States, Germany, Switzerland, Finland, France, Norway and Argentina. The Company also provides certain certain employees, principally in the United States and Brazil. postretirement health care and life i ff nsurance benefits forff The Company also maintains an Executive Nonqualified Pension Plan (“ENPP”) that provides certain senior if certain requirements are met. executives with retirement income forff Benefits under the ENPP vest if the participant has attained age 50 and has at least ten years of service (including five years as a participant in the ENPP), but are not payable until the participant reaches age 65. The lifetime annuity benefit generally is a period of 15 years or up to a lifeti ff me annuity,tt 76 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) available only to vested participants who retire on or afteff reaching age 65 subsequent to December 31, 2022. The ENPP is an unfunded, nonqualified defined benefit pension plan. r reaching age 65 and was eliminated during 2021 for participants Net annual pension costs forff the years ended December 31, 2021, 2020 and 2019 for the Company’s m defined benefit pension plans and ENPP are set forth below (in millions): Pension benefits Service cost .............................................................................................. $ Interest cost .............................................................................................. Expected return on plan assets................................................................. Amortization of net actuarial losses......................................................... Amortization of prior service cost ........................................................... Net loss recognized due to settlement...................................................... Curtailment gain (1)................................................................................... Net annual pension cost ........................................................................... $ 2021 2020 2019 $ 15.0 12.6 (31.3) 16.5 0.7 0.1 (1.2) $ 16.2 16.5 (28.4) 15.5 2.1 0.2 — 12.4 $ 22.1 $ 15.5 20.7 (28.1) 14.3 1.6 0.5 — 24.5 ___________________________________ (1) During 2021, the Company amended its Executive Nonqualified Pension Plan (“ENPP”) to freeze the plan as of December 31, 2024 to future salary benefit accruals, and to eliminate a lifetimff curtailment gain as well as a net prior service credit. e annuity feature for participants reaching age 65 subsequent to December 31, 2022. This amendment resulted in a m The component s of net periodic pension and postretirement benefitsff cost, other than the service cost component, are included in “Other expense, net” in the Company’s Consolidated Statements of Operations. The weighted average assumptions used to determine the net annual pension costs forff the Company’s defined benefit pension plans and ENPP for the years ended December 31, 2021, 2020 and 2019 are as foll ff ows: 2021 2020 2019 All plans: Weighted average discount rate.............................................................. Weighted average expected long-term rate of returnt on plan assets ...... Rate of increase in future compensation................................................. 1.5 % 3.9 % 1.5%-5.0% 2.0 % 4.1 % 1.8%-5.0% 2.8 % 4.6 % 1.8%-5.0% U.S.-based plans: Weighted average discount rate.............................................................. on plan assets(1) ... Weighted average expected long-term rate of returnt Rate of increase in future compensation(2).............................................. 2.75 % 5.0 % 5.0 % 3.45 % 5.0 % 5.0 % 4.35 % 5.5 % 5.0 % ___________________________________ (1) Applicable for U.S. funded, qualified plans. (2) Applicable for U.S. unfunded, nonqualified plan. For the Company’s Swiss cash balance plan, the interest crediting rate of 1.0% for both 2021 and 2020 was set equal to the current annual minimum rate set by the government for the mandatory portion of the account balance. Above mandatory amounts have an interest crediting rate of 0.25% for 2021 and 0.0% for 2020. m Net annual postretirement benefitff costs, and the weighted average discount rate used to determine them, for the years ended December 31, 2021, 2020 and 2019 are set forth below (in millions, except percentages): Postretirement benefits Service cost .............................................................................................. $ Interest cost .............................................................................................. Amortization of net actuarial losses......................................................... Amortization of prior service cost ........................................................... Net annual postretirement benefitff cost .................................................... $ Weighted average discount rate ............................................................... 2021 2020 2019 0.1 0.9 0.1 0.1 1.2 $ $ 0.1 1.2 0.1 0.1 1.5 $ $ 0.1 1.3 — 0.1 1.5 3.8 % 4.5 % 5.2 % 77 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The folff lowing tables set forth reconciliations of the changes in benefit obligation, plan assets and funded ff status as of December 31, 2021 and 2020 (in millions): Change in benefit obligation Pension and ENPP Benefits 2021 2020 Postretirement Benefits 2020 2021 Benefit obligation at beginning of year...................... $ 1,033.7 $ 917.3 $ 26.4 $ Service cost ................................................................ Interest cost ................................................................ Plan participants’ contributions.................................. Actuarial losses (gains) .............................................. Amendments .............................................................. Curtailment................................................................. Settlements ................................................................. Benefits paid............................................................... Foreign currency exchange rate changes ................... 15.0 12.6 1.4 (70.7) (13.6) (9.7) (0.2) (47.2) (16.5) 16.2 16.5 1.3 86.8 (0.3) — (0.3) (44.6) 40.8 0.1 0.9 — (3.7) 0.4 — — (1.3) (0.2) Benefit obligation at end of year ................................ $ 904.8 $ 1,033.7 $ 22.6 $ 29.4 0.1 1.2 — (1.1) — — — (1.5) (1.7) 26.4 Pension and ENPP Benefits 2021 2020 Postretirement Benefits 2020 2021 Change in plan assets Fair value of plan assets at beginning of year ............ $ Actual return on plan assets ....................................... Employe m r contributions .............................................. Plan participants’ contributions.................................. Benefits paid............................................................... Settlements ................................................................. Foreign currency exchange rate changes ................... Fair value of plan assets at end of year ...................... $ Funded status.............................................................. $ Unrecognized net actuarial losses (gains) .................. Unrecognized prior service cost................................. Accumulated other comprehensive loss..................... 808.6 $ 711.0 $ — $ 27.7 36.0 1.4 (47.2) (0.2) (10.7) 815.6 $ (89.2) $ 291.7 7.1 (298.8) 76.6 32.4 1.3 (44.6) (0.3) 32.2 808.6 $ (225.1) $ 385.1 20.1 (405.2) — 1.3 — (1.3) — — — $ (22.6) $ (1.1) 3.2 (2.1) Net amount recognized............................................... $ (89.2) $ (225.1) $ (22.6) $ Amounts recognized in Consolidated Balance Sheets: Other long-term asset ................................................. $ Other current liabilities............................................... Accrued expenses....................................................... Pensions and postretirement health care benefits (noncurrent)................................................................ $ 109.4 (7.1) (3.6) $ 13.2 (6.7) (3.2) (187.9) (228.4) Net amount recognized............................................... $ (89.2) $ (225.1) $ — $ (1.5) — (21.1) (22.6) $ 78 — — 1.5 — (1.5) — — — (26.4) 2.6 2.9 (5.5) (26.4) — (1.4) — (25.0) (26.4) AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The folff lowing table summarizes the activity in accumulated other comprehensive loss related to the Company’s ENPP and defined pension and postretirement benefit plans during the years ended December 31, 2021 and 2020 (in millions): Before-Tax Amount Income Tax After-Tax Amount Accumulated other comprehensive loss as of December 31, 2019 ......... $ (393.2) $ (96.8) $ (296.4) Prior service credit arising during the year .............................................. tt Net loss recognized due to settlement...................................................... al loss arising during the year................................................. Net actuari Amortization of prior service cost .......................................................... Amortization of net actuarial losses......................................................... 0.3 0.3 (37.8) 2.2 15.7 — — (5.1) 0.1 2.6 0.3 0.3 (32.7) 2.1 13.1 Accumulated other comprehensive loss as of December 31, 2020 ......... $ (412.5) $ (99.2) $ (313.3) Prior service credit arising during the year .............................................. Net loss recognized due to settlement...................................................... Net loss recognized due to curtailment.................................................... al gain arising during the year ................................................ Net actuari tt Amortization of prior service cost .......................................................... Amortization of net actuarial losses ........................................................ 13.1 0.1 8.5 71.0 0.8 16.6 3.1 — 2.2 17.4 0.2 4.3 10.0 0.1 6.3 53.6 0.6 12.3 Accumulated other comprehensive loss as of December 31, 2021 ......... $ (302.4) $ (72.0) $ (230.4) The unrecognized net actuarial losses included in accumulated other comprehensive loss related to the Company’s defined benefit pension plans and ENPP as of December 31, 2021 and 2020 are set forth below (in millions): Unrecognized net actuarial losses ........................................................................................... $ 291.7 $ 385.1 2021 2020 The decrease in unrecognized net actuari tt al losses between years primarily resulted from higher discount rates at t m ions, actual demographic to December 31, 2020, as well as a result of the amendment to the Company's ENPP as December 31, 2021 compared previously discussed. The unrecognized net actuarial losses will be impacted in future periods by actual experience and certain other facff rate changes, currency exchange rate fluctuat Company’s defined benefit pension plans, these losses, to the extent they exceed 10% of the greater of the plan’s liabila the fair value of assets (“the gain/loss corridor”), will be amortized on a straight-line basis over the periods discussed as follows. For the Company’s U.S. salaried, U.S. hourly and U.K. defined benefit pension plans, the population covered is predominantly inactive participants, and losses related to those plans, to the extent they exceed the gain/loss corridor, will be amortized over the average remaining lives of those participants while covered by the respective plan. For the Company’s ENPP, the population is predominantly active participants, and losses related to the plan will be amortized over the average future working lifetime of the active participants expected to receive benefits. As of December 31, 2021, the average amortization periods were as follows: tors. For some of the a t asset returns, discount ities or Average amortization period of losses related to defined benefit pension plans ........ 7 years ENPP U.S. Plans 14 years U.K. Plan 19 years The following tabla e summarizes the unrecognized prior service cost related to the Company’s defined benefit pension plans as of December 31, 2021 and 2020 (in millions): Unrecognized prior service cost.............................................................................................. $ 7.1 $ 20.1 2021 2020 The decrease in the unrecognized prior service cost between years is due primarily to the amortization of unrecognized prior service cost related to prior plan amendments. The decrease also reflects the 2021 plan amendment to the Company's 79 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ENPP, as previously discussed. The amortization of unrecognized prior service cost during 2020 also included the initial amortization impacts of an amendment to the Company’s ENPP during 2019. The following tablea summarizes the unrecognized net actuari tt al (gains) losses included in the Company’s accumulated other comprehensive loss related to the Company’s December 31, 2021 and 2020 (in millions): m U.S. and Brazilian postretirement health care benefit plans as of Unrecognized net actuarial (gains) losses(1) ............................................................................ $ (1.1) $ 2.6 ___________________________________ (1) Includes a gain of approximately $0.2 million and a loss of $1.0 million, respectively, related to the Company’s U.S. postretirement benefit plans. 2021 2020 The unrecognized net actuarial gains related to the Company’s U.S. and Brazilian postretirement benefit plans was to the experience of the plans and assumption changes as of December 31, 2021 as compared primarily due to liability gain dued to December 31, 2020. The unrecognized net actuarial gains or losses will be impacted in future periods by discount rate changes, actual demographic extent they exceed the gain/loss corridor, will be amortized on a straight-line basis over the average remaining service period of active employees expected to receive benefits, or the average remaining lives of inactive participants, covered under the postretirement benefit plans. As of December 31, 2021, the average amortization period was 10 years for the Company’s U.S. postretirement benefit plans. experience, actual health care inflation and certain other factors. These gains or losses, to the a As of December 31, 2021 and 2020, the net prior service cost related to the Company’s Brazilian postretirement health care benefit plans was as folff lows (in millions): Net prior service cost .............................................................................................................. $ 3.2 $ 2.9 2021 2020 The following tabla e summarizes the fair value of plan assets, aggregate projected benefit obligation and accumulated benefit obligation as of December 31, 2021 and 2020 for defined benefit pension plans, ENPP and other postretirement plans with accumulated benefit obligations in excess of plan assets (in millions): 2021 2020 p All plans: Fair value of plan assets ....................................................................................................... $ 43.4 $ Projected benefit obligation.................................................................................................. Accumulated benefit obligation ........................................................................................... U.S.-based plans and ENPP: p Fair value of plan assets ....................................................................................................... $ Projected benefit obligation.................................................................................................. Accumulated benefit obligation ........................................................................................... 264.1 246.6 4.9 130.9 125.4 $ 41.6 306.2 269.4 5.1 157.4 135.4 The amounts forff 2021 and 2020 disclosed above a do not include the faiff obligation or the accumulated benefit obligation related to the Company’s plan assets was in excess of the plan’s accumulated benefit obligation as of December 31, 2021 and 2020. m r value of plan assets, the projected benefit U.K. plan. The Company’s U.K. plan’s fair value of 80 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company’s accumulated comprem hensive loss as of Decemberm 31, 2021 and 2020 reflects a reductd ion in equity related to the foll ff owing items (in millions): p All plans: (1) Reduction in equity, net of taxes of $72.0 and $98.6 at December 31, 2021 and 2020, respectively . $ 300.9 $ 410.8 2021 2020 GIMA joint venture: j (2) Reduction in equity, net of taxes of $0.5 and $0.6 at December 31, 2021 and 2020, respectively ..... 1.5 1.7 ______________________________________ (1) Primarily related to the Company’s U.K. pension plan. (2) These amounts represented 50% of GIMA’s unrecognized net actuarial losses and unrecognized prior service cost associated with its pension plan. In addition, GIMA recognized a net actuarial loss due to settlements of approximately $0.1 million in 2020. m The Company’s defined benefit pension obligation has been reflected based on the manner in which its definff ed benefit plans are being administered. The obligation and resulting liability is calculated employing both actuarial and legal assumptions. These assumptim ons include, but are not limited to, future inflation, the retut rn on pension assets, discount rates, life expectancy and potential salary increases. There are also assumptions related to the manner in which individual benefitff plan benefits are calculated, some of which are legal in nature and include, but are not limited to, member eligibility, years of service and the uniformity of both guaranteed minimum pension benefits and member normal retirement ages for men and women. Some of these assumptions also are subject to the outcome of certain legal cases, which are currently unknown. In the event that any of these assumptions or the administration approac and approach, there could be material increases in the Company’s and timing of future contributions to be paid by the Company. h are proven to be different from the Company’s current interpretations defined benefit pension obligation and the related amounts m a The weighted average assumptm ions used to determine the benefit obligation for the Company’s defined benefit pension plans and ENPP as of December 31, 2021 and 2020 are as follows: p All plans: Weighted average discount rate............................................................................................ 1.9 % 1.5 % Rate of increase in future compensation .............................................................................. 1.50%-5.0% 1.50%-5.0% U.S.-based plans: p Weighted average discount rate............................................................................................ Rate of increase in future compensation(1) ........................................................................... 3.05 % 4.25 % 2.75 % 5.0 % 2021 2020 ____________________________________ (1) Applicable for U.S. unfunded, nonqualified plan. The weighted average discount rate used to determine the benefit obligation forff plans for the years ended December 31, 2021 and 2020 was 4.1% and 3.8%, respectively. the Company’s postretirement benefit For the years ended December 31, 2021, 2020 and 2019, the Companym used a globally consistent methodology to set the discount rate in the countries where its largest benefit obligations exist. In the United States, the United Kingdom and the Euro Zone, the Company constructed a hypothetical bond portfolio of high-quality corporate bonds and then applie d the cash flows of the Company’s benefit plans to those bond yields to derive a discount rate. The bond portfolio and plan-specific cash flows vary by country, but the methodology in which the portfolio is constructed is consistent. In the United States, the bond portfolio is large enough to result in taking a “settlement approach” to derive the discount rate, in which high-quality corporate bonds are assumed to be purchased and the resulting coupon payments and maturities are used to satisfy the Company’s U.S. pension plans’ projected benefit payments. In the United Kingdom and the Euro Zone, the discount rate is derived using a “yield curve approach,” in which an individual spot rate, or zero coupon bond yield, for each future annual period is developed benefit payment and, thereby, determine the present value of all future payments. The Company uses a to discount each future spot yield curve to determine the discount rate applicable in the United Kingdom to measure the U.K. pension plan’s service cost and interest cost. Under the settlement and yield curve approaches, the discount rate is set to equal the single discount rate that produd ces the same present value of all future payments. a ff 81 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) For measuring the expected U.S. postretirement benefit obligation at December 31, 2021, the Company assumed a 6.8% health care cost trend rate for 2022 decreasing to 5.0% by 2029. For measuring the expected U.S. postretirement benefit obligation at December 31, 2020, the Company assumed a 7.0% health care cost trend rate for 2021 decreasing to 5.0% by 2029. For measuring the Brazilian postretirement benefit plan obligation at December 31, 2021, the Company assumed a 9.96% health care cost trend rate for 2022, decreasing to 4.28% by 2033. For measuring the Brazilian postretirement benefit plan obligation at December 31, 2020, the Company assumed a 9.96% health care cost trend rate for 2021, decreasing to 4.28% by 2032. The Company currently estimates its minimum contributions and benefit payments to its U.S.-based underfunded defined benefit pension plans and unfunded ENPP for 2022 will aggregate approxim estimates its minimum contributions for underfunded plans and benefit payments for unfunded plans for 2022 to its non-U.S.- based defined benefit pension plans will aggregate approximately $31.3 million, of which approxi mately $21.1 million relates to its U.K. pension plan. The Company currently estimates its benefit payments for 2022 to its U.S.-based postretirement health ff nsurance benefit plans will aggregate approximately $1.5 million and its benefit payments for 2022 to its Brazilian care and life i postretirement health care benefit plans will aggregate less than $0.1 million. ately $5.0 million. The Company currently a a During 2021, approximately $47.4 million of benefit payments were made related to the Company’s defined benefit pension plans and ENPP. At December 31, 2021, the aggregate expected benefit payments for the Company’s defined benefit pension plans and ENPP are as follows (in millions): 2022 ...................................................................................................................................................................... $ 2023 ...................................................................................................................................................................... 2024 ...................................................................................................................................................................... 2025 ...................................................................................................................................................................... 2026 ...................................................................................................................................................................... 2027 through 2031................................................................................................................................................ $ 53.2 51.6 51.8 52.2 52.5 279.1 540.4 During 2021, approximately $1.3 million of benefit payments were made related to the Company’s U.S. and Brazilian postretirement benefit plans. At December 31, 2021, the aggregate expected benefit payments for the Company’s U.S. and Brazilian postretirement benefit plans are as follows (in millions): 2022 ...................................................................................................................................................................... $ 2023 ...................................................................................................................................................................... 2024 ...................................................................................................................................................................... 2025 ...................................................................................................................................................................... 2026 ...................................................................................................................................................................... 2027 through 2031................................................................................................................................................ 1.5 1.6 1.6 1.6 1.6 7.5 $ 15.4 82 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Investment Strate gye tt and Concentrationtt of Riskii The weighted average asset allocation of the Company’s m U.S. pension benefit plans as of December 31, 2021 and 2020 are as follows: Asset Category Equity securities .................................................................................................................... Fixed income securities ......................................................................................................... Other investments.................................................................................................................. Total ...................................................................................................................................... 2021 2020 14 % 75 % 11 % 100 % 36 % 57 % 7 % 100 % The weighted average asset allocation of the Company’s m non-U.S. pension benefit plans as of December 31, 2021 and 2020 are as follows: Asset Category Equity securities .................................................................................................................... Fixed income securities ......................................................................................................... Other investments.................................................................................................................. Total ...................................................................................................................................... 2021 2020 14 % 80 % 6 % 100 % 41 % 53 % 6 % 100 % The Company categorizes its pension plan assets into one of three levels based on the assumptions used in valuing the asset. See Note 13 for a discussion of the faiff Measurements” (“ASC 820”). The Company’s valuation techniques are designed to maximize the use of observable inputs and minimize the use of unobservablea its pension plan assets: inputs. The Company uses the following valuation methodologies to measure the fair value of r value hierarchy as per the guidance in ASC 820, “Fair Value ecSS urities: Equity securities are valued on the basis of the closing price per unit on each business day as exchange. Equity funds are valued using the net asset value of the fund, which is based on a cablea Equity Stt reported on the appli the fair value of the underlying securities. FixedFF income investment trades. Fixed income funds fair value of the underlying securities. ff • • • • Income: Fixed income securities are valued using the closing prices in the active market in which the fixed are valued using the net asset value of the fund, which is based on the CashCC : These investments primarily consist of short-term investment funds which are valued using the net asset value. u ions or redemptions is dictated by each fund’s governing documents. The amount of Alternative Investments: These investments are reported at faiff r value as determined by the general partner of the alternative investment. The “market approach” valuation technique is used to value investments in these funds. The funds typically are open-end funds as they generally offer subscription and redemption options to investors. The frequency of such subscript liquidity provided to investors in a particular fund generally is consistent with the liquidity and risk associated with the underlying portfolio (i.e., the more liquid the investments in the portfolio, the greater the liquidity provided to investors). Liquidity of individual funds varies based on various factors and may include “gates,” “holdbacks” and as well as redemption fees that may also apply. Investments in “side pockets” imposed by the manager of the fund, these funds typically are valued utilizing the net asset valuations provided by their underlying investment managers, general partners or administrators. The funds consider subscription and redemption rights, including any restrictions on the disposition of the interest, in its determination of the fair value. ff • II Insurance Contractstt : Insurance contracts are valued using current prevailing interest rates. 83 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ff The fair value of the Company’s pension assets as of December 31, 2021 is as follows (in millions): Total Level 1 Level 2 Level 3 Equity securities: Global equities .......................................................... $ U.S. large cap ea quities............................................... Total equity securities........................................... Fixed income: Aggregate fixeff d income ............................................ Total fixff ed income share(1) .................................. Alternative investments: Private equity fund .................................................... Hedge funds measured at net asset value(4)............... Total alternative investments(2)............................. Miscellaneous funds(3) ................................................. Cash and equivalents measured at net asset value(4).... 102.5 5.6 108.1 615.9 615.9 3.5 41.7 45.2 40.2 6.2 $ $ 18.2 5.6 23.8 $ 84.3 — 84.3 615.9 615.9 — — — — — — — — — — — — Total assets ........................................................... $ 815.6 $ 639.7 $ 84.3 $ — — — — — 3.5 — 3.5 40.2 — 43.7 ______________________________________ (1) 50% of "fixed income" securities are in government treasuries; 20% are in foreign securities; 13% are in investment-grade corporate bonds; 8% are in high yield securities; 6% are in other various fixed income securities and 3% are in asset-backed and mortgage-backed securities. (2) 42% of “alternative investments” are in relative value funds; 28% are in long-short equity funds; 14% are in event-driven funds; 8% are in credit funds; and 8% are distributed in hedged and non-hedged funds. (3) “Miscellaneous funds” is comprised of insurance contracts in Finland, Norway and Switzerland. (4) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The following is a reconciliation of Level 3 assets as of December 31, 2021 (in millions): Beginning balance as of December 31, 2020 ............................................ $ tt Actual on plan assets: returntt Total Alternative Investments Miscellaneous Funds 38.7 $ 2.1 $ 36.6 (a) Relating to assets still held at reporting date..................................... (b) Relating to assets sold during period ................................................ Purchases, sales and /or settlements .......................................................... Foreign currency exchange rate changes................................................... Ending balance as of December 31, 2021 ................................................. $ 3.3 — 4.7 (3.0) 43.7 $ 1.4 — — — 3.5 $ 1.9 — 4.7 (3.0) 40.2 84 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ff The fair value of the Company’s pension assets as of December 31, 2020 is as follows (in millions): Total Level 1 Level 2 Level 3 Equity securities: Global equities .......................................................... $ Non-U.S. equities...................................................... U.K. equities ............................................................. quities............................................... U.S. large cap ea U.S. small cap equities.............................................. Total equity securities........................................... Fixed income: d income ............................................ Aggregate fixeff International fixff ed income ........................................ Total fixed income share(1) .................................. Alternative investments: Private equity fund .................................................... Hedge funds measured at net asset value(4)............... Total alternative investments(2)............................. Miscellaneous funds(3) ................................................. Cash and equivalents measured at net asset value(4).... $ 235.3 4.7 65.2 5.2 3.9 314.3 162.9 249.5 412.4 2.1 38.5 40.6 36.6 4.7 $ 156.5 4.7 65.2 5.2 3.9 235.5 162.9 249.5 412.4 — — — — — $ 78.8 — — — — 78.8 — — — — — — — — Total assets ........................................................... $ 808.6 $ 647.9 $ 78.8 $ — — — — — — — — — 2.1 — 2.1 36.6 — 38.7 _______________________________________ (1) 44% of “fixed income” securities are in investment-grade corporate bonds; 20% are in government treasuries; 11% are in high-yield securities; 10% are in foreign securities; 6% are in asset-backed and mortgage-backed securities; and 9% are in other various fixed income securities. (2) 42% of “alternative investments” are in relative value funds; 25% are in long-short equity funds; 14% are in event-driven funds; 5% are distributed in hedged and non-hedged funds; and 14% are in credit funds. (3) “Miscellaneous funds” is comprised of insurance contracts in Finland, Norway and Switzerland. (4) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The following is a reconciliation of Level 3 assets as of December 31, 2020 (in millions): Beginning balance as of December 31, 2019 ............................................ $ 33.1 $ Total Alternative Investments 2.3 $ Miscellaneous Funds returntt on plan assets: tt Actual (a) Relating to assets still held at reporting date..................................... (b) Relating to assets sold during period ................................................ Purchases, sales and /or settlements .......................................................... Foreign currency exchange rate changes................................................... Ending balance as of December 31, 2020 ................................................. $ 0.1 — 2.4 3.1 (0.2) — — — 38.7 $ 2.1 $ 30.8 0.3 — 2.4 3.1 36.6 All tax-qualified pension fund investments in the United States are held in the AGCO Corporation Master Pension Trust. The Company’s global pension fund strategy is to diversify investments across broad categories of equity at income securities with appropria investment objective of the Company’s pension plans is to secure participant retirement benefits. As such, the key objective in the pension plans’ financial management is to promote stabila te use of alternative investment categories to minimize risk and volatility. The primary ity and, to the extent appropriate, growth in funde nd fixed d status. a ff 85 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The investment strategy for the plans’ portfolio of assets balances the requirement to generate returns with the need to control risk. The asset mix is recognized as the primary mechanism to influff ence the reward and risk structu fund investments in an effort to accomplish the plans’ funding objecb allocations of retirement fund investments for the Company’s U.S.-based pension plans and the non-U.S. based pension plans are as follows: tives. The overall investment strategies and target re of the pension rr Overall investment strategies: g (2) Assets for the near-term benefit payments ........................................................................... Assets for longer-term growth.............................................................................................. Total.................................................................................................................................... Target allocations: g Equity securities ................................................................................................................... Fixed income securities ........................................................................................................ ive investments........................................................................................................ r Alternat Cash and cash equivalents.................................................................................................... U.S. Pension Plans Non-U.S. Pension Plans(1) 80.0 % 20.0 % 100.0 % 17.0 % 75.0 % 3.0 % 5.0 % 82.5 % 17.5 % 100.0 % 12.5 % 82.5 % 5.0 % — % Total.................................................................................................................................... 100.0 % 100.0 % _______________________________________ (1) The majority of the Company’s non-U.S. pension fund investments are related to the Company’s pension plan in the United Kingdom. (2) The overall U.S. and non-U.S. pension funds invest in a broad diversification of asset types. rr The Companym has noted that over very l ong periods, this mix of investments would achieve an average returntt on its U.S.-based pension plans of approximately 4.87%. In arriving at the choice of an expected returntt assumption of 4.25% for its U.S. plans for the year ended December 31, 2022, the Company has tempered this historical indicator with lower expectations for returns and changes to investments in the futuret over very long periods, this mix of investments would achieve an average returntt approximately 2.50%. In arriving at the choice of an expected return assumption of 2.25% for its U.K.-based plans for the year ended December 31, 2022, the Company has tempered this historical indicator with lower expectations for returns and changes to investments in the futuret as well as the administrative costs of the plans. The Company has noted that as well as the administrative costs of the plans. on its non-U.S. based pension plans of tt Equity securities primarily include investments in large-cap aa nd small-cap companies located across the globe. Fixed income securities include corporate bonds of companies fromff mortgages, asset-backed securities and government securities. Alternative and other assets include investments in hedge fund of funds that follow diversified investment strategies. To date, the Company has not invested pension funds in its own stock and has no intention of doing so in the future. diversified industries, mortgage-backed securities, agency tt Within each asset class, careful consideration is given to balancing the portfolio among indusd try srr ectors, geographie a s, interest rate sensitivity, dependence on economic growth, currency and other facff tors affeff cting investment returns. The assets are managed by professional investment firms, who are bound by precise mandates and are measured against specific benchmarks. Among asset managers, consideration is given, among others, to balancing security ct investment style and reliance on particular active investment strategies. oncentration, issuer concentration, The Companym participates in a small number of multiemployer plans in the Netherlands and Sweden. The Company has assessed and determined that none of the multiemployer plans which it participates in are individually, or in the aggregate, significant to the Company’s ity or expect to significff antly increase its contributions over the remainder of the multiemployer plans’ contract periods. Consolidated Financial Statements. The Company does not expect to incur a withdrawal liabila m The Companym maintains separate defined contribution plans covering certain employees and executives, primarily in the United States, the United Kingdom and Brazil. Under the plans, the Companym eligible employee’s compensation. The Companym the years ended December 31, 2021, 2020 and 2019, respectively. contributed approxi a contributes a specified percentage of each mately $16.9 million, $15.4 million and $15.8 million forff 86 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 9. Stockholders’ Equity Common Stock At December 31, 2021, the Company had 150,000,000 authorized shares of common stock with a par value of $0.01 per share, with approxi issuance under the Company’s 2006 Long-Term Incentive Plan (the “Plan”) (See Note 10). mately 74,441,312 shares of common stock outstanding and approximately 4,000,968 shares reserved for a Share Repurc ee hase Program In August and November 2021, the Company entered into two accelerated share repurchase ("ASR") agreements with financial institutions to repurchase an aggregate of $135.0 million of shares of its common stock. The Company received approximately 952,204 shares associated with these transactions as of December 31, 2021. On January 19, 2022, the Company final settlement of its November 2021 ASR agreement. In February and March 2020, received additional 113,824 shares uponu the Company entered into two ASR agreements with financial institutions to repurchase an aggregate of $55.0 million of shares of its common stock. The Company received approxi All shares received under the ASR agreements were retired upon share was recorded to a combination of “Additional paid-in capia tal” and “Retained earnings” within our Consolidated Balance Sheets. mately 970,141 shares in these transactions as of December 31, 2020. receipt, and the excess of the purchase price over par value per u a As of December 31, 2021, the remaining amount authorized to be repurchased under board-approved a share repurchase authorizations was approxima a tely $110.0 million, which has no expiration date. Dividends m The Company’s Board of Directors has declared and the Company has paid cash dividends per common share during the following years: Dividends declared and paid per common share ............................................... $ 4.74 $ 0.63 $ 0.63 2021(1)(2) 2020(2) 2019(2) ____________________________________ (1) The Company’s Board of Directors declared and the Company has paid quarterly cash dividends of $0.20 per common share beginning in the second quarter of 2021, from $0.16 per common share in the first quarter of 2021. On January 20, 2022, the Company's Board of Directors approved a quarterly dividend of $0.20 per common share outstanding commencing in the first quarter of 2022. In addition, the Company's Board of Directors also declared and the Company paid a special cash dividend of $4.00 per common share during 2021 totaling approximately $301.5 million. (2) The Company’s Board of Directors declared and the Company has paid quarterly cash dividends of $0.16 per common share beginning in the second quarter of 2019, from $0.15 per common share in the first quarter of 2019, through the first quarter of 2021. ff 87 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Accumulated Other Comprehensive Loss AGCO Corporation and its subsidiaries forff lowing table sets forth changes in accumulated other comprehensive loss by component, net of tax, attributed to the years ended December 31, 2021 and 2020 (in millions): The folff Accumulated other comprehensive loss, December 31, 2019 ......................................... $ (296.4) $ (1,297.5) $ (1.3) $ (1,595.2) Defined Benefit Pension Plans Cumulative Translation Adjustment Deferred Net Gains (Losses) on Derivatives Total m nsive loss.... d ments ............................ Other comprehensive (loss) income before reclassifications............................. Net losses (gains) reclassified fromff accumulated other comprehe Other comprehensive loss, net of reclassification adjust Accumulated other comprehensive loss, December 31, 2020 ......................................... Other comprehensive income (loss) before reclassifications............................. Net losses (gains) reclassified fromff nsive accumulated other comprehe income (loss)............................................ m Other comprehensive income (loss), net of reclassification adjust Accumulated other comprehensive loss, December 31, 2021 ......................................... $ d ments ............................ (32.1) 15.2 (16.9) (197.5) — (197.5) (313.3) (1,495.0) 70.0 12.9 82.9 (45.1) — (45.1) 5.1 (6.3) (1.2) (2.5) 5.1 (3.0) 2.1 (224.5) 8.9 (215.6) (1,810.8) 30.0 9.9 39.9 (230.4) $ (1,540.1) $ (0.4) $ (1,770.9) 88 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ff The foll owing table sets forth reclassification adjustments out of accumulated other comprehe m nsive loss by component attributed to AGCO Corporation and its subsidiaries forff the years ended December 31, 2021 and 2020 (in millions): Amount Reclassified fromff Accumulated Other Comprehensive Loss Details about Accumulated Other Comprehensive Loss Components Year ended December 31, 2021(1) Year ended December 31, 2020(1) Derivatives: Affected Line Item within the Consolidated Statements of Operations ff Net losses (gains) on foreign contracts ......................................................... $ Net gains on commodity contracts ................. Reclassification before tax................................. y currenc r Reclassification net of tax.................................. $ Defined benefit pension plans: Amortization of net actuarial losses ............... $ Amortization of prior service cost.................. Reclassification before tax................................. Reclassification net of tax.................................. $ Net losses reclassified from accumulated other comprehensive loss ............................... $ $ 11.4 (17.2) (5.8) 2.8 (3.0) $ 16.6 0.8 17.4 (4.5) 12.9 $ $ 9.9 $ (6.4) Cost of goods sold — Cost of goods sold (6.4) 0.1 (6.3) Income tax provision 15.7 Other expense, net(2) 2.2 Other expense, net(2) 17.9 Income tax provision (2.7) 15.2 8.9 ____________________________________ (1) (Gains) losses included within the Consolidated Statements of Operations for the years ended December 31, 2021 and 2020, respectively. (2) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost. See Note 8 to the Company’s Consolidated Financial Statements. 10. Stock Incentive Plan Under the Plan, up to 10,000,000 shares of AGCO’s common stock may be issued. As of December 31, 2021, of the 10,000,000 shares reserved for issuance under the Plan, approximately 4,000,968 shares remained 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 apprec a of the Company. iation rights, restricted stock units and restricted stock awards to employe es, officers and non-employee directors m Long-Term Incentive Plall n and Relatedtt Performance Awards m The Company’s primary long-term incentive plan is a performance share plan that provides forff awards of shares of the returntt on invested capita Company’s common stock based on achieving financial targets, such as targets forff margins, return on net assets and revenue growth, as determined by the Company’s Board of Directors. The stock awards under the Plan are earned over a performance period, and the number of shares earned is determined based on annual cumulative or average results for the specified period, depending on the measurement. Performance periods for the Company’s primary l ong- term incentive plan are consecutive and overlapping three-year cycles, and performance targets are set at the beginning of each cycle. The primary long-term incentive plan provides for participants to earn 33% to 200% of the target awards depending on the actual under the Plan are paid in shares of common stock at the end of each three-year performance period. The percentage level achievement is determined annually or over the three-year cycle in aggregate, with the ultimate award that is earned determined based uponu shareholder return modifier. The compensation expense associated with these awards is amortized ratably over the vesting or performance period based on the Company’s performance achieved, with no shares earned if performance is below the established minimum target. Awards earned the average of the three annual percentages. The 2021 grant of performance award shares is subject to a total projected assessment of the level of performance that will be achieved and earned. al, operating m rr r tt 89 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) During 2021, the Company granted 281,310 performance awards related to varying performance periods. m ion expense recorded during Compensat the grant date. For the 2021 awards that included a market condition, the Companym simulation. The weighted average grant-date fair value of performance awards granted under the Plan during 2019 was as follows: 2021, 2020 and 2019 with respect to awards granted was based upon the faiff r value as of measured the fair value using a Monte Carlo 2021, 2020 and dd d Weighted average grant-date fair value ............................................ $ 123.33 $ 70.84 $ 61.01 Years Ended December 31, 2020 2019 2021 Performance award transactions during 2021 were as follows and are presented as if the Companym were to achieve its maximum levels of performance under the plan: Shares awarded but not earned at January 1 ...................................................................................................... Shares awarded .................................................................................................................................................. ed .................................................................................................................................................. Shares forfeit ff ..................................................................................................................................................... Shares earnedr Shares awarded but not earned at December 31 ................................................................................................ 582,952 281,310 (40,350) (309,198) 514,714 Based on the level of performance achieved as of December 31, 2021, 330,174 shares were earned under the related performance period, including 97,818 shares earned as of December 31, 2020 related to certain retirees and other individuals. 330,174 shares were issued in February 2022, net of 125,363 shares that were withheld forff taxes related to the earned awards. The Plan allows for the participant to have the option of forfeiting a portion of the shares awarded in lieu of a cash payment tt contributed to the participant’s tax withholding to satisfy the participant’s statutory ent at the time of grant. In addition, assuming the maximum target levels of performance achieved, taxes which would be payablea there were 59,182 shares earned as of December 31, 2021 related to certain retirees and other individuals that will be issued at the end of the relevant performance periods based on the ultimate level of performance achieved with respect to those periods. minimum federal, state and employm m As of December 31, 2021, the total compensation cost r lelat ded to une i m sumi gng hthe Com ypany’s current projprojec dted assessment of hthe lle as $20.6 million, a dnd hthe w ieighteghtedd ave grage years. hiThis e istimate iis bba dsed on hthe current projprojec dted lle lvels off perfformance off o tual achihi l yyet recogniz lvel of performance hthat ecogniz ded iis ap iperi dod over hwhiich ih i it is expectedd t bo be recogniz utstandi gng di lvels off p ferformance. higher or llower bba dsed on ac ogniz ded co lduld bbe higher deved lle d arned performance awardds not yyet recogni illwill bbe achihievedd, was ognizedd, approximat lelyy i proximat lely oy ne and one-half d awards. hThe compensat iion cost not m i tt Restricted Stoctt k UnitsUU During the year ended December 31, 2021, the Company granted 92,848 restricted stock unit (“RSU”) awards. These awards entitle the participant to receive one share of the Company’s common stock forff third per year over a three-year requisite service period. The 2020 grant of RSUs to certain executives has a three-year cliff metric relative to the Company's defined peer vesting requirement subject to adjustment based on a total shareholders returntt group. The compensation expense associated with all RSU awards is being amortized ratablya 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 years ended December 31, 2021, 2020 and 2019 were $113.91, $70.83 and $61.01, respectively. RSU transactions during the year ended December 31, 2021 were as follows: each RSU granted and vest one- dd Shares awarded but not vested at January 1 ....................................................................................................... Shares awarded ................................................................................................................................................... Shares forfeited................................................................................................................................................... Shares vested ...................................................................................................................................................... Shares awarded but not vested at December 31 ................................................................................................. 143,287 92,848 (9,797) (67,110) 159,228 90 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A majority of the 67,110 shares vested with respect to RSU awards during dd 2021 were issued in January 2021. 3,830 shares earned during 2021 related to certain retirees. During January 2022, 44,991 RSUs shares were issued, net of 23,726 shares that were withheld forff shares awarded in lieu of a cash payment contributed to the participant's tax withholding to satisfy the participant's statutory minimum federal, state and employment taxes which would be payable at the time of grant. As of December 31, 2021, the total compensat ion cost related to the unvested RSUs not yet recognized was approximately $8.5 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years. taxes. The Plan allows for the participant to have the option of forfeiting a portion of the m tt ii Stock-settltt edll Appreci ati pp on Rights Certain executives and key managers were eligible to receive grants of SSARs through the year ended in shares of the Company’s common stock. The participant may exercise his or her SSARs at r r the grant is vested but no later than seven years after the date of grant. The SSARs vest ratably over a four-yea December 31, 2020. The Company did not grant any SSARs during the year ended December 31, 2021. The SSARs provide a participant with the right to receive the aggregate appreciation in stock price over the market price of the Company’s common stock at the date of grant, payablea any time afteff period from the date of grant. SSAR awards made to certain executives and key managers under the Plan are made with the base price equal to the price of the Company’s common stock on the date of grant. The Company recorded stock compensation expense of approximately $0.8 million, $1.9 million and $2.4 million associated with SSAR awards during 2021, 2020 and 2019, respectively. The compensation expense associated with these awards is being amortized ratablya The Company estimated the fair value of the grants using the Black-Scholes option pricing model. over the vesting period. ff The weighted average grant-date fair value of SSAR awards granted under the Plan and the weighted average assumptim ons under the Black-Scholes option model were as follows for the years ended December 31, 2020 and 2019: Weighted average grant-date fair value............................................................................... $ 12.31 $ 11.34 2020 2019 Weighted average assumptions under Black-Scholes option model: Expected life of awards (years) ........................................................................................... Risk-free interest rate .......................................................................................................... Expected volatility............................................................................................................... Expected dividend yield ...................................................................................................... 3.0 1.5 % 24.1 % 0.9 % SSAR transactions during the year ended December 31, 2021 were as follows: SSARs outstanding at January 1......................................................................................................................... SSARs granted.................................................................................................................................................... SSARs exercised................................................................................................................................................. SSARs canceled or forfeited............................................................................................................................... SSARs outstanding at December 31................................................................................................................... SSAR price ranges per share: p g p 3.0 2.6 % 24.2 % 1.0 % 403,150 — (194,661) (13,878) 194,611 Granted............................................................................................................................................................. $ Exercised.......................................................................................................................................................... ted........................................................................................................................................ Canceled or forfei ff — 43.88 - 73.14 46.58 - 73.14 Weighted average SSAR exercise prices per share: p p g g Granted............................................................................................................................................................. $ Exercised.......................................................................................................................................................... ted........................................................................................................................................ Canceled or forfei Outstanding at December 31............................................................................................................................ ff — 64.41 68.51 68.33 91 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) At December 31, 2021, the weighted average remaining contractual life of SSARs outstanding was approxi mately four ion cost related to unvested SSARs not yet recognized was approximately years. As of December 31, 2021, the total compensat $0.8 million and the weighted-average period over which it is expected to be recognized is approximately one and one-half years. m a remaining contractual The following tablea tt lives by groups of similar price as of December 31, 2021: sets forth the exercise price range, number of shares, weighted average exercise price, and Range of Exercise Prices $46.58 - $63.47 $72.74 - $73.14 Number of Shares 80,523 114,088 194,611 SSARs Outstanding Weighted Average Remaining Contractual Life (Years) 3.51 4.41 SSARs Exercisable Weighted Average Exercise Price 61.91 $ 72.86 $ Exercisable as of December 31, 2021 38,923 35,013 Weighted Average Exercise Price 60.91 $ 72.99 $ 73,936 $ 66.63 The total faiff r value of SSARs vested during 2021 was approxi a mately $1.5 million. There were 120,675 SSARs that were not vested as of December 31, 2021. The total intrinsic value of outstanding and exercisable SSARs as of December 31, 2021 was $9.3 million and $3.7 million, respectively. The total intrinsic value of SSARs exercised during 2021 was approximately $13.6 million. The excess tax benefit realized for tax deductions in the United States related to the exercise of SSARs, vesting of RSU awards and vesting of performance awards under the Plan was approxi December 31, 2021. The excess tax benefit realized forff ions in the United States related to the exercise of SSARs and vesting of RSU awards and vesting of performance awards under the Plan was approxi the year ended December 31, 2020. The excess tax benefit realized forff ions in the United States related to the exercise of mately $2.7 million forff SSARs and vesting of RSU awards and vesting of performance awards under the Plan was approxi year ended December 31, 2019. The Company realized an insignificant tax benefit from the exercise of SSARs, vesting of performance awards and vesting of RSU awards in certain foreign jurisdictions during the years ended December 31, 2021, 2020 and 2019. mately $3.3 million forff mately $2.5 million forff the year ended tax deductd tax deductd a a a the On January 20, 2022, the Company granted 137,283 performance award shares (subject to the Company achieving future target levels of performance) and 91,583 RSUs under the Plan. The 2022 grant of performance award shares is subject to a total shareholder returntt modifier. Directortt Restricted Stock SS Grants Pursuant to the Plan, all non-employee directors receive annual restricted stock grants of the Company’s common stock. All restricted stock grants made to the Company’s directors are restricted as to transferability for a period of one year. In the event a director departs from the Company’s Board of Directors, the non-transferabila 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 statutt ory minimum federal, state and employment taxes that would be payable at the time of grant. The 2021 grant was made on April 22, 2021 and equated to 9,117 shares of common stock, of which 7,899 shares of common stock were issued, after shares were withheld for taxes. The Company recorded stock compensat ion expense of approximately $1.4 million during 2021 associated with these grants. ity period expires immediately. m 11. Derivative Instruments and Hedging Activities The Company attempts to manage its transactional foreign exchange exposure by hedging foreign currency cash flowff forecasts and commitments arising from the anticipated settlement of receivables and payables and from future purchases and sales. Where natural ly offsetting currency positions do not occur, the Company hedges certain, but not all, of its exposures through the use of foreign currency contracts. The Company’s translation exposure resulting from translating the financial tt 92 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) statements of foreign subsidiaries into United States dollars may be partially hedged from time to time. When practical, the translation impact is reduced by finaff ncing local operations with local borrowings. The Company uses floating rate and fixed rate debt to finance its operations. The floff ating rate debt obligations expose ity in interest payments due to changes in the EURIBOR, LIBOR or other appl the Company to variabila interest rates such as SOFR upon the discontinuation of LIBOR. The Company believes it is prudent to limit the variability of a portion of its interest payments, and to meet that objective, the Company periodically enters into interest rate swaps to manage the interest rate risk associated with the Company’s borrowings. The Company designates interest rate contracts used to convert the interest rate exposure on a portion of the Company’s debt portfolio fromff while those contracts converting the Company’s interest rate exposure from a fixff ed rate to a floaff value hedges. ting rate to a fixff ed rate as cash flow hedges, ting rate are designated as fair icable benchmark a floaff a To protect the value of the Company’s investment in foreign operations against adverse changes in foreign currency exchange rates, the Company from time to time, may hedge a portion of the Company’s net investment in the foreff subsidiaries by using a cross currency swap. The component of the gains and losses on the Company’s net investment in the designated forei gn exchange rates are economically offset by movements in the fair value of the cross currency swap contracts. gn operations driven by changes in forei ign ff ff The Company is exposed to commodity risk from steel and other raw material purchases where a portion of the contractual purchase price is linked to a variablea enters into cash flowff hedges to mitigate its exposure to variabila ity in commodity pt rices. rate based on publicly available market data. From time to time, the Company The Company’s senior management establia shes the Company’s foreign currency and interest rate risk management policies. These policies are reviewed periodically by the Finance Committee of the Company’s Board of Directors. The policies allow for the use of derivative instruments to hedge exposures to movements in forei The Company’s policies prohibit the use of derivative instruments forff ff speculative purposes. gn currency and interest rates. All derivatives are recognized on the Company’s Consolidated Balance Sheets at fair value. On the date the derivative contract is entered into, the Company designates the derivative as either (1) a cash flowff (2) a faiff r value hedge of a recognized liabia lity, (3) a hedge of a net investment in a forei derivative instrument. ff hedge of a forec gn operation, or (4) a non-designated asted transaction, ff The Company categorizes its derivative assets and liabilities into one of three levels based on the assumptions used in valuing the asset or liabila The Company’s valuation techniques are designed to maximize the use of observable inputs and minimize the use of unobservable inputs. ity. See Note 13 for a discussion of the fair value hierarchy as per the guidance in ASC 820. Counterparty Risk The Company regularly monitors the counterparty risk and credit ratings of all the counterparties to the derivative instruments. The Company believes that its exposures are appropriately diversified across counterparties and that these counterparties are creditworthy financial institutions. If the Company perceives any risk with a counterparty, then the Company would cease to do business with that counterparty. There have been no negative impacts to the Company from any non- performance of any counterparties. Derivativtt e Transacti TT ons Designatedtt as Hedging Instruments tt Cash Flow Hedges Foreigni Currency Contractstt The Company uses cash flow hedges to minimize the variabila ity in cash flows of assets or liabilities or forec ff asted a by fluctuations in foreign currency exchange rates. The changes in the fair values of these cash flow hedges transactions caused are recorded in accumulated other comprehensive loss and are subsequently reclassified into “Cost of goods sold” during the period the sales and purchases are recognized. These amounts offset the effect of the changes in foreign currency rates on the related sale and purchase transactions. 93 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) During 2021, 2020 and 2019, the Company designated certain foreign currency contracts as cash flow hedges of hedges expected future sales and purchases. The Company did not have any derivatives that were designated as cash flowff related to foreign currency contracts as of December 31, 2021. The total notional value of derivatives that were designated as cash flow hedges was $395.8 million as of December 31, 2020. Steel Commodity Contracts In December 2020, the Company designated certain steel commodity contracts as cash flow hedges of expected future purchases of steel. The total notional value of derivatives that were designated as cash flowff $31.9 million and $14.7 million as of December 31, 2021 and 2020, respectively. hedges was approximately The following table summarizes the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income durid ng 2021, 2020 and 2019 (in millions): Recognized in Net Income Gain (Loss) Recognized in Accumulated Other Comprehensive Loss Classification of Gain (Loss) Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of the Line Item in the Consolidated Statements of Operations Containing Hedge Gains (Losses) 2021 Foreign currency contracts .............................. $ Commodity contracts(1) ................................... Total................................................................. $ 2020 Foreign currency contracts .............................. $ Commodity contracts(1) ................................... Total................................................................. $ 2019 Foreign currency contracts .............................. $ (7.4) Cost of goods sold 12.5 Cost of goods sold 5.1 4.6 Cost of goods sold 0.5 Cost of goods sold 5.1 (2.6) Cost of goods sold $ $ $ $ $ (10.2) $ $ 13.2 3.0 $ 6.3 — $ 6.3 8,566.0 8,566.0 7,092.2 7,092.2 0.1 $ 7,057.1 ____________________________________ (1) The outstanding contracts as of December 31, 2021 range in maturity through July 2022. 94 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ff The foll owing table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the years ended December 31, 2021, 2020 and 2019 (in millions): Beforff e-Tax Amount Income Tax After-Tax Amount Accumulated derivative net gains as of December 31, 2018 ..................................... $ Net changes in faiff Net gains reclassified from accumulated other comprehe Accumulated derivative net losses as of December 31, 2019 .................................... $ r value of derivatives ..................................................................... nsive loss into income...... m r value of derivatives ..................................................................... nsive loss into income...... m Net changes in faiff Net gains reclassified from accumulated other comprehe Accumulated derivative net losses as of December 31, 2020 .................................... $ Net changes in fair value of derivatives ..................................................................... ff Net gains reclassified from accumulated other comprehens Accumulated derivative net losses as of December 31, 2021(1) ................................. $ ive loss into income...... m 1.6 $ (3.0) (0.1) (1.5) $ 4.9 (6.4) (3.0) $ 8.3 (5.8) (0.5) $ 0.2 $ (0.4) — (0.2) $ (0.2) (0.1) (0.5) $ 3.2 (2.8) (0.1) $ 1.4 (2.6) (0.1) (1.3) 5.1 (6.3) (2.5) 5.1 (3.0) (0.4) ____________________________________ (1) As of December 31, 2021, approximat ely $0.2 million of derivative realized net losses and approximately $1.5 million of derivative realized net gains, before taxes, remain in accumulated other comprehensive loss related to foreign currency contracts and commodity contracts, respectively, associated with inventory that had not yet been sold. a Net Investment Hedges The Company uses non-derivative and derivative instrurr ments, to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. For instrumrr foreign operations, changes in the fair value of the derivative instrumrr ff adjustments, a component of accumulated other comprehensive loss, to offseff t changes in the value of the net investments being hedged. When the net investment in foreign operations is sold or substantially liquidates, the amounts recorded in accumulated other comprehensive loss are reclassified to earnings. To the extent foreign currency denominated debt is de-designated from a net investment hedge relationship, changes in the value of the foreign currenc through the maturity date. ents that are designated as hedges of net investments in ents are recorded in forei y denominated debt are recorded in earnings gn currency translation r ff In January 2018, the Company entered into a cross currency swap ca ontract as a hedge of its net investment in foreign ff currency translation gains or losses on the net investment. The cross currency swap expired on operations to offset foreign January 19, 2021. At maturity of the cross currency swap ca approximately €245.7 million (or approximately $297.1 million as of January 19, 2021) and received $300.0 million froff m the counterparties, resulting in a gain of approxim The Company received quarterly interest payments from the counterparties based on a fixeff cross currenc ately $2.9 million that was recognized in accumulated other comprehensive loss. ontract, the Company delivered the notional amount of d interest rate until maturit y of the y swap. a r tt On January 29, 2021, the Company entered into a new cross currency swap contract as a hedge of its net investment in ff gn currency translation gains or losses on the net investment. The cross currenc foreign operations to offset forei expiration date of January 29, 2028. At maturity of the cross currency swap ca amount of approximately €247.9 million (or approximately $281.3 million as of December 31, 2021) and will receive $300.0 million from the counterparties. The Company will receive quarterly interest payments fromff on a fixff ed interest rate until maturi ty of the cross currenc ontract, the Company will deliver the notional the counterparties based y swap. y swap has an r r t The following table summarizes the notional values of the instrument designated as a net investment hedge (in millions): Cross currency swap contract ................................................................................. $ 300.0 $ 300.0 Notional Amount as of December 31, 2021 December 31, 2020 95 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ff The foll owing table summarizes the after-tax impact of changes in the fair value of the instrument designated as a net investment hedge (in millions): Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Years Ended December 31, 2020 December 31, 2019 December 31, 2021 Foreign currency denominated debt .......................................................... $ Cross currency swap ca ontract.................................................................... — $ 11.0 $ 1.7 (25.5) 2.5 9.3 Derivativett Transactions NotNN Designated as HedHH ging dd Instrumtt entstt During 2021, 2020 and 2019, the Company entered into foreign currency contracts to economically hedge receivabla es and its subsidi s on the Companym and payablea functional currency. These contracts were classifiedff contracts are substantially offset by losses and gains on the remeasurement of the underlying asset or liabia lity being hedged and are immediately recognized into earnings. As of December 31, 2021 and 2020, the Companym had outstanding foreign currency contracts with a notional amount of approxi aries’ balance sheets that are denominated in foreign currencies other than the as non-designated derivative instruments. Gains and losses on such mately $3,681.9 million and $3,326.6 million, respectively. u a The following table summarizes the impacm t that changes in the fair ff value of derivatives not designated as hedging instruments had on net income (in millions): Classification of Gain (Loss) December 31, 2021 For the Years Ended December 31, 2020 December 31, 2019 Foreign currency contracts.............................. Other expense, net $ 54.8 $ 3.7 $ 20.4 The tabla e below sets fort ff h the fair value of derivative instrumrr ents as of December 31, 2021 (in millions): Asset Derivatives as of December 31, 2021 Liability Derivatives as of December 31, 2021 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivative instruments designated as hedging instruments: $ $ — 2.0 — 5.1 7.1 r Foreign currenc assets Commodity contracts ................................ Other current assets y contracts........................ Other current r $ — Other current liabilities 0.2 Other current liabilities Cross currency swap contract.................... Other noncurrent assets 12.5 Other noncurrent liabilities Derivative instruments not designated as hedging instruments: Foreign currency contracts (1) ................... Other current assets 15.1 Other current liabilities Total derivative instruments ................. $ 27.8 ____________________________________ (1) The outstanding contracts as of December 31, 2021 range in maturity through October 2022. 96 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The table below sets forth the fair value of derivative instruments as of December 31, 2020 (in millions): Asset Derivatives as of December 31, 2020 Liability Derivatives as of December 31, 2020 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivative instruments designated as hedging instruments: Foreign currency contracts........................ Other current assets Commodity contracts ................................ Other current assets Cross currency swap contract.................... Other noncurrent assets Derivative instruments not designated as hedging instruments: Foreign currency contracts........................ Other current assets Total derivative instruments ................. $ $ 1.0 Other current liabilities 0.5 Other current liabilities 1.5 Other noncurrent liabilities 12.3 Other current liabilities 15.3 $ $ 4.5 — — 22.2 26.7 12. Commitments and Contingencies The futuret payments required under the Company’s significant commitments, excluding indebtedness, as of December 31, 2021 are as follows (in millions): Interest payments on indebtedness – As of December 31, 2021, the Companym had interest payments of approximately $15.1 million due during the year ended December 31, 2022. Interest payments generally do not vary materially year to year. Indebtedness amounts reflect the principal amount of the Company's senior term loan, senior notes, credit facility and certain short-term borrowings, gross of any debt issuance costs. Refer to Note 7 of the Consolidated Financial Statements for additional information regarding indebtedness. Unconditional purchase obligati ons – As of December 31, 2021, the Company had approximately $131.1 million of outstanding purchase obligations payable during the year ended December 31, 2022. These obligations generally do not vary materially year to year. i Other short-term and long-term obligations – As of December 31, 2021, the Company had approximately $40.1 million of income tax liabilities related to uncertain income tax provisions connected with ongoing income tax audits in various jurisdictions that it expects to pay or settle within the next 12 months. These liabilities and related income tax audits are subject to statutory contribution requirements under its U.S. and non-U.S. defined benefit pension and postretirement plans due during the year ended December 31, 2022. Refer to Notes 6 and 8 of the Consolidated Financial Statements for additional information regarding the Company's uncertain tax positions and pension and postretirement plans, respectively. These obligations comprisem a majority of the Company's other short-term and long-term obligations. expiration. Additionally, the Company had approximately $37.8 million of estimated futurett minimum tt Off-Balance Sheet Arrangements Guarantees The Company maintains a remarketing agreement with its U.S. finance joint venture, t AGCO Finance LLC, whereby the Company is obligated to repurchase up to $6.0 million of repossessed equipment each calendar year. The Company believes that any losses that might be incurred on the resale of this equipment will not materially impact the Company’s financial position or results of operations, due to the fair value of the underlying equipment. At December 31, 2021, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $25.2 million, primarily related to dealer and end-user financing of equipment. Such guarantees generally obligate the Company to repay outstanding finance obligations owed to financial instituti such loans through 2027. Losses under such guarantees historically have been insignificant. In addition, the Company generally would expect to be able to recover a significant portion of the amounts paid under such guarantees from the sale of the underlying financed farm equipment, as the fair value of such equipment is expected to be sufficient to offset a substantial portion of the amounts paid. The Company also guarantees indebtedness owed to certain of its financ ons if dealers or end users default on e joint ventures if dealers ff tt tt 97 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) or end users default on loans. Losses under such guarantees historically have been insignificant and the guarantees are not material. The Company believes the credit risk associated with these guarantees is not material. In addition, at December 31, 2021, the Companym had accrued approxi a mately $23.3 million of outstanding guarantees of minimum residual values that may be owed to its finaff of certain eligible operating leases between the finance joint ventures and end users. The maximum potential amount of future payments under the guarantee is approxim nce joint ventures in the United States and Canada due upon expiration ately $160.7 million. a Other At December 31, 2021, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $3,681.9 million. The outstanding contracts as of December 31, 2021 range in maturity through October 2022. The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $31.9 million that range in maturity through July 2022 (see Note 11). The Company sells a majority of its wholesale receivablea s in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finaff arrangements to finaff that these facilities should be accounted forff nce joint ventures. The Company also sells certain accounts receivablea ncial institutions around the world. The Company reviewed the sale of such receivablea under factoring s and determined as off-balance sheet transactions. Contingencies In August 2008, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of the Company’s Brazilian operations and the related transfer of certain assets to the Company’s Brazilian subsidiaries. The amount of the tax disallowance through December 31, 2021, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $23.6 million). The amount ultimately in dispute will be significantly greater because of interest and penalties. The Company has been advised by its legal and tax advisors that its position with respect to the deductd ions is allowable under the tax laws of Brazil. The Company is contesting the disallowance and believes that it is not likely that the assessment, interest or penalties will be required to be paid. However, the ultimate outcome will not be determined until the Brazilian tax appeal process is complem te, which could take several years. During 2017, the Company purchased Precision Planting, which provides precision agricultural technology solutions. In 2018, Deere & Company filed separate complaints in the U.S. District Court of Delaware against the Company and its Precision Planting subsidiary alleging that certain products of those entities infringe certain patents of Deere. The two complam ints subsequently were consolidated into a single case, Case No. 1:18-cv-00827-CFC (CONSOLIDATED), that currently is scheduled for trial in July 2022. It is the Company’s position that no patents have been, or are continuing to be, infringed, and the Company is vigorously contesting the allegations in the complam int. The Company has an indemnity right under the purchase agreement related to the acquisition of Precision Planting from its previous owner. Pursuant to that right, the previous owner of Precision Planting currently is responsible for the litigation costs associated with the complaint and is obligated to reimburse AGCO for some or all of the damages in the event of an adverse outcome in the litigation. In the event of an adverse outcome, the Company estimates that the range of possible damages, based upon specialists, would be up to approximately $7.0 million. Deere & Company has provided an estimate of its damages that is significantly higher than the Company estimates and that the Company believes does not have merit. the advice of third-party u The Company is a party to various other legal claims and actions incidental to its business. The Company believes that none of these claims or actions, either individually or in the aggregate, is material to its business or financial statements as a whole, including its results of operations and financial condition. 98 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 13. Fair Value of Financial Instruments The Companym categorizes its assets and liabilities into one of three levels based on the assumptions used in valuing the r value hierarchy that prioritizes the asset or liability. Estimates of fair value for financial assets and liabia lities are based on a faiff inputs to valuation techniques used to measure fair value. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value measurements are classified under the folff lowing hierarchy: • • • Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Quoted prices forff liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observablea can be corroborated by observablea market data for substantially the full term of the assets or liabilities. . Level 3 - Model-derived valuations in which one or more significant inputs are unobservablea similar assets or liabilities in active markets; quoted prices for identical or similar assets or or The Company categorizes its pension plan assets into one of the three levels of the fair value hierarchy. See Note 8 forff a discussion of the valuation methods used to measure the fair value of the Company’s pension plan assets. The Company enters into forei ff gn currency, commodity and interest rate swap contracts. The fair values of the Company’s derivative instruments are determined using discounted cash flow valuation models. The significant inputs used in these models are readily available in public markets, or can be derived fromff observablea market transactions, and therefore have been classified as Level 2. Inputs used in these discounted cash flowff applicable exchange rates, forward rates or interest rates. Such models used forff See Note 11 for a discussion of the Company’s derivative instruments and hedging activities. valuation models for derivative instruments include the option contracts also use implim ed volatility. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and 2020 are summarized below (in millions): Derivative assets................................................................................... $ Derivative liabilities ............................................................................. — $ — 27.8 $ 7.1 — $ — 27.8 7.1 As of December 31, 2021 Level 1 Level 2 Level 3 Total Derivative assets................................................................................... $ Derivative liabilities ............................................................................. — $ — 15.3 $ 26.7 — $ — 15.3 26.7 As of December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents, accounts and notes receivable, net and accounts payable are valued at their carrying Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial amounts in the Company’s instruments. m The carrying amounts of long-term debt under the Company’s 1.002% senior term loan duedd 2025 and senior term loans due between 2023 and 2028 approximate fair value based on the borrowing rates currently available to the Company for loans with similar terms and average maturities. At December 31, 2021, the estimated fair value of the Company's 0.800% senior notes due 2028, based on listed market values, was approximately €595.1 million (or approximately $675.2 million as of December 31, 2021), compared to the carrying value of €600.0 million (or approximately $680.8 million as of December 31, 2021). See Note 7 forff additional information on the Company’s long-term debt. 99 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 14. Related Party Transactions tt ff a a finaff Rabobank, ncial instituti on based in the Netherlands, is a 51% owner in the Company’s finance joint ventures, which are located in the United States, Canada, Europe, Brazil, Argentina and Australia. Rabobank is also the principal agent and participant in the Company’s revolving credit facility ( joint ventures represents financ Under the various joint venturet primarily through lines of credit. During 2021, the Company did not make additional investments in its finance joint ventures. nce joint venture in During 2020, the Company made a total of approximately $1.9 million of additional investments in its finaff the Netherlands. During 2019, the Company did not make additional investments in its finance joint ventures. During 2021, the t Company received approximately $84.4 million dividends from certain of its finaff nce joint ventures. During 2020, the Company did not receive dividends from its financ t dividends from certain of its finance joint ventures. e receivables. The majoa rity of the liabilities represents notes payable and accrued interest. agreements, Raboba During 2019, the Company received approximately $40.5 million nk or its affiliates provide financing to the joint venture companim ty of the assets of the Company’s finance see Note 7). The majori e joint ventures. es, a a ff t t t The Company’s finance joint ventures t provide retail finff ancing and wholesale finff ancing to its dealers. The terms of the financing arrangements offered to the Company’s dealers are similar to arrangements the finance joint ventures provide to unaffiliated third parties. In addition, the Company transfers, on an ongoing basis, a majority of its wholesale receivablea North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finaff The Company maintains a remarketing agreement with its U.S. finance joint venturett minimum residual values that may be owed to its finaff eligible operating leases and has guarantees with its other finaff In addition, as part of sales incentives provided to end users, the Company may fromff retail finff ancing provided by its finaff Company’s dealers (see Note 1). nce joint ventures in the U.S. and Canada upon the expiration of certain nce joint ventures which were not material (see Note 12). nce joint ventures. The cost of those programs is recognized at the time of sale to the nce joint ventures (see Note 4). and has outstanding guarantees of time to time subsidize interest rates of s in The Company has a minority equity interest in Tractors and Farm Equipment Limited (“TAFE”), which manufactures and sells Massey Ferguson-branded equipment primarily in India, and also supplies tractors and components to the Company for sale in other markets. On October 15, 2020, TAFE repurchased 461,000 shares of its common stock fromff the Company for approximately $33.9 million, resulting in an approximate remaining 20.7% ownership interest. Mallika Srinivasan, who is the Chairman and Managing Director of TAFE, is currently a member of the Company’s Board of Directors. As of December 31, 2021, TAFE beneficially owned 12,150,152 shares of the Company’s common stock, not including shares of the Company’s common stock received by Ms. Srinivasan for service as a director. The Company and TAFE are parties to an agreement pursuant to which, among other things, TAFE has agreed not to purchase in excess of 12,150,152 shares of the Company’s common stock, subjeu representative to its Board of Directors. During 2021, 2020 and 2019, the Company purchased approximately $137.6 million, $78.9 million and $92.7 million, respectively, of tractors and components from TAFE. During 2021, 2020 and 2019, the Company sold approximately $1.4 million, $1.3 million and $1.5 million, respectively, of parts to TAFE. The Company received dividends from TAFE of approximately $2.0 million, $1.8 million and $2.0 million during 2021, 2020 and 2019, respectively. ct to certain adjustments, and the Company has agreed to annually nominate a TAFE 100 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 15. Segment Reporting segments distribute a fulff The Company’s four reportablea equipment and related replacement parts. The Company evaluates segment performance primarily based on income from operations. Sales for each segment are based on the location of the third-party customer. The Company’s selling, general and administrative expenses and engineering expenses are generally charged to each segment based on the region and division where the expenses are incurred. As a result, the components of income fromff years ended December 31, 2021, 2020 and 2019 based on the Company’s reportablea operations for one segment may not be comparable to another segment. Segment results for the segments are as follows (in millions): l range of agricultural tt South America Europe/ Middle East Asia/ Pacific/ Africa Consolidated Years Ended December 31, 2021 Net sales .................................................................. $ 2,659.2 238.1 operations .......................................... Income fromff North America $ 1,307.7 132.2 $ Depreciation............................................................ Assets ...................................................................... Capital expenditures................................................ 60.8 1,328.1 41.2 26.5 922.7 32.5 $ 6,221.7 755.4 116.5 2,348.7 184.6 $ 949.7 113.9 16.9 610.6 11.5 11,138.3 1,239.6 220.7 5,210.1 269.8 2020 Net sales .................................................................. $ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ 9,149.7 Income fromff operations .......................................... Depreciation............................................................ Assets ...................................................................... Capital expenditures................................................ 2019 193.7 61.3 1,051.9 42.2 29.3 25.8 687.6 18.8 585.3 110.5 2,238.7 201.8 62.1 14.9 536.2 7.1 870.4 212.5 4,514.4 269.9 Net sales .................................................................. $ 2,191.8 $ 802.2 $ 5,328.8 $ 718.6 $ 9,041.4 Income (loss) from operations ................................ Depreciation............................................................ Assets ...................................................................... Capital expenditures................................................ 121.6 61.6 1,125.6 52.1 (39.4) 32.4 758.0 32.9 638.2 102.7 2,187.7 173.5 43.4 14.2 430.2 14.9 763.8 210.9 4,501.5 273.4 101 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A reconciliation from the segment information to the consolidated balances for income fromff operations and total assets is set forth below (in millions): 2021 2020 2019 Segment income fromff Corporate expenses .............................................................................. operations ........................................................ $ $ 1,239.6 (135.2) $ 870.4 (134.7) Amortization of intangibles ................................................................. Stock compensation expense ............................................................... Impairment charges.............................................................................. Restructuring expenses ........................................................................ Consolidated income fromff operations ................................................. $ Segment assets ..................................................................................... $ Cash and cash equivalents.................................................................... Investments in affiliates ....................................................................... Deferred tax assets, other current and noncurrent assets ..................... Intangible assets, net ............................................................................ (61.1) (26.6) — (15.3) 1,001.4 5,210.1 889.1 413.5 996.4 392.2 $ $ (59.5) (36.8) (20.0) (19.7) 599.7 4,514.4 1,119.1 442.7 665.9 455.6 $ $ Goodwill .............................................................................................. Consolidated total assets ...................................................................... $ 1,280.8 9,182.1 $ 1,306.5 8,504.2 $ 763.8 (129.0) (61.1) (40.0) (176.6) (9.0) 348.1 4,501.5 432.8 380.2 645.2 501.7 1,298.3 7,759.7 Property, plant and equipment, right-of-use lease assets and amortizablea intangible assets by country as of December 31, 2021 and 2020 was as foll ff ows (in millions): 2021 2020 United States ....................................................................................................................... $ 499.1 $ Germany.............................................................................................................................. Finland ................................................................................................................................ Brazil................................................................................................................................... France.................................................................................................................................. Italy ..................................................................................................................................... China ................................................................................................................................... Denmark.............................................................................................................................. Other ................................................................................................................................... 446.7 189.5 144.9 133.2 112.7 91.6 84.7 222.0 541.2 456.6 191.4 150.4 137.6 129.0 98.9 101.9 232.8 $ 1,924.4 $ 2,039.8 102 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 16. Revenue Contract Liabiliii tiii es Contract liabilities relate to the following: (1) unrecognized revenues where advance payment of consideration m performance with respect to extended warranty and maintenance contracts and where the performance precedes the Company’s obligation is satisfied over time, (2) unrecognized revenues where advance payment of consideration precedes the Company’s performance with respect to certain grain storage and protein production systems and where the performance obligation is satisfied over time and (3) unrecognized revenues where advance payment consideration precedes the Company’s performance with respect to precision technology services and where the performance obligation is satisfied over time. Significant changes in the balance of contract liabila ities for the years ended December 31, 2021 and 2020 were as follows (in millions): Year Ended December 31, 2021 Year Ended December 31, 2020 Balance at beginning of period......................................................................................... $ Advance consideration received....................................................................................... Revenue recognized during the period for extended warranty contracts, maintenance services and technology services...................................................................................... Revenue recognized during the period related to grain storage and protein production systems ............................................................................................................................. Foreign currency translation............................................................................................. 172.0 $ 227.8 (64.0) (103.5) (6.1) Balance as of December 31 .............................................................................................. $ 226.2 $ 104.0 192.7 (46.6) (85.6) 7.5 172.0 The contract liabilities are classified as either “Other current liabilities” and "Other noncurrent liabilities" or “Accrued expenses” in the Company’s Consolidated Balance Sheets. In 2021, the Company recognized approximately $80.7 million of revenue that was recorded as a contract liabila approximately $44.0 million of revenue that was recorded as a contract liability at the beginning of 2020. ity at the beginning of 2021. In 2020, the Company recognized Remaining Performance Obligati i ons The estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2021 are $73.2 million in 2022, $62.5 million in 2023, $35.4 million in 2024, $16.9 million in 2025 and $7.6 million thereafter, and relate primarily to extended warranty contracts. The Company applied the practical expedient in ASU 2014-09 and has not disclosed information about remaining performance obligations that have original expected durations of 12 months or less. 103 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Disaggregated Revenue Net sales forff the year ended December 31, 2021 disaggregated by primary geographical markets and majoa r products consisted of the folff lowing (in millions): North America South America Europe/ Middle East Asia/ Pacific/Africa Consolidated Primary geographic a al markets: United States........................................ $ 2,116.2 $ — $ Canada ................................................. 436.7 Germany .............................................. France .................................................. United Kingdom and Ireland............... Finland and Scandinavia ..................... Other Europe ....................................... South America..................................... Middle East and Algeria...................... Africa................................................... Asia...................................................... Australia and New Zealand ................. Mexico, Central America and Caribbean............................................. — — — — — — — — — — — — — — — — 1,294.8 — — — — 106.3 12.9 — $ — 1,332.0 1,129.1 635.3 836.3 2,104.6 — 184.4 — — — — — $ — — — — — — — — 152.3 436.5 360.9 — 2,116.2 436.7 1,332.0 1,129.1 635.3 836.3 2,104.6 1,294.8 184.4 152.3 436.5 360.9 119.2 $ 2,659.2 $ 1,307.7 $ 6,221.7 $ 949.7 $ 11,138.3 Major products: Tractors................................................ $ Replacement parts ............................... Grain storage and protein production systems ................................................ Combines, application equipment and other machinery................................... $ $ 940.4 379.1 534.9 $ 664.6 131.8 140.1 $ 4,338.2 1,070.5 174.0 804.8 2,659.2 $ 371.2 1,307.7 $ 639.0 6,221.7 $ 443.7 106.5 227.1 172.4 949.7 $ $ 6,386.9 1,687.9 1,076.1 1,987.4 11,138.3 104 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Net sales for the year ended December 31, 2020 disaggregated by primary geographical markets and majoa r products consisted of the folff lowing (in millions): North America South America Europe/ Middle East Asia/ Pacific/Africa Consolidated Primary geographic a al markets: United States ....................................... $ Canada................................................. Germany.............................................. $ 1,763.2 325.9 — — $ — — — $ — 1,280.6 — $ — — France.................................................. United Kingdom and Ireland............... Finland and Scandinavia ..................... Other Europe ....................................... South America..................................... Middle East and Algeria...................... Africa .................................................. Asia ..................................................... Australia and New Zealand................. Mexico, Central America and Caribbean ............................................ — — — — — — — — — 85.9 — — — — 865.4 — — — — 8.4 1,080.2 557.8 698.5 1,613.1 — 136.7 — — — — — — — — — — 58.3 373.1 302.6 — $ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ Majora products: Tractors ............................................... $ 692.0 $ 469.8 $ 3,814.3 $ 296.1 $ Replacement parts ............................... Grain storage and protein production systems ................................................ Combines, application equipment and other machinery................................... 338.4 471.0 673.6 84.0 82.8 237.2 936.1 122.2 494.3 87.2 226.0 124.7 $ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ 1,763.2 325.9 1,280.6 1,080.2 557.8 698.5 1,613.1 865.4 136.7 58.3 373.1 302.6 94.3 9,149.7 5,272.2 1,445.7 902.0 1,529.8 9,149.7 105 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Net sales for the year ended December 31, 2019 disaggregated by primary geographical markets and majoa r products consisted of the folff lowing (in millions): North America South America Europe/ Middle East Asia/ Pacific/Africa Consolidated Primary geographic a al markets: United States ....................................... $ Canada................................................. Germany.............................................. $ 1,787.4 302.0 — — $ — — — $ — 1,194.3 — $ — — France.................................................. United Kingdom and Ireland............... Finland and Scandinavia ..................... Other Europe ....................................... South America..................................... Middle East and Algeria...................... Africa .................................................. Asia ..................................................... Australia and New Zealand................. Mexico, Central America and Caribbean ............................................ — — — — — — — — — — — — — 789.7 — — — — 102.4 12.5 1,097.6 561.9 772.8 1,629.0 — 73.2 — — — — — — — — — — 116.2 344.7 257.7 — $ 2,191.8 $ 802.2 $ 5,328.8 $ 718.6 $ Majora products: Tractors ............................................... $ 662.4 $ 447.7 $ 3,772.0 $ 300.6 $ Replacement parts ............................... Grain storage and protein production systems ................................................ Combines, application equipment and other machinery................................... 310.2 547.9 671.3 88.2 79.5 186.8 874.8 172.8 509.2 74.6 234.6 108.8 $ 2,191.8 $ 802.2 $ 5,328.8 $ 718.6 $ 1,787.4 302.0 1,194.3 1,097.6 561.9 772.8 1,629.0 789.7 73.2 116.2 344.7 257.7 114.9 9,041.4 5,182.7 1,347.8 1,034.8 1,476.1 9,041.4 106 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 17. Leases The Company leases certain land, buildings, machinery, equipment, vehicles and office and computer equipment accounts for these leases pursuant to ASU 2016-02, “Leases”. Under the right to use an underlying asset during the lease term while lease liabilities represent the Company’s obligation under finance and operating leases. The Companym standard, lessees are required to record an asset (ROU asset or finance lease asset) and a lease liability. ROU assets represent the Company’s m to make lease payments during the lease term. The standard allows for two types of leases for income statement recognition purposes: operating leases and finance leases. Operating leases result in the recognition of a single lease expense on a straight- line basis over the lease term whereas financ regarding the identification of embedded leases in service and supply contracts, as well as the identification of lease and nonlease components of an arrangement. All leases greater than 12 months result in the recognition of an ROU asset and liability at the lease commencement date based on the present value of the lease payments over the lease term. The present value of the lease payments is calculated using the appli a cable weighted-average discount rate. The weighted-average discount from the lease, then the rate is based on the discount rate implicit in the lease, or if the implicit rate is not readily determinablea Company estimates an applicable incremental borrowing rate. The incremental borrowing rate is estimated using the currency lease term and the Company’s applicablea denomination of the lease, the contractual e leases result in an accelerated expense. ASU 2016-02 also contains guidance borrowing rate. ff tt The Company does not recognize an ROU asset or lease liabia lity with respect to operating leases with an initial term of 12 months or less and recognizes expense on such leases on a straight-line basis over the lease term. The Company accounts for lease components separately from nonlease components other than for real estate and office equipment. The Company evaluated its supplier agreements for the existence of leases and determined these leases comprised an insignificant portion of its supplier agreements. As such, these leases were not material to the Company’s Consolidated Balance Sheets. The Company has certain leases that contain one or more options to terminate or renew that can extend the lease term up to 15 years. Options that the company is reasonably certain to exercise are included in the lease term. The depreciable life of ROU assets and leasehold improvements are limited by the expected lease term. The Company has certain lease agreements that include d periodically for inflation based on the index rate as defined by the appli variable rental payments that are adjuste government authority. Generally, the Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. cablea d a Total lease assets and liabilities at December 31, 2021 and 2020 were as follows (in millions): Lease Assets Operating ROU assets........ Right-of-use lease assets Finance lease assets ........... Property, plant and equipment, net(1) Classification Total lease assets........... $ As of December 31, 2021 As of December 31, 2020 165.1 $ 154.1 $ 10.6 164.7 $ 15.1 180.2 Lease Liabilities Current: Classification As of December 31, 2021 As of December 31, 2020 Operating......................... Accrued expenses Finance ............................ Other current liabilities Noncurrent: Operating......................... Operating lease liabia lities Finance ............................ Other noncurrent liabilities Total lease liabilities ..... $ $ 42.3 $ 3.8 115.5 6.0 167.6 $ 43.5 3.0 125.9 9.8 182.2 ____________________________________ (1) Finance lease assets are recorded net of accumulated depreciation of $7.8 million and $15.6 million as of December 31, 2021 and 2020, respectively. 107 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Total lease costs for 2021 and 2020 are set fort ff h below (in millions): Operating lease cost............................................. Variable lease cost............................................... Short-term lease cost ........................................... Finance lease cost: Classification Selling, general and administrative expenses Selling, general and administrative expenses Selling, general and administrative expenses Amortization of lease assets ............................. Depreciation expense(1) Interest on lease liabili Interest expense, net ties ................................ Total lease cost .................................................... a Year Ended December 31, 2021 Year Ended December 31, 2020 $ $ 59.0 $ 1.0 18.7 2.4 0.3 81.4 $ 54.0 1.7 11.0 3.7 0.6 71.0 ____________________________________ (1) Depreciation expense was included in both cost of goods sold and selling, general and administrative expenses. Lease payment amounts forff December 31, 2021 were as follows ff operating and finance leases with remaining terms greater than one year as of (in millions): December 31, 2021 2022 ................................................................................................................................... $ 2023 ................................................................................................................................... 2024 ................................................................................................................................... 2025 ................................................................................................................................... 2026 ................................................................................................................................... Thereafteff r........................................................................................................................... Operating Leases 45.7 36.2 24.5 17.3 12.3 39.1 Total lease payments.......................................................................................................... Less: imputed interest(1) .................................................................................................. Present value of lease liabia lities......................................................................................... $ 175.1 (17.3) 157.8 $ ____________________________________ (1) Calculated using the implicit interest rate for each lease. Lease payment amounts forff operating and finance leases with remaining terms greater than one year as of December 31, 2020 were as folff lows (in millions): Finance Leases 4.0 $ 0.9 0.6 0.4 0.2 6.3 12.4 (2.5) 9.9 December 31, 2020 Operating Leases Finance Leases 2021 ................................................................................................................................... $ 2022 ................................................................................................................................... 2023 ................................................................................................................................... 2024 ................................................................................................................................... 2025 ................................................................................................................................... Thereafter........................................................................................................................... Total lease payments.......................................................................................................... Less: imputed interest(1) .................................................................................................. Present value of lease liabilities......................................................................................... $ $ 47.6 37.7 28.6 18.9 13.6 44.5 190.9 (21.5) 169.4 $ 3.3 1.4 1.1 0.8 0.6 9.1 16.3 (3.5) 12.8 ____________________________________ (1) Calculated using the implicit interest rate for each lease. 108 AGCO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The folff lowing table summarizes the weighted-average remaining lease term and weighted-average discount rate: As of December 31, 2021 As of December 31, 2020 Weighted-average remaining lease term: Operating leases.................................................................................. Finance leases ..................................................................................... Weighted-average discount rate: Operating leases.................................................................................. Finance leases ..................................................................................... 7 years 12 years 3.1 % 2.4 % 7 years 15 years 3.5 % 2.7 % The following tabla e summarizes the supplemental cash flow information for 2021 and 2020 (in millions): Year Ended December 31, 2021 Year Ended December 31, 2020 Cash paid for amounts included in the measurement of lease liabila ities: Operating cash flows from operating leases ................................................ $ Operating cash flows from finance leases ................................................... Financing cash flows from finance leases ................................................... Leased assets obtained in exchange for lease obligations: Operating leases........................................................................................... $ Finance leases .............................................................................................. 59.8 $ 0.2 2.6 50.6 $ 0.9 54.1 0.4 3.8 30.8 0.9 109 Changes in and Disagreements wtt ith Accountants tt on Accountintt g an nd Financial Disclosure ll Item 9. None. Item 9A. Controls all nd Procedures The Company’s management, including the Chief Executive Officer and the Chief Financial Officff er, does not expect However, our that the Company’s disclosure controls or the Company’s internal controls will prevent all errors and all fraud. principal executive officer and principal financial officer have concluded the Company’s disclosure controls and procedures are effective at the reasonable assurance level. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in a cost effective control system, misstatements dued controls to enhance, where necessary, our procedures and controls. to error or fraud may occur and not be detected. We will conduct periodic evaluations of our internal ff Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in RuleRR 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2021, have concluded that, as of such date, our disclosure controls and procedures were effecff reasonable assurance level. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it filff es or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar funct ions, as appropriate to allow timely decisions regarding required disclosure. tive at the ff Management’s Annual Report on Internal Control over Financial Reporting Management of the Company is responsible for establia shing and maintaining effective internal control over financial 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over reporting as defined in RuleRR financial reporting is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements forff external purposes in accordance with generally accepted accounting principles. In assessing the effectiveness of the Company’s internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Int“ e ernal Control — InteII grated Framework (2013).” Management assessed the effecff tiveness of the Company’s internal control over finaff ncial reporting as of December 31, 2021. Based on this assessment, management believes that, as of December 31, 2021, the Company’s internal control over finaff ncial reporting is effective based on the criteria referred to above. The effecff tiveness of the Company’s internal control over finaff ncial reporting as of December 31, 2021 has been audited by KPMG LLP, an independent registered public accounting firm, which also audited the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2021. KPMG LLP’s report on internal control over finaff set forth below. ncial reporting is Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during t, our internal control over finaff our last fiscal quarter that have materially affected, or are reasonably likely to materially affecff ncial reporting. However, as a result of the Company’s processes to comply with the Sarbanes-Oxley Act of 2002, enhancements to the Company’s internal control over finaff identified. ncial reporting were implemented as management addressed and remediated deficiencies that had been d 110 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors AGCO Corporation: Opinion on Internal Control Over Financial Report e ing We have audited AGCO Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2021, based on criteria establia of Sponsoring Organizations of the Treadway Commission. In our opinion, the Companym effective internal control over financial reporting as of December 31, 2021, based on criteria establia e Integrate ork (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. maintained, in all material respects, shed in Internal Control — shed in Internal Control — Integrated Framework (2013) issued by the Committee d Framew FF We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Companym statements of operations, comprehensive income (loss), stockholders’ equity,t year period ended December 31, 2021, and the related notes and financial statement schedule II — Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February 25, 2022 expressed an unqualified opinion on those consolidated finaff as of December 31, 2021 and 2020, the related consolidated each of the years in the three- and cash flows forff ncial statements. Basis for Opinion The Company’s management is responsible for maintaining effecff tive internal control over financial reporting and forff ncial reporting, included in the accompanying Management’s its assessment of the effectiveness of internal control over finaff Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effecff procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. tiveness of internal control based on the assessed risk. Our audit also included performing such other Definition and Limitations of Internal Control Over Financial Reporting e A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding ity of finaff ncial reporting and the preparation of financial statements for external purposes in accordance with the reliabila generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and faiff and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures t company; disposition of the company’s assets that could have a material effect on the financial statements. and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or are being made only in accordance with authorizations of management and directors of the of the companym rly reflect the transactions m Becausea of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subjeu inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ct to the risk that controls may become /s/ KPMG LLP Atlanta, Georgia February 25, 2022 111 Item 9B. Other InfII orff marr tion None. PART III The information called for by Items 10, 11, 12, 13 and 14, if any, will be contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders, which we intend to file in March 2022. Item 10 Directors, Executive Officers and Corporate Governanrr ce The information with respect to directors and committees required by this Item set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders in the sections entitled “Proposal Number 1 — Election of Directors” and “Board of Directors and Corporate Governance” is incorporated herein by reference. The information with respect to executive officers required by this Item set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders in the section entitled “Executive Compensation” is incorporated herein by reference. See the inforff mation under the heading “Availablea Information” set forth in Part I of this Form 10-K. The code of conduct refereff and controller and the persons performing similar functions. nced therein appl a ies to our principal executive officer, principal financial officer, principal accounting officer Item 11. Executive Compensation The information with respect to executive compensation and its establia shment required by this Item set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders in the sections entitled “Board of Directors and Corporate Governance,” “2021 CEO Pay Ratio,” “Executive Compensation” and “Compensation Committee Report” is incorporated herein by reference. Item 12. Security Ownership oii f Co erCC tain Bii eneficiali Owners and Management and Related Stockh SS older MatteMM rs (a) Securities Authorized for Issuance Under Equity Compensation Plans AGCO maintains its Plan pursuant to which we may grant equity awards to eligible persons. For additional information, see Note 10, “Stock Incentive Plan,” in the Notes to Consolidated Financial Statements included in this filing. The following tablea gives information about equity awards under our Plan. Plan Category Equity compensation plans approved by security holders ........................................... Equity compensation plans not approved by security holders ...................................... Total ............................................................. (a) (b) (c) Number of Securities to be Issued upon Exercise of Outstanding Awards Under the Plans Weighted-Average Exercise Price of Outstanding Awards Under the Plans Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) 868,553 $ — 868,553 $ 90.29 — 90.29 4,000,968 — 4,000,968 (b) Security Ownership of Certain Beneficial Owners and Management The information required by this Item set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders in the section entitled “Principal Holders of Common Stock” is incorporated herein by reference. Item 13. Certain Relati ll onships and Relatell TT d PartPP y Ttt ransacti ons, and Director Independence The information required by this Item set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders in the section entitled “Certain Relationships and Related Party Transactions” is incorporated herein by reference. 112 Item 14. ii Princi pal ii Accountingtt Fees and Services The information required by this Item set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders in the sections entitled “Audit Committee Report” and “Board of Directors and Corporate Governance” is incorporated herein by reference. Item 15. Exhibitsii and Finanii cialii Statett ment Schedules (a) The folff lowing documents are filed as part of this Form 10-K: PART IV (1) The Consolidated Financial Statements, Notes to Consolidated Financial Statements, Report of Independent Registered Public Accounting Firm for AGCO Corporation and its subsidiaries are presented under Item 8 of this Form 10-K. (2) Financial Statement Schedules: The following Consolidated Financial Statement Schedule of AGCO Corporat rr ion and its subsidiaries is included herein and foll ff ows this report. Schedule Schedule II Descriptionp Valuation and Qualifying Accounts Schedules other than that listed above have been omitted because the required information is contained in Notes to the Consolidated Financial Statements or because such schedules are not required or are not applicable. (3) The following exhibits are filed or incorporated by reference as part of this report. Each management contract or m ion plan required to be filed as an exhibit is identified by an asterisk (*). The exhibits below may not include all compensat instruments defining the rights of holders of long-term debt where the debt does not exceed 10% of the Company’s total assets. The Company agrees to furnish copies of those instruments to the Commission upon request. Exhibit Number Description of Exhibit Certificate of Incorporation Amended and Restated By-Laws Description of Securities t Indenture, dated as of October 6, 2021 2006 Long-Term Incentive Plan* The Filings Referenced forff Incorporation by Reference are AGCO Corporation June 30, 2002, Form 10-Q, Exhibit 3.1 January 27, 2021, Form 8-K, Exhibit 3.1 March 1, 2021, Form 10-K, Exhibit 4.1 October 7, 2021, Form 8-K, Exhibit 4.1 September 30, 2017, Form 10-Q, Exhibit 10.5 2006 Form of Stock Appreciation Rights Agreement* March 31, 2006, Form 10-Q, Exhibit 10.4 2019 Form of Stock Appreciation Rights Agreement* January 22, 2019, Form 8-K, Exhibit 10.2 2018 Form of Restricted Stock Units Agreement* June 30, 2018, Form 10-Q, Exhibit 10.1 2019 Form of Restricted Stock Units Agreement* January 22, 2019, Form 8-K, Exhibit 10.1 2021 Form of Performance Share Agreement* January 27, 2021, Form 8-K, Exhibit 10.1 Amended and Restated Management Incentive Program* June 30, 2019, Form 10-Q, Exhibit 10.3 Amended and Restated Executive Nonqualified Pension Plan* April 12, 2021, Form 8-K, Exhibit 10.1 Executive Nonqualified Defined Contribution Plan* December 31, 2015, Form 10-K, Exhibit 10.9 Amended and Restated Employment and Severance Agreement with Eric P. Hansotia* Filed herewith Employm m ent and Severance Agreement with Andrew H. Beck* March 31, 2010, Form 10-Q, Exhibit 10.2 Employm m ent and Severance Agreement with Robert B. Crain* m m Employm Employm Veltmaat* ent and Severance Agreement with Torsten Dehner* ent and Severance Agreement with Hans-Bernd 113 December 31, 2017, Form 10-K, Exhibit 10.13 Filed herewith December 31, 2009, Form 10-K, Exhibit 10.17 3.1 3.2 4.1 4.2 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 Exhibit Number Description of Exhibit The Filings Referenced forff Incorporation by Reference are AGCO Corporation Debt Agreement dated December 18, 2014 December 31, 2014, Form 10-K, Exhibit 10.15 Credit Agreement dated as of October 17, 2018 September 30, 2018, Form 10-Q, Exhibit 10.1 Amendment, dated as of April 9, 2020, to the Credit Agreement dated as of October 17, 2018 Letter Agreement, dated November 5, 2015, between AGCO International GmbH and TAFE International LLC, Turkey and Tractors and Farm Equipment Limited Amended and Restated Letter Agreement, dated April 24, 2019, between AGCO Corporat ion and Tractors and Farm Equipment Limited rr Farm and Machinery Distributor Agreement, dated January 1, 2012, between AGCO Internat Farm Equipment Limited ional GmbH and Tractors and r Letter Agreement, dated August 3, 2007, between AGCO Corporation and Tractors and Farm Equipment Limited Letter Agreement for Far East Markets, dated July 24, 2017, between AGCO Internat ional GmbH and Tractors and Farm Equipment Limited r Letter Agreement for Mexico, dated July 24, 2017, between AGCO International GmbH and Tractors and Farm Equipment Limited Letter Agreement for Australia/New// 2017, between AGCO Internat Farm Equipment Limited r Zealand, dated July 24, ional GmbH and Tractors and Amendment to the Letter Agreement for Afriff ca, dated July 24, 2017, between AGCO Internat Farm Equipment Limited ional GmbH and Tractors and r 10.26 Current Director Compensation* Subsidiaries of the Registrant Consent of KPMG LLP Powers of Attorney Certification of Eric P. Hansotia Certification of Andrew H. Beck April 13, 2020, Form 8-K, Exhibit 10.1 September 30, 2015, Form 10-Q, Exhibit 10.1 March 31, 2019, Form 10-Q, Exhibit 10.1 September 4, 2014, Form 8-K, Exhibit 10.2 September 4, 2014, Form 8-K, Exhibit 10.3 July 27, 2017, Form 8-K, Exhibit 10.1 July 27, 2017, Form 8-K, Exhibit 10.2 July 27, 2017, Form 8-K, Exhibit 10.3 July 27, 2017, Form 8-K, Exhibit 10.4 Filed herewith Filed herewith Filed herewith Filed herewith Filed herewith Filed herewith 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 21.1 23.1 24.1 31.1 31.2 32.1 Certification of Eric P. Hansotia and Andrew H. Beck Furnished herewith 114 Exhibit Number 101 Description of Exhibit The following audited financial information from this Annual Report on Form 10-K for the year ended December 31, 2021, are formatted in Inline XBRL: (i) Consolidated Statements of Operations; (ii) Consolidated Statements of Comprehensive Income; (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Stockholders' Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. The Filings Referenced forff Incorporation by Reference are AGCO Corporation Filed herewith 104 Cover Page Interactive Data File - the cover page from this Annual Report on Form 10-K for the year ended December 31, 2021 is formatted in Inline XBRL Filed herewith Item 16. Form 10-K Summary None. 115 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused a this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Dated: February 25, 2022 AGCO Corporation By: /s/ ERIC P. HANSOTIA Eric P. Hansotia Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capac a ities and on the date indicated. Signature /s/ ERIC P. HANSOTIA Eric P. Hansotia /s/ ANDREW H. BECK Andrew H. Beck /s/ LARA T. LONG Lara T. Long /s/ MICHAEL C. ARNOLD * Michael C. Arnold /s/ SONDRA L. BARBOUR * Sondra L. Barbour /s/ P. GEORGE BENSON * P. George Benson /s/ SUZANNE P. CLARK * Suzanne P. Clark /s/ BOB DE LANGE Bob De Lange AA * /s/ GEORGE E. MINNICH * George E. Minnich /s/ NIELS PÖRKSEN * Niels Pörksen /s/ MALLIKA SRINIVASAN * Mallika Srinivasan /s/ MATTHEW TSIEN * Matthew Tsien *By: /s/ ANDREW H. BECK Andrew H. Beck Attorney-in-Fact Title Chairman of the Board, President and Chief Executive Officer Date February 25, 2022 Senior Vice President and Chief Financial Officer (Principal Financial Officer) February 25, 2022 Vice President, Chief Accounting Officff (Principal Accounting Officer) er February 25, 2022 Director Director Director Director Director Director Director Director Director February 25, 2022 February 25, 2022 February 25, 2022 February 25, 2022 February 25, 2022 February 25, 2022 February 25, 2022 February 25, 2022 February 25, 2022 rr Februar y 2rr 5, 2022 116 [THIS PAGE INTENTIONALLY LEFT BLANK] AGCO CORPORATRR ION AND SUBSIDIARIES SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS (in millions) Additions SCHEDULE II Description Year ended December 31, 2021 Balance at Beginning of Period Acquired Businesses Charged to Costs and Expenses Deductions Foreign Currency Translation Balance at End of Period Allowances for doubtful accounts .............. $ 36.4 Year ended December 31, 2020 Allowances for doubtful accounts .............. $ 28.8 Year ended December 31, 2019 Allowances for doubtful accounts .............. $ 31.7 $ $ $ 0.2 $ 0.5 — $ 14.5 — $ 5.8 $ $ $ Additions (2.8) $ (1.7) $ 32.6 (6.8) $ (0.1) $ 36.4 (8.3) $ (0.4) $ 28.8 Description Balance at Beginning of Period Charged to Costs and Expenses Reversal of Accrual Deductions Foreign Currency Translation Balance at End of Period Year ended December 31, 2021 Accruals of severance, relocation and other closure costs....................................... Year ended December 31, 2020 Accruals of severance, relocation and other closure costs....................................... Year ended December 31, 2019 Accruals of severance, relocation and other closure costs....................................... $ $ $ 16.8 $ 19.9 $ (2.3) $ (19.1) $ (0.6) $ 14.7 4.8 $ 17.6 $ (0.4) $ (5.1) $ (0.1) $ 16.8 7.1 $ 6.1 $ (0.7) $ (7.3) $ (0.4) $ 4.8 Additions Balance at Beginning of Period Acquired Businesses Charged (Credited) to Costs and Expenses(1) Deductions Foreign Currency Translation Balance at End of Period Description Year ended December 31, 2021 Deferred tax valuation allowance ............... $ 181.0 Year ended December 31, 2020 Deferred tax valuation allowance ............... $ 169.1 Year ended December 31, 2019 Deferred tax valuation allowance ............... $ 83.9 $ $ $ 0.4 0.9 $ $ (130.8) $ — $ (3.3) $ 47.3 28.7 $ $ — $ (17.7) $ 181.0 — $ (1.9) $ 169.1 — $ 87.1 ____________________________________ (1) There were no amounts credited or charged through other comprehensive income during 2021. Amounts credited through other comprehensive income (loss) during the years ended December 31, 2020 and 2019 were approximately $12.4 million and approximately $2.5 million, respectively. II-2 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] Our Leadership Board of Directors Senior Management Michael C. Arnold Former President and Chief Executive Officer, Ryerson Inc. Sondra L. Barbour Former Executive Vice President, Lockheed Martin Corporation P. George Benson Professor of Decision Sciences and former President of the College of Charleston Suzanne Clark Chief Executive Officer, U.S. Chamber of Commerce Bob De Lange Group President, Services, Distribution and Digital, Caterpillar Inc. Eric P. Hansotia Chairman, President and Chief Executive Officer, AGCO Corporation George E. Minnich Former Senior Vice President and Chief Financial Officer, ITT Corporation Niels Pörksen Chief Executive Officer, Südzucker AG David Sagehorn Former Executive Vice President and Chief Financial Officer, Oshkosh Corporation Mallika Srinivasan Chairman and Managing Director, TAFE Tractors and Farm Equipment Limited Matthew Tsien Former Executive Vice President and Chief Technology Officer, General Motors and Former President, General Motors Ventures Bradley C. Arnold Senior Vice President and General Manager, Precision AGCO Roger N. Batkin Senior Vice President, General Counsel, Chief ESG Officer and Corporate Secretary Andrew H. Beck Senior Vice President, Chief Financial Officer Kelvin E. Bennett Senior Vice President, Engineering Stefan Caspari Senior Vice President and General Manager, Grain and Protein Robert B. Crain Senior Vice President, Customer Experience Seth H. Crawford Senior Vice President and General Manager, Precision Ag and Digital Torsten R. W. Dehner Senior Vice President and General Manager, Fendt/Valtra Luís F. S. Felli Senior Vice President and General Manager, Massey Ferguson Eric P. Hansotia Chairman, President and Chief Executive Officer Ivory M. Harris Senior Vice President, Chief Human Resources Officer Tiffany Snyder Vice President, Strategy and Transformation Josip T. Tomasevic Senior Vice President, Chief Procurement Officer Hans-Bernd Veltmaat Senior Vice President, Chief Supply Chain Officer O U R L E A D E R S H P I Shareholder Information CORPORATE HEADQUARTERS 4205 River Green Parkway Duluth, Georgia 30096 U.S. +1-770-813-9200 TRANSFER AGENT & REGISTRAR You can contact Computershare through the following methods: Overnight Mail Delivery 462 South 4th Street, Suite 1600 Louisville, KY 40202 U.S. Regular Mail Delivery P.O. Box 505000 Louisville, KY 40233 U.S. Telephone +1-800-962-4284 STOCK EXCHANGE AGCO Corporation common stock (trading symbol is “AGCO”) is traded on the New York Stock Exchange. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP Atlanta, Georgia U.S. FORM 10-K The Form 10-K Annual Report filed with the Securities and Exchange Commission is available in the “Investors” Section of our corporate website (www.agcocorp.com), under the heading “SEC Filings,” or upon request from the Investor Relations Department at our corporate headquarters. ANNUAL MEETING The annual meeting of the Company’s stockholders will be held at 9:00 a.m. ET April 28, 2022 at the offices of AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096 U.S. © 2022 AGCO Corporation All rights reserved. Incorporated in Delaware. An Equal Opportunity Employer. AGCO®, Fendt®, GSI®, Massey Ferguson®, Valtra® and their respective logos as well as corporate and product identity used herein are trademarks of AGCO or its subsidiaries and may not be used without permission. Challenger® is a registered trademark of Caterpillar, Inc. and may not be used without permission. AGCO 4205 River Green Parkway Duluth, GA 30096 U.S. +1-770-813-9200 agcocorp.com 

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