SEC Company Response from TEREX CORP (TEX) (CIK 0000097216) (TEX) — Sep 20, 2007
TEREX CORP (TEX) (CIK 0000097216)
Date: Sept. 20, 2007 · CIK: 0000097216 · Accession: 0000097216-07-000298
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-10702
Referenced dates: August 21, 2007
Letter
Securities and Exchange Commission Division of Corporation Finance Washington, DC 20540-6010 Re: Terex Corporation Definitive 14A Filed April 4, 2007, File No. 001-10702 (the “Definitive 14A”)
Dear Mr. Hindin:
I have received a copy of your letter dated August 21, 2007 conveying the comments of the staff of the Securities and Exchange Commission (the “Commission”) on the above-referenced filing. The following sets forth the text of each of the items addressed in your letter and the response of Terex Corporation (“Terex” or the “Company”) with respect to each of such items.
Definitive 14A Filed April 4, 2007
Executive Compensation Philosophy, page 18
Comment:
1. We note your reference to the compensation committee’s engagement of Hewitt Associates and Sibson Consulting on the top of page 19. Describe the nature and scope of their assignment and the material elements of the instructions or directions given to the consultants with respect to the performance of their duties under the engagement. See Item 407(e)(3)(iii) of Regulation S-K.
Response:
The Company hired Sibson Consulting (“Sibson”) to assist it in two discrete projects relating to executive and director compensation. In the first project, Sibson was asked to provide an
Perry J. Hindin
Securities and Exchange Commission
September 20, 2007
Page 2 of
assessment of the competitive pay position for nine of the top senior executives of the Company. The assessment included an analysis of the Company’s use of pay-for-performance and long-term incentive vehicles. This project was conducted over a three month period. In the second project, Sibson was asked to review a report prepared by The Ross Companies (the Committee’s prior outside compensation consultant as indicated in the Definitive 14A with respect to director compensation. Sibson commented on the appropriateness of the recommendations by The Ross Companies and offered suggestions to help create a competitive compensation program for the directors. This project was conducted over a one month period.
In August 2006, the Compensation Committee of the Company’s Board of Directors (the “Committee”) retained Hewitt Associates (“Hewitt”) to assist the Committee in determining the compensation of the Company’s executive officers, including its Chief Executive Officer (“CEO”). Hewitt was not given a narrow list of instructions but rather was engaged to provide the Committee with any and all information and advice that might assist the Committee in performing its duties.
The Company believes its disclosure of the engagement of the compensation consultants as included in the Definitive 14A complies in all material respects with the Securities and Exchange Act of 1934, as amended, and the rules promulgated thereunder. The Company is of the opinion that the details included above would not provide investors with additional material information.
Executive Compensation Program, page 20
Comment:
2. You indicate that your chief executive officer plays an integral role, in conjunction with the compensation committee, in determining the compensation of the other executive officers of the company. Please discuss more fully his role in determining or recommending the amount or form of executive compensation.
Response:
Under the Company’s performance management system, the CEO annually evaluates each of the Company’s senior executives that report to him. This assessment includes setting goals for the coming year for each senior executive and evaluating the senior executive’s performance against the goals for the prior year. Consistent with the Committee’s charter, the CEO then makes recommendations to the Committee regarding the performance goals and the compensation of the Company’s senior executives.
Perry J. Hindin
Securities and Exchange Commission
September 20, 2007
Page 3 of
The Company will discuss more fully the CEO’s role in determining or recommending the amount or form of executive compensation in its applicable future filings.
Annual Bonus, page 21
Comment:
3. You state on page 22 that 40% of the bonus target for executive officers was based on individual performance which could include all or any combination of personal goals, Terex Business Systems and human resources planning initiatives, and other financial and non-financial measurements. You also state that $1 million of your chief executive officer’s bonus was contingent on his satisfaction of qualitative performance measures in the areas listed at the top of page 23. Please disclose in greater detail these financial and non-financial targets and qualitative performance measures considered by the compensation committee in awarding annual bonuses to each of your named executive officers for your 2006, and to the extent known, 2007 fiscal years. To the extent you believe disclosure of these targets and performance measures is not required because it would result in competitive harm such that you may omit this information under Instruction 4 to Item 402(b) of Regulation S-K, please provide on a supplemental basis a detailed explanation for such conclusion. Please also disclose how difficult it would be for the named executive officers or how likely it will be for you to achieve the undisclosed targets and qualitative performance measures. General statements regarding the level of difficulty or ease associated with achieving performance goals are not sufficient. In discussing how difficult it will be for an executive or how likely it will be for you to achieve the targets, please provide as much detail as necessary without providing information that would result in competitive harm.
Response:
The Company listed in its Definitive 14A the general categories reflecting the qualitative portions upon which a senior executive’s bonus is based. The Company went further with respect to its CEO and listed in bulletpoint format each of the categories reflecting the qualitative portion of the CEO’s bonus because the Company felt that this additional disclosure was warranted due to the CEO’s unique position with the Company. The Company did not disclose in greater detail each of the qualitative performance measure targets for the other named executive officers as they differ for each of them. The qualitative bonus calculation for the named executive officers, other than the CEO, is done on a holistic basis in evaluating the goals rather than based upon a rigid formula.
The following table provides a listing of the qualitative performance measures considered by the Committee in awarding the CEO’s 2006 bonus:
Perry J. Hindin
Securities and Exchange Commission
September 20, 2007
Page 4 of
Performance Measure
Weighting (%)
Excerpt of Goals
Talent Development, Diversity and Succession Planning
30%
Hire/Promote senior executives as appropriate. Develop written Diversity Strategy. Development of high potential team members.
Financial Controls, Ethics and Information Technology
20%
Strengthen financial controls. Implement online ethics training and new information technology system. Enhance financial and tax staff.
Corporate Operational Initiatives
15%
Implement supply chain purchasing savings initiatives. Train/develop people to enhance the Company’s operating capabilities.
Marketing and Branding
10%
Build marketing capabilities, including enhancing marketing staff, receiving better market share data and developing brand research.
Development of New Markets
10%
The Company is not disclosing these targets as disclosure of this confidential information would result in competitive harm to the Company.
Making Terex a Better Place to Work
5%
Continue to improve team member communication and satisfaction.
Terex Business System
5%
Enhanced training and development for senior and operations leaders. Continue development/implementation of measurement system.
Capital Structure and Transformation
5%
The Company is not disclosing these targets as disclosure of this confidential information would result in competitive harm to the Company.
The following table provides a detailed listing of the qualitative performance measures that will be considered by the Committee in awarding the CEO’s 2007 bonus:
Performance Measure
Weighting (%)
Excerpt of Goals
Talent Development, Diversity and Succession Planning
15%
Develop and diversify talent base. Implement new programs to recruit and retain talent.
Financial Controls, Ethics and Information Technology
15%
Strengthen financial controls and continue to enhance finance and tax staff. Develop future tax strategy plans.
Corporate Operational Initiatives
20%
Enhance supply chain purchasing savings initiatives. Continue to train/develop people to enhance the Company’s operating capabilities.
Corporate Marketing Initiatives
20%
Continue to build marketing capabilities, including analyzing and acting upon market share and research data.
Making Terex a Better Place to Work
10%
Continue to improve team member communication and satisfaction. Increase focus on team member health and safety.
Perry J. Hindin
Securities and Exchange Commission
September 20, 2007
Page 5 of
Business Development
10%
The Company is not disclosing these targets as disclosure of this confidential information would result in competitive harm to the Company.
Financial Structure
10%
The Company is not disclosing these targets as disclosure of this confidential information would result in competitive harm to the Company.
The Company is not disclosing the Business Development and Financial/Capital Structure targets for Mr. DeFeo for 2006 and 2007 because such targets involve plans and ideas that have not been disclosed to the marketplace and are not known by the Company’s competitors. Such disclosure would make it more difficult for the Company to achieve such targets and would provide a competitive advantage to the Company’s competitors. In addition, the disclosure of uses of its cash and acquisition or disposition opportunities that the Company has decided not to pursue would place the Company in a competitive disadvantage.
The difficulty in achieving the targeted goals depends on a variety of factors, some of which are in the Company’s control and some of which are not. These targets are established annually in conjunction with setting the business plan of the Company for the coming year. If the Company achieves its business plan objectives for the year, the Company believes the goals are attainable. In 2006, portions of the Development of New Markets target were achieved at a 120% level and other portions were achieved at an 80% level, while the Capital Structure and Transformation target was achieved at a 120% level.
Instruction 1 to Item 402(b) of Regulation S-K states that “the purpose of the Compensation Discussion and Analysis is to provide to investors material information that is necessary to an understanding of the registrant’s compensation policies and decisions regarding the named executive officers.” The Company does not believe that disclosing in greater detail the qualitative bonus targets for the named executive officers, other than the CEO, is material information that is necessary for such an understanding. With respect to the CEO’s qualitative targets, while the Company does not believe that the level of detail included above is beneficial to investors, the Company will include in its applicable future filings more information with respect to the CEO’s qualitative targets, including the relative weightings of the different qualitative factors.
Comment:
4. In addition to disclosing these non-financial targets, please also provide a more detailed discussion and analysis of how these various non-financial measures contributed to actual 2006 bonuses for each named executive officer. For example, were certain qualitative performance measures weighted more heavily than others?
Perry J. Hindin
Securities and Exchange Commission
September 20, 2007
Page 6 of
Response:
The following table details the qualitative portion of the CEO’s 2006 An
Show Raw Text
CORRESP
1
filename1.htm
Eric I
Cohen
Senior
Vice President, Secretary
and
General Counsel
Telephone: (203) 222-5950
Facsimile:
(203) 227-1647
E-mail: ecohen@terex.com
September
20, 2007
Perry J.
Hindin
Securities and Exchange Commission
Division
of Corporation Finance
One
Station Place
100 F
Street, NE
Washington, DC 20540-6010
Re:
Terex Corporation Definitive 14A Filed April 4, 2007,
File No. 001-10702
(the “Definitive 14A”)
Dear Mr.
Hindin:
I have received a copy of your letter dated August 21, 2007 conveying the
comments of the staff of the Securities and Exchange Commission (the
“Commission”) on the above-referenced filing. The following sets forth the text
of each of the items addressed in your letter and the response of Terex Corporation
(“Terex” or the “Company”) with respect to each of such
items.
Definitive 14A Filed April 4, 2007
Executive Compensation Philosophy, page 18
Comment:
1.
We note your reference to the compensation committee’s engagement
of Hewitt Associates and Sibson Consulting on the top of page 19. Describe the nature and
scope of their assignment and the material elements of the instructions or directions given
to the consultants with respect to the performance of their duties under the engagement.
See Item 407(e)(3)(iii) of Regulation S-K.
Response:
The
Company hired Sibson Consulting (“Sibson”) to assist it in two discrete
projects relating to executive and director compensation. In the first project, Sibson was
asked to provide an
Perry J.
Hindin
Securities
and Exchange Commission
September
20, 2007
Page 2 of
13
assessment of the competitive pay position for nine of the top senior
executives of the Company. The assessment included an analysis of the Company’s use
of pay-for-performance and long-term incentive vehicles. This project was conducted over a
three month period. In the second project, Sibson was asked to review a report prepared by
The Ross Companies (the Committee’s prior outside compensation consultant as
indicated in the Definitive 14A with respect to director compensation. Sibson commented on
the appropriateness of the recommendations by The Ross Companies and offered suggestions to
help create a competitive compensation program for the directors. This project was
conducted over a one month period.
In
August 2006, the Compensation Committee of the Company’s Board of Directors (the
“Committee”) retained Hewitt Associates (“Hewitt”) to assist the
Committee in determining the compensation of the Company’s executive officers,
including its Chief Executive Officer (“CEO”). Hewitt was not given a narrow
list of instructions but rather was engaged to provide the Committee with any and all
information and advice that might assist the Committee in performing its duties.
The
Company believes its disclosure of the engagement of the compensation consultants as
included in the Definitive 14A complies in all material respects with the Securities and
Exchange Act of 1934, as amended, and the rules promulgated thereunder. The Company is of
the opinion that the details included above would not provide investors with additional
material information.
Executive Compensation Program, page 20
Comment:
2.
You indicate that your chief executive officer plays an integral role, in
conjunction with the compensation committee, in determining the compensation of the other
executive officers of the company. Please discuss more fully his role in determining or
recommending the amount or form of executive compensation.
Response:
Under the
Company’s performance management system, the CEO annually evaluates each of the
Company’s senior executives that report to him. This assessment includes setting
goals for the coming year for each senior executive and evaluating the senior
executive’s performance against the goals for the prior year. Consistent with the
Committee’s charter, the CEO then makes recommendations to the Committee regarding
the performance goals and the compensation of the Company’s senior
executives.
Perry J.
Hindin
Securities
and Exchange Commission
September
20, 2007
Page 3 of
13
The
Company will discuss more fully the CEO’s role in determining or recommending the
amount or form of executive compensation in its applicable future filings.
Annual Bonus, page 21
Comment:
3.
You state on page 22 that 40% of the bonus target for executive officers
was based on individual performance which could include all or any combination of personal
goals, Terex Business Systems and human resources planning initiatives, and other financial
and non-financial measurements. You also state that $1 million of your chief executive
officer’s bonus was contingent on his satisfaction of qualitative performance
measures in the areas listed at the top of page 23. Please disclose in greater detail these
financial and non-financial targets and qualitative performance measures considered by the
compensation committee in awarding annual bonuses to each of your named executive officers
for your 2006, and to the extent known, 2007 fiscal years. To the extent you believe
disclosure of these targets and performance measures is not required because it would
result in competitive harm such that you may omit this information under Instruction 4 to
Item 402(b) of Regulation S-K, please provide on a supplemental basis a detailed
explanation for such conclusion. Please also disclose how difficult it would be for the
named executive officers or how likely it will be for you to achieve the undisclosed
targets and qualitative performance measures. General statements regarding the level of
difficulty or ease associated with achieving performance goals are not sufficient. In
discussing how difficult it will be for an executive or how likely it will be for you to
achieve the targets, please provide as much detail as necessary without providing
information that would result in competitive harm.
Response:
The
Company listed in its Definitive 14A the general categories reflecting the qualitative
portions upon which a senior executive’s bonus is based. The Company went further
with respect to its CEO and listed in bulletpoint format each of the categories reflecting
the qualitative portion of the CEO’s bonus because the Company felt that this
additional disclosure was warranted due to the CEO’s unique position with the
Company. The Company did not disclose in greater detail each of the qualitative performance
measure targets for the other named executive officers as they differ for each of them. The
qualitative bonus calculation for the named executive officers, other than the CEO, is done
on a holistic basis in evaluating the goals rather than based upon a rigid
formula.
The
following table provides a listing of the qualitative performance measures considered by
the Committee in awarding the CEO’s 2006 bonus:
Perry J.
Hindin
Securities
and Exchange Commission
September
20, 2007
Page 4 of
13
Performance Measure
Weighting (%)
Excerpt of Goals
Talent Development, Diversity and Succession
Planning
30%
Hire/Promote senior executives as appropriate. Develop
written Diversity Strategy. Development of high potential team
members.
Financial Controls, Ethics and Information
Technology
20%
Strengthen financial controls. Implement online ethics
training and new information technology system. Enhance financial and tax
staff.
Corporate Operational Initiatives
15%
Implement supply chain purchasing savings initiatives.
Train/develop people to enhance the Company’s operating
capabilities.
Marketing and Branding
10%
Build marketing capabilities, including enhancing marketing
staff, receiving better market share data and developing brand
research.
Development of New Markets
10%
The Company is not disclosing these targets as disclosure of
this confidential information would result in competitive harm to the
Company.
Making Terex a Better Place to Work
5%
Continue to improve team member communication and
satisfaction.
Terex Business System
5%
Enhanced training and development for senior and operations
leaders. Continue development/implementation of measurement
system.
Capital Structure and Transformation
5%
The Company is not disclosing these targets as disclosure of
this confidential information would result in competitive harm to the
Company.
The
following table provides a detailed listing of the qualitative performance measures that
will be considered by the Committee in awarding the CEO’s 2007 bonus:
Performance Measure
Weighting (%)
Excerpt of Goals
Talent Development, Diversity and Succession
Planning
15%
Develop and diversify talent base. Implement new programs to
recruit and retain talent.
Financial Controls, Ethics and Information
Technology
15%
Strengthen financial controls and continue to enhance
finance and tax staff. Develop future tax strategy plans.
Corporate Operational Initiatives
20%
Enhance supply chain purchasing savings initiatives.
Continue to train/develop people to enhance the Company’s operating
capabilities.
Corporate Marketing Initiatives
20%
Continue to build marketing capabilities, including
analyzing and acting upon market share and research data.
Making Terex a Better Place to Work
10%
Continue to improve team member communication and
satisfaction. Increase focus on team member health and safety.
Perry J.
Hindin
Securities
and Exchange Commission
September
20, 2007
Page 5 of
13
Business Development
10%
The Company is not disclosing these targets as disclosure of
this confidential information would result in competitive harm to the
Company.
Financial Structure
10%
The Company is not disclosing these targets as disclosure of
this confidential information would result in competitive harm to the
Company.
The
Company is not disclosing the Business Development and Financial/Capital Structure targets
for Mr. DeFeo for 2006 and 2007 because such targets involve plans and ideas that have not
been disclosed to the marketplace and are not known by the Company’s competitors.
Such disclosure would make it more difficult for the Company to achieve such targets and
would provide a competitive advantage to the Company’s competitors. In addition, the
disclosure of uses of its cash and acquisition or disposition opportunities that the
Company has decided not to pursue would place the Company in a competitive
disadvantage.
The
difficulty in achieving the targeted goals depends on a variety of factors, some of which
are in the Company’s control and some of which are not. These targets are established
annually in conjunction with setting the business plan of the Company for the coming year.
If the Company achieves its business plan objectives for the year, the Company believes the
goals are attainable. In 2006, portions of the Development of New Markets target were
achieved at a 120% level and other portions were achieved at an 80% level, while the
Capital Structure and Transformation target was achieved at a 120% level.
Instruction 1 to Item 402(b) of Regulation S-K states that “the
purpose of the Compensation Discussion and Analysis is to provide to investors material
information that is necessary to an understanding of the registrant’s compensation
policies and decisions regarding the named executive officers.” The Company does not
believe that disclosing in greater detail the qualitative bonus targets for the named
executive officers, other than the CEO, is material information that is necessary for such
an understanding. With respect to the CEO’s qualitative targets, while the Company
does not believe that the level of detail included above is beneficial to investors, the
Company will include in its applicable future filings more information with respect to the
CEO’s qualitative targets, including the relative weightings of the different
qualitative factors.
Comment:
4.
In addition to disclosing these non-financial targets, please also
provide a more detailed discussion and analysis of how these various non-financial measures
contributed to actual 2006 bonuses for each named executive officer. For example, were
certain qualitative performance measures weighted more heavily than others?
Perry J.
Hindin
Securities
and Exchange Commission
September
20, 2007
Page 6 of
13
Response:
The
following table details the qualitative portion of the CEO’s 2006 An