STOCKHOLDERS’ EQUITY

On December 31, 2014, there were 124.6 million shares of Common Stock issued and 105.4 million shares of Common Stock outstanding. Of the 175.4 million unissued shares of Common Stock at that date, 3.3 million shares of Common Stock were reserved for issuance for the exercise of stock options and the vesting of restricted stock. Additionally, 7.9 million shares of Common Stock were reserved for issuance for the shares that are contingently issuable for the 4% Convertible Notes.

Common Stock in Treasury. The Company values treasury stock on an average cost basis. As of December 31, 2014, the Company held 19.2 million shares of Common Stock in treasury totaling $801.9 million, including 0.8 million shares held in a trust for the benefit of the Company’s Deferred Compensation Plan at a total of $17.8 million.

Preferred Stock. The Company’s certificate of incorporation was amended in June 1998 to authorize 50.0 million shares of preferred stock, $0.01 par value per share. As of December 31, 2014 and 2013, there were no shares of preferred stock outstanding.

Long-Term Incentive Plans. In May 2009, the stockholders approved the Terex Corporation 2009 Omnibus Incentive Plan (the “2009 Plan”). The purpose of the 2009 Plan is to provide a means whereby employees, directors and third-party service providers of the Company develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its stockholders. The 2009 Plan provides for incentive compensation in the form of (i) options to purchase shares of Common Stock, (ii) stock appreciation rights, (iii) restricted stock awards and restricted stock units, (iv) other stock awards, (v) cash awards, and (vi) performance awards. In May 2013, the stockholders approved an increase in the number of shares of Common Stock authorized for issuance under the 2009 Plan from 5.0 million shares to 8.0 million shares. The maximum number of shares available for issuance under the 2009 Plan is 8.0 million shares plus the number of shares remaining available for issuance under the Terex Corporation 2000 Incentive Plan (the “2000 Plan”) and the 1996 Terex Corporation Long-Term Incentive Plan (the “1996 Plan”). As of December 31, 2014, 4.4 million shares were available for grant under the 2009 Plan.

In May 2000, the stockholders approved the 2000 Plan. The purpose of the 2000 Plan is to assist the Company in attracting and retaining selected individuals to serve as directors, officers, consultants, advisers and employees of the Company and its subsidiaries and affiliates who will contribute to the Company’s success and to achieve long-term objectives which will inure to the benefit of all stockholders of the Company through the additional incentive inherent in the ownership of the Common Stock. The maximum number of shares available for issuance under the 2000 Plan is 12.0 million shares plus any shares related to awards under the 2000 Plan that were not issued or were subsequently forfeited, expired or otherwise terminated.

In May 1996, the stockholders approved the 1996 Plan. The maximum number of shares available for issuance under the 1996 Plan is 4.0 million shares plus any shares related to awards under the 1996 Plan that were not issued or were subsequently forfeited, expired or otherwise terminated.

Substantially all stock option grants under the 2000 Plan and the 1996 Plan vested over a four year period and have a contractual life of ten years. There were no options granted during the years ended December 31, 2014, 2013 or 2012. The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $0.2 million, $1.2 million and $0.2 million, respectively.

The following table is a summary of stock options under all of the Company’s plans.



	Number of Options		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	209,557		$	38.92
Exercised	(52,098	)	$	17.36
Canceled or expired	(7,500	)	$	45.75
Outstanding at December 31, 2014	149,959		$	46.07	1.46	$	0.29
Exercisable at December 31, 2014	149,959		$	46.07	1.46	$	0.29
Vested at December 31, 2014	149,959		$	46.07	1.46	$	0.29

Under the 2009 Plan, 2000 Plan and the 1996 Plan, approximately 11% of all restricted stock awards vest over a four year period, with 25% of each grant vesting on each of the first four anniversary dates of the grant; approximately 5% of all restricted stock awards vest over a five year period and approximately 83% of all restricted stock awards vest over a three year period with approximately 52% of these awards vesting on the first three anniversary dates and approximately 48% vesting at the end of the three year period. Approximately 49% of the outstanding restricted stock awards are subject to performance targets that may or may not be met and for which the performance period has not yet been completed.

The fair value of the restricted stock awards is based on the market price at the date of grant except for 0.9 million shares of performance grants based on a market condition. The Company uses the Monte Carlo method to provide grant date fair value for awards with a market condition. The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award. The following table presents the weighted-average assumptions used in the valuations:



	February 26, 2014	February 27, 2013	February 29, 2012	March 27, 2012
Dividend yields	0.46%	—%	—%	—%
Expected volatility	56.84%	60.03%	59.15%	56.83%
Risk free interest rate	0.63%	0.35%	0.41%	0.47%
Expected life (in years)	3	3	3	3
Grant date fair value per share	$53.17	$43.64	$32.58	$29.50

As of December 31, 2014, unrecognized compensation costs related to restricted stock totaled approximately $43.4 million, which will be expensed over a weighted average period of 1.7 years. The grant date weighted average fair value for restricted stock awards during the years ended December 31, 2014, 2013 and 2012 was $44.23, $33.84 and $25.74, respectively. The total fair value of shares vested for restricted stock awards was $36.2 million, $19.0 million and $16.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

During the year ended December 31, 2014, the Company issued 33 thousand shares of its outstanding Common Stock which were contributed into a deferred compensation plan under a Rabbi Trust.

The following table is a summary of restricted stock awards under all of the Company’s plans:



	Restricted Stock Awards		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2013	3,721,424		$	26.14
Granted	999,622		$	44.23
Vested	(1,245,147	)	$	29.11
Canceled or expired	(280,578	)	$	32.44
Nonvested at December 31, 2014	3,195,321		$	33.56

Compensation expense recognized under all stock-based compensation arrangements was $46.1 million, $44.7 million and $29.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. The stock-based compensation expense was included in Selling, general and administrative expenses in the Consolidated Statements of Income. The related tax benefit was $14.6 million, $13.5 million and $9.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Cash received from option exercises under all stock-based compensation arrangements totaled $1.0 million.

The excess tax benefit for all stock-based compensation is included in the Consolidated Statement of Cash Flows as an operating cash outflow and a financing cash inflow.

Comprehensive Income (Loss). The following table reflects the accumulated balances of other comprehensive income (loss) (in millions):

Accumulated Other Comprehensive Income (Loss) Attributable to Terex Corporation



	Cumulative Translation Adjustment			Derivative Hedging Adjustment			Debt & Equity Securities Adjustment			Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2012	$	(39.6	)	$	(3.6	)	$	0.9		$	(83.2	)	$	(125.5	)
Current year change	53.7			3.2			1.0			(56.5		)	1.4
Balance at December 31, 2012	14.1			(0.4		)	1.9			(139.7		)	(124.1		)
Current year change	(22.0		)	3.1			(1.9		)	28.4			7.6
Balance at December 31, 2013	(7.9		)	2.7			—			(111.3		)	(116.5		)
Current year change	(237.6		)	(3.4		)	1.6			(73.9		)	(313.3		)
Balance at December 31, 2014	$	(245.5	)	$	(0.7	)	$	1.6		$	(185.2	)	$	(429.8	)

Accumulated Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest



	Cumulative Translation Adjustment			Derivative Hedging Adjustment		Debt & Equity Securities Adjustment		Pension Liability Adjustment		Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2012	$	—		$	—	$	—	$	—	$	—
Current year change	0.5			—		—		—		0.5
Balance at December 31, 2012	0.5			—		—		—		0.5
Current year change	0.4			—		—		—		0.4
Balance at December 31, 2013	0.9			—		—		—		0.9
Current year change	(0.1		)	—		—		—		(0.1		)
Balance at December 31, 2014	$	0.8		$	—	$	—	$	—	$	0.8

Accumulated Other Comprehensive Income (Loss)



	Cumulative Translation Adjustment			Derivative Hedging Adjustment			Debt & Equity Securities Adjustment			Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2012	$	(39.6	)	$	(3.6	)	$	0.9		$	(83.2	)	$	(125.5	)
Current year change	54.2			3.2			1.0			(56.5		)	1.9
Balance at December 31, 2012	14.6			(0.4		)	1.9			(139.7		)	(123.6		)
Current year change	(21.6		)	3.1			(1.9		)	28.4			8.0
Balance at December 31, 2013	(7.0		)	2.7			—			(111.3		)	(115.6		)
Current year change	(237.7		)	(3.4		)	1.6			(73.9		)	(313.4		)
Balance at December 31, 2014	$	(244.7	)	$	(0.7	)	$	1.6		$	(185.2	)	$	(429.0	)

As of December 31, 2014, accumulated other comprehensive income for the pension liability adjustment and the derivative hedging adjustment are net of a tax benefit of $54.2 million and a tax provision of $0.1 million, respectively.

Changes in Accumulated Other Comprehensive Income

The table below presents changes in AOCI by component for the year ended December 31, 2014 and 2013. All amounts are net of tax (in millions).



	Year ended December 31, 2014														Year ended December 31, 2013
	CTA ⁽¹⁾			Derivative Hedging Adj.			Debt & Equity Securities Adj.		Pension Liability Adj.			Total			CTA			Derivative Hedging Adj.			Debt & Equity Securities Adj.			Pension Liability Adj.			Total
Beginning balance	$	(7.0	)	$	2.7		$	—	$	(111.3	)	$	(115.6	)	$	14.6		$	(0.4	)	$	1.9		$	(139.7	)	$	(123.6	)
Other comprehensive income before reclassifications	(264.6		)	(1.4		)	1.6		(78.8		)	(343.2		)	(19.0		)	6.1			—			21.9			9.0
Amounts reclassified from AOCI	26.9			(2.0		)	—		4.9			29.8			(2.6		)	(3.0		)	(1.9		)	6.5			(1.0		)
Net Other Comprehensive Income (Loss)	(237.7		)	(3.4		)	1.6		(73.9		)	(313.4		)	(21.6		)	3.1			(1.9		)	28.4			8.0
Ending balance	$	(244.7	)	$	(0.7	)	$	1.6	$	(185.2	)	$	(429.0	)	$	(7.0	)	$	2.7		$	—		$	(111.3	)	$	(115.6	)

⁽¹⁾ Reclassification from dispositions of Demag Cranes and Components Pty. Ltd. and the truck business of $22.9 million and $4.0 million was recorded in Selling, general and administrative expenses and Gain (loss) on disposition of discontinued operations, respectively, for year ended December 31, 2014.

Share Repurchases and Dividends

In December 2013, the Company’s Board of Directors announced authorization for the repurchase of up to $200 million of the Company’s outstanding shares of common stock through December 31, 2015. During the year ended December 31, 2014 the Company repurchased approximately 5.3 million shares for approximately $170 million under this program. In total, the Company has purchased approximately 6.1 million shares under this program for approximately $200 million. In February 2015, the Company’s Board of Directors announced authorization for the repurchase of up to an additional $200 million of the Company’s outstanding shares of common stock. The Company declared and paid a dividend of $0.05 per share in each quarter of 2014. Additionally in February 2015, the Company declared a $0.06 per share dividend to be paid in March 2015.

Redeemable Noncontrolling Interest

Noncontrolling interest with redemption features that are not solely within the Company’s control (“redeemable noncontrolling interest”) are presented separately from Total stockholders’ equity in the Consolidated Balance Sheet at the maximum redemption value. If the maximum redemption value is greater than carrying value, the increase is adjusted directly to additional paid in capital and does not impact net income.

The following is a summary of redeemable noncontrolling interest as of December 31, 2014 and 2013 (in millions):



Balance at January 1, 2013	$	246.9
Redemptions and Purchases	(174.1		)
Accrued guaranteed payment obligation	3.7
Payments of guaranteed obligations	(18.4		)
Reversal of guaranteed obligations	(5.7		)
Foreign currency translation	1.5
Balance at December 31, 2013	$	53.9
Purchases	(53.7		)
Foreign currency translation	(0.2		)
Balance at December 31, 2014	$	—

In January 2014, the Company paid $71.3 million for the remaining outstanding shares of Terex Material Handling & Port Solutions AG (“TMHPS”), of which $53.7 million was recorded as a reduction of redeemable noncontrolling interest and $17.6 million was recorded as a reduction in additional paid-in capital for the excess of the purchase price over the carrying value of redeemable noncontrolling interest. The Company now owns 100% of TMHPS.