Form 4: Terex Corp Executive Stephen Johnston Reports Changes in Beneficial Ownership

VP, CAO, and Controller of Terex Corp, Stephen Johnston, reports acquisition and disposal of common stock due to tax withholding and long-term incentive plan grants.

Summary

• Stephen Johnston, VP, CAO, and Controller of Terex Corp, filed a Form 4 detailing changes in beneficial ownership of Terex Corp [TEX] common stock.
• On March 15, 2024, 438 shares were withheld for payment of tax liability associated with the vesting of restricted stock awards at a price of $58.35.
• On the same date, 1,117 shares were granted pursuant to a long-term incentive plan, vesting in the first quarter of 2027 if the company achieves a targeted return on invested capital (ROIC) in each of 2024, 2025, and 2026.
• The number of shares in this grant are subject to adjustment, up or down, based upon attainment above or below the targeted ROIC.
• Also on March 15, 2024, 3,351 shares were granted pursuant to a long-term incentive plan, vesting in three equal installments on March 15, 2025, March 15, 2026, and March 15, 2027.
• On March 18, 2024, 329 shares were withheld for payment of tax liability associated with the vesting of restricted stock awards at a price of $59.07.
• Following these transactions, Johnston directly owns 17,825 shares of Terex Corp common stock.

Sentiment

Score: 7

Explanation: The document reflects standard executive compensation practices and stock ownership adjustments. The use of ROIC as a performance metric is a positive sign, aligning management's interests with shareholder value. There are no overtly negative signals.

Positives

• The granting of shares under long-term incentive plans aligns executive compensation with company performance, specifically ROIC targets.
• The vesting schedule of the incentive shares encourages long-term commitment from the executive.

Risks

• The number of shares granted under the long-term incentive plan is subject to adjustment based on the company's ROIC performance, which introduces uncertainty.
• Tax liabilities arising from vesting restricted stock awards can lead to the disposal of shares, potentially diluting ownership.

Future Outlook

The long-term incentive plan shares are scheduled to vest in the first quarter of 2027, contingent on the company achieving a targeted return on invested capital (ROIC) in each of 2024, 2025 and 2026.

Industry Context

Executive compensation packages often include stock options and restricted stock awards to align management's interests with those of shareholders. The use of ROIC as a performance metric is common in capital-intensive industries like manufacturing.

Comparison to Industry Standards

• Many companies in the industrial sector, such as Caterpillar and Deere & Company, utilize long-term incentive plans with performance-based metrics like ROIC or earnings per share (EPS).
• The vesting schedules for restricted stock awards typically range from three to five years, which aligns with the vesting schedule described in the document.
• Tax withholding practices for vested stock awards are standard across publicly traded companies to ensure compliance with tax regulations.

Stakeholder Impact

• Shareholders may view the long-term incentive plan positively, as it aligns executive compensation with company performance.
• Employees may be motivated by the potential for similar incentive plans within the company.

Key Dates