19. Equity

Changes in shareholders’ equity during 2014 were as follows:

(€ thousand)Share capitalCapital reservesLegal reserves: cumulative translation adjustment reserve/OCILegal reserves: otherRetained profit/(loss)Profit/(loss) for the yearTotal
Balances at December 31, 2012 1,919,433 435,372 (142,943) 1,921,599 (296,229) 791,210 4,628,442
Allocation of prior year result - - -   791,210 (791,210) -
Dividend distributed - - - - (275,076) - (275,076)
Presentation of the effects of the Merger:              
Cancellation of Fiat Industrial S.p.A. share capital and issuance of CNH Industrial N.V. share capital (1,902,695) 1,902,695 - - - - -
Ownership interests in CNH Global N.V. 1,495 1,000 (22,374) - 868,896 - 849,017
Share based compensation: costs accrued in the
period and effects of share issuance upon exercise of the grants
12 (8,364) - - 11,038 - 2,686
Result for the year - - - - - 788,962 788,962
Current period change in OCI, net of taxes - - (489,508) - - - (489,508)
Legal reserve - - - 778,162 (778,162) - -
Balances at December 31, 2013 18,245 2,330,703 (654,825) 2,699,761 321,677 788,962 5,504,523
Allocation of prior year result - - - - 788,962 (788,962) -
Dividend distributed - - - - (270,619) - (270,619)
Share based compensation: costs accrued in the
period and effects of share issuance upon exercise of the grants
52 41,397 - - - - 41,449
Result for the year - - - - - 690,137 690,137
Current period change in OCI, net of taxes - - 244,444 - - - 244,444
Other movements - - - - (4,514)   (4,514)
Legal reserve - - - 325,356 (325,356) - -
Balances at December 31, 2014 18,297 2,372,100 (410,381) 3,025,117 510,150 690,137 6,205,420

At December 31, 2014, equity totaled €6,205,420 thousand. The increase in equity of €700,897 thousand over year-end 2013 is mainly the result of the profi t for the year of €690,137 thousand, partially offset by the dividend distributed by CNH Industrial N.V. for €270,619 thousand (€0.20 per common share outstanding at the dividend date).

Share capital

Share capital, fully paid-in, amounts to €18,297,939.16 at December 31, 2014 and consists of 1,355,319,640 common shares and 474,474,276 special voting shares, of which 59,074,773 acquired by the Company following the de-registration of the corresponding amount of qualifying common shares from the Loyalty Register, all with a par value of €0.01 each.

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 - which were allotted to Fiat Industrial S.p.A. and CNH Global N.V. shareholders on the basis of established exchange ratios - and 474,474,276 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 – both 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.

During 2014, the Company issued a total of 5,246,110 new common shares in relation to certain share-based incentive plans (1,205,758 common shares issued during 2013 relating to certain share-based incentive plans granted by the predecessor companies CNH Global N.V. and Fiat Industrial S.p.A. 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, 2014:

(number of shares)At
September
29, 2013
Effects of the
Merger
At September
30, 2013
Capital
increase
(Purchases)/
Sales of
treasury
shares
At December
31, 2013
Capital
increase
(Purchases)/
Sales of
treasury
shares
At December
31, 2014
Fiat Industrial S.p.A. common shares pre- merger issued 1,222,568,882 (1,222,568,882) - - - - - - -
Less: Treasury shares pre-merger (8,635) 8,635 - - - - - - -
Total Fiat Industrial S.p.A. common shares pre- merger outstanding 1,222,560,247 (1,222,560,247) - - - - - - -
CNH Global N.V. Common Shares pre-merger (non-controlling interests) 32,995,696 (32,995,696) - - - - - - -
CNH Industrial N.V.     1,348,867,772 1,348,867,772 1,205,758 - 1,350,073,530 5,246,110 - 1,355,319,640
common shares issued   (*)              
Less: Treasury shares   - - - - - - - -
CNH Industrial N.V. common shares outstanding   1,348,867,772 1,348,867,772 1,205,758 - 1,350,073,530 5,246,110 - 1,355,319,640
CNH Industrial N.V.    474,474,276 474,474,276 - - 474,474,276 - - 474,474,276
special voting shares issued   (**)              
Less: Treasury shares (a)   - - - (5,479,890) 5,479,890) - 53,594,883) 59,074,773)
CNH Industrial N.V. special voting shares outstanding   474,474,276 474,474,276 - (5,479,890) 468,994,386 - 53,594,883) 415,399,503
Total Shares issued by CNH Industrial N.V.     1,823,342,048 1,205,758 - 1,824,547,806 5,246,110 - 1,829,793,916
Less: Treasury shares     - - (5,479,890) 5,479,890) - 53,594,883) 59,074,773)
Total CNH Industrial N.V. outstanding shares     1,823,342,048 1,205,758 (5,479,890) 1,819,067,916 5,246,110 53,594,883) 1,770,719,143

(a) Special voting shares acquired by the Company following the de-registration of the corresponding amount of qualifying common shares from the Loyalty Register.

(*) 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.

Capital reserves

At December 31, 2014, capital reserves amounting to €2,372 million (€2,331 million at December 31, 2013) consisted mainly of the effects of the Merger.

Legal reserves As of December 31, 2014, legal reserves amounted to €2,615 million (€2,045 million at December 31, 2013) and mainly refer to unrealized currencies translation losses and other OCI components for a net negative amount of €410 million, and other reserves for €3,025 million, due to research and development costs capitalized by equity investments, earnings from affi liated companies subject to certain restrictions on the transfer of funds to the parent company in form of dividend or otherwise. The legal reserve also includes a reserve for the share capital and share premium of a subsidiary due to the limitations on capital repayments from this subsidiary.

Pursuant to Dutch law, limitations exist relating to the distribution of shareholders’ equity for the entire amount of the legal reserves. By their nature, unrealized losses relating to currency translation differences reduce shareholders’ equity and thereby distributable amounts.

Share-based compensation

In connection with the Merger, 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.

For the year ended December 31, 2014 and 2013 CNH Industrial recognized total share-based compensation expense of €38 million and €30 million, respectively. For the years ended December 31, 2014 and 2013, CNH Industrial recognized a total tax benefi t relating to share-based compensation expense of €8 million and €7 million, respectively. As of December 31, 2014, CNH Industrial had unrecognized share-based compensation expense related to non-vested awards of approximately €86 million based on current assumptions related to achievement of specifi ed performance objectives, when applicable. Unrecognized share-based compensation costs will be recognized over a weighted-average period of 2.8 year.

CNH Industrial’s equity awards are governed by several plans: (i) CNH Industrial N.V. Directors’ Compensation Plan (“CNH Industrial DCP”); (ii) CNH Industrial N.V. Equity Incentive Plan (“CNH Industrial EIP”); (iii) CNH Global N.V. Directors’ Compensation Plan (“CNH DCP”); (iv) CNH Global N.V. Equity Incentive Plan (“CNH EIP”); and, (v) Fiat Industrial Long-Term Incentive Plan (“Fiat Industrial Plan”).

Detailed information on Board of Directors compensation, including their shares and share options, is included in the Consolidated Financial Statements of the Group.