24. Equity

Consolidated shareholder’s equity at December 31, 2013 exceeds that at December 31, 2012 by €180 million. The increase in equity is mainly the result of the profit for the year of €917 million, partially offset by the dividend distributed for €277 million and by the decrease in the translation reserve of €586 million arising on the translation into euros of the financial statements of subsidiaries denominated in currencies other than the Euro.

Share capital

Share capital, fully paid-in, amounts to €18 million at December 31, 2013 and consists of 1,350,073,530 common shares and 474,474,276 special voting shares, of which 5,479,890 acquired by the Company following the deregistration of the corresponding amount of qualifying common shares from the Loyalty Register, all with a par value of €0.01 each.

At December 31, 2012, the share capital of Fiat Industrial S.p.A. was €1,919 million, fully paid-in, and consisted of 1,222,568,882 common shares, including 8,635 treasury shares that were cancelled at the closing of the merger.

Upon the completion of the merger of Fiat Industrial S.p.A. and CNH Global N.V. with and into CNH Industrial N.V., CNH Industrial N.V. issued 1,348,867,772 common shares with a par value of €0.01 each, which were allotted to Fiat Industrial S.p.A. and CNH Global N.V. shareholders on the basis of the established exchange ratios of one common share of CNH Industrial N.V. for each share of Fiat Industrial S.p.A. and 3.828 common shares of CNH Industrial N.V for each share of CNH Global N.V. CNH Industrial N.V. also issued special voting shares (non-tradable) which were allotted to eligible Fiat Industrial S.p.A. and CNH Global N.V. shareholders who had elected to receive special voting shares. On the basis of the requests received, CNH Industrial issued a total of 474,474,276 special voting shares with a par value of €0.01 each. See the following section Special voting shares for more detailed information about Special voting shares and the special-voting structure.

Furthermore the Company during the fourth quarter of 2013 issued a total of 1,205,758 new common shares in relation to certain share-based incentive plans granted by the predecessor company CNH Global N.V. before the completion of the Merger.

The following table shows a reconciliation between the composition of the share capital of CNH Industrial N.V. at September 30, 2013 on the basis of the shares issued according to the exchange ratios with Fiat Industrial S.p.A. and CNH Global N.V. shares upon the completion of the merger, and the composition of the share capital of CNH Industrial N.V. at December 31, 2013:

(number of shares)Common
shares pre-merger
CNH Industrial N.V.
common shares
issued on merger (*)
CNH Industrial
N.V. special
voting shares
issued on
merger (**)
Total
CNH Industrial N.V.
shares
Fiat Industrial S.p.A. common shares1,222,560,247 (a)1,222,560,247451,262,0831,673,822,330
CNH Global N.V. common shares (non-controlling interests)32,995,696126,307,52523,212,193149,519,718
Total CNH Industrial N.V. shares at September 30, 2013 1,348,867,772474,474,2761,823,342,048
Capital increase 1,205,758-1,205,758
(Purchases)/Sales of treasury shares -(5,479,890)(5,479,890)
Total CNH Industrial N.V. outstanding shares at December 31, 2013 1,350,073,530468,994,3861,819,067,916
(a) Total n. 1,222,568,882 Fiat Industrial S.p.A. common shares are shown net of 8,635 treasury shares that have been cancelled at the closing of the Transaction.
(*) Allotted on the basis of the established exchange ratios of one common share of CNH Industrial N.V. for each share of Fiat Industrial S.p.A. and 3.828 common shares of CNH Industrial N.V for each share of CNH Global N.V.
(**) Allotted to eligible Fiat Industrial S.p.A. and CNH Global N.V. shareholders who had elected to receive special voting shares.

The Company shall maintain a special capital reserve to be credited against the share premium exclusively for the purpose of facilitating any issuance or cancellation of special voting shares. The special voting shares shall not carry any entitlement to the balance of the special capital reserve. The Board of Directors shall be authorized to resolve upon (i) any distribution out of the special capital reserve to pay up special voting shares or (ii) re-allocation of amounts to credit or debit the special capital reserve against or in favor of the share premium reserve.

The Company shall maintain a separate dividend reserve for the special voting shares. The special voting shares shall not carry any entitlement to any other reserve of the Company. Any distribution out of the special voting shares dividend reserve or the partial or full release of such reserve will require a prior proposal from the Board of Directors and a subsequent resolution of the general meeting of holders of special voting shares.

From the profits, shown in the annual accounts, as adopted, such amounts shall be reserved as the Board of Directors may determine.

The profits remaining thereafter shall first be applied to allocate and add to the special voting shares dividend reserve an amount equal to one percent (1%) of the aggregate nominal amount of all outstanding special voting shares. The calculation of the amount to be allocated and added to the special voting shares dividend reserve shall occur on a time-proportionate basis. If special voting shares are issued during the financial year to which the allocation and addition pertains, then the amount to be allocated and added to the special voting shares dividend reserve in respect of these newly issued special voting shares shall be calculated as from the date on which such special voting shares were issued until the last day of the financial year concerned. The special voting shares shall not carry any other entitlement to the profits.

Any profits remaining thereafter shall be at the disposal of the general meeting of Shareholders for distribution of dividend on the common shares only subject to the provision that the distribution of profits shall be made after the adoption of the annual accounts, from which it appears that the same is permitted.

Subject to a prior proposal of the Board of Directors, the general meeting of Shareholders may declare and pay dividends in U.S. Dollars. Furthermore, subject to the approval of the general meeting of Shareholders and the Board of Directors having been designated as the body competent to pass a resolution for the issuance of shares in accordance with Article 5 of the Articles of Association, the Board of Directors may decide that a distribution shall be made in the form of shares or that Shareholders shall be given the option to receive a distribution either in cash or in the form of shares.

The Company shall only have power to make distributions to Shareholders and other persons entitled to distributable profits to the extent the Company's equity exceeds the sum of the paid-up portion of the share capital and the reserves that must be maintained in accordance with provision of law. No distribution of profits may be made to the Company itself for shares that the Company holds in its own share capital.

The Board of Directors shall have power to declare one or more interim dividends, provided that the requirements of the Article 22 paragraph 5 of the Articles of Association are duly observed as evidenced by an interim statement of assets and liabilities as referred to in Article 2:105 paragraph 4 of the Dutch Civil Code and provided further that the policy of the Company on additions to reserves and dividends is duly observed. The provisions of the Article 22 paragraphs 2 and 3 of the Articles of Association shall apply mutatis mutandis.

The Board of Directors may determine that dividends or interim dividends, as the case may be, shall be paid, in whole or in part, from the Company's share premium reserve or from any other reserve, provided that payments from reserves may only be made to the Shareholders that are entitled to the relevant reserve upon the dissolution of the Company.

Dividends and other distributions of profit shall be made payable in the manner and at such date(s) - within four weeks after declaration thereof - and notice thereof shall be given, as the general meeting of Shareholders, or in the case of interim dividends, the Board of Directors shall determine, provided, however, that the Board of Directors shall have the right to determine that each payment of annual dividends in respect of shares be deferred for a period not exceeding five consecutive annual periods.

Dividends and other distributions of profit, which have not been collected within five years and one day after the same have become payable, shall become the property of the Company.

In the event of a winding-up, a resolution to dissolve the Company can only be passed by a general meeting of Shareholders pursuant to a prior proposal of the Board of Directors. In the event a resolution is passed to dissolve the Company, the Company shall be wound-up by the Board of Directors, unless the general meeting of Shareholders would resolve otherwise.

The general meeting of Shareholders shall appoint and decide on the remuneration of the liquidators.

Until the winding-up of the Company has been completed, the Articles of Association of the Company shall to the extent possible, remain in full force and effect.

Special voting shares

In order to foster the development and continued involvement of a core base of long-term shareholders in a manner that reinforces the Group’s stability, as well as providing the Group enhanced flexibility in pursuing strategic opportunities in the future, CNH Industrial’s Articles of association provide for a special-voting structure that rewards shareholder loyalty by granting long-term Group shareholders with the equivalent of two votes for each CNH Industrial N.V. common share that they hold through the issuance of special voting shares.

After closing of the above Merger, a shareholder may at any time elect to participate in the loyalty voting structure by requesting the registration of all or some of the common shares held by such shareholder in a separate register (the “Loyalty Register”) of the Company. If such common shares have been registered in the Loyalty Register for an uninterrupted period of three years in the name of the same shareholder, such shares will become “Qualifying Common Shares” and the relevant shareholder will be entitled to receive one special voting share for each such Qualifying Common Share.

As mentioned above, CNH Industrial N.V. issued special voting shares with a nominal value of €0.01 each to those eligible shareholders for and elect to receive such special voting shares upon completion of the merger of Fiat Industrial and of CNH Global N.V. respectively with and into CNH Industrial N.V.; the Company could issue further special voting shares, following the completion of such merger, pursuant to the “Terms and Conditions” of the special voting shares.

The electing shareholders are not required to pay any amount to the Company in connection with the allocation of the special voting shares.

Common shares are freely transferable, while, as described below, special voting shares are transferable exclusively in limited circumstances, as described below, and they are not admitted to listing. In particular, at any time, a holder of common shares that are Qualifying Common Shares wishing to transfer such common shares other than in limited specified circumstances (e.g., transfers to affiliates or relatives through succession, donation or other transfers) must first request a de-registration of such Qualifying Common Shares from the Loyalty Register and to move back into the Regular Trading System. After de-registration from the Loyalty Register, such common shares no longer qualify as Qualifying Common Shares and, as a result, the holder of such common shares is required to offer and transfer the special voting shares associated with the transferred common shares to the Company for no consideration.

The special voting shares have minimal economic entitlements as per the purpose of the special voting shares is to grant long-term shareholders with an extra voting right by means of granting an additional special voting share, without granting such shareholders with any economic rights additional to the ones pertaining to the common shares.

However, as a matter of Dutch law, such special voting shares cannot be fully excluded from economic entitlements.

Therefore, the Articles of Association provide that only a minimal dividend accrues to the special voting shares, which is not distributed, but allocated to a separate special dividend reserve.

Policies and processes for managing capital

The objectives identified by the Group for managing capital are to create value for shareholders as a whole, safeguard business continuity and support the growth of the Group. As a result, the Group endeavors to maintain an adequate level of capital that at the same time enables it to obtain a satisfactory economic return for its Shareholders and guarantee economic access to external sources of funds, including by means of achieving an adequate rating.

The Group constantly monitors the evolution of its debt/equity ratio and in particular the level of net debt and the generation of cash from its industrial activities.

To reach these objectives the Group aims at a continuous improvement in the profitability of the business in which it operates. Further, in general, it may sell part of its assets to reduce the level of its debt, while the Board of Directors may make proposals to Shareholders in general meeting to reduce or increase share capital or, where permitted by law, to distribute reserves.

The Company shall at all times have the authority to acquire fully paid-up shares in its own share capital, provided that such acquisition is made for no consideration (om niet).

The Company shall also have authority to acquire fully paid-up shares in its own share capital for consideration, if:

  • the general meeting of Shareholders has authorized the Board of Directors to make such acquisition – which authorization shall be valid for no more than eighteen months – and has specified the number of shares which may be acquired, the manner in which they may be acquired and the limits within which the price must be set; 
  • the Company's equity, after deduction of the acquisition price of the relevant shares, is not less than the sum of the paid-up portion of the share capital and the reserves that have to be maintained by provision of law; and 
  • the aggregate par value of the shares to be acquired and the shares in its share capital the Company already holds, holds as pledgee or are held by a subsidiary company, does not amount to more than one half of the aggregate par value of the issued share capital.

If no annual accounts have been confirmed and adopted when more than six months have expired after the end of any financial year, then it shall not be allowed any acquisition.

No authorization shall be required, if the Company acquires its own shares for the purpose of transferring the same to directors or employees of the Company or a Group company as defined in Article 2:24b of the Dutch Civil Code, under a scheme applicable to such employees. Such own shares must be officially listed on a price list of an exchange.

The preceding provisions shall not apply to shares which the Company acquires under universal title of succession (algemene titel).

No voting rights may be exercised in the general meeting of Shareholders for any share held by the Company or any of its subsidiaries. Beneficiaries of a life interest on shares that are held by the Company and its subsidiaries are not excluded from exercising the voting rights provided that the life interest was created before the shares were held by the Company or any of its subsidiaries. The Company or any of its subsidiaries may not exercise voting rights for shares in respect of which it holds a usufruct.

Any acquisition by the Company of shares that have not been fully paid up shall be void.

Any disposal of shares held by the Company will require a resolution of the Board of Directors. Such resolution shall also stipulate the conditions of the disposal.

As of December 31, 2013 the Company didn’t own any treasury common share; currently the Group has not been authorized to purchase CNH Industrial common shares. Before the Transaction, Fiat Industrial S.p.A. owned 8,635 treasury shares that have been cancelled at the closing of the Transaction.

As of December 31, 2013 the Company owned 5,479,890 Special Voting Shares acquired following the de-registration of the corresponding amount of Qualifying Common Shares from the Loyalty Register.

Capital reserves

At December 31, 2013 capital reserves amounting to €2,331 million (€435 million at December 31, 2012) includes the effects of the Merger.

Earnings reserves

Earnings reserves, amounting to €3,810 million at December 31, 2013 (€2,417 million at December 31, 2012) consist mainly of retained earnings and profits attributable to the owners of the parent.

Other comprehensive income
The amount of Other comprehensive income can be analyzed as follows:

(€ million)20132012
Other comprehensive income that will not be reclassified subsequently to profit or loss:  
Gains/(losses) on the remeasurement of defined benefit plans116(196)
Total Other comprehensive income that will not be reclassified subsequently to profit or loss (A)  116(196)
Other comprehensive income that may be reclassified subsequently to profit or loss:  
Gains/(losses) on cash flow hedging instruments arising during the period159(71)
Gains/(losses) on cash flow hedging instruments reclassified to profit or loss(50)116
Gains/(losses) on cash flow hedging instruments10945
Gains/(losses) on the remeasurement of available-for-sale financial assets arising during the period--
Gains/(losses) on the remeasurement of available-for-sale financial assets reclassified to profit or loss--
Gains/(losses) on the remeasurement of available-for-sale financial assets--
Exchange gains/(losses) on translating foreign operations arising during the period(615)(223)
Exchange gains/(losses) on translating foreign operations reclassified to profit or loss--
Exchange gains/(losses) on translating foreign operations(615)(223)
Share of Other comprehensive income of entities accounted for using the equity method arising during the period(40)(19)
Reclassification adjustment for the share of Other comprehensive income of entities accounted for using the equity method-(28)
Share of Other comprehensive income of entities accounted for using the equity method(40)(47)
Total Other comprehensive income that may be reclassified subsequently to profit or loss (B) (546)(225)
Tax effect of the other components of Other comprehensive income (C)(98) 15
Total Other comprehensive income, net of tax (A) + (B) + (C)(528)(406)

The income tax effect relating to Other comprehensive income can be analyzed as follows:

 20132012
(€ million)Before tax amountTax  (expense)/ benefitNet-of-tax amountBefore tax amountTax (expense)/ benefitNet-of-tax amount
Other comprehensive income that will not be reclassified subsequently to profit or loss:      
Gains/(losses) on the remeasurement of defined benefit plans116(67)49(196)25(171)
Total Other comprehensive income that will not be reclassified subsequently to profit or loss116(67)49(196)25(171)
Other comprehensive income that may be reclassified subsequently to profit or loss:      
Gains/(losses) on cash flow hedging instruments109-317845(10)35
Gains/(Losses) on the remeasurement of available-for-sale financial assets------
Exchange gains/(losses) on translating foreign operations(615)-(615)(223)-(223)
Share of Other comprehensive income of entities accounted for using the equity method(40)-(40)(47)-(47)
Total Other comprehensive income that may be reclassified subsequently to profit or loss(546)(31)(577)(225)(10)(235)
Total Other comprehensive income(430)(98)(528)(421)15(406)

Share-based compensation

In connection with the merger of Fiat Industrial S.p.A. and CNH Global N.V. with and into CNH Industrial N.V., CNH Industrial N.V. assumed the sponsorship of the Fiat Industrial Long-Term Incentive Plan (the “Fiat Industrial Plan”), the CNH Global N.V. Equity Incentive Plan (the “CNH EIP”) and the CNH Global N.V. Directors’ Compensation Plan (“CNH DCP”), effective as of September 29, 2013 (the “Effective Date”).

On the Effective Date, outstanding stock options, unvested restricted share units and performance share units under the former CNH EIP became exercisable or convertible for common shares of CNH Industrial N.V. The number of shares of outstanding equity awards was increased and exercise price of stock options reduced for the conversion ratio of 3.828.

On the Effective Date, the unvested equity awards under the former Fiat Industrial Plan became convertible for common shares of CNH Industrial N.V. on a one-for-one basis.

The conversion did not change the aggregate fair value of the outstanding equity awards and, therefore, resulted in no additional share-based compensation expense in 2013. For the year ended December 31, 2013 and 2012, CNH Industrial recognized total share-based compensation expense of €35 million and €52 million, respectively.

Furthermore, on September 9, 2013 the CNH Industrial N.V. Directors’ Compensation Plan (the “CNH Industrial DCP”) was approved by the shareholders and adopted by the Board of Directors of CNH Industrial.

CNH Industrial N.V. Directors’ Compensation Plan (“CNH Industrial DCP”) This plan provides for the payment of the following to eligible members of the CNH Industrial N.V. Board in the form of cash, and/or common shares of CNH Industrial, and/or options to purchase common shares of CNH Industrial, provided that such members do not receive salary or other employment compensation from CNH Industrial or Fiat S.p.A., and their subsidiaries and affiliates:

  • an annual retainer fee of US$125,000; 
  • an Audit Committee membership fee of US$25,000;
  • a Governance and Sustainability Committee membership fee of US$20,000;
  • a Compensation Committee membership fee of US$20,000; 
  • an Audit Committee chair fee of US$35,000; 
  • a Governance and Sustainability Committee chair fee of US$25,000; and
  • a Compensation Committee chair fee of US$25,000 (collectively, the “fees”).

Each quarter of the CNH Industrial DCP year, the eligible directors elect the form of payment of their fees. If the elected form is common shares, the eligible director will receive as many common shares as equal to the amount of fees the director elects to be paid in common shares, divided by the fair market value of a CNH Industrial common share on the date that the quarterly payment is made. Common shares issued to the eligible director vest immediately upon grant. If an eligible director elects to receive all or a portion of fees in the form of a stock option, the number of common shares underlying the stock option is determined by dividing (i) by (ii) where (i) equals the dollar amount of the quarterly payment that the eligible director elects to receive in the form of stock options multiplied by four and (ii) the fair market value of the common shares on the date that the quarterly payment is made. The CNH Industrial DCP defines fair market value, as applied to each ordinary share, to be equal to the average of the highest and lowest sale price of a CNH Industrial common share during normal trading hours on the last trading day of each plan quarter in which sales of common shares on the New York Stock Exchange are recorded. Stock options granted as a result of such an election vest immediately, but shares purchased under options cannot be sold for six months following the date of exercise. Stock options terminate upon the earlier of: (1) ten years after the grant date; or (2) six months after the date an individual ceases to be a director.

At December 31, 2013, there were 200,000 common shares, reserved for issuance under the CNH Industrial DCP. In 2013, 6,402 stock options were issued under the CNH Industrial DCP at an exercise price of US$11.325.

CNH Global Directors’ Compensation Plan (“CNH DCP”)

Directors of former CNH Global were compensated in the form of cash, and/or common shares of CNH Global N.V., and/or options to purchase common shares of CNH Global N.V. under the CNH DCP. Stock options issued under the CNH DCP were converted using the ratio of 3.828 and exercisable for common shares of CNH Industrial N.V. upon the Effective Date. As of December 31, 2013, 186 thousand stock options from the CNH DCP were still outstanding.

The CNH DCP was terminated effective as of the Merger and no new equity awards will be issued under the CNH DCP.

CNH Global Equity Incentive Plan (the “CNH EIP”)

This plan provides for grants of stock options, restricted share units and performance share units to officers and employees of former CNH Global. CNH Industrial can not issue any new equity awards under the CNH EIP; however, CNH Industrial is required to issue shares under the CNH EIP to settle the exercise or vesting of the existing equity awards.

Modification

On December 28, 2012, CNH Global had paid a special dividend of US$10 per common share to its minority shareholders of record as of December 20, 2012, as part of the merger agreement with Fiat Industrial. In accordance with the anti-dilutive provision of both the CNH EIP and CNH DCP, on January 28, 2013, the CNH Global Corporate Governance and Compensation Committee approved required equitable adjustments to outstanding equity awards.

The adjustments were retrospectively made to outstanding options under the CNH EIP and CNH DCP, unvested performance share units and unvested restricted share units under the CNH EIP, as of the ex-dividend date on December 18, 2012. The exercise price was reduced and the number of outstanding shares increased for stock options, and the number of unvested share units was increased for performance share units and restricted share units, to maintain the pre-dividend fair value. The weighted average exercise price of outstanding options decreased from US$40.45 to US$33.34, the number of outstanding options increased from 4.6 million to 5.6 million, the number of unvested performance share units increased from 1.9 million to 2.3 million and the number of unvested restricted share units increased from 451 thousand to 548 thousand. These additional shares were issued in January 2013. The aggregate fair value, the aggregate intrinsic value and the ratio of the exercise price to the market price are approximately equal immediately before and after the adjustment. Therefore, no additional compensation expense was recognized in 2012 and 2013.

The information disclosed below was adjusted retrospectively for the conversion ratio of 3.828. The exercise price and grant-date fair value is expressed in US dollars as this is the currency used in the award agreements with plan participants.

Stock option plan

In September 2012, approximately 2,680 thousand performance-based stock options (at target award levels) were issued under the CNH EIP (the “2012 Grant”). As CNH Global exceeded its 2012 target performance objective, approximately four million of these options were granted overall, of which 171,575 options were granted in February 2013. One-third of the options vested in February 2013 following the approval of 2012 results of CNH by the Board of Directors of CNH Global. The remaining options will vest equally on the first and second anniversary of the initial vesting date. Options granted under the CNH EIP have a contractual life of five years from the initial vesting date.

The following table summarizes outstanding stock options under the CNH EIP:

 At December 31, 2013At December 31, 2012
Exercise Price (in US$)Number of options
Outstanding
Weighted average
remaining
contractual
life (in years)
Weighted
average
exercise price
(in US$)
Number of options
Outstanding
Weighted
average
exercise price
(in US$)
2.92 - 5.00495.6311.12.92723,4543.55
5.01 - 10.006,522,6573.48.038,666,0259.38
10.01 - 15.005,603,4573.110.168,276,97312.43
Total12,621,745  17,666,452 

Changes during the period in stock option plans are as follows:

 20132012
 Number of
options
Weighted
average
exercise price
(in US$)
Number of
options
Weighted
average
exercise Price
(in US$)
Outstanding at the beginning of the year17,666,45210.5723,447,8639.15
Anti-dilution adjustment for special dividend3,796,9978.70--
Granted171.5758.774,267,15710.79
Forfeited(390.612)9.36(558.766)10.01
Exercised(8,277,318)8.45(9,488,562)7.19
Expired(345.349)11.04(1.240)5.54
Outstanding at the end of the year12,621,7458.7717,666,45210.57
Exercisable at the end of the year6,731,7198.235,804,09810.36

The Black-Scholes pricing model was used to calculate the fair value of stock options for the 2012 Grant. As part of the 2012 Grant, options issued in 2013 had the same per share fair value. The assumptions used under the Black- Scholes pricing model were as follows:

 2012
 Equity
incentive plan
Option life (years)3.39
Price volatility of CNH Global N.V. shares (%)51.7
Expected dividend yield (%)0.0
Risk-free interest rate (%)0.4

The risk-free interest rate was based on the U.S. Treasury rate for a bond of approximately the expected life of the options. The expected volatility was based on the historical activity of common shares of CNH Global N.V. over a period at least equal to the expected life of the options. The expected life for the CNH EIP grant was based on the average of the vesting period of each tranche and the original contract term of 65 to 70 months. The expected dividend yield was determined to be zero as management did not expect CNH Global N.V. to pay ordinary dividends.

Based on this model, the fair values of stock options awarded for the 2012 Grant, before the Merger, under CNH EIP was US$3.60.

Performance Share Units Performance-based shares were granted to selected key employees and executive officers of former CNH Global under the CNH EIP. Performance-based shares vest upon the attainment of specified performance objectives.

No performance-based shares were granted in 2013. In 2012, CNH Global N.V. issued several grants of performancebased shares throughout the year. These shares will cliff vest in February 2015 based on their respective performance targets. The total number of shares granted in 2012 was 520,371 with a weighted average fair value of US$10.62 per share.

The following table reflects performance-based share activity under the CNH EIP:

 20132012
 Number of
shares
Weighted
average grant
date fair value
(in US$)
Number of
shares
Weighted
average grant
date fair value
(in US$)
Non-vested at the beginning of the year7,367,8979.217,732,5609.16
Anti-dilution adjustment for special dividend1,584,0607.58--
Granted--520,37110.62
Forfeited(415,239)7.54(885,034)9.59
Vested(2,921,194)7.54--
Non-vested at the end of the year5,615,5247.617,367,8979.21

Restricted Share Units

In 2013, no restricted share units were granted. In 2012, 723,236 restricted share units were granted under the CNH EIP with a weighted average fair value of US$11.40 per share. Restricted share units are service based and vest in three equal installments over three years starting from the grant date.

The following table reflects restricted share activity under the CNH EIP:

 20132012
 Number of
shares
Weighted
average grant
date fair value
(in US$)
Number of
shares
Weighted
average grant
date fair value
(in US$)
Non-vested at the beginning of the year1,696,7159.281,800,1907.88
Anti-dilution adjustment for special dividend363,9887.64--
Granted--723,23611.40
Forfeited(102,703)7.66(133,549)7.94
Vested(1,027,475)7.36(693,162)8.10
Non-vested at the end of the year930,5257.951,696,7159.28

In 2013, no share units were granted under CNH EIP.

Fiat Industrial Plan

In the General Meeting held on April 5, 2012, Fiat Industrial Shareholders approved the adoption of a Long Term Incentive Plan articulated in two components (Company Performance LTI and Retention LTI) taking the form of stock grants. According to the Plan, Fiat Industrial granted the Chairman 1 million rights as part of the Company Performance LTI and 1.1 million rights as part of the Retention LTI.

In the case of the Retention LTI, one third of the rights vested on February 22, 2013 and each of the remaining two thirds will vest on February 22, 2014 and February 22, 2015, on condition that Mr. Marchionne remains Chairman.

Under the terms of Long Term Incentive Plan, the rights to the Company Performance LTI would vest on condition that predetermined financial performance targets for the period from January 1, 2012 to December 31, 2014 were met and on condition that the beneficiary remained in office up to the date of approval of the Consolidated Financial Statements at December 31, 2014 by the Board of Directors; the rights would become exercisable in a single installment subsequent to the date of approval of the Consolidated Financial Statements at December 31, 2014 by the Board of Directors.

The two awards will be settled by issuing new shares.

On October 31, 2013, upon recommendation of the Remuneration Committee, the Board of Directors of CNH Industrial resolved to consider the performance conditions met for the Chairman’s Company performance share units (“PSU”s). The units will vest February 1, 2015.

At December 31, 2013, the contractual terms of the Long Term Incentive Plan were therefore as follows:

PlanBeneficiaryNumber of sharesVesting dateVesting portion
Company Performance LTIChairman1,000,0001st Quarter 20151,000,000
Retention LTIChairman1,100,000February 22, 2013 (*)366,667
 February 22, 2014 (*)366,667
 February 22, 2015366,666

(*) As of February 27, 2014 the beneficiary has not exercised its right with respect to the restricted share units vested.

The following table reflects share activity under the Company Performance LTI:

  2013 2012
 Number of
shares
Weighted
average grant
date fair value
(in €)
Number of
shares
Weighted
average grant
date fair
value
(in €)
Non-vested at the beginning of the year1,000,0007,795--
Granted--1,000,0007,795
Forfeited----
Vested----
Non-vested at the end of the year1,000,0007,7951,000,0007,795

The following table reflects share activity under the Retention LTI:

 Number of
shares
Weighted
average
grant date
fair value
(in €)
Number of
shares
Weighted
average
grant date
fair value
(in €)
Non-vested at the beginning of the year1,100,0007,795--
Granted--1,100,0007,795
Forfeited----
Vested(366,667) (a)7,795--
Non-vested at the end of the year733,3337,7951,100,0007,795

(a) As of February 27, 2014 the beneficiary has not exercised its right with respect to the restricted share units vested.