The Board and Independence
AGCO is committed to sound corporate governance that is in the best interests of all of our stockholders and that aligns with our goal of long-term value creation. The Board conducts a holistic review of AGCO’s governance and compensation practices and is focused on ensuring strong independent oversight.
A majority of the Board of Directors must meet the criteria for independence established by applicable laws and regulations and the New York Stock Exchange. At the end of calendar year 2020, all of our twelve Directors, except our Chairman and one other Director, were independent. Each member of the Audit, Compensation and Governance Committees is an independent Director under the applicable rules with respect to such Committees.
The Board has been and remains actively focused on its overall composition. The Board is comprised of Directors with varied social and professional experience and backgrounds which provide depth and breadth of insight and perspectives that support overall Board effectiveness. AGCO has appointed new directors in 2019, 2020 and 2021, with three Directors also retiring at our 2021 Annual Meeting. As a result of our focused Board refreshment efforts, AGCO’s average Board tenure is expected to be six or less years by May 2021. In evaluating Director candidates, there are a number of factors that are considered to ensure the entire Board, collectively, embraces a wide variety of characteristics including experience, expertise, gender and racial diversity, independence, integrity and reputation. Three of our Directors are female and every Director must stand for election annually.
During 2020, in addition to the ongoing Board refresh activities, the Board made the following changes to leadership and governance practices:
- Appointed a new Lead Independent Director, effective January 1, 2021
- Enhanced the already robust duties of the Lead Independent Director role
- Appointed three new Committee chairs, also effective January 1, 2021
- Adopted five-year term limits for Board leadership positions, including the Lead Independent Director position and three independent Committee Chairs
- Updated AGCO’s Hedging and Pledging Policy
Committees of the Board of Directors
The Board has delegated certain functions to six standing committees: an Executive Committee, an Audit Committee, a Compensation Committee, a Finance Committee, a Governance Committee and a Succession Planning Committee. Each of the Committees has a written charter.
As from 2021, certain sustainability topics are included in our risk management process overseen by the Audit Committee. In addition, the Governance Committee regularly reviews with management, and provides input into, the social, environmental and sustainability initiatives, including the consideration of social and environmental impacts of major business decisions and provides feedback on AGCO's public reporting on these topics.
Corporate Governance Principles, Charters, Global Code of Conduct and Other Policies
AGCO is dedicated to maintaining the highest standards of ethical conduct and responsible corporate governance. We are proud of the integrity of our employees, managers, officers and the Board of Directors. We are committed to ensuring the full disclosure of our activities and policies. We provide policies and training to our employees to serve as the structure and framework to guide them in their behavior at AGCO. We provide various corporate governance and other information on our website:
- our corporate governance principles and charters for the Audit, Compensation, Executive, Finance, Governance and Succession Planning Committees of the Board
- our Global Code of Conduct
We recognize that sustainability can only be effective if it is firmly integrated into organizational and management systems. Therefore, in 2020, we introduced a new structure to promote sustainable business activities, from Board oversight to strategic planning to implementation and reporting.
The Board of Directors is responsible for the overall corporate governance at AGCO, which includes oversight of sustainability and corporate responsibility. As part of its role, the Board is responsible for enhancing the long-term value of AGCO for shareholders. In its charter and activities, the Governance Committee reviews our social, environmental and sustainability initiatives.
Day-to-day accountability for sustainability rests with AGCO’s executive leadership and, in particular, our Chief Executive Officer.
Operational Approach to Managing Sustainability
In 2021, we intend to establish a Sustainability Council to drive sustainability integration across policies, activities, products and services. The Sustainability Council will consist of AGCO senior brand and functional leadership. The Council will monitor risks, opportunities, and progress, and remove barriers to support integration of sustainability into the business.
AGCO's newly established Sustainability Core Team drives the implementation of Council decisions and leads or oversees execution of and reporting on sustainability initiatives and programs.
AGCO's newly established Strategy workstreams lead the advancement and execution of AGCO’s stated sustainability goals and commitments.
Green Leaders champion sustainability, drive knowledge and best practice sharing throughout the business and provide expert insights to workstreams for the core team, promoting the integration of sustainability into day-to-day practices across AGCO.