Table of Contents
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than
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Check the appropriate
box: |
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Preliminary Proxy
Statement |
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Soliciting Material Under Rule
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Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy
Statement |
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Definitive Additional
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Deere & Company |
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Specified In Its Charter) |
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of Person(s) Filing Proxy Statement, if Other Than the
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the appropriate box): |
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
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Table of Contents
Notice of 2015 Annual Meeting and Proxy
Statement |
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Table of Contents
Notice of Annual Meeting of
Stockholders
Date: |
Wednesday, February 25,
2015 |
Time: |
10:00 a.m. Central Standard
Time |
Place: |
Deere & Company World
Headquarters |
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One John Deere Place, Moline, Illinois
61265 |
At the Annual Meeting, stockholders will
be asked to:
1. |
Elect the twelve director nominees named in the Proxy
Statement (see page 4) |
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2. |
Approve an amendment to Deeres Bylaws to permit
stockholders to call special meetings (see page 20) |
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3. |
Approve the Companys executive compensation on an
advisory basis (say-on-pay) (see page
21) |
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4. |
Amend the John Deere Omnibus Equity and Incentive Plan
(see page 57) |
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5. |
Re-approve the John Deere Short-Term Incentive Bonus
Plan (see page 62) |
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6. |
Ratify the appointment of Deloitte & Touche LLP as
Deeres independent registered public accounting firm for fiscal 2015
(see page 65) |
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7. |
Consider any other business properly brought before the
meeting |
You may vote at the Annual Meeting if you
were a Deere stockholder of record at the close of business on December 31,
2014.
YOUR VOTE IS VERY IMPORTANT. We urge
all stockholders to vote on the matters described in the accompanying Proxy
Statement as soon as possible, whether or not they attend the Annual
Meeting. Please refer to the section
beginning on page 1 of the Proxy Statement entitled Voting and Meeting
Information for information about voting by mail, telephone, internet, or in
person at the Annual Meeting.
Along with the accompanying Proxy
Statement, we are also sending you our Annual Report, which includes our fiscal
2014 financial statements. Most of you can elect to view future proxy statements
and annual reports via the internet instead of receiving paper copies in the
mail. Please refer to your proxy card and the section entitled Electronic
Delivery of Proxy Statement and Annual Report on page 3 of the Proxy Statement
for further information.
For the Board of Directors,
Todd E. Davies
Secretary
Moline, Illinois
January 14, 2015
REVIEW YOUR PROXY STATEMENT AND VOTE IN
ONE OF FOUR WAYS: |
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VIA THE
INTERNET Visit the website
listed on your proxy card |
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BY MAIL Sign, date, and return your proxy card in the enclosed
envelope |
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BY TELEPHONE Call the telephone number on your proxy
card |
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IN PERSON Attend the Annual Meeting and vote in
person |
Table of Contents
Proxy Statement
Summary
This summary highlights selected
information contained in this Proxy Statement. It does not contain all the
information you should consider and as such we urge you to carefully read the
Proxy Statement in its entirety prior to voting. For additional information,
please review the Companys Annual Report on Form 10-K for the fiscal year ended
October 31, 2014.
Meeting Agenda and
Voting Recommendations
Item |
Voting Standard |
Vote Recommendation |
Page Reference |
1 |
Annual Election of Directors |
Majority of votes cast |
FOR each nominee |
4 |
2 |
Approval of Special Meeting Rights
Bylaw Amendment |
Majority of votes present in person
or by proxy |
FOR |
20 |
3 |
Advisory Vote on Executive Compensation |
Majority of votes present in person or by proxy |
FOR |
21 |
4 |
Amendment of John Deere Omnibus
Equity and Incentive Plan |
Majority of votes present in person
or by proxy |
FOR |
57 |
5 |
Re-Approval of John Deere Short-Term Incentive Bonus
Plan |
Majority of votes present in person or by proxy |
FOR |
62 |
6 |
Ratification of Independent
Registered Public Accounting Firm |
Majority of votes present in person
or by proxy |
FOR |
65 |
Table of Contents
Director
Nominees
You are being asked to vote on the
election of these 12 directors. Each member of our Board of Directors is elected
annually by majority voting. All directors other than Mr. Allen are
independent.
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Committee Memberships* |
Name |
Age |
Director Since |
Primary
Occupation |
Independent? |
E |
ARC |
CC |
CG |
PPOC |
Samuel R. Allen |
61 |
2009 |
Chairman & CEO, Deere & Company |
No |
C |
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Crandall C. Bowles |
67 |
1990-1994; since 1999 |
Chairman, The Springs Company |
Yes |
X |
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X |
C |
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Vance D. Coffman |
70 |
2004 |
Retired Chairman, Lockheed Martin |
Yes |
X |
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C |
X |
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Charles O. Holliday, Jr. |
66 |
2007 |
Chairman, National Academy of Engineering |
Yes |
X |
C |
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X |
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Dipak C. Jain |
57 |
2002 |
Director, Sasin Graduate Institute of Business
Administration |
Yes |
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X |
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X |
Michael O. Johanns |
64 |
2015 |
Retired United States Senator
from Nebraska |
Yes |
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X |
X |
Clayton M. Jones |
65 |
2007 |
Retired Chairman, Rockwell Collins |
Yes |
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X |
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X |
Joachim Milberg |
71 |
2003 |
Chairman of the Supervisory Board, BMW |
Yes |
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X |
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X |
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Richard B. Myers |
72 |
2006 |
Retired Chairman, Joint Chiefs
of Staff and Retired General, United States Air Force |
Yes |
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X |
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X |
Gregory R. Page |
63 |
2013 |
Executive Chairman, Cargill |
Yes |
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X |
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X |
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Thomas H. Patrick |
71 |
2000 |
Chairman, New Vernon Capital |
Yes |
X |
X |
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C |
Sherry M.
Smith |
53 |
2011 |
Former Executive VP
and CFO, Supervalu |
Yes |
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X |
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X |
*E = Executive; ARC = Audit Review; CC =
Compensation; CG = Corporate Governance; PPOC = Pension Plan Oversight
X =
Member; C = Chair
Corporate Governance
Highlights
At Deere, we recognize the importance of
corporate governance as a component of providing long-term stockholder value.
That is why we are committed to sound governance practices, including the
following:
INDEPENDENCE |
BEST PRACTICES |
●11 of our 12 director
nominees are independent
●Independent
Presiding Director has strong role with significant governance
responsibilities
●All Board committees
that meet regularly are comprised wholly of independent
directors
●Independent
directors meet regularly in executive session without management
present |
●Directors may not stand for reelection after their 72nd
birthdays absent rare circumstances approved by the
Board
●Recoupment policy for executive incentive
compensation
●Stock ownership requirements for directors and executives that are
reviewed annually
●Anti-hedging and anti-pledging
policies |
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ACCOUNTABILITY |
RISK OVERSIGHT |
●Annual election of all directors
●Majority voting in uncontested elections
●Annual performance self-evaluations by Board and
committees |
●Board oversight of overall Company risk management
infrastructure
●Committee oversight of certain risks related to each committees
areas of
responsibility |
Table of Contents
Fiscal 2014
Performance Highlights
Fiscal 2014 was a year of continued solid
performance representing the second highest year of earnings in Deeres history,
exceeded only by fiscal 2013. The Companys performance reflects weaker
conditions in the agricultural equipment market, partially offset by
improvements in the results for the Construction & Forestry and Financial
Services operations. Overall, the Company continued executing on the business
strategy and is positioned to earn solid returns for our stockholders throughout
the business cycle.
Net
Sales and Revenues (Millions) |
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Worldwide net sales and revenues
decreased 5% in 2014 compared with 2013 due to lower agriculture and turf
equipment sales, partially offset by higher construction and forestry equipment sales
and financial services revenues. |
Net Income* (Millions) |
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Net income* declined 11% in 2014
due to lower shipment and production volumes, a less favorable product
mix, the unfavorable effects of foreign exchange rates, and higher production
costs mainly related to engine emissions programs, partially offset by
price realization.
*Net income
attributable to Deere & Company |
Earnings Per Share (Diluted) |
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Net income* per share decreased
by $.46 for 2014 compared with 2013. Dividends declared per share were
$1.79 in 2012; $1.99 in 2013; and $2.22 in 2014.
*Net income attributable to Deere &
Company |
Deere Share Price (at October 31) |
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Deere & Company stock is
traded on the New York Stock Exchange under the ticker symbol DE. Average
number of common shares outstanding (basic) was 397.1 million in 2012;
385.3 million in 2013; and 363.0 million in
2014. |
Table of Contents
Fiscal 2014 Executive
Compensation Highlights
Our compensation programs and practices
are designed to create incentive opportunities that align with our stockholders
long-term interests. We use consistent metrics that align with our business
strategy and motivate our employees to create value for stockholders at all
levels of the business cycle:
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Operating
Return on Operating Assets and Return on Equity → Exceptional Operating
Performance |
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Shareholder
Value Added and Revenue Growth → Disciplined Growth |
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Total
Shareholder Return → Stockholder Experience |
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The table below highlights the 2014
compensation for the CEO and average named executive officer (NEO) as disclosed in the
Summary Compensation Table of the Proxy Statement. It also shows the delivery of
cash versus equity and the significant portion of compensation that is
performance-based. The STI and MTI amounts for the CEO reflect a reduction of
25% below the amount the CEO would have otherwise earned based on
previously-approved plan metrics and goals and actual performance results. See
further explanation under Pay for Performance
Review and Analysis in the Executive Summary
of the Compensation Discussion & Analysis on page 25 of the Proxy
Statement.
Summary Compensation Table Elements |
Salary |
STI |
MTI |
Performance Stock Units |
Restricted Stock Units
and Stock Options |
Retirement
and Other Compensation |
Total |
CEO
% of Total |
$1,495,204 7% |
$2,779,846 14% |
$2,618,045 13% |
$4,421,271 22% |
$5,243,606 26% |
$3,715,324 18% |
$20,273,296 100% |
Cash vs.
Equity |
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Total Cash
34% |
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Total equity
48% |
Other 18% |
100% |
Short-Term
vs. Long-Term |
Short-Term
21% |
Long-Term 79% |
100% |
Fixed vs. Performance
Based |
Fixed
7% |
Performance Based
75% |
Other
18% |
100% |
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Average NEO
% of Total |
$604,665 12% |
$1,019,283 20% |
$994,022 20% |
$784,662 15% |
$930,683 18% |
$763,129 15% |
$5,096,444 100% |
Cash vs. Equity |
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Total Cash
52% |
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Total equity
33% |
Other 15% |
100% |
Short-Term
vs. Long-Term |
Short-Term
32% |
Long-Term 68% |
100% |
Fixed vs. Performance
Based |
Fixed
12% |
Performance Based
73% |
Other
15% |
100% |
COMPENSATION
ELEMENT: |
DESCRIPTION: |
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Salary |
Annual base pay |
STI |
Short-term incentive; annual
performance-based bonus |
MTI |
Mid-term incentive;
performance-based bonus using 3-year results |
Performance Stock
Units |
Performance-based equity using
3-year results |
Restricted Stock Units and Stock
Options |
Other equity whose value increases
with stock price |
Retirement and Other
Compensation |
Retirement plan values, benefits,
and miscellaneous compensation |
Table of Contents
Proxy
Statement
Table of Contents
Voting and Meeting
Information
Why am I receiving
this proxy statement?
The Deere
& Company Board of Directors (the Board) has made available to you the
Notice of Annual Meeting of Stockholders, this proxy statement (Proxy
Statement), our annual report for the fiscal year ended October 31, 2014
(Annual Report), a proxy card, and a voter instruction card (collectively,
Proxy Solicitation Materials) either on the internet or by mail in connection
with the Deere & Company (Deere, the Company, we, or us) 2015 Annual
Meeting of Stockholders (the meeting or Annual Meeting). You are receiving
this Proxy Statement because you owned shares of Deere common stock at the close
of business on December 31, 2014, which entitles you to vote at the Annual
Meeting. By use of a proxy, you can vote whether or not you attend the Annual
Meeting. This Proxy Statement describes the matters on which you are asked to
vote and provides information about those matters so that you can make an
informed decision.
The Proxy Solicitation Materials are being
mailed to, or can be accessed online by, stockholders on or about January 14,
2015.
What is Notice and
Access and why did Deere elect to use it?
We make the Proxy Solicitation Materials available to stockholders
electronically via the internet under the Notice and Access regulations of the
U.S. Securities and Exchange Commission (the SEC).
Most of our stockholders have received a
Notice of Electronic Availability (Notice) in lieu of receiving a full set of
Proxy Solicitation Materials in the mail. The Notice includes information on how
to access and review the Proxy Solicitation Materials, and how to vote, via the
internet. We believe this method of delivery will expedite distribution of Proxy
Solicitation Materials to you while allowing us to conserve natural resources
and reduce the costs of printing and distributing these materials.
Stockholders who received a Notice but
would like to receive printed copies of the Proxy Solicitation Materials in the
mail should follow the instructions in the Notice for requesting such
materials.
How do I
vote?
You can vote either
in person at the
Annual Meeting or by proxy without attending the meeting. We urge you to vote by proxy
even if you plan on attending the Annual Meeting so that we will know as soon as
possible whether enough votes will be present for us to hold the meeting. If you
attend the meeting in person, you may vote at the meeting and your proxy will
not be counted.
To vote your shares, follow the
instructions in the Notice, voter instruction form, or proxy card. Telephone and
internet voting is available to all registered and most beneficial
holders.
Stockholders voting by proxy may use one
of the following three options:
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fill out the enclosed voter
instruction form or proxy card, sign it, and mail it in the enclosed
postage-paid envelope; |
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vote by internet (if available;
instructions are on the voter instruction form, proxy card, or Notice);
or |
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vote by telephone (if available;
instructions are on the voter instruction form, proxy card, or
Notice). |
If your shares are held in street name
by a bank, broker, or other holder of record, telephone or Internet voting will
be available to you for voting these shares only if offered by them. Please
refer to the information forwarded by your holder of record to see the options
available to you. If your shares are held in street name and you wish to vote
them in person at the meeting, you must obtain a legal proxy from your record
holder to do so.
The telephone and internet voting
facilities for stockholders will close at 11:59 p.m. Eastern Standard Time on
February 24, 2015. If you vote over the internet, you may incur costs, such as
telephone and internet access charges, for which you will be responsible. The
telephone and internet voting procedures are designed to authenticate
stockholders and to allow you to confirm that your instructions have been
properly recorded.
If you hold shares through one of our
employee savings plans, your vote must be received by the plan administrator by
February 20, 2015, or the shares represented by the card will not be
voted.
Can I change my
proxy vote?
Yes. At any time before
your shares are voted by proxy at the meeting, you may change your vote
by:
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revoking it by written notice to Todd
E. Davies, our Corporate Secretary, at the address on the cover of this
Proxy Statement; |
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delivering a later-dated proxy
(including a telephone or internet vote); or |
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voting in person at the
meeting. |
If you hold your shares in street name,
please refer to the information forwarded by your bank, broker, or other holder
of record for procedures on revoking or changing your proxy.
How many votes do I
have?
You will have one vote for
each share of Deere common stock that you owned at the close of business on
December 31, 2014.
How many shares are
entitled to vote?
There are 342,432,982 shares of Deere common stock outstanding as of December 31, 2014 and
entitled to vote at the meeting. Each share is entitled to one vote. There is no
cumulative voting.
1
Table of Contents
How many votes must be
present to hold the meeting?
Under our
Bylaws, a majority of the votes that can be cast must be present in person or by
proxy to hold the Annual Meeting. Abstentions and shares represented by broker
non-votes, as described below, will be counted as present and entitled to vote
for purposes of determining a quorum.
What will I be voting
on?
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Election of directors (see page
4) |
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Approval of an amendment to
Deeres Bylaws to permit stockholders to
call special meetings (see page 20) |
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Advisory resolution to approve
executive compensation (say-on-pay) as
disclosed in this Proxy Statement (see page 21) |
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Amendment of the John Deere
Omnibus Equity and Incentive Plan (see page
57) |
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Re-approval of the John Deere
Short-Term Incentive Bonus Plan (see page
62) |
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Ratification of the independent
registered public accounting firm (see page
65) |
How many votes are needed
for the proposals to pass?
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Nominees for director who receive
a majority of for votes cast will be
elected as directors. The number of shares voted for a nominee must exceed the number of shares voted against
that nominee. If an incumbent director
nominee does not receive a majority of
votes cast in an uncontested election, our Bylaws require the director to promptly tender his or her written
resignation to the Board. The Corporate Governance
Committee of the Board will make a
recommendation to the Board on whether to
accept or reject the resignation. The Board will act on the tendered resignation, taking this recommendation
into account, and publicly disclose its
decision and the rationale behind it within
90 days of the date the election results are certified. In the event the number of nominees exceeds the
number of directors to be elected, the nominees
who receive the most votes will be elected
as directors. |
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For each of the other proposals
to be voted on, the affirmative vote of a
majority of the shares present in person or by proxy must be cast in favor of the proposal for it to
pass. |
What if I vote
abstain?
If you vote to abstain, your
shares will be counted as present for purposes of determining whether enough
votes are present to hold the Annual Meeting. A vote to abstain on the
election of directors will have no
effect on the outcome. A vote to abstain on
the other proposals will have the effect of a vote against the proposal.
What if I dont return my
proxy card and dont attend the Annual Meeting?
If you are a holder of record (that is, your shares are registered in
your own name with our transfer agent) and you do not vote your shares, your
shares will not be voted.
If you hold your shares in street name
and you do not give your bank, broker, or other holder of record specific voting
instructions for your shares, your record holder can vote your shares on the
ratification of the independent registered public accounting firm. However, your
record holder cannot vote your shares without your specific instructions on the
election of directors, the approval of the Companys proposal to amend its
Bylaws to permit stockholders to call special meetings, the advisory vote on
executive compensation, the amendment of the John Deere Omnibus Equity and
Incentive Plan, or the re-approval of the John Deere Short-Term Incentive Bonus
Plan.
For the aforementioned proposals on which
a broker cannot vote without your instruction, if you do not provide voting
instructions to your broker, the votes will be considered broker non-votes and
will not be counted in determining the outcome of the vote. Broker non-votes
will be counted as present for purposes of determining whether enough votes are
present to hold the Annual Meeting.
What happens if a nominee
for director declines or is unable to accept election?
If you vote by proxy, and if unforeseen circumstances make it
necessary for the Board to substitute another person for a nominee, we will vote
your shares for that other person.
Is my vote
confidential?
Yes. Your voting records
will not be disclosed to us except:
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as required by law; |
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to the inspectors of voting;
or |
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if the election is
contested. |
The tabulator, the proxy solicitation
agent, and the inspectors of voting must comply with confidentiality guidelines
that prohibit disclosure of votes to Deere. The tabulator of the votes and at
least one of the inspectors of voting will be independent of Deere and our
officers and directors.
If you are a holder of record or an
employee savings plan participant and you write comments on your proxy card,
your comments will be provided to us but your vote will remain
confidential.
2
Table of Contents
Annual Report
Will I receive a copy of
Deeres Annual Report?
We have either
mailed the Annual Report to you with this Proxy Statement or, if you have
previously elected to view our annual reports over the internet, provided in the
Notice the web address for you to access the Annual Report online. The Annual
Report includes our audited financial statements and other financial information
for the fiscal year ended October 31, 2014. We urge you to read it
carefully.
How can I receive a copy
of Deeres 10-K?
You can obtain, free of
charge, a copy of our Annual Report on Form 10-K for the fiscal year ended
October 31, 2014 (the Form 10-K), by:
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accessing our internet site at
www.deere.com/stock; or |
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writing
to: |
Deere &
Company
Stockholder Relations
One John Deere Place
Moline, Illinois
61265-8098
You can also obtain a copy of our Form
10-K and other filings with the SEC from the SECs EDGAR database at
www.sec.gov.
Householding
Information
What is
householding?
Either a single copy of
the Proxy Solicitation Materials or the Notice, as applicable, will be sent to
households at which two or more stockholders reside if they appear to be members
of the same family unless one of the stockholders at that address notifies us
that they wish to receive individual copies. This procedure reduces our printing
costs and fees. Householding will not affect dividend check mailings in any
way.
A number of brokerage firms have
instituted householding. If you hold your shares in street name, please
contact your bank, broker, or other holder of record to request information
about householding.
If Proxy Solicitation Materials were
delivered to an address that you share with another stockholder, we will
promptly deliver a separate copy if you make a written or verbal request to
Deere & Company Stockholder Relations, One John Deere Place, Moline,
Illinois 61265-8098, (309) 765-4539.
How do I revoke my
consent to the householding program?
You
must revoke your consent to the householding program by contacting Broadridge
Financial Solutions, Inc. (Broadridge), either by calling toll free at (800)
542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way,
Edgewood, New York 11717. You will be removed from the householding program
within 30 days of Broadridges receipt of the revocation of your
consent.
Electronic Delivery of
Proxy
Statement and Annual Report
Can I access Deeres
proxy materials and Annual Report electronically?
Most stockholders can elect to view future proxy statements and annual
reports over the internet instead of receiving copies in the mail.
You can choose this option and save us the
cost of producing and mailing these documents by:
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following the instructions
provided on your proxy card, voter instruction form, or Notice;
or |
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going to www.proxyvote.com and
following the instructions provided. |
If you choose to receive future proxy
statements and annual reports over the internet, you will receive an e-mail
message next year containing the internet address to access future proxy
statements and annual reports. This e-mail will include instructions for voting
over the internet. If you have not elected electronic delivery, you will receive
a notice indicating that proxy solicitation materials are available at
www.proxyvote.com.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON
FEBRUARY 25, 2015: The Proxy Statement and Annual Report are available on our
website at www.deere.com/stock.
Information not Incorporated
into this Proxy Statement
The information on our website
(www.deere.com) is not, and shall not be deemed to be, a part of this Proxy
Statement nor, by reference or otherwise (except to the extent we specifically
incorporate it by reference), incorporated into any other filings we make with
the SEC.
3
Table of Contents
Item 1 Election of
Directors
Identification and
Evaluation of Director Nominees
The
Corporate Governance Committee of the Board is responsible for screening
candidates and recommending director nominees to the full Board, which nominates
the slate of directors for election at each annual meeting of stockholders and
also elects directors to fill vacancies or newly-created seats on the Board. The
Corporate Governance Committee considers candidates as recommended by
stockholders, directors, officers, and third party search firms. Recommendations
from stockholders are considered by the Corporate Governance Committee in
accordance with the procedures described under the section of this Proxy
Statement entitled 2016 Stockholder Proposals and Nominations. The Corporate
Governance Committee reviews all candidates in the same manner, regardless of
the source of the recommendation.
The general criteria and framework for
assessing director candidates are provided by our Corporate Governance Policies,
which are described below in the Corporate Governance section of this Proxy
Statement. In accordance with our Corporate Governance Policies, when screening
candidates for nomination to the Board, the Corporate Governance Committee
considers skills, experience, international versus domestic background,
diversity, age, and legal and regulatory requirements in the context of an
assessment of the perceived needs of the Board. The Corporate Governance
Committee seeks to ensure that the Board is composed of members whose particular
skills, qualifications, experiences, and attributes, when taken together, allow
the Board to satisfy its oversight responsibilities effectively.
At a minimum, the Board assesses the
diversity of its members and nominees on an annual basis during its performance
evaluation by considering, among other factors, diversity in expertise,
experience, background, ethnicity, and gender.
Directors of Deere must tender their
resignation from the Board upon any material change in their occupation, career,
or principal business activity, including retirement. Directors must retire from
the Board upon the first annual meeting of stockholders following their 72nd
birthday, except in rare circumstances approved by the Board.
Director
Nominees
Following the process described
above, the Corporate Governance Committee has recommended, and the Board has
nominated, each of Samuel R. Allen, Crandall C. Bowles, Vance D. Coffman,
Charles O. Holliday, Jr., Dipak C. Jain, Michael O. Johanns, Clayton M. Jones, Joachim Milberg, Richard B. Myers, Gregory R. Page, Thomas H. Patrick, and Sherry M. Smith to be elected for terms
expiring at the annual meeting in 2016. As required by the Companys Certificate
of Incorporation, all members of the Board are elected annually.
Michael O. Johanns was elected to the Board effective January 8, 2015 for a term expiring at the 2015 annual meeting.
As discussed above, a Deere director is expected to retire from the Board effective with the first annual meeting of stockholders following his or her 72nd birthday, except in rare circumstances approved by the Board. In nominating Richard B. Myers, the Board has determined that, in light of General Myers unique experiences and qualifications, it is in the Company’s best interests to waive the normal retirement policy and thus has exercised its discretion to allow him to stand for election at the 2015 annual meeting.
Each nominees age as of December 31,
2014, present and past professional positions (including positions with Deere,
if applicable), current directorships at other companies, previous directorships
at public companies and registered investment companies held during the past
five or more years, and key qualifications, experiences, and attributes
qualifying them to serve on the Companys Board appear below.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR ALL TWELVE NOMINEES.
|
4
Table of Contents
Samuel R. Allen |
Current and Past
Positions: |
Chairman and Chief
Executive Officer of Deere
Age: 61
Director since: 2009
Committees: Executive (Chair) |
Chairman and Chief Executive
Officer of Deere since February 2010
President and Chief Executive
Officer of Deere - August 2009 to February 2010
President and Chief Operating
Officer of Deere - June 2009 to August 2009
President, Worldwide Construction & Forestry
Division and John Deere Power Systems of Deere - March 2005 to June
2009
President, Global Financial Services, John Deere
Power Systems, and Corporate Human Resources of Deere - November 2003 to
March 2005
Other Current
Directorships:
Whirlpool
Corporation
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Allen
should serve on Deeres Board of Directors: his leadership experience as
an officer of Deere since 2001, the breadth of his management experiences
within and knowledge of each of Deeres major global operations, and his
subject matter knowledge in the areas of engineering, manufacturing, and
industrial management |
|
|
Crandall C. Bowles |
Current and Past
Positions: |
Chairman of The
Springs Company
Age: 67
Director from: 1990 to 1994 and since 1999
Committees: Corporate Governance
(Chair) Compensation Executive |
Chairman of The Springs Company
(asset management company) since August 2007
Chairman of Springs Industries, Inc. (Springs Window
Fashions) - January 2006 to June 2013
Co-Chairman and Co-Chief Executive Officer of Springs
Global US, Inc. and Springs Global Participacoes S.A. - January 2006 to
June 2007
Chairman and Chief Executive Officer of Springs
Industries, Inc. - April 1998 to January 2006
Other Current
Directorships:
JPMorgan Chase &
Co.
Other Previous
Directorships:
Sara Lee Corporation
Key Qualifications,
Experiences, and Attributes: In
addition to her professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Ms. Bowles
should serve on Deeres Board of Directors: her leadership qualities
developed from her service as Chairman and Chief Executive Officer of
Springs Industries, Inc., the breadth of her experiences in auditing, risk
management, and other areas of oversight while serving as a member of the
boards of directors of other global corporations, and her subject matter
knowledge in the areas of economics and sales and marketing of consumer
products |
5
Table of Contents
Vance D. Coffman |
Current and Past
Positions: |
Retired Chairman of
Lockheed Martin
Corporation
Age: 70
Director since: 2004
Committees: Compensation (Chair) Corporate
Governance Executive |
Retired Chairman of Lockheed
Martin Corporation (aerospace, defense, and information technology) since
April 2005
Chairman of Lockheed Martin
Corporation - April 1998 to April 2005
Chief Executive Officer of
Lockheed Martin Corporation - August 1997 to August 2004
Other Current
Directorships:
3M Company
Amgen Inc.
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Coffman
should serve on Deeres Board of Directors: his leadership qualities
developed from his service as Chairman and Chief Executive Officer of
Lockheed Martin Corporation, the breadth of his experiences in auditing,
corporate governance, and other areas of oversight while serving as a
member of the boards of directors of other global corporations, and his
subject matter knowledge in the areas of engineering, manufacturing, and
finance |
|
|
Charles O. Holliday, Jr. |
Current and Past
Positions: |
Chairman of the
National Academy of Engineering
Age: 66
Director since: 2007
Committees: Audit Review (Chair) Corporate
Governance Executive
Presiding Director since
2009 |
Chairman of the National Academy
of Engineering (nonprofit engineering institution) since July
2012
Chairman of Bank of America
Corporation (banking, investing, and asset management) - April 2010 to
October 2014
Chairman from January 1999 to
December 2009 and Chief Executive Officer from 1998 through 2008 of DuPont
(agricultural, electronics, materials science, safety and security, and
biotechnology)
Other
Current Directorships:
Bank of America
Corporation
CH2M HILL Companies,
Ltd.
Royal Dutch Shell plc
Other Previous
Directorships:
E.I. du Pont de Nemours and
Company
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Holliday
should serve on Deeres Board of Directors: his leadership qualities
developed from his experiences while serving as Chairman of the National
Academy of Engineering, Chairman of Bank of America Corporation, and
Chairman and Chief Executive Officer of DuPont, the breadth of his
experiences in auditing, compensation, and other areas of oversight while
serving as a member of the boards of directors of other global
corporations, and his subject matter knowledge in the areas of
engineering, finance, business development, and corporate
responsibility |
6
Table of Contents
Dipak C. Jain |
Current and Past
Positions: |
Director, Sasin
Graduate Institute of Business Administration
Age: 57
Director since: 2002
Committees: Audit Review Pension
Plan Oversight |
Director, Sasin Graduate Institute
of Business Administration (international graduate business school) since
August 2014
Chaired Professor of Marketing,
INSEAD - March 2013 to August 2014
Dean, INSEAD - May 2011 to March
2013
Dean, Kellogg School of
Management, Northwestern University, Evanston, Illinois - July 2001 to
September 2009
Associate Dean for Academic
Affairs, Kellogg School of Management, Northwestern University - 1996 to
2001
Sandy and Morton Goldman Professor
of Entrepreneurial Studies and Professor of Marketing, Kellogg School of
Management, Northwestern University - 1994 to 2001 and since
2009
Other Current
Directorships:
Northern Trust
Corporation
Reliance Industries Limited,
India
Global Logistics Properties
Limited, Singapore
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Jain
should serve on Deeres Board of Directors: his leadership qualities
developed from his experiences while serving as Director of the Sasin
Graduate Institute of Business Administration, Dean of INSEAD, Dean of the
Kellogg School of Management, and as a foreign affairs adviser for the
Prime Minister of Thailand, the breadth of his experiences in
compensation, corporate governance, and other areas of oversight while
serving as a member of the boards of directors of other global
corporations, and his subject matter knowledge in the areas of marketing,
global product diffusion, and new product forecasting and
development |
Michael O.
Johanns |
Current and Past
Positions: |
Retired United States Senator
from Nebraska
Age: 64
Director since: 2015
Committees: Corporate Governance Pension Plan
Oversight |
Retired United States Senator since January
2015
United States Senator from
Nebraska - January 2009 to January 2015
United States Secretary of
Agriculture - January 2005 to September 2007
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background, the following qualifications led
the Board to conclude that Mr. Johanns should serve on Deeres Board of
Directors: his leadership qualities developed from his service as a United
States Senator, the United States Secretary of Agriculture, and the
Governor of Nebraska, the breadth of his experiences in law, governance,
and other areas of oversight while serving as a partner of a law firm and
a member of the U.S. Senate and various Senate committees, and his subject
matter knowledge in the areas of agriculture, banking, commerce, and
foreign trade |
7
Table of Contents
Clayton M. Jones |
Current and Past
Positions: |
Retired Chairman of Rockwell
Collins, Inc.
Age: 65
Director since: 2007
Committees: Compensation Pension
Plan Oversight |
Retired Chairman of Rockwell
Collins, Inc. (aviation electronics and communications) since July
2014
Chairman of Rockwell Collins, Inc.
- July 2013 to July 2014
Chairman and Chief Executive
Officer of Rockwell Collins, Inc. - September 2012 to July 2013
Chairman, President, and Chief
Executive Officer of Rockwell Collins, Inc. - June 2002 to September
2012
Other Current
Directorships:
Cardinal Health, Inc.
Other Previous
Directorships:
Rockwell Collins, Inc.
Unisys Corporation
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Jones
should serve on Deeres Board of Directors: his leadership qualities
developed from his service as Chairman and Chief Executive Officer of
Rockwell Collins, Inc., the breadth of his experiences in finance,
compensation, and other areas of oversight while serving as a member of
the boards of directors of other global corporations, and his subject
matter knowledge in the areas of government affairs and
marketing |
|
|
Joachim Milberg |
Current and Past
Positions: |
Chairman of the
Supervisory Board of Bayerische Motoren Werke (BMW)
AG
Age: 71
Director since: 2003
Committees: Audit Review Corporate
Governance |
Chairman of the Supervisory Board
of Bayerische Motoren Werke (BMW) AG (motor vehicles) since May
2004
Retired Chief Executive Officer of
BMW AG since May 2002
Chairman of the Board of
Management and Chief Executive Officer of BMW AG - February 1999 to May
2002
Other Current
Directorships:
Bertelsmann AG
BMW AG
Other Previous
Directorships:
Festo AG
SAP AG
ZF Friedrichshafen AG
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Milberg
should serve on Deeres Board of Directors: his leadership qualities
developed from his experiences while serving as Chief Executive Officer of
BMW AG and Chairman of BMW AGs Board of Management and Supervisory Board,
the breadth of his global experiences from his service as a member of the
boards of directors of non-U.S.-based corporations, and his subject matter
knowledge in the areas of engineering, production automation, and robotic
technology |
8
Table of Contents
Richard B.
Myers |
Current and Past
Positions: |
Retired Chairman of the Joint
Chiefs of Staff and Retired General of the United States Air
Force
Age: 72
Director since: 2006
Committees: Compensation Pension Plan Oversight |
Retired Chairman of the Joint Chiefs of Staff
(principal military advisor to the President, the Secretary of Defense,
and the National Security Council) and Retired General of the United
States Air Force since September 2005
Colin L. Powell Chair for National Security
Leadership, Character, and Ethics at the National Defense University since
March 2006
Foundation Professor of Military History and
Leadership at Kansas State University since February 2006
Chairman of the Joint Chiefs of
Staff and General of the United States Air Force - October 2001 to
September 2005
Other Current
Directorships:
Aon plc
Northrop Grumman
Corporation
United Technologies
Corporation
Key Qualifications,
Experiences, and Attributes: In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that General Myers should serve on Deeres Board of Directors: his leadership qualities developed from his service as the 15th Chairman of the Joint Chiefs of Staff, the breadth of his experiences in compliance, finance, and other areas of oversight while serving as a member of the boards of directors of other global corporations, and his subject matter knowledge in the areas of crisis management, national security, and international geopolitics |
|
|
Gregory R. Page |
Current and Past
Positions: |
Executive Chairman of
Cargill, Incorporated
Age: 63
Director since: 2013
Committees: Audit Review Corporate
Governance |
Executive Chairman of Cargill,
Incorporated (agricultural, food, financial, and industrial products and
services) since December 2013
Chairman and Chief Executive
Officer of Cargill, Incorporated 2011 to December 2013
Chairman, Chief Executive Officer,
and President of Cargill, Incorporated - 2007 to 2011
President and Chief Operating
Officer of Cargill, Incorporated - 2000 to 2007
Other Current
Directorships:
Carlson
Eaton Corporation plc
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Page
should serve on Deeres Board of Directors: his leadership qualities
developed from his experiences while serving as Chairman and Chief
Executive Officer of Cargill, Incorporated, the breadth of his experiences
in auditing, corporate governance, and other areas of oversight while
serving as a member of the boards of directors of other global
corporations, and his subject matter knowledge in the areas of
commodities, agriculture, operating processes, finance, and
economics |
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Table of Contents
Thomas H. Patrick |
Current and Past
Positions: |
Chairman of New Vernon
Capital, LLC
Age: 71
Director since: 2000
Committees: Pension Plan Oversight (Chair) Audit
Review Executive |
Chairman of New Vernon Capital,
LLC (private equity fund) since 2003
Executive Vice Chairman of Merrill
Lynch & Co., Inc. - November 2002 to July 2003
Executive Vice President and Chief
Financial Officer of Merrill Lynch & Co., Inc. - February 2000 to
November 2002
Other Current
Directorships:
Baldwin & Lyons,
Inc.
Other Previous
Directorships:
Computer Sciences Corporation
Key Qualifications,
Experiences, and Attributes: In
addition to his professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Mr. Patrick
should serve on Deeres Board of Directors: his leadership qualities
developed from his service as an executive officer of Merrill Lynch &
Co., Inc., the breadth of his experiences in auditing, corporate
governance, and other areas of oversight while serving as a member of the
boards of directors of other global corporations, and his subject matter
knowledge in the areas of finance, economics, and asset
management |
Sherry M. Smith |
Current and Past
Positions: |
Former Executive
Vice President and Chief Financial Officer of Supervalu
Inc.
Age: 53
Director since: 2011
Committees: Audit Review Pension
Plan Oversight |
Executive Vice President and Chief
Financial Officer of Supervalu Inc. (retail and wholesale grocery and
retail general merchandise products) - December 2010 to August
2013
Senior Vice President, Finance of
Supervalu Inc. - 2005 to 2010
Senior Vice President, Finance and
Treasurer of Supervalu Inc. - 2002 to 2005
Other Current
Directorships:
Tuesday Morning
Corporation
Key Qualifications,
Experiences, and Attributes: In
addition to her professional background and prior Deere Board experience,
the following qualifications led the Board to conclude that Ms. Smith
should serve on Deeres Board of Directors: her leadership qualities
developed from her experience while serving as a senior executive and as
Chief Financial Officer of Supervalu Inc., the breadth of her experiences
in auditing, finance, accounting, compensation, strategic planning, and
other areas of oversight, her family farming background, and her subject
matter knowledge in the areas of finance, accounting, and food and supply
chain management |
10
Table of Contents
Corporate
Governance
Our
Values
At Deere, our actions are guided by
our core values of integrity, quality, commitment, and innovation. We strive to
live up to these values in everything we do, not just because it is good
business, but because it is the right thing to do. We are committed to strong
corporate governance as a means of upholding these values and ensuring that we
are accountable to our stockholders.
In recognition of the importance of
corporate governance as a component of providing stockholder value, our Board of
Directors has adopted Corporate Governance Policies for the Company. Our
Corporate Governance Policies are periodically reviewed and revised as
appropriate by the Board to ensure that the policies reflect the Boards
corporate governance objectives.
Please visit the Corporate
Governance portion of our website (www.deere.com/corpgov) to learn more
about our corporate governance practices and access the following
materials:
●Our Corporate
Governance Policies
●Our Code of Business
Conduct
●Our Guiding
Principles
●Charters for our Board Committees
●Our Code of
Ethics
●Our Supplier Code of
Conduct
|
Director
Independence
As part of our Corporate
Governance Policies, the Board has adopted categorical standards to assist the
Board in evaluating the independence of each director. The categorical standards
are intended to assist the Board in determining whether or not certain
relationships between our directors and Deere or its affiliates (either directly
or indirectly as a partner, stockholder, officer, director, trustee, or employee
of an organization that has a relationship with Deere) are material
relationships for purposes of the New York Stock Exchange (NYSE) independence
standards. The categorical standards establish thresholds at which such
relationships are deemed to not be material. The categorical standards are
attached as Appendix A to this Proxy Statement and are included as part of the
Corporate Governance Policies referenced above. A copy may also be obtained upon
request to the Deere & Company Stockholder Relations Department. In
addition, each directors independence is evaluated under our Related Person Transactions Approval Policy, as
discussed in the Review
and Approval of Related Persons Transactions section
below. The independence standards set forth in our Corporate Governance Policies
meet or exceed the independence requirements of the NYSE.
In November 2014, we reviewed the independence of each then-sitting director and
in December 2014 we reviewed the independence of Mr. Johanns, in each case applying the independence standards set forth in
our Corporate Governance Policies. The review considered relationships and transactions between each subject (and his or
her immediate family and affiliates) and each of the following: Deere, Deeres management, and Deeres
independent registered public accounting firm.
Based on this review, at the December 2014 regular
Board meeting (and, in the case of Mr. Johanns, at a January 7, 2015 special meeting of the Board), the Board affirmatively determined that no director other than Mr.
Allen had a material relationship with Deere and its affiliates and that each
director other than Mr. Allen is independent as defined in our Corporate
Governance Policies and the listing standards of the NYSE. Mr. Allen is not
considered to be an independent director because of his employment relationship
with Deere.
Board Leadership
Structure
The Chairman of the Board also
serves as our Chief Executive Officer. The Board believes that combining the
Chairman and Chief Executive Officer roles is the most appropriate structure for
the Company at this time because the Board believes that: (1) this structure has
a longstanding history of serving our stockholders well, through many economic
cycles, business challenges, and the succession of multiple leaders; (2) its
governance processes, as reflected in the Corporate Governance Policies and
Board committee charters, preserve Board independence by ensuring independent
discussion among directors and independent evaluation of, and communication
with, members of senior management; and (3) the enhanced role of the independent
Presiding Director strengthens the Companys governance structure such that
separation of the Chairman and Chief Executive Officer roles is unnecessary at
this time.
Presiding
Director
Charles O. Holliday, Jr., an
independent director, currently serves as our Presiding Director. Mr. Holliday
is currently serving his sixth term as our Presiding
Director.
11
Table of Contents
The Presiding Director is elected by a
majority of the independent directors upon a recommendation from the Corporate
Governance Committee. The Presiding Director is appointed for a one-year term
beginning upon election and expiring upon the selection of a successor Presiding
Director.
The Board has determined that the
Presiding Director should have the following duties and
responsibilities:
●Preside at all meetings of
the Board at which the Chairman is not present, including executive sessions of
the independent directors;
●Serve as liaison between
the Chairman and the independent directors;
●In consultation with the
Chairman, review and approve the schedule of meetings of the Board, the proposed
agendas, and the materials to be sent to the
Board;
●Call meetings of the
independent directors when necessary and appropriate; and
●Remain available for
consultation and direct communication with Deeres
stockholders.
The Board believes that the role of the
Presiding Director furthers the Companys continuing commitment to strong
corporate governance and Board independence.
Board
Meetings
Under the Companys Bylaws,
regular meetings of the Board are held at least quarterly at such times and
places as the Board may designate. Our typical practice is to schedule at least
one Board meeting per year at a Company location other than our worldwide
headquarters in order to provide our directors with first-hand perspectives on
different aspects of our business. The Board met five times during fiscal 2014.
Directors are expected to attend Board
meetings, meetings of committees on which they serve, and stockholder meetings.
Directors are expected to spend the time needed and meet as frequently as
necessary to properly discharge their responsibilities. During fiscal 2014, all
directors attended 75% or more of the meetings of the Board and committees on
which they served. Overall attendance at such meetings was approximately 96%.
All directors then in office attended the Annual Meeting of Stockholders in
February 2014.
Each Board meeting normally begins or ends
with a session between the CEO and the independent directors. This provides a
platform for discussions outside the presence of the non-Board management
attendees, as well as an opportunity for the independent directors to go into
executive session (without the CEO) if requested by any director. The
independent directors may meet in executive session, without the CEO, at any
time, and such non-management executive sessions are scheduled (and in practice
typically occur) at each regularly scheduled Board meeting. The Presiding
Director presides over these executive sessions.
Board
Committees
The Board has delegated some of
its authority to the following five committees of the Board: the Executive
Committee, the Audit Review Committee, the Compensation Committee, the Corporate
Governance Committee, and the Pension Plan Oversight Committee. Each such
committee has adopted a charter that complies with current NYSE rules relating
to corporate governance matters. Copies of the committee charters are available
at www.deere.com/corpgov, and may also be obtained upon request to the Deere
& Company Stockholder Relations Department. Each committee (other than the
Executive Committee, of which Mr. Allen serves as chair) is comprised solely of
independent directors.
Executive
Committee
2014 Meetings: 0
Members: Samuel R. Allen
(Chair) Crandall C. Bowles Vance D. Coffman Charles O. Holliday,
Jr. Thomas
H. Patrick |
●Acts on behalf of
the Board on matters requiring Board action between meetings of the full
Board
●Authority to act on
certain significant matters limited by our Bylaws and applicable
law
●All members, other
than Mr. Allen, are
independent |
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Table of Contents
Audit
Review Committee
2014 Meetings: 5
Members: Charles O. Holliday, Jr.
(Chair) Dipak C. Jain Joachim Milberg Gregory R. Page Thomas
H. Patrick Sherry M. Smith |
●Oversees the
independent registered public accounting firms qualifications,
independence, and performance
●Assists the Board in
overseeing the integrity of our financial statements, compliance with
legal requirements, and the performance of our internal
auditors
●Pre-approves all
audit and allowable non-audit services by the independent registered
public accounting firm
●Reports its
activities to the full Board
●All members have
been determined to be independent and financially literate under current
NYSE listing standards
●The Board has also
determined that Mr. Holliday, Mr. Page, Mr. Patrick, and Ms. Smith are
audit committee financial experts as defined by the SEC and that each
has accounting or related financial management expertise as required by
NYSE listing standards |
Compensation Committee
2014 Meetings: 5
Members: Vance D. Coffman
(Chair) Crandall C. Bowles Clayton M. Jones Richard B.
Myers |
●Makes
recommendations to the Board regarding incentive and equity-based
compensation plans
●Evaluates and
(except for the CEO) approves the compensation of our executive officers,
including reviewing and approving corporate performance goals and
objectives related to the compensation of our executive
officers
●Evaluates and
approves compensation granted pursuant to the Companys equity-based and
incentive compensation plans, policies, and
programs
●Retains, oversees,
and assesses the independence of compensation consultants and other
advisors
●Oversees our
policies on structuring compensation programs for executive officers to
preserve tax deductibility
●Reviews and
discusses the CD&A with our management and determines whether to
recommend to the Board that the CD&A be included in our filings with
the SEC
●Reports its
activities to the full Board
●All members have
been determined to be independent under current NYSE listing standards,
including those standards applicable specifically to compensation
committee members |
Corporate
Governance Committee
2014 Meetings: 4
Members: Crandall C. Bowles
(Chair) Vance D. Coffman Charles O. Holliday, Jr. Michael O. Johanns Joachim
Milberg Gregory R. Page |
●Monitors corporate
governance policies and oversees our Center for Global Business
Conduct
●Reviews senior
management succession plans and identifies and recommends to the Board
individuals to be nominated as directors
●Makes
recommendations concerning the size, composition, committee structure, and
fees for the Board
●Reviews and reports
to the Board on the performance and effectiveness of the Board and the
Corporate Governance Committee
●Oversees the
evaluation of our management
●Reports its
activities to the full Board
●All members have
been determined to be independent under current NYSE listing
standards |
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Table of Contents
Pension Plan Oversight Committee |
●Oversees our pension
plans
●Establishes
corporate policy with respect to pension
plans
●Formulates Company
pension funding policies
●Is authorized to
make substantive amendments and modifications to the pension
plans
●Reports its
activities to the full Board
●All members have
been determined to be independent under current NYSE listing
standards |
2014 Meetings: 4
Members: Thomas H. Patrick
(Chair) Dipak C. Jain Michael O. Johanns Clayton M. Jones Richard B. Myers Sherry
M. Smith |
Board Oversight of
Risk Management
The Board believes that
strong and effective internal controls and risk management processes are
essential elements in achieving long-term stockholder value. The Board, directly
and through its committees, is responsible for overseeing risks potentially
affecting the Company.
Risk Management
Approach
The Company maintains a
structured risk management approach to enable the achievement of its strategic
business objectives. Under this approach, risks are identified and classified
into specified categories and escalated as necessary within a well-defined
internal risk management structure, which is administered at a management level
by a Management Risk Committee consisting of the CEO and his direct reports. The
Management Risk Committee,
in turn, is responsible for providing
periodic reports to the Board regarding the Companys risk management processes
and reviewing with the Board high-priority areas of enterprise risk. Dedicated
risk management sessions typically take place at the regularly-scheduled Board
meetings each February and August, and risk management topics are also discussed
as necessary at other Board and committee meetings.
Board and Committee Risk Oversight
Responsibilities
Each Board committee
is responsible for oversight of risk categories related to the committees
specific function, while the full Board exercises ultimate responsibility for
overseeing the risk management function as a whole. The respective areas of risk
oversight exercised by the Board and its committees are as
follows:
Board/Committee |
Primary Areas of Risk
Oversight |
Full Board |
●Oversees overall
Company risk management procedures and regularly receives and evaluates
reports and presentations from the Chairs of the Audit Review,
Compensation, Corporate Governance, and Pension Plan Oversight Committees
on risk-related matters falling within each respective committees
oversight responsibilities |
Audit Review Committee |
●Oversees financial, operational, strategic, and
hazard-related risks by regularly reviewing reports and presentations
given by management, including our Senior Vice President and General
Counsel, Senior Vice President and Chief Financial Officer, and Vice
President, Internal Audit, as well as other operational Company
personnel
●Regularly reviews
our risk management practices and risk-related policies (for example, the
Companys Code of Business Conduct, information security policies, risk
management and insurance portfolio, and legal and regulatory reviews) and
evaluates potential risks related to internal control over financial
reporting |
Compensation Committee |
●Oversees potential
risks related to the design and administration of our compensation plans,
policies, and programs, including our performance-based compensation
programs, to promote appropriate incentives which do not encourage
unnecessary and excessive risk-taking by our executive officers or other
employees |
14
Table of Contents
Board/Committee |
Primary Areas of Risk Oversight |
Corporate Governance Committee |
●Oversees potential risks related to our governance practices
by, among other things, reviewing succession plans and performance
evaluations of the Board and CEO, monitoring legal developments and trends
regarding corporate governance practices, and evaluating potential related
person transactions
●Monitors risks
relating to environmental factors as well as product
safety/compliance |
Pension Plan Oversight Committee |
●Oversees potential
risks related to funding our U.S. qualified pension plans (other than the
defined contribution savings and investment plans) and monitoring
compliance with applicable laws and Company policies and
objectives |
Political
Contributions
In order to promote
transparency and good corporate citizenship, we have since 2012 provided
voluntary disclosure relating to the political contribution activities of the
Company and its political action committee. This information is publicly
available at www.deere.com/politicalcontributions.
Communication with the
Board
If you wish to communicate with the
Board you may send correspondence to: Corporate Secretary, Deere & Company,
One John Deere Place, Moline, Illinois 61265-8098.
The Corporate Secretary will submit your
correspondence to the Board or the appropriate committee, as
applicable.
You may communicate directly with the
Presiding Director of the Board by sending correspondence to: Presiding
Director, Board of Directors, Deere & Company, Department A, One John Deere
Place, Moline, Illinois 61265-8098.
Compensation of
Directors
We pay nonemployee directors an annual
retainer along with additional fees to committee chairpersons and the Presiding
Director as described below. We do not pay any other committee retainers or
meeting fees. In addition, nonemployee directors are awarded restricted stock
units (RSUs) after each annual meeting during their service as directors. A
person who becomes a nonemployee director between annual meetings, or who serves
a partial term, receives a prorated retainer and a prorated RSU award. We also
reimburse directors for expenses related to meeting attendance. Directors who
are employees receive no additional compensation for serving on the Board or its
committees. Compensation for nonemployee
directors is reviewed annually by
the Corporate Governance Committee. No
changes to nonemployee director compensation were approved in fiscal 2014. The
following chart describes amounts we pay and the value of awards we grant to
nonemployee directors:
Date Approved by Corporate |
|
|
Governance Committee: |
|
August 2013 |
Effective Date of Annual Amounts: |
|
January 2014 |
Retainer |
|
$120,000 |
Equity Award |
|
$120,000 |
Presiding Director
Fee |
|
$20,000 |
Audit Review Committee Chair Fee |
|
$20,000 |
Compensation Committee
Chair Fee |
|
$20,000 |
Corporate Governance Committee Chair
Fee |
|
$15,000 |
Pension Plan Oversight Committee Chair Fee |
|
$10,000 |
Under our Nonemployee Director Deferred
Compensation Plan, directors may choose to defer some or all of their annual
retainers until their retirement as a director. A director may elect to have
these deferrals invested in either an interest-bearing account or an account
with a return equivalent to an investment in Deere common stock.
Prior to fiscal 2008, nonemployee
directors received the equity award in the form of restricted shares. Beginning
in fiscal 2008, directors receive the equity award in the form of RSUs. In
fiscal 2012, the Board adopted stock ownership guidelines requiring each
nonemployee director to own Company common stock equivalent in value to at least
three times the directors annual cash retainer. This ownership level must be
achieved within five years of the date the director joins the Board. Restricted
shares, RSUs, and any common stock held personally by the nonemployee director
are included in determining whether the applicable ownership requirement has
been achieved. Other than Mr. Johanns, who was first elected to
15
Table of Contents
the Board in January 2015, each nonemployee director has
achieved stockholdings in excess of the applicable multiple as of the date of
this Proxy Statement. Additionally, we require nonemployee directors to hold all
equity awards until the occurrence of one of the following triggering events:
retirement from the Board, permanent and total disability, death, or a change in
control of Deere combined with a qualifying termination of the director. The
directors are prohibited from selling, gifting, or otherwise disposing of their
equity awards prior to a triggering event. While the restrictions are in effect,
the nonemployee directors may vote the restricted shares (but not shares
underlying RSUs) and receive dividends on the restricted shares and dividend
equivalents on the RSUs.
In fiscal 2014, we provided the following
compensation to our nonemployee directors:
Fiscal 2014 Director
Compensation Table |
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
Fees Earned |
|
|
|
|
Deferred |
|
|
|
|
|
or Paid in |
|
|
Stock |
|
Compensation |
|
|
|
Name* |
|
Cash (1) |
|
Awards
(2) |
|
Earnings (3) |
|
Total |
Crandall C. Bowles |
|
|
$ |
130,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
249,972 |
Vance D. Coffman |
|
|
$ |
135,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
254,972 |
Charles O. Holliday, Jr. |
|
|
$ |
155,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
274,972 |
Dipak C. Jain |
|
|
$ |
115,000 |
|
|
$ |
119,972 |
|
|
$ |
12,697 |
|
|
$ |
247,669 |
Clayton M. Jones |
|
|
$ |
115,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
234,972 |
Joachim Milberg |
|
|
$ |
115,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
234,972 |
Richard B. Myers |
|
|
$ |
115,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
234,972 |
Gregory R. Page |
|
|
$ |
115,000 |
|
|
$ |
119,972 |
|
|
$ |
571 |
|
|
$ |
235,543 |
Thomas H. Patrick |
|
|
$ |
125,000 |
|
|
$ |
119,972 |
|
|
$ |
|
|
|
$ |
244,972 |
Aulana L. Peters (4) |
|
|
$ |
25,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
25,000 |
Sherry M. Smith |
|
|
$ |
115,000 |
|
|
$ |
119,972 |
|
|
$ |
1,441 |
|
|
$ |
236,413 |
* Michael O. Johanns did not receive any compensation in fiscal 2014 and as such is
not included in this table.
(1) All fees earned in fiscal 2014 for
services as a director, including Committee Chairperson and Presiding Director
fees, whether paid in cash or deferred under the Nonemployee Director Deferred
Compensation Plan, are included in this column.
(2) Represents the aggregate grant date
fair value of RSUs computed in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation
Stock Compensation, and does not correspond to the actual value that will be
realized by the nonemployee directors. The values in this column exclude the
effect of estimated forfeitures. All grants are fully expensed in the fiscal
year granted based on the grant price (the average of the high and low price for
Deere common stock on the grant date). For fiscal
2014, the grant date was March
5, 2014, and the grant price was $86.56. The nonemployee director grant date is
seven calendar days after the Annual Meeting. The assumptions made in valuing
the RSUs reported in this column are discussed in Note 24, Stock Option and
Restricted Stock Awards, of our consolidated financial statements filed with
the SEC on Form 10-K for the fiscal year ended October 31, 2014. The following
table lists the cumulative restricted shares and RSUs held by the nonemployee
directors as of October 31, 2014:
|
|
Restricted |
|
|
Name* |
|
Stock |
|
RSUs |
Crandall C.
Bowles |
|
19,916 |
|
11,920 |
Vance D. Coffman |
|
6,532 |
|
11,920 |
Charles O. Holliday,
Jr. |
|
1,160 |
|
11,920 |
Dipak C. Jain |
|
13,234 |
|
11,920 |
Clayton M. Jones |
|
824 |
|
11,920 |
Joachim Milberg |
|
10,708 |
|
11,920 |
Richard B. Myers |
|
3,176 |
|
11,920 |
Gregory R. Page |
|
|
|
2,372 |
Thomas H.
Patrick |
|
19,252 |
|
11,920 |
Sherry M. Smith |
|
|
|
4,522 |
* Neither Michael O. Johanns nor Aulana L. Peters held any
restricted shares or RSUs as of October 31, 2014 and as such neither is included in
this table.
(3) Directors are eligible to participate
in the Nonemployee Director Deferred Compensation Plan. Under this plan,
participants may defer part or all of their annual cash compensation. For these
deferrals, two investment choices are available:
– |
an interest-bearing
alternative which pays interest at the end of each calendar quarter based
on the Moodys A rated Corporate Bond Rate for amounts deferred during
or after fiscal 2010. For amounts deferred prior to fiscal 2010, the
interest rate is based on the prime rate as determined by the Federal
Reserve Statistical Release plus 2%; or |
– |
an equity alternative
denominated in units of Deere common stock which earns additional shares
each quarter at the quarterly dividend rate on Deere common
stock. |
Amounts included in this column represent
the above-market earnings on any amounts deferred under the Nonemployee Director
Deferred Compensation Plan. Above-market earnings represent the difference
between the interest rate used to calculate earnings under the applicable
investment choice and 120% of the applicable federal long-term rate.
(4) Ms.
Peters retired from the Board effective as of the 2014 annual meeting (February
26, 2014). Her compensation amounts reflect a prorated retainer fee covering the
portion of fiscal 2014 during which she served as a
director.
16
Table of Contents
Security Ownership of
Certain
Beneficial Owners and Management
The following table shows the number of
shares of Deere common stock beneficially owned as of December 31, 2014 (unless
otherwise indicated) by:
– |
each person, who, to
our knowledge, beneficially owns more than 5% of our common
stock; |
– |
each individual who was serving as a nonemployee director as of December 31, 2014; |
– |
each of the named
executive officers listed in the Summary Compensation Table of this Proxy
Statement; and |
– |
all individuals who
served as directors or executive officers on December 31, 2014, as a
group. |
A beneficial owner of stock is a person
who has sole or shared voting power, meaning the power to control voting
decisions, or sole or shared investment power, meaning the power to cause
the sale or other disposition of the stock
(represented in column (a) below). A person is also considered the beneficial
owner of shares to which that person has the right to acquire beneficial
ownership (within the meaning of the preceding sentence) within 60 days. For
this reason, the following table includes exercisable stock options (represented
in column (b) below) and options, restricted shares, and RSUs that would become
exercisable or be settled within 60 days of December 31, 2014 at the discretion
of an individual identified in the table (for example, upon retirement)
(represented in column (c) below).
All individuals listed in the table have
sole voting and investment power over the shares unless otherwise noted. As of
December 31, 2014, Deere had no preferred stock issued or
outstanding.
|
|
Shares |
|
|
|
Options,
Restricted |
|
|
|
|
|
|
|
|
|
Beneficially |
|
|
|
Shares, and
RSUs |
|
|
|
|
|
|
|
|
|
Owned |
|
Exercisable |
|
Available |
|
|
|
Percent
of |
|
|
And
Held |
|
Options |
|
Within 60
Days |
|
|
|
Shares |
|
|
(a) |
|
(b) |
|
(c) |
|
Total |
|
Outstanding |
Greater Than 5%
Owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cascade
Investment, L.L.C. (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
2365 Carillon
Point |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland, WA
98033 |
|
30,008,573 |
|
|
|
|
|
30,008,573 |
|
|
8.8% |
|
|
Vanguard Group, Inc.
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
P.O. Box 2600 V26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Valley Forge, PA 19482 |
|
20,488,439 |
|
|
|
|
|
20,488,439 |
|
|
6.0% |
|
|
|
|
Non-Employee Directors
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Crandall C.
Bowles |
|
2,800 |
|
|
|
31,836 |
|
34,636 |
|
|
* |
|
|
Vance D. Coffman |
|
|
|
|
|
18,452 |
|
18,452 |
|
|
* |
|
|
Charles O.
Holliday, Jr. |
|
|
|
|
|
13,080 |
|
13,080 |
|
|
* |
|
|
Dipak C. Jain |
|
|
|
|
|
25,154 |
|
25,154 |
|
|
* |
|
|
Clayton M.
Jones |
|
|
|
|
|
12,744 |
|
12,744 |
|
|
* |
|
|
Joachim Milberg |
|
|
|
|
|
22,628 |
|
22,628 |
|
|
* |
|
|
Richard B.
Myers |
|
|
|
|
|
15,096 |
|
15,096 |
|
|
* |
|
|
Gregory R. Page |
|
3,750 |
|
|
|
2,372 |
|
6,122 |
|
|
* |
|
|
Thomas H.
Patrick |
|
|
|
|
|
31,172 |
|
31,172 |
|
|
* |
|
|
Sherry M. Smith |
|
|
|
|
|
4,522 |
|
4,522 |
|
|
* |
|
|
|
|
Named Executive Officers
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Samuel R.
Allen |
|
113,579 |
|
739,412 |
|
124,135 |
|
977,126 |
|
|
* |
|
|
James M. Field |
|
21,735 |
|
186,387 |
|
|
|
208,122 |
|
|
* |
|
|
Jean H.
Gilles |
|
21,090 |
|
128,346 |
|
23,062 |
|
172,498 |
|
|
* |
|
|
Rajesh Kalathur |
|
4,358 |
|
76,324 |
|
|
|
80,682 |
|
|
* |
|
|
Michael J. Mack, Jr. |
|
36,584 |
|
91,367 |
|
22,238 |
|
150,189 |
|
|
* |
|
|
|
|
All directors and executive officers as a group (19 persons)
(5) |
|
247,880 |
|
1,516,102 |
|
368,597 |
|
2,132,579 |
|
|
* |
|
|
* Less than 1% of the outstanding shares
of Deere common stock.
17
Table of Contents
(1) The ownership information for Cascade
Investment, L.L.C. (Cascade) is based on information supplied by Cascade in a
statement on Schedule 13D filed with the SEC on December 18, 2013. All shares of
common stock held by Cascade may be deemed beneficially owned by William H.
Gates III as the sole member of Cascade. Cascade has sole voting power and sole
dispositive power over 30,008,573 shares owned.
(2) The ownership information for Vanguard
Group, Inc. (Vanguard) is based on information supplied by Vanguard in a
statement on Form 13F filed with the SEC for the period ended September 30,
2014. Vanguard holds the shares in its capacity as a registered investment
advisor on behalf of numerous investment advisory clients, none of which is
known to own more than five percent of Deeres shares. Vanguard has sole voting
power over 589,541 shares owned and sole dispositive power over 19,925,659
shares owned.
(3) The table includes restricted shares
and RSUs awarded to directors under the Deere & Company Nonemployee Director
Stock Ownership Plan (see footnote (2) to the Fiscal 2014 Director Compensation
Table). Restricted shares and RSUs may not be transferred prior to retirement as
a director. RSUs are payable only in Deere common stock following retirement and
have no voting rights until they are settled in shares of stock. In addition,
directors own the following number of deferred stock units, which are payable
solely in cash under the terms of the Nonemployee Director Deferred Compensation
Plan:
Director |
|
Deferred Units |
Crandall C.
Bowles |
|
36,240 |
Vance D. Coffman |
|
21,262 |
Dipak C. Jain |
|
5,257 |
Gregory R. Page |
|
690 |
Thomas H. Patrick
|
|
13,916 |
(4) See the Outstanding Equity Awards at
Fiscal 2014 Year-End table for additional information regarding equity ownership
for NEOs as of October 31, 2014.
(5) The number of shares shown for all
directors and executive officers as a group includes 121,839 shares owned jointly
with family members over which the directors and executive officers share voting
and investment power.
Review and Approval of Related
Person Transactions
The Board has adopted a Related Person
Transactions Approval Policy (the Related Person Policy). Under the Related
Person Policy, our Corporate Governance Committee is responsible for reviewing,
approving, and ratifying all related person transactions.
The following are considered to be related
persons under the Related Person Policy:
(1) executive officers and directors of
Deere;
(2) any holder of 5% or more of Deeres voting securities; or
(3)
immediate family members of anyone in categories (1) or (2).
A related person
transaction is a transaction, relationship, or arrangement between a related
person and Deere where:
– |
the amount involved
exceeds $120,000; and |
– |
any related person (as
defined above) has or will have a direct or
indirect material interest in the
transaction. |
Each year, our directors and executive
officers complete annual questionnaires designed to elicit information about
potential related person transactions. Deeres directors and officers must
promptly advise our Corporate Secretary if there are any changes to the
information they previously provided. After consultation with our General
Counsel, management, and outside counsel, as appropriate, our Corporate
Secretary determines whether the transaction is reasonably likely to be a
related person transaction. Transactions deemed reasonably likely to constitute
related person transactions are submitted to the Corporate Governance Committee
for consideration at its next meeting. If action is required prior to the next
meeting, the transaction is submitted to the Chairperson of the Corporate
Governance Committee (the Chairperson) and the Chairpersons determination is
then reported to the Corporate Governance Committee at its next
meeting.
When evaluating potential related person
transactions, the Corporate Governance Committee
or the Chairperson, as applicable, considers all reasonably available relevant
facts and circumstances and approves only those related person transactions
determined in good faith to be in compliance with, or not inconsistent with, our
Code of Ethics, Code of Business Conduct, and the best interests of our
stockholders.
Patrick E. Mack is an employee in the
Companys Financial Services division and is the brother of Michael J. Mack,
Jr., the Group President of that division. Patrick E. Mack does not directly
report to Michael J. Mack, Jr. During fiscal 2014, Patrick E. Mack received
$770,245 in direct cash compensation, along with stock options valued at
$198,000 at the time of grant. Patrick E. Macks compensation is consistent with
that of other employees at his grade level. Pursuant to the Related Person
Policy, this transaction was approved by the Corporate Governance Committee
after determining that it is not inconsistent with our Code of Ethics or Code of
Business Conduct.
18
Table of Contents
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Securities Exchange
Act of 1934, as amended (the Exchange Act), requires our directors, certain of
our officers, and persons who own more than 10% of a registered class of our
equity securities to file reports of ownership and changes in ownership with the
SEC. These individuals are required by SEC regulations to furnish Deere with
copies of all such Section 16(a) forms.
We help our directors and officers prepare
and file the required reports. We have established procedures where the
directors and officers (and others on their behalf) provide us with the relevant
information regarding their transactions in Deere shares. Based on this
information, we prepare and file the required ownership reports on behalf of the
directors and officers. We have reviewed the reports we prepared and filed. In
addition, our directors and officers have made written statements to us
regarding their Deere stock ownership and reports. Based solely upon a review of
these statements and reports, we believe that during 2014 all Section 16(a)
filing requirements applicable to our insiders were complied with except for the
following: due to a miscommunication, a statement of change in beneficial
ownership on Form 4 for Gregory R. Page was not timely filed for his purchase of
Deere common stock on the open market on August 22, 2014. The Form 4 for Mr.
Page was filed on November 4, 2014.
19
Table of Contents
Item 2
Approval of Bylaw
Amendment to Permit Stockholders
to Call Special
Meetings
Summary of the
Proposal
The Board unanimously recommends
that the Companys stockholders approve an amendment to the Companys Bylaws
(the Special Meeting Bylaw Amendment) that would add a right permitting
holders of record of at least twenty-five percent (25%) of the voting power of
the Companys outstanding capital stock who have held such shares in a net long
position continuously for at least one year to call a special meeting of
stockholders by written request filed with the Corporate Secretary and otherwise
in accordance with the Bylaws. Shares subject to hedging transactions will not
be included toward satisfying the 25% threshold. Currently, the Companys Bylaws
provide that only the Chairman of the Board or the Board may call a special
meeting of stockholders.
The presentation of this proposal reflects
the Boards belief that granting such a right to stockholders is good corporate
governance. In establishing an ownership threshold of at least 25% in order for
stockholders to request a special meeting, the Board believes it is striking an
appropriate balance between enhancing the rights of stockholders and avoiding
the costs and distractions associated with the calling of special meetings,
unless a significant group of stockholders believes that the calling of a
special meeting of stockholders is warranted. Organizing and preparing for a
special meeting involves a significant commitment of time and focus by
management, and imposes substantial legal, administrative, and distribution
costs. Accordingly, the Board believes that special meetings should be held only
to cover special or extraordinary events, when fiduciary, strategic, or other
similar considerations dictate that the matter be addressed on an expeditious
basis, rather than waiting until the next annual meeting. A 25% threshold also
minimizes the risk of frequent meeting requests, potentially covering agenda
items relevant to particular constituencies as opposed to stockholders
generally. In addition, the net long position and one year holding requirements
are intended to protect against a special meeting being called by stockholders
whose interests are transitory or otherwise not aligned with the interests of
other stockholders in the long-term success of the Company. We therefore believe
that a threshold of 25% based on net long ownership with a one year holding
period is appropriate and reflects the best interests of
stockholders.
The Special Meeting Bylaw Amendment
contains procedural and informational requirements that are intended to
facilitate the Company and stockholders receiving basic information about the
meeting and to ensure, among other things, that the special meeting is not
duplicative of matters that were or, in the near term, could be covered at an
annual meeting. In particular, the Special Meeting Bylaw Amendment provides,
among other things, that: no business may be conducted at the special meeting
except as set
forth in the Companys notice of meeting;
no stockholder special meeting request may be made during the period commencing
120 days prior to the first anniversary of the date of the immediately preceding
annual meeting and ending on the earlier of the date of the next annual meeting
or 30 days after the first anniversary of the previous annual meeting; a special
meeting request cannot cover business substantially similar to what was covered
at an annual or special meeting held not more than 12 months, or in the case of
director elections 120 days, before the special meeting request was received by
the Secretary; a special meeting will not be held if similar business is to be
covered at an annual or special meeting called by the Board to be held within
120 days after the special meeting request is received by the Corporate
Secretary; any shares beneficially owned or held of record as of the date of the
request and sold by the requesting holder prior to the meeting will be treated
as a revocation of the request to the extent of the shares sold; and the
requesting stockholders notice must include information (as specified in the
Special Meeting Bylaw Amendment) as to the business proposed to be conducted and
as to each director nominee (if applicable). Only those stockholders soliciting
requests for a special meeting and their affiliates must provide the additional
information that would otherwise be required to be provided by stockholders
seeking to propose business or nominate directors at an annual or special
meeting of stockholders, including information with respect to any material
interest of such stockholder in the proposed business and any information
required to be disclosed in a proxy statement or other filings required to be
made in connection with the solicitation of proxies with respect to the proposed
business (or the election of directors, if applicable).
This description of the Special Meeting
Bylaw Amendment is a summary and is qualified by the complete text of Article
II, Section 4 of the Bylaws, as proposed to be amended, which is set forth in
Appendix B to this Proxy Statement.
Upon approval of the Companys
stockholders, the Special Meeting Bylaw Amendment will become
effective.
Vote
Required
The affirmative vote of a
majority of the shares present in person or by proxy is needed to approve the
Special Meeting Bylaw Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE SPECIAL MEETING BYLAW
AMENDMENT. |
20
Table of Contents
Item 3
Advisory Vote on
Executive Compensation
In accordance with Section 14A of the
Exchange Act, we are asking our stockholders to approve, on an advisory basis,
the compensation of the executives named in the Summary Compensation Table of
this Proxy Statement (the Named Executive Officers or NEOs) as disclosed in
the Compensation Discussion & Analysis (CD&A) and tabular and
narrative executive compensation disclosures of this Proxy Statement. The
Companys practice, which was approved by its stockholders at the 2011 annual
meeting, is to conduct this non-binding vote on an annual basis.
SUPPORTING STATEMENT
Pay for
Performance
Deeres compensation
philosophy is to pay for performance, support Deeres business strategies, and
offer competitive compensation arrangements. Our compensation programs consist
of elements designed to complement one another and reward achievement of
short-term and long-term objectives. The metrics used for our incentive programs
are associated with operating performance or based upon a function of the
Companys stock price with linkage to revenue growth and total shareholder
return. See the Pay for Performance for 3 Years Ended October 31, 2013 graph
in the Executive Summary of the CD&A, which highlights our success in
aligning executive compensation with the Companys financial
performance.
Program
Design
In the CD&A, we provide
stockholders with a detailed description of our compensation programs and
philosophy. Our compensation approach is supported by the following principles,
among others, as fully described in the CD&A:
|
Attracting, retaining, and
motivating high-caliber executives |
|
With greater responsibility,
placing a larger portion of total compensation at-risk with a larger portion tied to
long-term incentives |
|
Recognizing the cyclical nature
of our equipment businesses and the need to
manage value throughout the business cycle |
|
Providing opportunity for NEOs to
be long-term stockholders of Deere |
|
Structuring compensation programs
to be regarded positively by our
stockholders and employees |
The Board believes that the executive
compensation as disclosed in the CD&A, tabular disclosures, and other
narrative executive compensation disclosures in this Proxy Statement is
consistent with our compensation philosophy and aligns with the pay practices of
our peer group.
FOR THE REASONS STATED, THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR THE FOLLOWING NON-BINDING
RESOLUTION: RESOLVED, that the stockholders approve the
compensation of the NEOs as disclosed in this Proxy Statement pursuant to
the compensation disclosure rules of the SEC, including the CD&A,
tabular disclosures, and other narrative executive compensation
disclosures. |
Effect of
Proposal
The say-on-pay resolution is
non-binding. The approval or disapproval of this proposal by stockholders will
not require the Board or the Compensation Committee to take any action regarding
the Companys executive compensation practices. The final decision on the
compensation and benefits of our NEOs and on whether, and if so, how, to address
stockholder disapproval remains with the Board and the Compensation
Committee.
The Board believes that the Compensation
Committee is in the best position to consider the extensive information and
factors necessary to make independent, objective, and competitive compensation
recommendations and decisions that are in the best interests of the Company and
its stockholders.
The Board values the opinions of the
Companys stockholders as expressed through their votes and other
communications. Although the resolution is non-binding, the Board and the
Compensation Committee will carefully consider the outcome of the advisory vote
and those opinions when making future compensation
decisions.
21
Table of Contents
Compensation Discussion & Analysis
In this section, we provide a detailed
description of our compensation programs, including the philosophy and strategy
underpinning the programs, the individual elements of the programs, the
methodology and processes used by the Board and the Compensation Committee (the
Committee) to make compensation decisions, and the relationship between
Company performance and compensation delivered in fiscal 2014. The discussion in
this CD&A focuses on the compensation of our CEO, CFO, and the next three
most highly compensated executive officers (the NEOs) for the fiscal year
ended October 31, 2014, who were:
Name |
|
Title |
Samuel R. Allen |
|
Chairman and Chief Executive Officer |
Rajesh Kalathur |
|
Senior Vice
President and Chief Financial Officer |
James M. Field |
|
President, Agricultural Equipment Operations |
Jean H. Gilles |
|
Senior Vice
President, John Deere Power Systems, Worldwide Parts Services, Advanced
Technology and Engineering, and Global Supply Management and
Logistics |
Michael J. Mack, Jr. |
|
Group
President, John Deere Financial Services, Global Human Resources, and
Public Affairs |
Executive
Summary
Our compensation strategy is
designed to motivate our NEOs and salaried employees to execute our business
strategy and strive for higher Company performance while maintaining our core
values of quality, innovation, integrity, and commitment. In order to ensure
that our compensation strategy aligns with our core values and drives
performance across the Company, we regularly compare our compensation practices
and governance against market best practices. Here are some of the best
practices we have incorporated into our compensation programs:
● |
We use a combination
of short-term and long-term incentives to ensure a strong connection
between Deeres performance and actual compensation. |
● |
We do not enter into
employment agreements with our executives except where legally
required. |
● |
Burn rate and dilution
associated with our equity incentive program are reviewed annually by the
Committee and have historically been competitive within our peer
group. |
● |
Our equity incentive
plan prohibits us from: (i) granting stock options with an exercise price
less than the fair market value of the Companys common stock on the date
of grant; (ii) re-pricing stock options without the prior approval of our
stockholders; (iii) cashing out underwater stock options; and (iv)
including reload provisions in any stock option
grant. |
● |
We annually conduct a
review of all our compensation plans, policies, and significant practices
as well as a comprehensive review of risks associated with
compensation. |
● |
Our executive officers
(including the NEOs) participate in Company benefits programs (including
health care, life insurance, disability, and retirement plans) on the same
basis as other full-time employees of the
Company. |
● |
We do not provide tax gross ups for
executives except for those available to all
employees generally and we do not provide excise tax gross ups upon a change in control. |
● |
We include a double-trigger change in
control provision in our executive Change in
Control Severance Program as well as our current
equity plan, under which participants will receive severance benefits only if both a change in control and
qualifying termination occur. |
● |
Executive perquisites are limited and
reviewed annually by the Committee. |
● |
The Committee and Company management
regularly evaluate our peer group and pay
positioning under a range of performance
scenarios. |
● |
The Committee is advised by an
independent compensation consultant that performs
no other services for the Company. |
● |
We have adopted an Executive Incentive
Compensation Recoupment Policy to ensure
accountability in the presentation of our
financial statements. |
● |
We have established stock ownership
requirements to ensure the retention of stock by
our directors and executives and strengthen the
relationship between compensation and performance. |
● |
We prohibit all directors and employees,
including our executive officers, and their
related persons from engaging in short sales of
the Companys stock or trading in instruments designed to hedge against price declines by the Companys
stock. |
● |
We prohibit our directors and officers
from holding Company securities in margin accounts
or pledging Company securities as collateral for
loans or other obligations. |
22
Table of Contents
In addition to the practices described
above, in order to strengthen the relationship between compensation and the
experience of our stockholders, we added a total shareholder return (TSR)
modifier for payouts to executive officers under our Mid-Term Incentive (MTI)
plan for the three-year performance period starting in November 2014. This
action is an example of the commitment of the Company and the Committee to
continually review and modify our compensation programs to enhance the
relationship between pay and performance.
Pay for Performance Review and
Analysis
Pay for performance is an
essential component of our longstanding compensation philosophy. Our
compensation approach is designed to motivate our executives, including our
NEOs, to substantially contribute individually and
collaboratively to the Companys long-term, sustainable growth and help us
achieve our aspiration to distinctively serve our customers those linked to
the land through a great business. To achieve this aspiration, our business
strategy includes:
|
Exceptional operating
performance; |
|
Disciplined growth of shareholder
value added (SVA); and |
|
Aligned high-performance
teamwork. |
We continue to demonstrate our commitment
to stockholders through our performance-based compensation programs using
metrics that align with our business strategy:
● |
To align compensation with exceptional operating performance,
we use Operating Return on Operating Assets (OROA) and Return on Equity
(ROE) as the metrics for our Short-Term Incentive (STI) plan. These
metrics are designed to incentivize the efficient use of assets and
capital. STI goals are adjusted based on the business cycle to ensure the
level of difficulty of earning STI awards will be comparable
for a range of sales volumes and capacity utilization
levels. |
2014 OROA Performance
● |
To align compensation with disciplined growth, we use SVA as
the metric for our MTI plan. SVA measures our success in delivering
sustained growth in economic
profitability. |
Deere Enterprise SVA
● |
To align compensation with stockholder experience, our Long-Term Incentive (LTI) plan utilizes stock
options and restricted stock units (RSUs), whose ultimate values are
tied to the Companys stock price, and performance stock units (PSUs),
the ultimate value of which also depends on relative revenue growth and TSR as
compared to the S&P Industrial
Sector. |
PSU Performance Metrics for 3-Year
Period Ended 10/31/14
23
Table of Contents
The following chart shows the direct and
indirect components of our compensation strategy:
COMPENSATION STRATEGY
TOTAL DIRECT COMPENSATION |
TOTAL INDIRECT COMPENSATION |
Short-Term Compensation |
Long-Term Compensation |
Other Compensation and
Benefits |
Base Salary |
STI |
MTI |
LTI |
Fixed cash component |
Annual cash award for
profitability and efficient operations during the fiscal year |
Cash award for sustained
profitable growth during a multi-year period |
Equity award for creation of
stockholder value, as reflected by the Companys stock price, with linkage
to revenue growth and TSR |
Perquisites; Retirement Benefits;
Deferred Compensation Benefits; and Additional Benefits Payable upon a
Change-in-Control Event |
As our NEOs assume greater responsibility,
our pay for performance approach provides that: (1) a larger portion of their
total compensation should be at-risk in the form of short-term, mid-term, and
long-term incentive awards; and (2) a larger proportion of their incentive
awards should be in the form of long-term awards
in order to drive sustainable growth of
stockholder value. The following chart illustrates the allocation of all fiscal
2014 Total Direct Compensation components at target for our CEO and for our
other NEOs as a group. This chart highlights the Companys emphasis on long-term
and at-risk compensation.
2014 Target Direct Compensation Mix
for Named Executive Officers
24
Table of Contents
The Committee believes that the Companys
Total Direct Compensation program is strongly aligned with stockholders
interests. Each performance metric is rigorously reviewed for alignment with
stockholder value creation and performance goals are consistently calibrated to
deliver meaningful value to stockholders. Nevertheless, there are times when
financial results do not align with relative TSR results. In order to further
refine the pay-for-performance relationship, the Committee has approved a
modification to future MTI plan cycles that increases the influence of relative
TSR performance (see the Mid-Term Incentive (MTI) section below).
In addition, in light of recent stock
price performance as well as in recognition of more recent, challenging business
conditions, and in spite of strong financial performance against established
goals, Mr. Allen has requested that the Board reduce his cash incentive plan
compensation for fiscal 2014. The Board considered Mr. Allens request and
agreed to exercise its discretion to reduce his cash incentive awards by 25%,
resulting in total payments under these awards of $1.8 million less than the
amounts he would have otherwise earned based on previously-approved plan metrics
and goals and actual performance results (see footnote (4) to the Fiscal 2014
Summary Compensation Table).
Consultant Review of Pay for
Performance Relative to Peer Group
In
the course of reviewing our overall executive compensation program, the
Committees consultant, Pearl Meyer & Partners (Pearl Meyer), reviewed the
relationship between total realizable compensation and our performance for the
three fiscal years ended October 31, 2013. This approach was selected because
this is the most recent time period coinciding with our fiscal year-end for
which corresponding compensation information is available for our peer
companies. This review was conducted to understand the degree of alignment
between total compensation delivered to our NEOs during the period and our
performance relative to our peer group as identified in the Market Analysis
section below. For purposes of this review, company performance is defined as
TSR. Total realizable compensation for Deeres NEOs is defined as the sum of
the following components:
1. Actual base salaries paid over the
three-year period;
2. Actual STI awards paid over the
three-year period;
3. The Black-Scholes value as of October
31, 2013 of any stock options granted over the three-year period;
4. The value as of October 31, 2013 of
RSUs granted over the three-year period;
5. The value as of October 31, 2013 of
PSUs reflecting actual performance for (i) the 2011-2013 performance cycle and
(ii) the in-process 2012-2014 and 2013-2015 performance cycles; and
6. The value of actual MTI payouts made
over the three-year period.
For peer companies, realizable pay includes
cash-based long-term incentive plan and performance share plan payouts for
performance cycles fully contained within the 3-year period with award values
multiplied by a factor that reflects grant frequency and long-term incentive
vehicle mix.
Pearl Meyers analysis, as shown in the
chart below, reveals that TSR was aligned with realizable pay, for our CEO and
other NEOs, near the 25th percentile of our peer group. Based on these results,
combined with the results of past comparisons of pay and performance alignment
as discussed in our proxy statements for previous years, we believe that our pay
programs are effective at ensuring that pay levels for our executives are
aligned with performance.
The Company works closely with the
Committee and the Committees outside consultant to continually review its
compensation programs to ensure that they meet the objectives of the Companys
compensation philosophy.
2014 Compensation
Overview
At Deere, we remain committed to
our longstanding compensation philosophy, which incorporates the principles of
paying for performance, supporting business strategies, and paying competitively. The Committee believes this
philosophy continues to drive our NEOs and salaried employees to produce
sustainable, positive results for the Company and our stockholders.
25
Table of Contents
Compensation Strategy and
Objectives
Our compensation strategy
includes Total Direct Compensation (base salary, short-term, mid-term, and
long-term incentive compensation) and Total Indirect Compensation (other
compensation and benefits). The award ranges and values for each of the
incentive compensation components are tied to our performance through
association with operating metrics or as a function of our stock price. As
discussed above, we have chosen financial metrics that align compensation with
our business strategy and our stockholders interests. This alignment is further
accomplished by keeping our metrics simple, transparent, and consistently
communicated from year to year. SVA, for example, has been published in the
annual report every year since 2002 in the section following the Chairmans
message.
Although this compensation strategy
applies to most salaried employees, this Proxy Statement focuses on its
applicability to our NEOs based on the following principles:
● |
Attract, retain, and motivate
high-caliber executives |
● |
With greater responsibility,
place a larger portion of total compensation at-risk with a larger
portion tied to long-term incentives |
● |
Provide the appropriate level
of reward for performance (below median total compensation for substandard
Company performance; median total compensation for median levels of
performance; and upper quartile total compensation for sustained upper
quartile performance) |
● |
Recognize the cyclical nature
of our equipment businesses and the need to manage value throughout the
business cycle |
● |
Provide opportunity for NEOs
to be long-term stockholders of the Company |
● |
Structure compensation
programs to meet the tax deductibility criteria in the U.S. Internal
Revenue Code (IRC) where practicable |
● |
Structure compensation
programs to be regarded positively by our stockholders and
employees |
Compensation
Elements
The elements of our
compensation program are summarized in the table below:
Component |
Purpose |
Characteristics |
Where Reported in Accompanying Tables |
Base Salary |
Reward for level of responsibility,
experience, and sustained individual performance |
Fixed cash component targeted at our
peer group median; Base salary can vary from the market due to individual
performance, experience, time in position, and internal equity
considerations |
Fiscal 2014 Summary Compensation
Table under the column Salary |
Discretionary Bonus Awards |
To recognize outstanding individual
achievement |
A cash award that may not exceed 20%
of base salary, except in unusual circumstances |
No discretionary bonuses were
awarded in fiscal 2014 to our NEOs |
Short-Term Incentive (STI) |
Reward for the achievement of higher
profitability through operating efficiencies and asset management during
the fiscal year |
A target STI award is designed to
provide median annual cash compensation compared with our peer group when
combined with base salary and median overall compensation compared with
our peer group when combined with base salary, a target MTI award, and a
base-level LTI award |
Fiscal 2014 Summary Compensation
Table under the column Non-Equity Incentive Plan Compensation and Fiscal
2014 Grants of Plan-Based Awards under the column Estimated Future
Payouts Under Non-Equity Incentive Plan Awards |
Mid-Term Incentive (MTI) |
Reward for the achievement of
sustained profitable growth over a multi-year performance
period |
Cash portion of long-term
compensation; A target MTI award is designed to provide median
compensation compared with our peer group in combination with base salary,
a target STI award, and a base-level LTI award |
Fiscal 2014 Summary Compensation
Table under the column Non-Equity Incentive Plan Compensation and Fiscal
2014 Grants of Plan-Based Awards under the column Estimated Future
Payouts Under Non-Equity Incentive Plan Awards |
26
Table of Contents
Component |
Purpose |
Characteristics |
Where Reported in Accompanying Tables |
Long-Term Incentive (LTI) |
Reward for the creation of
stockholder value as reflected by our stock price with linkage to revenue
growth and TSR |
Equity-based portion of long-term
compensation; A base-level LTI award is designed to provide median
compensation compared with our peer group when combined with base salary
and target STI and MTI awards; Award is delivered through a combination of
PSUs, RSUs, and stock options; Ultimate value of award depends on our
stock price and operating performance |
Fiscal 2014 Summary Compensation
Table under the columns Stock Awards and Option Awards; Fiscal 2014
Grants of Plan-Based Awards under the columns referencing stock and option
awards; Outstanding Equity Awards at Fiscal 2014 Year-End; Fiscal 2014
Option Exercises and Stock Vested; Fiscal 2014 Nonqualified Deferred
Compensation Table in the row Deferred RSUs |
Perquisites |
Provide our executives with selected
benefits commensurate with those provided to executives at our peer group
companies |
Types of compensation that
personally benefit an employee, are not related to job performance, and
are available to a select group of employees |
Fiscal 2014 Summary Compensation
Table under the column All Other Compensation |
Retirement Benefits |
Provide income upon
retirement |
Defined benefit pension plans plus a
401(k) plan; Our matches to the 401(k) plan are based on the applicable
pension option and Company performance |
Fiscal 2014 Summary Compensation
Table under the columns Change in Pension Value and Nonqualified Deferred
Compensation Earnings and All Other Compensation; Fiscal 2014 Pension
Benefits Table |
Deferred Compensation Benefits |
Allow executives to defer
compensation on a tax-efficient basis |
Executives can elect to defer base
salary, STI, or MTI into the Voluntary Deferred Compensation Plan;
Executives participating in the Contemporary pension option can defer
employee contributions and receive matching employer contributions under
the Defined Contribution Restoration Plan; RSUs may also be
deferred |
Accumulated amounts deferred are
reported in the Fiscal 2014 Nonqualified Deferred Compensation Table;
Above-market earnings on these amounts are reported in the Fiscal 2014
Summary Compensation Table under the column Change in Pension Value and
Nonqualified Deferred Compensation Earnings |
Potential Payments upon Change
in Control |
Encourage executives to operate in
the best interests of stockholders both before and after a Change in
Control event |
Contingent in nature; Most elements
are payable only if a NEOs employment is terminated as specified under
various plans |
Fiscal 2014 Potential Payments upon
Change in Control |
Other
Potential Post- Employment Payments |
Provide potential payments under the
scenarios of death, disability, retirement, termination without cause or
for cause, and voluntary separation |
Contingent in nature; Amounts are
payable only if a NEOs employment is terminated as specified under the
arrangements of various plans |
Fiscal 2014 Potential Payments upon
Termination of Employment Other than Following a Change in
Control |
27
Table of Contents
Compensation Methodology
and Process
Independent Review and
Approval of Executive Compensation
The
Committee, all the members of which are independent under current NYSE listing
standards, is responsible for reviewing and approving goals and objectives
related to incentive compensation for the majority of salaried employees. The
Committee evaluates the NEOs performances in relation to established goals and
ultimately approves the compensation for the NEOs (except for the CEO). See the
Board Committees section of this Proxy Statement for a detailed listing of
Committee responsibilities and members.
The Committee does not delegate any
substantive responsibilities related to the compensation of NEOs and exercises
its independent judgment when approving executive compensation. No member of the
Committee is a former or current officer of Deere or any of its
subsidiaries.
The Committee periodically reviews
compensation delivery to ensure its alignment with our business strategy, the
Companys performance, and the interests of our employees and stockholders. In
addition, the Committee periodically reviews market practices for all
significant elements of executive compensation and approves necessary
adjustments to remain competitive.
The Corporate Governance Committee of the
Board directs an annual evaluation process of the CEO. Generally, at the Board
meeting in August of each year, the full Board (in executive session without the
CEO present) evaluates the CEOs performance. The Committee considers the
Boards evaluation when providing recommendations to the Board for the CEOs
compensation. The Committees recommendations for the CEOs compensation are
presented to and approved by the independent members of the Board. The CEO does
not play a role in and is not present during discussions regarding his own
compensation.
The CEO plays a significant role in
setting the compensation for the other NEOs. The CEO presents an evaluation of
each NEOs individual performance. The CEO also provides recommendations for
changes to the NEOs base salaries and LTI awards. Since the STI and MTI awards
are calculated using predetermined factors, the CEO does not provide
recommendations for changes to the other NEOs STI and MTI awards. The Committee
has the discretion to accept, reject, or modify the CEOs recommendations. The
other NEOs are not present during these discussions.
As part of its process for making
compensation decisions, the Committee reviews the results of the Companys most
recent annual advisory say-on-pay vote. A substantial majority (approximately
93%) of our stockholders who voted on the say-on-pay proposal in our fiscal 2013 proxy
statement approved our executive compensation as described in the CD&A and
tabular and narrative disclosures. The Committee took account of this strong
level of stockholder support in determining to apply the same effective
principles and philosophy in structuring our executive compensation program for
fiscal 2014.
The Role of the Compensation
Consultant
The Committee has retained
Pearl Meyer as its compensation consultant. Pearl Meyer reviews our executive
compensation program design and assesses our compensation approach relative to
our performance and the market. The Committee has sole responsibility for
setting and modifying Pearl Meyers compensation, determining the nature and
scope of its services, evaluating its performance, and terminating its
engagement and/or hiring another compensation consultant at any time.
Pearl Meyer attends Committee meetings,
reviews compensation data with the Committee, and participates in general
discussions regarding executive compensation issues. While the Committee
considers input from Pearl Meyer, ultimately the Committees decisions reflect
many factors and considerations. Management works with Pearl Meyer at the
Committees direction to develop materials and analysis essential to the
Committees compensation evaluations and determinations. Such materials include
competitive market assessments and summaries of current legal and regulatory
developments.
Pearl Meyer periodically meets
independently with the Chairman of the Committee to discuss compensation
matters. In addition, Pearl Meyer regularly participates in executive sessions
with the Committee (without any of the Companys personnel or executives
present) to discuss compensation matters. Pearl Meyer does not provide other
significant services to Deere and has no other direct or indirect business
relationships with Deere or any of its affiliates. Taking these and other
factors into account, the Committee has determined that the work performed by
Pearl Meyer does not raise any conflicts of interest. Additionally, based on its
analysis of the factors identified in the Committees charter as being relevant
to compensation consultant independence, the Committee has concluded that Pearl
Meyer is independent of the Companys management.
Market
Analysis
To ensure that total
compensation for our NEOs aligns with the market, we compared our compensation
and performance against the companies in our executive compensation peer group.
This comparison includes an evaluation of the mix of cash versus equity and
short-term versus long-term components. The companies in the peer group that we
used in our fiscal 2014 market analysis process, listed in the chart below, are
similar to Deere in sales volume, products, services, market capitalization,
and/or global presence.
28
Table of Contents
Fiscal 2014 Executive
Compensation Peer Group
|
|
|
|
|
|
|
|
|
|
Revenues * |
|
Market Value 10/31/2014 |
Company |
|
Fiscal Year |
|
Employees * |
|
($MM) |
|
($MM) |
3M Company |
|
|
Dec 13 |
|
|
|
88,667 |
|
|
|
$ |
30,871 |
|
|
|
$ |
98,539 |
|
Alcoa Inc. |
|
|
Dec 13 |
|
|
|
60,000 |
|
|
|
$ |
23,032 |
|
|
|
$ |
19,757 |
|
The Boeing
Company |
|
|
Dec 13 |
|
|
|
168,400 |
|
|
|
$ |
86,623 |
|
|
|
$ |
89,052 |
|
Caterpillar Inc. |
|
|
Dec 13 |
|
|
|
118,501 |
|
|
|
$ |
55,656 |
|
|
|
$ |
61,394 |
|
Cummins Inc. |
|
|
Dec 13 |
|
|
|
47,900 |
|
|
|
$ |
17,321 |
|
|
|
$ |
26,706 |
|
E.I. du Pont de Nemours and
Company |
|
|
Dec 13 |
|
|
|
64,000 |
|
|
|
$ |
35,935 |
|
|
|
$ |
62,646 |
|
Eaton Corp. Plc |
|
|
Dec 13 |
|
|
|
102,000 |
|
|
|
$ |
22,046 |
|
|
|
$ |
32,547 |
|
Emerson Electric Co. |
|
|
Sep 14 |
|
|
|
115,100 |
|
|
|
$ |
24,537 |
|
|
|
$ |
44,434 |
|
General Dynamics
Corporation |
|
|
Dec 13 |
|
|
|
96,000 |
|
|
|
$ |
31,218 |
|
|
|
$ |
46,315 |
|
Honeywell International Inc. |
|
|
Dec 13 |
|
|
|
131,000 |
|
|
|
$ |
39,055 |
|
|
|
$ |
75,244 |
|
Illinois Tool Works
Inc. |
|
|
Dec 13 |
|
|
|
51,000 |
|
|
|
$ |
14,135 |
|
|
|
$ |
35,595 |
|
Johnson Controls, Inc. |
|
|
Sep 14 |
|
|
|
168,000 |
|
|
|
$ |
42,828 |
|
|
|
$ |
31,445 |
|
Lockheed Martin
Corporation |
|
|
Dec 13 |
|
|
|
115,000 |
|
|
|
$ |
45,358 |
|
|
|
$ |
60,206 |
|
Northrop Grumman Corporation |
|
|
Dec 13 |
|
|
|
65,300 |
|
|
|
$ |
24,661 |
|
|
|
$ |
27,868 |
|
PACCAR Inc |
|
|
Dec 13 |
|
|
|
21,800 |
|
|
|
$ |
17,124 |
|
|
|
$ |
23,176 |
|
Raytheon Company |
|
|
Dec 13 |
|
|
|
63,000 |
|
|
|
$ |
23,706 |
|
|
|
$ |
32,033 |
|
United Technologies
Corporation |
|
|
Dec 13 |
|
|
|
212,400 |
|
|
|
$ |
62,626 |
|
|
|
$ |
97,547 |
|
Whirlpool Corporation |
|
|
Dec 13 |
|
|
|
69,000 |
|
|
|
$ |
18,769 |
|
|
|
$ |
13,398 |
|
Xerox
Corporation |
|
|
Dec 13 |
|
|
|
143,100 |
|
|
|
$ |
21,435 |
|
|
|
$ |
15,160 |
|
|
75th Percentile |
|
|
|
|
|
|
121,626 |
|
|
|
$ |
39,998 |
|
|
|
$ |
61,707 |
|
Median |
|
|
|
|
|
|
92,334 |
|
|
|
$ |
27,766 |
|
|
|
$ |
34,071 |
|
25th Percentile |
|
|
|
|
|
|
62,250 |
|
|
|
$ |
21,893 |
|
|
|
$ |
27,577 |
|
|
Deere &
Company |
|
|
Oct 14 |
|
|
|
58,210 |
|
|
|
$ |
36,067 |
|
|
|
$ |
30,659 |
|
Deere Percentile |
|
|
|
|
|
|
16th |
|
|
|
|
68th |
|
|
|
|
32nd |
|
Source: Factset Research Systems,
Inc.
* Reflects employees and revenues
for last reported fiscal year
Compensation paid by our peer group is
representative of the compensation we believe is required to attract, retain,
and motivate executive talent. The Committee, in consultation with Pearl Meyer,
periodically reviews the peer group list to confirm that it continues to be an
appropriate point of reference for NEO compensation. The Boeing Company and E.I.
du Pont de Nemours and Company were added to the executive compensation peer
group for fiscal 2014 while Ingersoll-Rand Plc, Parker-Hannifin Corp, and
Textron Inc. were dropped, reflecting the Committees desire to bring the peer
group into closer alignment with Deere in terms of revenue levels. No changes
were made to the peer group for fiscal 2015.
Total Direct Compensation
Elements
The following information
describes each direct compensation element, including discussion of performance
metrics where applicable.
Base Salary
In determining salary levels for each of our NEOs, the
Committee takes into consideration factors such as fulfillment of job
responsibilities, the financial and operational performance of the activities
directed by each NEO, experience, time in position, internal equity, and
potential. The Committee also considers each NEOs current salary as compared to
the salary range and the median salary practices of our peer group.
In fiscal 2014, after considering the
aforementioned factors, the Board approved a base salary increase of 4% for the
CEO and the Committee approved increases ranging from 3-6% for the other NEOs.
The resulting salary levels align with the market median for similar positions
except for Mr. Kalathur, whose base salary is below the market median due to his
relatively short time in the CFO position.
29
Table of Contents
Short-Term Incentive
(STI)
The following factors are used
to calculate the amount of the STI award paid to our NEOs:
|
Salary; |
|
|
|
Target STI rate as described
below under Approval of STI Rates; and |
|
|
|
Deeres actual Operating Return
on Operating Assets (OROA) and Return on Equity (ROE) performance as
defined below under Performance Metrics
for STI. |
Individual awards under the STI plan are
capped at $5 million per performance period. The STI plan is periodically
approved by our stockholders and was last approved at the annual meeting in
February 2010. The STI plan will be considered for re-approval at the February
2015 annual meeting.
Performance Metrics for
STI
There are two metrics used in the
calculation of STI:
|
OROA for the Equipment Operations
(consisting of our worldwide Agriculture and Turf Operations and
Construction and Forestry Operations) |
|
|
|
ROE for our Financial Services
segment |
Deere is primarily a manufacturing company
with high investment in fixed assets, such as buildings and machinery, and
significant expenses with longer term payoffs, such as research and development.
OROA was selected as the STI performance metric for the Equipment Operations
because the Committee believes it effectively measures the efficient use of the
Equipment Operations assets.
Targeted OROA performance for each
Equipment Operations business segment varies based on the segments sales
volume. The actual sales volume is measured in relationship to mid-volume sales.
Mid-volume sales is determined at the beginning of the fiscal year using
historical sales volumes, industry growth rates, and market share data, among
other considerations, and represents the midpoint of a business
cycle.
The preceding graph represents how Deeres
operating leverage functions in a given business. For Deere, operating leverage
means:
|
When sales volumes and capacity
utilization are low compared to mid-volume, it is more difficult to cover
fixed costs and achieve high asset
turnover; therefore, OROA performance goals
are lower; and |
|
|
|
When sales volumes and capacity
utilization are high compared to mid-volume, it is easier to cover fixed
costs and achieve high asset turnover;
therefore, OROA performance goals are higher. |
By adjusting OROA performance goals as
sales volumes change, Deere believes the level of difficulty in attaining
targeted performance will be comparable for a range of sales volumes and
capacity utilization levels. Using OROA aligns employee decisions with our
strategic approach to sound investment of capital and asset utilization. This
model encourages our management team to make necessary structural changes, such
as those related to capacity, margin enhancements, and asset turnover for a
given volume level.
At the beginning of fiscal 2014, the
Committee approved the following OROA goals at different sales volume levels for
the Equipment Operations:
Fiscal 2014 OROA
Goals |
Minimum |
Target |
Maximum |
OROA Goals at Low
Volume |
|
4% |
|
|
8% |
|
|
12% |
|
OROA Goals at
Mid-Volume |
|
8% |
|
|
12% |
|
|
20% |
|
OROA Goals at High
Volume |
|
12% |
|
|
20% |
|
|
28% |
|
These OROA goals have not changed since
fiscal 2007. Minimum, target, and maximum OROA goals are interpolated for sales
volumes between low and mid-volume and between mid-volume and high
volume.
ROE is the performance metric for
Financial Services. Financial Services experiences different cash flow risk
characteristics and operates with significantly different debt-to-equity
leverage than the Equipment Operations. ROE goals are adjusted for the actual
mix of business subsidized by the Equipment Operations versus the business that
is not subsidized. The Committee approved the following ROE goals at the
beginning of fiscal 2014:
Fiscal 2014 ROE
Goals |
Minimum |
Target |
Maximum |
Subsidized
Business |
|
10% |
|
|
10% |
|
|
10% |
|
Non-Subsidized
Business |
|
10% |
|
|
13% |
|
|
16% |
|
These ROE goals have not changed since
fiscal 2011. See Appendix C, Deere & Company Reconciliation of Non-GAAP
Measures, for additional information regarding the calculation of OROA and ROE
for fiscal 2014.
30
Table of Contents
For fiscal 2014, the various business
results were weighted to calculate STI as follows (which weighting has not
changed since fiscal 2011):
Equipment Operations
OROA |
|
50% |
Agriculture and Turf
Operations OROA |
|
25% |
Construction and Forestry
Operations OROA |
|
15% |
Financial Services
ROE |
|
10% |
Approval of STI Rates
At the beginning of the fiscal year, after
review and consideration of Deeres peer group data for target cash bonuses, the
Committee approves target STI rates as a percentage of the NEOs base salary. A
target STI award is designed to provide median annual cash compensation compared
with our peer group when combined with base salary and median overall
compensation compared with our
peer group when combined with base salary,
a target MTI award, and a base-level LTI award. In December 2013, the Committee
approved STI rates for fiscal 2014 as follows:
Target STI Rates: |
|
|
CEO |
|
125% |
Other NEOs |
|
85% |
Fiscal 2014 Performance Results for
STI
The chart below details:
|
the goals that were necessary to
achieve STI payout based on the actual sales volumes (OROA) and the actual
mix of subsidized and non-subsidized business (ROE); and |
|
|
|
the actual OROA and ROE
performance results. |
Fiscal 2014 Performance
Results for STI |
|
Goal to Achieve Payout |
|
Fiscal 2014 Performance
Results |
|
Performance as % of
Target |
|
Fiscal 2014
Award Weighting |
|
Weighted Award Results |
Equipment Operations OROA |
|
19.2% for maximum |
|
27.7% |
|
200% |
|
50% |
|
|
100% |
|
Agriculture and Turf Operations
OROA |
|
19.2% for maximum |
|
30.9% |
|
200% |
|
25% |
|
|
50% |
|
Construction and Forestry Operations
OROA |
|
18.4% for maximum |
|
17.6% |
|
189% |
|
15% |
|
|
28% |
|
Financial Services ROE |
|
12.1% for maximum |
|
13.6% |
|
200% |
|
10% |
|
|
20% |
|
|
|
Actual
Performance as % of Target 198% |
|
To further explain this chart and the
fiscal 2014 OROA goals, actual sales volumes for the combined Equipment
Operations were slightly below mid-volume levels for fiscal 2014. Therefore, the
combined Equipment Operations needed to achieve 19.2% OROA to earn maximum
payout. Since an OROA of 27.7% was achieved, a maximum payout for that component
of STI was earned.
The amount of the STI award paid to a NEO
is calculated as follows:
Base salary for the fiscal year
x
Target STI rate
x Actual performance as a percent of target (up to a maximum
of 200%)
= STI award amount
STI awards paid to NEOs are detailed in
the Fiscal 2014 Summary Compensation Table under footnote (4). At the request of
the CEO, the Board agreed to exercise its discretion to reduce the CEOs STI
compensation by 25% below the amount he would have otherwise earned for fiscal
2014 based on previously-approved plan metrics and goals and actual performance
results. The Committee did not exercise its authority to decrease or eliminate
the STI awards for the other NEOs.
The STI plan and the results for fiscal
2014 described above are also used to determine the STI awards paid to most
other executive, administrative, and professional employees worldwide. For
fiscal
2014, STI awards paid to the NEOs
consisted of approximately 1.3% of the total amount of STI awards paid to all
eligible employees.
Long-Term
Compensation
Long-term compensation
includes a combination of MTI and LTI. MTI is paid in cash and is considered
part of long-term compensation because multiple fiscal years are included in the
performance period. LTI, the equity-based portion of long-term compensation,
consisted of RSUs, PSUs, and stock options in fiscal 2014.
Mid-Term Incentive
(MTI)
The following factors are used
to calculate the amount of the MTI award paid to our NEOs:
|
Median of actual salaries for the
salary grade; |
|
|
|
Target MTI rate as described
below under Approval of MTI Rates; and |
|
|
|
SVA results as defined below
under Performance Metrics for MTI. |
Individual awards under the MTI plan are
capped at $4.5 million per performance period. The MTI plan is periodically
approved by our stockholders and was last approved at the annual meeting in
February 2013.
31
Table of Contents
Performance Metrics for
MTI
In 2003, the Committee established SVA
as the MTI performance metric. SVA measures Deeres success in delivering
sustained growth in economic profitability. SVA was selected as the MTI
performance metric because the Committee believes that Deere should:
(a) |
|
earn, at a minimum, its weighted
average cost of capital each year; |
|
|
|
(b) |
|
ensure that investments in
capital and research and development earn their cost of capital;
and |
|
|
|
(c) |
|
ensure that acquisitions do not
dissipate stockholder value. |
SVA is fundamental to how Deere operates
its business at the corporate and business unit level. We believe that sustained
growth for Deere can be accomplished through a combination of revenue growth and
high returns on invested capital, both of which are reflected in the SVA metric.
Since it is based on enterprise-wide SVA, MTI encourages teamwork across all
units of our business. In addition, providing Deere employees the opportunity to
share in a
portion of SVA fosters and reinforces a
culture of ownership and alignment with stockholders, which has been critical to
Deeres long-term success. For fiscal 2014, the MTI payout for all employees
amounted to about 7% of our average annual SVA over the three-year performance
period. See Appendix C, Deere & Company Reconciliation of Non-GAAP
Measures, for an explanation regarding the calculation of SVA.
The Committee has approved three-year
performance periods to emphasize and reward consistent, sustained operating
performance. The Committee
conducts annual reviews of the target and maximum SVA goals. The accumulated
maximum SVA goal for a three-year performance period is set at a level that
reflects market upper quartile return on invested capital performance and
matches enterprise SVA goals set by the business for the first year of that
performance period plus compounded 7% annual growth for the remaining two years.
The target SVA is set at half of the maximum SVA goal. The chart below details
the target and maximum SVA goals for each performance period that includes
fiscal 2014:
|
Fiscal 2012 |
Fiscal 2013 |
Fiscal 2014 |
|
through |
through |
through |
SVA
Goals for MTI |
Fiscal 2014 |
Fiscal 2015 |
Fiscal 2016 |
SVA Goal for Target Payout |
$2.5 billion |
$2.755 billion |
$3.605 billion |
SVA Goal for Maximum Payout |
$5 billion |
$5.51 billion |
$7.21 billion |
Payable in |
Dec 2014 |
Dec 2015 |
Dec 2016 |
Approved by Committee |
Dec 2011 |
Dec 2012 |
Dec
2013 |
Inherent in the MTI plan is a lagging,
three-year impact of SVA. Whether positive or negative, SVA results for a given
year become part of the MTI award calculation for that year and the subsequent two years. Negative SVA in a given year can offset positive SVA earned in a prior or future year.
Thus, MTI plan payouts in a strong-performance year, following a number of
weak-performance years, will be lower than the financial results that the
strong-performance year alone would justify. The opposite is also true: MTI plan
payouts made in a weak-performance year, following several strong-performance
years, will be higher than the financial results that the weak-performance year
alone would justify. Employees are motivated to achieve optimal SVA performance
each year because each year is included in three separate rolling performance
periods.
In an effort to further align executive compensation with stockholder
interests, in August 2014 the Committee approved the addition of a relative
TSR modifier to potential MTI payouts for our executive officers (including each
of the NEOs). Starting with the performance period that ends in fiscal 2017, the
TSR modifier is triggered if Deeres TSR relative to the S&P Industrial
Sector
(the same index used to measure relative
performance for PSU purposes) is below median for the performance period. For
TSR at or below the 25th percentile, the final MTI payout will be reduced 25%.
For TSR between the 25th and 50th percentiles, the final MTI payout will be
reduced between 0-25% on a linear basis as shown in the following
chart:
32
Table of Contents
Approval of MTI
Rates
After review and consideration of
compensation data for our peer group, the Committee approves target MTI rates as
a percentage of the median salary of the NEOs salary grade. A target MTI award
is designed to provide median compensation compared with our peer group in
combination with base salary, a target STI award, and a base-level LTI award. In
December 2011, the Committee approved the following target MTI rates for the
performance period ended October 31, 2014. When maximum SVA goals are met or
exceeded, 200% of target rates are paid.
Target MTI Rates*: |
|
CEO |
121% |
Other NEOs |
93% |
* A minimum MTI award ($1,100 for the CEO
and $400 for the other NEOs) will not be paid unless accumulated SVA exceeds $1
million for the performance period.
Fiscal 2014 Performance Results for
MTI
Deeres accumulated SVA, calculated in
accordance with the MTI performance metrics as described in Appendix C, is
reported in the following table for the three-year performance period ended
October 31, 2014:
Deere Enterprise SVA
For the three-year performance period
ended October 31, 2014, the accumulated SVA exceeded the maximum payout goal of
$5 billion, resulting in a maximum MTI award. MTI awards paid to NEOs are
detailed in the Fiscal 2014 Summary Compensation Table under footnote (4). At
the request of the CEO, the Board agreed to exercise its discretion to reduce
the CEOs MTI compensation by 25% below the amount he would have otherwise
earned for fiscal 2014 based on previously-approved plan metrics and goals and
actual performance results. The Committee did not exercise its authority to
decrease or eliminate the MTI awards for the other NEOs.
The MTI plan and the results for the
performance period ended in fiscal 2014 described above are also used to
determine the MTI awards paid to other eligible employees worldwide. MTI awards
paid to the NEOs for fiscal 2014 consisted of approximately 3.5% of the MTI
payout to all eligible employees.
In the ten years preceding the
implementation of MTI, fiscal years 1994 through 2003, accumulated SVA, as
reported, was negative $1.4 billion as compared to accumulated positive SVA of
$17.9 billion in the ten most recent fiscal years. The Committee believes that
Deeres adoption of the SVA model is an important factor driving the Companys
performance.
Long-Term Incentive
(LTI)
The purpose of LTI is to
reward the NEOs for the creation of sustained stockholder value, encourage
ownership of Deere stock, foster teamwork, and retain and motivate high-caliber
executives while aligning their interests with those of our stockholders.
Historically, LTI awards consisted of annual grants of restricted stock or RSUs,
along with market-priced stock options, under the John Deere Omnibus Equity and
Incentive Plan (Omnibus Plan). In fiscal 2011, the Committee introduced PSUs
as an element of the annual award mix in order to strengthen the incentive
features of LTI awards and create stronger alignment between ultimate payouts
and Company performance. The Omnibus Plan is periodically approved by our
stockholders and was last approved at the annual meeting in February 2010. The
Omnibus Plan will be considered for re-approval at the February 2015 annual
meeting.
The Committee established LTI grants to the NEOs based on the following
criteria: level of responsibility, individual performance, current market
practice, peer group data, and the number of shares available under the Omnibus
Plan. Awards granted in previous years are not a factor in determining the
current years LTI award, nor is potential accumulated wealth viewed as being
relevant. The following table summarizes the mix, performance measurements, and
general terms for each form of equity awarded to the NEOs for fiscal year
2014:
Fiscal Year 2014 LTI Award Overview for
NEOs
|
|
PSUs |
|
RSUs |
|
Stock Options |
LTI Mix |
|
40% |
|
25% |
|
35% |
Performance Measurements |
|
50% revenue growth*
and 50% TSR relative to the S&P Industrial Sector over a three-year
performance period |
|
Stock price appreciation |
|
Stock price
appreciation |
Vesting Period |
|
Cliff vest on the third anniversary of the grant date |
|
Cliff vest on the third anniversary of the grant
date |
|
Vest in approximately
equal annual installments over three years |
Restrictions/ Expiration |
|
Converted to Deere common stock upon
vesting |
|
Converted to Deere common stock upon
vesting |
|
Expire ten years from the grant
date |
* Based on the Companys compound annual
growth rate
33
Table of Contents
Approval of LTI Award
Values
At the beginning of the fiscal
year, after review and consideration of peer group data on target long-term
incentives, the Committee approves a dollar value for a base-level LTI award and
the mix of awards (options, RSUs, and PSUs) to be delivered. A base-level LTI
award is designed to provide median compensation compared with our peer group
when combined with base salary and target STI and MTI awards. The Committee
determines LTI awards at the first Committee meeting at the beginning of the
fiscal year. The Committee has the ability to increase (up to 20%) or decrease
(down to $0) the base-level award to distinguish an individuals level of
performance, deliver a particular LTI value, or reflect other adjustments as the
Committee deems necessary. For fiscal 2014, adjustments to base-level award
values ranging up to 15% were approved in recognition of the individual
performance of the NEOs. LTI awards were approved for the NEOs as
follows:
Adjusted Award Values*: |
|
Samuel R. Allen |
$8,740,000 |
Rajesh Kalathur |
$1,420,000 |
James M. Field |
$1,562,000 |
Jean H. Gilles |
$1,618,800 |
Michael J. Mack, Jr. |
$1,604,600 |
* Amounts differ from the value of equity
awards shown in the Fiscal Year 2014 Summary Compensation Table and Grants of
Plan-Based Awards table because those tables reflect the probable outcome of the
performance metrics for PSUs. The amounts shown here include PSUs valued at the
grant price on the date of grant, reflecting the value the Committee considered
when granting the LTI awards for fiscal 2014.
See the Fiscal 2014 Grants of Plan-Based
Awards table and footnotes for more information on LTI awards delivered as well
as the terms of the awards.
For fiscal 2014, the number of RSUs and
PSUs granted to the NEOs represented 51% of all RSUs and PSUs granted to
eligible salaried employees. The number of stock options granted to the NEOs
represented 9% of all stock options granted to eligible salaried employees in
fiscal 2014. These proportions are consistent with our philosophy that as NEOs
assume greater responsibility, a larger portion of their incentive compensation
should be focused on long-term awards.
PSUs Granted in Fiscal Year 2014
For PSUs granted in fiscal 2014, the
actual number of shares to be issued upon conversion will be based equally on Deeres
revenue growth and TSR for the three-year performance period ending in 2016. The
Companys performance will be measured relative to the companies in the S&P
Industrial Sector as of the end of the performance period.
Performance Targets (Performance Period Ending in
2016) |
|
Revenue Growth Payout
% × Weighted Portion of PSUs Awarded |
|
+ |
|
TSR Payout % × Weighted Portion of PSUs
Awarded |
|
= |
Final Award |
|
The number of PSUs that vest and convert
to shares can range from 0% to 200% of the number of PSUs awarded depending on
the Companys relative performance during the performance period as illustrated
in the following table:
|
%
of Target Shares |
Deeres Revenue Growth or TSR |
Earned |
Relative to the S&P Industrial Sector |
(Payout %) * |
Below 25th percentile |
0% |
At 25th percentile |
25% |
At 50th percentile |
100% |
At or above 75th percentile |
200% |
* Interim points are
interpolated
These performance targets reflect the
Committees belief that median levels of relative performance should lead to
median levels of compensation.
2012-2014 PSU Program (Payable in
Fiscal 2015)
The performance period for
PSUs granted in fiscal year 2012 ended on October 31, 2014. The final number of
shares earned was based on Deeres revenue growth and TSR relative to the
S&P Industrial Sector over the three-year performance period. The final
payout determination was made by the Committee in December 2014 following a
review of the relative performances of the Company and the S&P Industrial
Sector. Revenue growth and TSR were comparable to the 49th and 8th percentiles,
respectively, of the S&P Industrial Sector. This resulted in an overall
payout of 48.5% of target.
|
|
Performance |
|
|
|
|
|
|
|
|
Results for |
|
|
|
|
|
|
|
|
Performance |
|
|
|
|
|
|
|
|
Period Relative |
|
%
of Target |
|
|
|
|
|
|
to S&P Industrial |
|
Shares |
|
Award |
|
Weighted |
Metric |
|
Sector |
|
Earned |
|
Weighting |
|
Payout % |
Revenue
Growth |
|
49th percentile |
|
97% |
|
50% |
|
48.5% |
TSR |
|
8th percentile |
|
0% |
|
50% |
|
0% |
|
Final Payout as % of Target |
|
48.5% |
The number of units that are or would be
payable based on actual achievement relative to the S&P Industrial Sector
and year-end values for PSUs granted in fiscal years 2012 through 2014 are
included in the Outstanding Equity Awards at Fiscal 2014 Year-End
table.
34
Table of Contents
LTI Grant Practices
For more than 20 years, the Committee has authorized the
annual LTI awards for all eligible employees on a single date each year. The
grant date is seven calendar days after the first Board meeting of the fiscal
year. This timing allows for stock price stabilization after the release of
year-end financial results and Board meeting announcements. The grant price for
all currently-outstanding LTI awards is the average of the high and low common
stock price on the grant date as reported on the NYSE, although for awards made
after February 25, 2015 the grant price will be the closing price of Deere
common stock on the NYSE on the grant date. The grant price is also used to
determine the number of PSUs, RSUs, and stock options to be awarded.
Stock Ownership
Requirements
Stock ownership requirements
apply to NEOs to ensure the retention of stock acquired through our equity
incentive plan. The required levels of ownership are five times base salary for
the CEO and 3.5 times base salary for the other NEOs, to be achieved within five
years of the date the NEO is first appointed as CEO or as an executive officer,
as applicable. Only vested RSUs and any common stock held personally by the NEOs
are included in determining whether the applicable ownership requirement has
been met. Once the appropriate ownership level is achieved by the NEO, the
number of shares held at that time becomes the fixed stock ownership requirement
for the NEO for three years, even if base salary increases or stock price
decreases. Other than Mr. Kalathur, who was first appointed Senior Vice
President and Chief Financial Officer on September 1, 2012, each NEO has
achieved stockholdings in excess of the applicable multiple as of the date of
this Proxy Statement.
Our Insider Trading Policy precludes all
directors and employees, including our NEOs, and their related persons from
engaging in short sales of the Companys stock or trading in instruments
designed to hedge against price declines by the Companys stock. Our Insider
Trading Policy also prohibits our directors and officers (including NEOs) from
holding Company stock in margin accounts or pledging Company stock as collateral
for loans or other obligations.
Summary of Total Direct
Compensation
The Committee believes
each pay element included in Total Direct Compensation is consistent with our
compensation philosophy. The Committee reviews Total Direct Compensation in the
aggregate for the NEOs (excluding the CEO) as well as for each NEO individually
and compares this compensation to the market position data of our peer group.
This market position data takes into account the level of responsibility
(including the level of sales volume) for each NEOs respective operations. We
have a practice of rotating individuals among the executive officer positions.
As described above, a primary part of our strategy is aligned high-performance
teamwork.
A substantial portion of the evaluation of
individual performance is a careful analysis of each NEOs collaboration and
contribution to the success of a high-performing team. Thus, while the market
data for each position is a factor in reviewing Total Direct Compensation, the
Committee also considers individual fulfillment of duties, teamwork,
development, time in position, experience, and internal equity among NEOs (other
than the CEO). The Committee recognizes individual performance through
adjustments to base salary and LTI.
Total Direct Compensation for the CEO is
higher than other NEOs due to the CEOs breadth of executive and operating
responsibilities for the entire global enterprise. The Committee does not target
CEO compensation as a certain multiple of the compensation of the other NEOs.
The relationship between the CEOs compensation and that of the other NEOs is
influenced by our organizational structure, which does not include a chief
operating officer. For Mr. Allen, Total Direct Compensation as compared to the
other NEOs Total Direct Compensation is generally comparable to that of our
peer group.
In light of recent stock price performance
as well as in recognition of more recent, challenging business conditions, and
in spite of strong financial performance against established goals, Mr. Allen
has requested that the Board reduce his cash incentive plan compensation for
fiscal 2014. The Board considered Mr. Allens request and agreed to exercise its
discretion to reduce his cash incentive awards by 25%, resulting in total
payments under these awards of $1.8 million less than the amounts he would have
otherwise earned based on previously-approved plan metrics and goals and actual
performance results (see footnote (4) to the Fiscal 2014 Summary Compensation
Table).
Limitations on Deductibility of
Compensation
Section 162(m) of the IRC
generally limits to $1 million the U.S. federal income tax deductibility of
compensation paid in one year to a companys CEO or any of its three
next-highest-paid executive officers (other than the Chief Financial Officer).
Performance-based compensation is not subject to the limits on deductibility of
Section 162(m), provided such compensation meets certain requirements, including
stockholder approval of material terms of compensation. The Committee strives to
provide NEOs with incentive compensation programs that will preserve the tax
deductibility of compensation paid by Deere, to the extent reasonably
practicable and consistent with Deeres other compensation objectives. The
Committee believes, however, that stockholder interests are best served by not
restricting the Committees discretion and flexibility in structuring
compensation programs, even though such programs may result in certain
non-deductible compensation expenses.
35
Table of Contents
Recoupment of Previously Paid
Incentive Compensation
In November
2007, the Committee adopted the Executive Incentive Compensation Recoupment
Policy (Recoupment Policy). The Recoupment Policy authorizes the Committee to
determine whether to require recoupment of incentive compensation paid to or
deferred by certain executives (including the NEOs) if certain conditions are
met. The Committee may require recoupment if the executive engaged in misconduct
that:
|
contributed to the need
for a restatement of all or a portion of Deeres financial statements
filed with the SEC; or |
|
|
|
contributed to
inaccurate operating metrics being used to calculate incentive
compensation; |
and, in either case, the Committee
determines that the executives incentive compensation would have been less had
the misconduct not occurred.
Total Indirect
Compensation Elements
The following
sections describe each Total Indirect Compensation element:
Perquisites
We offer our NEOs various perquisites that the Committee
believes are reasonable in order to remain competitive. These perquisites
constitute a small percentage of the NEOs total compensation. The Committee
conducts an annual review of the perquisites offered to the NEOs. For more
information on the perquisites provided and to whom they apply, see footnote (6)
to the Fiscal 2014 Summary Compensation Table. In addition to the items listed
in the aforementioned footnote, NEOs, as well as other selected employees, are
also provided indoor parking and access to Deere-sponsored skyboxes at local
venues for personal use when not occupied for business purposes, both at no
incremental cost to the Company. All security services provided by the Company
are reimbursed by the NEOs.
In August 2006, the Board voted to require
the CEO to use the Companys aircraft for all business and personal travel,
believing that the ability to travel safely and efficiently provides substantial
benefits that justify the cost. The geographic location of Deeres headquarters
in the Midwest, outside of a major metropolitan area, makes personal and
business travel challenging. Traveling by company aircraft for business and
personal reasons allows the CEO to conduct business confidentially while in
transit. Since the CEO travels extensively, inefficient travel is costly to the
Company. Personal use of company aircraft by other NEOs is minimal. Any personal
travel on Deere aircraft by the other NEOs, individually or accompanied by their
family members, must be approved by the CEO. The Committee has limited the CEOs
annual personal usage of company aircraft to approximately 100
hours.
Retirement
Benefits
Each of our NEOs is currently
covered by the same defined benefit pension plans, which include the same plan
terms, as most qualifying U.S. salaried employees. We also maintain two
additional defined benefit pension plans in which NEOs may participate, the
Senior Supplementary Pension Benefit Plan (the Supplementary Plan) and the
John Deere Supplemental Benefit Plan (the Supplemental Plan).
The defined benefit pension plans have
compensation limits imposed by the IRC. The Supplementary Plan provides
participants with the same benefit they would have received without these
limits. This avoids the relative disadvantage that participants would experience
compared to other qualified plan participants. The Supplemental Plan is designed
to reward career service at Deere above a specified grade level by utilizing a
formula that takes into account only years of service above that grade level. We
believe that the defined benefit plans serve as important retention tools,
provide a level of competitive income upon retirement, and reward long-term
employment and service as an officer of Deere. For additional information, see
the Fiscal 2014 Pension Benefits Table, along with the accompanying narrative
and footnotes.
We also maintain a tax-qualified defined
contribution plan, the John Deere Savings and Investment Plan (SIP), which is
available to the majority of U.S. employees, including the NEOs. We make
matching contributions on up to six percent of an employees pay to participant
SIP accounts. The STI results for the previous fiscal year (see the Performance
Metrics for STI section above) are used to determine the level of actual
Company match for the following calendar year. The level of Company match also
depends on the pension option in which the employee participates, as explained
in the narrative preceding the Fiscal 2014 Pension Benefits Table. The following
table illustrates the Companys match for calendar 2014, which is reported for
our NEOs under the All Other Compensation column of the Fiscal 2014 Summary
Compensation Table:
Traditional Option match on 1-6% of eligible
earnings |
100% |
Contemporary Option match on first 2% of
eligible earnings |
300% |
Contemporary Option match on next 4% of
eligible earnings |
100% |
Deferred Compensation
Benefits
We also maintain certain
deferred compensation plans that provide the NEOs with longer-term savings
opportunities on a tax-efficient basis. All deferred compensation benefits are
designed to attract, retain, and motivate employees. Such deferred compensation
benefits are commonly offered by companies with whom we compete for talent. See
the Nonqualified Deferred Compensation section below for additional
details.
36
Table of Contents
Potential Payments upon Change in
Control and Other Potential Post-Employment Payments
Potential Payments upon Change in Control
In August 2009, the Committee approved a Change in Control
Severance Program (the CIC Program) to replace the change in control
agreements that had been in place since 2000. The CIC Program covers certain
executive officers, including each of the NEOs, and is intended to facilitate
continuity of management in the event of a change in control. The Committee
believes that the CIC Program serves the following purposes:
|
Encourages executives to act in
the best interests of stockholders in evaluating transactions that,
without a change in control arrangement, could be personally
detrimental; |
|
Keeps executives focused on
running the business in the face of real or rumored
transactions; |
|
Protects Deeres value by
retaining key talent in the face of corporate
changes; |
|
Protects Deeres value after a
change in control by including restrictive covenants (such as non-compete
provisions) and a general release of claims in favor of Deere;
and |
|
Assists in the attraction and
retention of executives as a competitive practice. For more information,
see Fiscal 2014 Potential Payments upon Change in Control and the
corresponding tables. |
Other Potential Post Employment
Payments
The Companys various plans and policies
provide payments to NEOs upon certain types of employment terminations that are
not related to a change in control. These events and amounts are explained in
the section below entitled Fiscal 2014 Potential Payments upon Termination of
Employment Other than Following a Change in Control.
Risk Assessment of
Compensation Policies and Practices
During
fiscal 2014, management conducted a comprehensive risk assessment of the
Companys compensation policies and practices. The risk assessment process
included the following:
(1) Convened a Compensation Risk
Assessment Team (Management Team) comprised of management personnel
representing relevant areas of oversight;
(2) Completed an inventory of the
Companys compensation programs globally for both executive and non-executive
employees; and
(3) Established a detailed risk assessment
questionnaire and applied it to the compensation programs that, due to their
size, potential payout, and/or structure, could potentially have a material
adverse effect on the Company.
The inquiries in the risk assessment
questionnaire focused on the following issues: (a) pay-for-performance
comparison against the Companys peer group; (b) balance of compensation
components; (c) program design and pay leverage; (d) program governance; and (e)
mitigating factors that offset program risks.
After review, the Management Team
concluded that the Companys compensation policies and practices do not create
risks that are reasonably likely to have a material adverse effect on the
Company. The Committee, along with its independent compensation consultant,
Pearl Meyer, reviewed the risk assessment and concurred with the Management
Teams conclusion. Specifically, the Committee believes the following key
factors support the Management Teams conclusion: (i) the performance metrics
for determining STI (OROA and ROE) and MTI (SVA) are based on worldwide,
publicly reported metrics with only minor adjustments and, therefore, are not
easily susceptible to manipulation; (ii) the variety of performance metrics
incorporated in our compensation plans discourage excessive risk taking by
removing the incentive to focus on a single performance goal or performance over
the course of a single year to the detriment of the Company; (iii) the metrics
for STI are capped at maximum levels of OROA and ROE performance, thereby
reducing the risk that executives might be motivated to attain excessively high
stretch goals in order to maximize short-term payouts; and (iv) the metrics
for MTI are capped at a maximum level of SVA performance, thereby reducing the
risk that executives might be motivated to attain excessively high stretch
goals in order to maximize mid-term payouts. In addition, Deere maintains stock
ownership requirements that are designed to incentivize our management team to
focus on the Companys long-term, sustainable growth. Finally, Deere has a
Recoupment Policy (described above) designed to prevent misconduct relating to
financial reporting.
37
Table of Contents
Compensation Committee Report
The reports of the
Compensation Committee and the Audit Review Committee that follow do not
constitute soliciting material and will not be deemed filed or incorporated by
reference by any general statement incorporating by reference this Proxy
Statement or future filings into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that Deere specifically incorporates the information by reference, and
will not otherwise be deemed filed under these Acts.
The Compensation Committee of the Board of
Directors has reviewed the Compensation Discussion and Analysis required by Item
402(b) of Regulation S-K and discussed it with Deeres management. Based on the
Compensation Committees review and discussions with management, the
Compensation Committee recommends to the Board of Directors that the
Compensation Discussion and Analysis be included in Deeres Proxy Statement.
Vance D. Coffman, Chair
Crandall C. Bowles
Clayton M. Jones
Richard B. Myers
38
Table of Contents
Executive
Compensation Tables
In this section, we provide tabular and
narrative information regarding the compensation of our NEOs for the fiscal year
ended October 31, 2014.
Fiscal 2014 Summary
Compensation Table
Name & Position |
|
Fiscal Year |
|
Salary (1) |
|
Stock Awards (2) |
|
Option Awards (3) |
|
Non-Equity Incentive
Plan Compensation (4) |
|
Change in Pension Value and
Nonqualified Deferred Compensation Earnings (5) |
|
All
Other Compensation (6) |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samuel R. Allen |
|
2014 |
|
$ |
1,495,204 |
|
$ |
6,606,197 |
|
|
$ |
3,058,680 |
|
|
|
$ |
5,397,891 |
|
|
|
$ |
3,137,079 |
|
|
|
$ |
578,245 |
|
|
$ |
20,273,296 |
Chairman and |
|
2013 |
|
$ |
1,435,644 |
|
$ |
6,241,025 |
|
|
$ |
3,058,773 |
|
|
|
$ |
6,705,518 |
|
|
|
$ |
1,187,712 |
|
|
|
$ |
520,067 |
|
|
$ |
19,148,739 |
Chief Executive
Officer |
|
2012 |
|
$ |
1,352,400 |
|
$ |
6,022,556 |
|
|
$ |
3,059,041 |
|
|
|
$ |
6,274,944 |
|
|
|
$ |
1,884,238 |
|
|
|
$ |
438,972 |
|
|
$ |
19,032,151 |
Rajesh Kalathur |
|
2014 |
|
$ |
525,437 |
|
$ |
1,073,209 |
|
|
$ |
496,928 |
|
|
|
$ |
1,879,751 |
|
|
|
$ |
190,760 |
|
|
|
$ |
131,124 |
|
|
$ |
4,297,209 |
Senior Vice President and |
|
2013 |
|
$ |
465,552 |
|
$ |
1,165,925 |
|
|
$ |
571,490 |
|
|
|
$ |
1,718,594 |
|
|
|
$ |
9,061 |
|
|
|
$ |
330,621 |
|
|
$ |
4,261,243 |
Chief Financial Officer |
|
2012 |
|
$ |
347,565 |
|
$ |
|
|
|
$ |
179,990 |
|
|
|
$ |
485,945 |
|
|
|
$ |
94,515 |
|
|
|
$ |
156,421 |
|
|
$ |
1,264,436 |
James M. Field |
|
2014 |
|
$ |
646,353 |
|
$ |
1,180,392 |
|
|
$ |
546,630 |
|
|
|
$ |
2,083,579 |
|
|
|
$ |
459,197 |
|
|
|
$ |
167,586 |
|
|
$ |
5,083,737 |
President,
Agricultural |
|
2013 |
|
$ |
620,543 |
|
$ |
1,115,269 |
|
|
$ |
546,644 |
|
|
|
$ |
1,969,106 |
|
|
|
$ |
28,796 |
|
|
|
$ |
159,379 |
|
|
$ |
4,439,737 |
Equipment
Operations |
|
2012 |
|
$ |
586,306 |
|
$ |
1,125,239 |
|
|
$ |
571,551 |
|
|
|
$ |
2,002,226 |
|
|
|
$ |
348,156 |
|
|
|
$ |
145,988 |
|
|
$ |
4,779,466 |
Jean H. Gilles |
|
2014 |
|
$ |
590,722 |
|
$ |
1,223,406 |
|
|
$ |
566,521 |
|
|
|
$ |
1,989,802 |
|
|
|
$ |
942,341 |
|
|
|
$ |
154,290 |
|
|
$ |
5,467,082 |
Senior Vice President |
|
2013 |
|
$ |
561,341 |
|
$ |
1,165,925 |
|
|
$ |
571,490 |
|
|
|
$ |
1,873,417 |
|
|
|
$ |
27,622 |
|
|
|
$ |
152,991 |
|
|
$ |
4,352,786 |
JDPS/Adv Tech & Eng |
|
2012 |
|
$ |
520,517 |
|
$ |
1,027,253 |
|
|
$ |
521,849 |
|
|
|
$ |
1,895,523 |
|
|
|
$ |
688,417 |
|
|
|
$ |
134,138 |
|
|
$ |
4,787,697 |
Michael J. Mack,
Jr. |
|
2014 |
|
$ |
656,147 |
|
$ |
1,212,742 |
|
|
$ |
561,549 |
|
|
|
$ |
2,100,089 |
|
|
|
$ |
822,000 |
|
|
|
$ |
185,218 |
|
|
$ |
5,537,745 |
Group President, |
|
2013 |
|
$ |
637,536 |
|
$ |
1,064,500 |
|
|
$ |
521,799 |
|
|
|
$ |
1,996,571 |
|
|
|
$ |
85,771 |
|
|
|
$ |
171,229 |
|
|
$ |
4,477,406 |
John Deere Financial
Services |
|
2012 |
|
$ |
624,532 |
|
$ |
1,027,253 |
|
|
$ |
521,849 |
|
|
|
$ |
2,064,224 |
|
|
|
$ |
621,724 |
|
|
|
$ |
158,140 |
|
|
$ |
5,017,722 |
(1) Includes amounts deferred by the NEO
under the John Deere Voluntary Deferred Compensation Plan. Salary amounts
deferred in fiscal 2014 are included in the first column of the Fiscal 2014
Nonqualified Deferred Compensation Table corresponding with Deferred
Plan.
(2) Represents the aggregate grant date
fair value of PSUs and RSUs computed in accordance with FASB ASC Topic 718. The
values in this column exclude the effect of estimated forfeitures. Assumptions
made in the calculation of these amounts are included in Note 24, Stock Option
and Restricted Stock Awards, of our consolidated financial statements filed
with the SEC on Form 10-K for the fiscal year ended October 31, 2014. For PSUs,
the value at the grant date is based upon the probable outcome of the
performance metrics over the three-year performance period. If the highest level
of payout was achieved, the value of the award as of the grant date for PSUs
would be as follows: $8,842,500 (Allen); $1,436,600 (Kalathur); $1,579,900
(Field); $1,637,500 (Gilles); and $1,623,300 (Mack). RSUs granted in fiscal
years 2013 and 2014 will vest three years after the grant date, at which time
they may be settled in Deere common stock. RSUs granted in fiscal year 2012 must
be held until five years after the grant date. Refer to the Fiscal 2014 Grants
of Plan-Based Awards table and footnote (7) thereto for a detailed description
of the grant date fair value of stock awards.
(3) Represents the aggregate grant date
fair value of stock options computed in accordance with FASB ASC Topic 718. The
values in this column exclude the effect of estimated forfeitures. The
assumptions made in valuing option awards reported in this column and a more
detailed discussion of the binomial lattice option pricing model are described
in Note 24, Stock Option and Restricted Stock Awards, of our consolidated
financial statements filed with the SEC on Form 10-K for the fiscal year ended
October 31, 2014. Refer to the Fiscal 2014 Grants of Plan-Based Awards table and
footnote (7) thereto for a detailed description of the grant date fair value of
option awards.
(4) Non-equity incentive plan compensation
includes cash awards under the STI and MTI plans. Cash awards earned under the
STI and MTI plans for the performance period ended in fiscal 2014 were paid to
NEOs on December 15, 2014 unless deferred under the Voluntary Deferred
Compensation Plan. Deferred STI and MTI amounts are included in the first column
of the Fiscal 2014 Nonqualified Deferred Compensation Table corresponding with
Deferred Plan.
39
Table of Contents
The following table shows the awards
earned under the STI and MTI plans:
|
|
STI
(a) |
|
|
MTI
(b) |
|
|
|
|
Name |
|
Target Award as % of Salary |
|
|
Actual Performance as % of Target |
|
|
Award Amount |
|
|
Target Award as % of Median Salary |
|
|
Actual Performance as % of Target |
|
|
Award Amount |
|
|
Total Non-Equity Incentive Plan Compensation |
|
Samuel R. Allen (c) |
|
|
125% |
|
|
|
|
198% |
|
|
|
|
$ |
2,779,846 |
|
|
|
|
121% |
|
|
|
|
200% |
|
|
|
$ |
2,618,045 |
|
|
|
$ |
5,397,891 |
|
|
Rajesh Kalathur |
|
|
85% |
|
|
|
|
198% |
|
|
|
|
$ |
885,729 |
|
|
|
|
93% |
|
|
|
|
200% |
|
|
|
$ |
994,022 |
|
|
|
$ |
1,879,751 |
|
|
James M. Field |
|
|
85% |
|
|
|
|
198% |
|
|
|
|
$ |
1,089,557 |
|
|
|
|
93% |
|
|
|
|
200% |
|
|
|
$ |
994,022 |
|
|
|
$ |
2,083,579 |
|
|
Jean H. Gilles |
|
|
85% |
|
|
|
|
198% |
|
|
|
|
$ |
995,780 |
|
|
|
|
93% |
|
|
|
|
200% |
|
|
|
$ |
994,022 |
|
|
|
$ |
1,989,802 |
|
|
Michael J. Mack, Jr. |
|
|
85% |
|
|
|
|
198% |
|
|
|
|
$ |
1,106,067 |
|
|
|
|
93% |
|
|
|
|
200% |
|
|
|
$ |
994,022 |
|
|
|
$ |
2,100,089 |
|
|
(a) Based on actual performance, as
discussed in the CD&A under Fiscal 2014 Performance Results for STI, the
NEOs earned an STI award equal to 198% of the target opportunity.
(b) Based on actual performance, as
discussed in the CD&A under Fiscal 2014 Performance Results for MTI, the
NEOs earned an MTI award equal to 200% of the target opportunity.
(c) At Mr. Allens request, the Board
agreed to exercise its discretion to reduce his non-equity incentive plan
compensation by 25% below the amount he would have otherwise earned for fiscal
2014 based on previously-approved plan metrics and goals and actual performance
results. See Pay for Performance Review and Analysis in the Executive Summary
of the CD&A.
(5) The following table shows the change
in pension value and above-market earnings on nonqualified deferred compensation
during fiscal 2014:
Name |
|
Change in Pension Value (a) |
|
Nonqualified Deferred Compensation Earnings (b) |
|
Total |
|
Samuel R. Allen |
|
|
$ |
3,074,776 |
|
|
|
$ |
62,303 |
|
|
$ |
3,137,079 |
|
Rajesh Kalathur |
|
|
$ |
185,859 |
|
|
|
$ |
4,901 |
|
|
$ |
190,760 |
|
James M. Field |
|
|
$ |
438,774 |
|
|
|
$ |
20,423 |
|
|
$ |
459,197 |
|
Jean H. Gilles |
|
|
$ |
914,028 |
|
|
|
$ |
28,313 |
|
|
$ |
942,341 |
|
Michael J. Mack,
Jr. |
|
|
$ |
786,903 |
|
|
|
$ |
35,097 |
|
|
$ |
822,000 |
|
(a) Represents the change in the actuarial
present value of each NEOs accumulated benefit under all defined benefit plans
from October 31, 2013 to October 31, 2014. The pension value calculations
include the same assumptions as used in the pension plan valuations for
financial reporting purposes. For more information on the assumptions, see
footnote (4) under the Fiscal 2014 Pension Benefits Table.
(b) Represents above-market earnings on
compensation that is deferred by the NEOs under our nonqualified deferred
compensation plans. Above-market earnings represent the difference between the
interest rate used to calculate earnings under the applicable plan and 120% of
the applicable federal long-term rate prescribed by the IRC. See the Fiscal 2014
Nonqualified Deferred Compensation Table for additional information.
40
Table of Contents
(6) The following table provides details
about each component of the All Other Compensation column in the Fiscal 2014
Summary Compensation Table:
Name |
|
Personal Use of Company Aircraft (a) |
|
Financial Planning (b) |
|
Medical Exams (c) |
|
Misc Perquisites (d) |
|
Company Contributions to
Defined Contribution Plans (e) |
|
Total
All Other Compensation |
Samuel R.
Allen |
|
$ |
80,051 |
|
|
$ |
|
|
|
|
$ |
3,191 |
|
|
|
$ |
4,244 |
|
|
|
|
$ |
490,759 |
|
|
|
$ |
578,245 |
|
Rajesh Kalathur |
|
$ |
|
|
|
$ |
|
|
|
|
$ |
2,140 |
|
|
|
$ |
1,193 |
|
|
|
|
$ |
127,791 |
|
|
|
$ |
131,124 |
|
James M.
Field |
|
$ |
|
|
|
$ |
1,810 |
|
|
|
$ |
|
|
|
|
$ |
842 |
|
|
|
|
$ |
164,934 |
|
|
|
$ |
167,586 |
|
Jean H. Gilles |
|
$ |
|
|
|
$ |
|
|
|
|
$ |
3,614 |
|
|
|
$ |
874 |
|
|
|
|
$ |
149,802 |
|
|
|
$ |
154,290 |
|
Michael J. Mack,
Jr. |
|
$ |
|
|
|
$ |
|
|
|
|
$ |
15,346 |
|
|
|
$ |
1,212 |
|
|
|
|
$ |
168,660 |
|
|
|
$ |
185,218 |
|
(a) Per Internal Revenue Service (IRS)
regulations, the NEOs recognize imputed income on the personal use of Deeres
aircraft at rates established by the IRS. For SEC disclosure purposes, the cost
of personal use of Deeres aircraft is calculated based on the incremental cost
to Deere. To determine the incremental cost, Deere calculates the variable costs
for fuel on a per mile basis, plus any direct trip expenses such as on-board
catering, landing/ramp fees, and crew expenses. Fixed costs that do not change
based on usage, such as pilot salaries, depreciation of aircraft, and
maintenance costs, are excluded. Mr. Allens personal usage of Company aircraft
in fiscal 2014 amounted to approximately 30 hours of travel, which represents
less than 1% of the total hours flown by Company aircraft.
(b) This column contains amounts Deere
paid for financial planning assistance on behalf of the NEOs. The CEO may
annually receive up to $15,000 of assistance and the other NEOs may receive up
to $10,000 annually.
(c) This column contains the amounts Deere
paid for annual medical exams for NEOs.
(d) Miscellaneous perquisites include
spousal attendance at company events.
(e) Deere makes contributions to the John
Deere Savings and Investment Plan (SIP) for all eligible employees. Deere also
credits contributions to the John Deere Defined Contribution Restoration Plan
for all employees covered by the Contemporary Option under the tax-qualified
pension plan. All of our current NEOs are covered by the Contemporary
Option.
41
Table of Contents
Fiscal 2014 Grants of
Plan-Based Awards
The following table
provides additional information regarding fiscal 2014 grants of RSU, PSU, and
stock option awards under the Omnibus Plan, and the potential range of awards
that were approved in fiscal 2014 under the STI and MTI plans for payout in
future years. These awards are further described in the CD&A under Total
Direct Compensation Elements.
|
|
|
|
|
|
|
|
All Other |
All Other |
|
|
|
|
|
|
|
|
|
|
Stock |
Option |
Exercise |
|
|
|
|
|
Awards: |
Awards: |
or Base |
Grant Date |
|
|
Estimated Future Payouts |
Estimated Future
Payouts |
Number of |
Number of |
Price of |
Fair Value |
|
|
Under Non-Equity
Incentive Plan |
Under Equity Incentive
Plan |
Shares of |
Securities |
Option |
of Stock |
|
|
Awards |
Awards |
Stock or |
Underlying |
Awards |
and Option |
|
Grant Date |
(2) |
(3) |
Units |
Options |
($ / Sh) |
Awards |
Name |
(1) |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
(4) |
(5) |
(6) |
(7) |
Samuel R. Allen |
12/3/2013-STI |
$ |
$1,869,005 |
$3,738,010 |
|
|
|
|
|
|
|
|
12/3/2013-MTI |
$1,100 |
$1,815,000 |
$3,630,000 |
|
|
|
|
|
|
|
|
12/11/2013 |
|
|
|
|
|
|
24,982 |
|
|
$2,184,926 |
|
12/11/2013 |
|
|
|
9,993 |
39,972 |
79,944 |
|
|
|
$4,421,271 |
|
12/11/2013 |
|
|
|
|
|
|
|
123,633 |
$87.46 |
$3,058,680 |
|
|
$1,100 |
$3,684,005 |
$7,368,010 |
9,993 |
39,972 |
79,944 |
24,982 |
123,633 |
|
$9,664,877 |
Rajesh Kalathur |
12/3/2013-STI |
$ |
$446,621 |
$893,242 |
|
|
|
|
|
|
|
|
12/3/2013-MTI |
$400 |
$510,102 |
$1,020,204 |
|
|
|
|
|
|
|
|
12/11/2013 |
|
|
|
|
|
|
4,058 |
|
|
$354,913 |
|
12/11/2013 |
|
|
|
1,623 |
6,494 |
12,988 |
|
|
|
$718,296 |
|
12/11/2013 |
|
|
|
|
|
|
|
20,086 |
$87.46 |
$496,928 |
|
|
$400 |
$956,723 |
$1,913,446 |
1,623 |
6,494 |
12,988 |
4,058 |
20,086 |
|
$1,570,137 |
James M. Field |
12/3/2013-STI |
$ |
$549,400 |
$1,098,800 |
|
|
|
|
|
|
|
|
12/3/2013-MTI |
$400 |
$510,102 |
$1,020,204 |
|
|
|
|
|
|
|
|
12/11/2013 |
|
|
|
|
|
|
4,464 |
|
|
$390,421 |
|
12/11/2013 |
|
|
|
1,785 |
7,142 |
14,284 |
|
|
|
$789,971 |
|
12/11/2013 |
|
|
|
|
|
|
|
22,095 |
$87.46 |
$546,630 |
|
|
$400 |
$1,059,502 |
$2,119,004 |
1,785 |
7,142 |
14,284 |
4,464 |
22,095 |
|
$1,727,022 |
Jean H. Gilles |
12/3/2013-STI |
$ |
$502,114 |
$1,004,228 |
|
|
|
|
|
|
|
|
12/3/2013-MTI |
$400 |
$510,102 |
$1,020,204 |
|
|
|
|
|
|
|
|
12/11/2013 |
|
|
|
|
|
|
4,627 |
|
|
$404,677 |
|
12/11/2013 |
|
|
|
1,850 |
7,402 |
14,804 |
|
|
|
$818,729 |
|
12/11/2013 |
|
|
|
|
|
|
|
22,899 |
$87.46 |
$566,521 |
|
|
$400 |
$1,012,216 |
$2,024,432 |
1,850 |
7,402 |
14,804 |
4,627 |
22,899 |
|
$1,789,927 |
Michael J. Mack, Jr. |
12/3/2013-STI |
$ |
$557,725 |
$1,115,450 |
|
|
|
|
|
|
|
|
12/3/2013-MTI |
$400 |
$510,102 |
$1,020,204 |
|
|
|
|
|
|
|
|
12/11/2013 |
|
|
|
|
|
|
4,586 |
|
|
$401,092 |
|
12/11/2013 |
|
|
|
1,834 |
7,338 |
14,676 |
|
|
|
$811,650 |
|
12/11/2013 |
|
|
|
|
|
|
|
22,698 |
$87.46 |
$561,549 |
|
|
$400 |
$1,067,827 |
$2,135,654 |
1,834 |
7,338 |
14,676 |
4,586 |
22,698 |
|
$1,774,291 |
(1) For the non-equity incentive plan
awards, the grant date is the date the Committee approved the range of the
estimated potential future payouts for the performance periods noted under
footnote (2) below. For equity awards, the grant date is seven calendar days
after the first regularly scheduled Board meeting of the fiscal year.
(2) These columns show the range of
potential payouts under the STI and MTI plans. The performance period for STI in
this table covers November 1, 2013 through October 31, 2014. For actual
performance between threshold, target, and maximum, the earned STI award is
prorated.
42
Table of Contents
The range of the MTI award covers the
three-year performance period beginning in fiscal 2014 and ending in fiscal
2016. Awards are not paid unless Deere generates at least $1 million of SVA for
the performance period. The target MTI award will be earned if $3.605 billion of
SVA is accumulated and the maximum MTI award will be earned if $7.21 billion or
more is accumulated during the performance period. The amounts shown in the
table represent potential MTI awards based on the median salary of the NEOs
salary grades as of September 30, 2014. The actual MTI awards will depend upon
Deeres actual SVA performance and the median salary of the NEOs salary grades
as of September 30, 2015.
(3) Represents the potential payout range
of PSUs granted in fiscal 2014 (in December 2013). The number of shares that
vest is equally based on TSR and revenue growth, both relative to companies in
the S&P Industrial Sector. Performance and payouts are determined
independently for each metric. At the end of the three-year performance period,
the actual award, delivered as Deere common stock, can range from 0% to 200% of
the original grant.
(4) Represents the number of RSUs granted
during fiscal 2014 (in December 2013). RSUs will vest three years after the
grant date, at which time they may be settled in Deere common stock. Prior to
settlement, each RSU entitles the individual to receive dividend equivalents in
cash at the same time as dividends are paid on Deeres common stock.
(5) Represents the number of options
granted during fiscal 2014 (in December 2013). These options vest in
approximately three equal annual installments on the first, second, and third
anniversaries of the grant date.
(6) The exercise price is the average of
the high and low price of Deere common stock on the NYSE on the grant
date.
(7) Amounts shown represent the grant date
fair value of equity awards granted to the NEOs in fiscal 2014 calculated in
accordance with FASB ASC Topic 718. The values in this column exclude the effect
of estimated forfeitures. For RSUs, fair value is the market value of the
underlying stock on the grant date (which is the same as the exercise price in
column (6) for stock options). For options, the fair value on the grant date was
$24.74, which was calculated using the binomial lattice option pricing model.
The grant date fair value of the PSUs subject to the TSR metric was $116.86
based on a lattice valuation model excluding dividends. The grant date fair
value of the PSUs subject to the revenue growth metric was $81.53 based on the
market price of a share of underlying common stock excluding
dividends.
For additional information on the
valuation assumptions, refer to Note 24, Stock Option and Restricted Stock
Awards, of Deeres consolidated financial statements filed with the SEC on Form
10-K for the fiscal year ended October 31, 2014.
Outstanding Equity Awards
at Fiscal 2014 Year-End
The following
table itemizes outstanding options, RSUs, and PSUs held by the NEOs as of
October 31, 2014:
|
Option Awards |
Stock Awards |
Name |
|
|
Number of Securities Underlying Unexercised Options Exercisable (1) |
|
|
Number of Securities Underlying Unexercised Options Unexercisable (1) |
|
|
Option Exercise Price |
|
|
Intrinsic Value of Unexercised Options (2) |
|
|
Option Expiration Date (3) |
|
|
Number of Shares or Units of Stock That Have Not Vested (4) |
|
|
Market Value of Shares or Units of
Stock That
Have Not
Vested (5) |
|
|
Equity Incentive Plan Awards: Number of Unearned
Shares, Units or Other Rights That Have Not Vested (6) |
|
|
Equity Incentive Plan Awards: Market or
Payout Value of Unearned Shares, Units or Other Rights That Have Not
Vested (7) |
Samuel R. Allen |
|
|
|
28,808 |
|
|
|
|
|
|
|
|
$ |
88.82 |
|
|
$ |
|
|
|
12/5/2017 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,704 |
|
|
|
|
|
|
|
|
$ |
39.67 |
|
|
$ |
2,876,546 |
|
|
12/17/2018 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
269,353 |
|
|
|
|
|
|
|
|
$ |
52.25 |
|
|
$ |
8,966,761 |
|
|
12/9/2019 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,253 |
|
|
|
|
|
|
|
|
$ |
80.61 |
|
|
$ |
563,267 |
|
|
12/8/2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,050 |
|
|
|
|
44,847 |
|
|
|
$ |
74.24 |
|
|
$ |
1,535,636 |
|
|
12/14/2021 |
|
|
52,269 |
|
|
$ |
4,471,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,825 |
|
|
|
|
85,074 |
|
|
|
$ |
86.36 |
|
|
$ |
|
|
|
12/12/2022 |
|
|
25,301 |
|
|
$ |
2,164,248 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
123,633 |
|
|
|
$ |
87.46 |
|
|
$ |
|
|
|
12/11/2023 |
|
|
24,982 |
|
|
$ |
2,136,960 |
|
|
|
9,193 |
|
|
|
|
$ |
786,369 |
|
|
|
|
|
609,993 |
|
|
|
|
253,554 |
|
|
|
|
|
|
|
$ |
13,942,210 |
|
|
|
|
|
102,552 |
|
|
$ |
8,772,298 |
|
|
|
9,193 |
|
|
|
|
$ |
786,369 |
|
43
Table of Contents
|
|
Option Awards |
Stock Awards |
Name |
|
|
Number
of Securities Underlying Unexercised Options Exercisable (1) |
|
|
Number
of Securities Underlying Unexercised Options Unexercisable (1) |
|
|
Option Exercise Price |
|
|
Intrinsic Value of
Unexercised Options (2) |
|
|
Option Expiration Date (3) |
|
|
Number of Shares or Units of
Stock That Have Not Vested (4) |
|
|
Market Value of Shares or Units of
Stock That Have Not Vested (5) |
|
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights That Have Not
Vested (6) |
|
|
Equity Incentive Plan Awards: Market or
Payout Value of Unearned Shares, Units or Other Rights
That Have Not Vested (7) |
Rajesh Kalathur |
|
|
|
4,366 |
|
|
|
|
|
|
|
|
$ |
34.44 |
|
|
$ |
223,103 |
|
|
12/7/2015 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,816 |
|
|
|
|
|
|
|
|
$ |
48.38 |
|
|
$ |
216,152 |
|
|
12/6/2016 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,519 |
|
|
|
|
|
|
|
|
$ |
88.82 |
|
|
$ |
|
|
|
12/5/2017 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,133 |
|
|
|
|
|
|
|
|
$ |
39.67 |
|
|
$ |
510,726 |
|
|
12/17/2018 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,151 |
|
|
|
|
|
|
|
|
$ |
52.25 |
|
|
$ |
404,507 |
|
|
12/9/2019 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,379 |
|
|
|
|
|
|
|
|
$ |
80.61 |
|
|
$ |
36,378 |
|
|
12/8/2020 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,357 |
|
|
|
|
2,639 |
|
|
|
$ |
74.24 |
|
|
$ |
90,355 |
|
|
12/14/2021 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,188 |
|
|
|
|
15,895 |
|
|
|
$ |
86.36 |
|
|
$ |
|
|
|
12/12/2022 |
|
|
|
4,727 |
|
|
|
|
$ |
404,348 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
20,086 |
|
|
|
$ |
87.46 |
|
|
$ |
|
|
|
12/11/2023 |
|
|
|
4,058 |
|
|
|
|
$ |
347,121 |
|
|
|
|
1,493 |
|
|
|
|
$ |
127,711 |
|
|
|
|
|
58,909 |
|
|
|
|
38,620 |
|
|
|
|
|
|
|
$ |
1,481,221 |
|
|
|
|
|
|
8,785 |
|
|
|
|
$ |
751,469 |
|
|
|
|
1,493 |
|
|
|
|
$ |
127,711 |
|
James M. Field |
|
|
|
17,680 |
|
|
|
|
|
|
|
|
$ |
88.82 |
|
|
$ |
|
|
|
12/5/2017 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,178 |
|
|
|
|
|
|
|
|
$ |
39.67 |
|
|
$ |
1,934,916 |
|
|
12/17/2018 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,457 |
|
|
|
|
|
|
|
|
$ |
52.25 |
|
|
$ |
1,879,454 |
|
|
12/9/2019 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,735 |
|
|
|
|
|
|
|
|
$ |
80.61 |
|
|
$ |
107,154 |
|
|
12/8/2020 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,011 |
|
|
|
|
8,380 |
|
|
|
$ |
74.24 |
|
|
$ |
286,918 |
|
|
12/14/2021 |
|
|
|
9,766 |
|
|
|
|
$ |
835,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,832 |
|
|
|
|
15,204 |
|
|
|
$ |
86.36 |
|
|
$ |
|
|
|
12/12/2022 |
|
|
|
4,521 |
|
|
|
|
$ |
386,726 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
22,095 |
|
|
|
$ |
87.46 |
|
|
$ |
|
|
|
12/11/2023 |
|
|
|
4,464 |
|
|
|
|
$ |
381,851 |
|
|
|
|
1,642 |
|
|
|
|
$ |
140,457 |
|
|
|
|
|
162,893 |
|
|
|
|
45,679 |
|
|
|
|
|
|
|
$ |
4,208,442 |
|
|
|
|
|
|
18,751 |
|
|
|
|
$ |
1,603,961 |
|
|
|
|
1,642 |
|
|
|
|
$ |
140,457 |
|
Jean H. Gilles |
|
|
|
10,704 |
|
|
|
|
|
|
|
|
$ |
88.82 |
|
|
$ |
|
|
|
12/5/2017 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,163 |
|
|
|
|
|
|
|
|
$ |
52.25 |
|
|
$ |
1,669,926 |
|
|
12/9/2019 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,376 |
|
|
|
|
|
|
|
|
$ |
80.61 |
|
|
$ |
100,454 |
|
|
12/8/2020 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,532 |
|
|
|
|
7,651 |
|
|
|
$ |
74.24 |
|
|
$ |
261,968 |
|
|
12/14/2021 |
|
|
|
8,915 |
|
|
|
|
$ |
762,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,188 |
|
|
|
|
15,895 |
|
|
|
$ |
86.36 |
|
|
$ |
|
|
|
12/12/2022 |
|
|
|
4,727 |
|
|
|
|
$ |
404,348 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
22,899 |
|
|
|
$ |
87.46 |
|
|
$ |
|
|
|
12/11/2023 |
|
|
|
4,627 |
|
|
|
|
$ |
395,794 |
|
|
|
|
1,702 |
|
|
|
|
$ |
145,589 |
|
|
|
|
|
104,963 |
|
|
|
|
46,445 |
|
|
|
|
|
|
|
$ |
2,032,348 |
|
|
|
|
|
|
18,269 |
|
|
|
|
$ |
1,562,731 |
|
|
|
|
1,702 |
|
|
|
|
$ |
145,589 |
|
Michael J. Mack,
Jr. |
|
|
|
24,388 |
|
|
|
|
|
|
|
|
$ |
88.82 |
|
|
$ |
|
|
|
12/5/2017 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,347 |
|
|
|
|
|
|
|
|
$ |
80.61 |
|
|
$ |
105,241 |
|
|
12/8/2020 |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,532 |
|
|
|
|
7,651 |
|
|
|
$ |
74.24 |
|
|
$ |
261,968 |
|
|
12/14/2021 |
|
|
|
8,915 |
|
|
|
|
$ |
762,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,476 |
|
|
|
|
14,513 |
|
|
|
$ |
86.36 |
|
|
$ |
|
|
|
12/12/2022 |
|
|
|
4,316 |
|
|
|
|
$ |
369,191 |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
22,698 |
|
|
|
$ |
87.46 |
|
|
$ |
|
|
|
12/11/2023 |
|
|
|
4,586 |
|
|
|
|
$ |
392,286 |
|
|
|
|
1,687 |
|
|
|
|
$ |
144,306 |
|
|
|
|
|
68,743 |
|
|
|
|
44,862 |
|
|
|
|
|
|
|
$ |
367,209 |
|
|
|
|
|
|
17,817 |
|
|
|
|
$ |
1,524,066 |
|
|
|
|
1,687 |
|
|
|
|
$ |
144,306 |
|
(1) Options become vested and exercisable
in approximately three equal annual installments on the first, second, and third
anniversaries of the grant date.
44
Table of Contents
(2) The amount shown represents the number
of options that have not been exercised (vested and unvested) multiplied by the
difference between the closing price for Deere common stock on the NYSE on
October 31, 2014, which was $85.54, and the option exercise price. No value is
shown for underwater options.
(3) Options expire ten years from the
grant date.
(4) RSUs vest three years from the grant
date. RSUs granted in fiscal years 2013 and 2014 must be held until three years
after the grant date before they are settled in Deere common stock. RSUs granted
in fiscal year 2012 must be held for five years. RSUs that have vested, but have
not been settled in Deere common stock, are included in the Fiscal 2014
Nonqualified Deferred Compensation Table.
The three-year performance period for PSUs
granted in fiscal 2012 ended on October 31, 2014. The final payout determination
was made by the Committee in December 2014 and the award vested and was settled
in Deere common stock on December 14, 2014 (the third anniversary of the grant
date). As discussed in the CD&A under 2012-2014 PSU Program (Payable in
Fiscal 2015), the final payout under the award was equal to 48.5% of the target
opportunity. The numbers of shares earned by the applicable NEOs were as
follows: 22,838 (Allen); 4,267 (Field); 3,895 (Gilles); and 3,895
(Mack).
(5) The amount shown represents the number
of RSUs that have not vested and PSUs described in footnote (4) to this table
multiplied by the closing price for Deere common stock on the NYSE on October
31, 2014, which was $85.54.
(6) The amount shown represents actual
achievement of the PSUs granted in fiscal years 2013 and 2014 relative to the
S&P Industrial Sector assuming truncated performance measurement periods.
The final number of shares earned, if any, will be based upon performance as
determined by revenue growth and TSR relative to the S&P Industrial Sector
at the end of the applicable performance period.
PSU Grant Date |
|
December 12, 2012 |
|
December 11, 2013 |
Truncated performance
period |
|
11/1/2012 -
10/31/2014 |
|
11/1/2013 -
10/31/2014 |
Actual performance period ending
date |
|
10/31/2015 |
|
10/31/2016 |
Payout of target number of
shares based on revenue growth |
|
0% |
|
0% |
Payout of target number of shares based on
TSR |
|
0% |
|
46% |
(7) The amount shown represents the number
of PSUs described in footnote (6) to this table multiplied by the closing price
for Deere common stock on the NYSE on October 31, 2014, which was
$85.54.
Fiscal 2014 Option
Exercises and Stock Vested
The following
table provides information regarding option exercises and vesting of RSUs and
PSUs during fiscal 2014. These options and stock awards were granted in prior
fiscal years and are not related to performance in fiscal 2014.
|
|
Option
Awards |
Stock Awards |
Name |
|
|
Number of Shares Acquired on Exercise (1) |
|
|
Value Realized on Exercise (2) |
|
|
Number of Shares Acquired on Vesting (3) |
|
|
Value Realized on Vesting (4) |
Samuel R. Allen |
|
|
|
32,371 |
|
|
|
|
$ |
1,412,834 |
|
|
|
|
67,409 |
|
|
|
|
$ |
5,751,336 |
|
Rajesh Kalathur |
|
|
|
4,860 |
|
|
|
|
$ |
273,505 |
|
|
|
|
|
|
|
|
|
$ |
|
|
James M. Field |
|
|
|
13,380 |
|
|
|
|
$ |
591,144 |
|
|
|
|
12,822 |
|
|
|
|
$ |
1,093,973 |
|
Jean H. Gilles |
|
|
|
22,650 |
|
|
|
|
$ |
1,201,905 |
|
|
|
|
12,022 |
|
|
|
|
$ |
1,025,717 |
|
Michael J. Mack,
Jr. |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
12,594 |
|
|
|
|
$ |
1,074,520 |
|
(1) Represents the total number of shares
that were exercised before any withholding of shares to pay the exercise price
and taxes.
(2) Value realized on exercise is based on
the market price upon exercise minus the exercise price (the grant
price).
(3) Represents the number of RSUs and PSUs
that vested during fiscal 2014. The RSUs were granted on December 8, 2010 and
vested on December 8, 2013. Although they are vested, these RSUs will not be
settled in Deere common stock until five years after the grant date (in December
2015).
The three-year performance period for PSUs
granted in fiscal 2011 ended on October 31, 2013. The final number of shares
earned was based on Deeres revenue growth and TSR relative to the S&P
Industrial Sector over the performance period. The final payout determination
was made by the Committee in December 2013 following a review of the relative
performances of the Company and the S&P Industrial Sector, and the award was
settled in Deere common stock on December 8, 2013 (the third anniversary of the
grant date). The final payout under the award was equal to 100% of the target
opportunity, as disclosed in the CD&A in last years proxy statement.
45
Table of Contents
The following table shows the number of
RSUs and PSUs that vested during fiscal 2014:
Name |
|
RSUs |
|
PSUs |
Samuel R. Allen |
|
25,927 |
|
41,482 |
James M. Field |
|
4,932 |
|
7,890 |
Jean H. Gilles |
|
4,624 |
|
7,398 |
Michael J. Mack, Jr. |
|
4,844 |
|
7,750 |
(4) Represents the number of RSUs and PSUs
vested multiplied by the closing price ($85.32) of Deere common stock on the
NYSE as of the vesting date.
Pension
Benefits
The NEOs are eligible to
participate in pension plans that provide benefits based on years of service and
pay. Pension benefits are provided under a qualified defined benefit pension
plan called the John Deere Pension Plan for Salaried Employees (the Salaried
Plan) and two nonqualified pension plans called the Senior Supplementary
Pension Benefit Plan (the Supplementary Plan) and the John Deere Supplemental
Pension Benefit Plan (the Supplemental Plan).
In 1996, we introduced a new pension
option under the Salaried Plan known as the Contemporary Option. At that time,
participants were given the choice between remaining in the existing Salaried
Plan option, known as the Traditional Option, or choosing the new Contemporary
Option. New employees hired between January 1, 1997 and October 31, 2014 automatically
participated in the Contemporary Option. For new employees hired on or after
November 1, 2014, pension benefits under the Salaried Plan are calculated based
on a cash balance methodology instead of the Traditional or Contemporary Option
formulas discussed below. None of the NEOs participate in the cash balance
plan.
Salaried Plan
The Salaried Plan is a qualified plan subject to certain IRC
limitations on benefits and is subject to the Employee Retirement Income
Security Act of 1974. Deere makes contributions to, and benefits are paid from,
a tax-exempt pension trust. Pension benefits provided by the Salaried Plan under
the Traditional and Contemporary Options are summarized as follows:
Traditional
Option
The Traditional Option pension
benefit is based on a formula that calculates a retirement benefit using service
credit, Final Average Pay as defined below, and a multiplier. Generally, Final
Average Pay is the participants aggregate salary (up to IRC limits) for the
last 60 months prior to retirement divided by 60, unless the last 60 months does
not represent the participants highest earnings. In that case, Final Average
Pay would be calculated using the participants five highest consecutive
anniversary years of earnings.
The formula for calculating monthly
pension benefits under the qualified Traditional Option is:
Final Average
Pay (up to IRC limits)
x Years of Service
x 1.5%
Eligibility to retire with unreduced
pension benefits under the Traditional Option is based on age and years of
service. Participants who are age 60 with ten or more years of service, or who
are age 65 with five or more years of service, receive unreduced pension
benefits.
Under the Traditional Option, early
retirement eligibility occurs upon the earliest of:
(1) having 30
years of service; or
(2) the sum of the participants years of service and
age equaling 80 or more.
Pension amounts are reduced 4% for each
year that retirement benefits are received before age 60. At this time, none of
our NEOs participate in the Traditional Option.
Contemporary Option
Under the Contemporary Option, Career Average Pay replaces
Final Average Pay in computing retirement benefits. Career Average Pay is
calculated using salary plus STI (up to IRC limits). For participants electing
the Contemporary Option, the transition to Career Average Pay includes salary
and STI awards from 1992 until retirement. For salaried employees participating
in this option, Deere makes enhanced contributions to the employees 401(k)
retirement savings account.
The formula for calculating benefits under
the qualified Contemporary Option is:
Career Average
Pay (up to IRC limits)
x Years of Service
x 1.5%
46
Table of Contents
Eligibility to retire with unreduced
benefits under the Contemporary Option occurs at age 67 for all participating employees that
were hired on or after January 1, 1997. For
employees hired before this date, the eligibility age for retiring with
unreduced benefits is based on years of service as of January 1, 1997 and ranges
from ages 60 to 67. None of our NEOs are currently eligible to retire with
unreduced benefits under the Contemporary Option.
For employees hired before January 1, 1997
who were not eligible to retire on January 1, 1997, and for employees participating in the Contemporary Option that were hired on or after January 1, 1997, early
retirement eligibility under the Contemporary Option is the earlier of:
(1) age 55 with
ten or more years of service; or
(2) age 65 with five or more years of
service.
Pension payments are reduced 4% for each
year the employee is under the unreduced benefits age upon retirement. Messrs.
Allen, Gilles, and Mack are the only NEOs currently eligible to retire early
with reduced benefits under the Contemporary Option.
Supplementary Plan
The Supplementary Plan is an unfunded,
nonqualified excess defined benefit plan that provides additional pension
benefits in a comparable amount to those benefits the participant would have
received under the Salaried Plan in the absence of IRC limitations. Benefit
payments for the Supplementary Plan are made from the assets of
Deere.
The Supplementary Plan uses the same
formula as the Salaried Plan to calculate the benefit payable, except that
eligible earnings include only amounts above IRC qualified plan
limits.
Supplemental Plan
The Supplemental Plan is an unfunded, nonqualified
supplemental retirement plan for certain employees, including all the NEOs.
Benefit payments for the Supplemental Plan are made from the assets of Deere.
The Supplemental Plan was closed to new participants effective November 1, 2014,
although benefits will continue to accrue for employees who were already
participating in the plan as of such date.
The formulas for calculating benefits
under the Supplemental Plan for the Contemporary and Traditional Options can be
summarized as follows:
Contemporary Option
Career Average
Pay
x Years of Service at grade 13 and above beginning January 1, 1997
x
0.5%
Traditional Option
The Supplemental Plan benefit under the Traditional Option is
derived by subtracting the value of the Traditional Option (Salaried Plan plus
Supplementary Plan) from the value of the Contemporary Option (Salaried Plan,
Supplementary Plan, plus Supplemental Plan) had it been chosen. If this amount
is positive, the NEO will receive this additional amount as a Supplemental Plan
benefit.
Fiscal 2014 Pension
Benefits Table
|
|
|
|
Assumed |
|
Number of Years |
|
Present Value of |
Name |
|
Plan Name (1) |
|
Retirement Age (2) |
|
of Credited Service (3) |
|
Accumulated Benefit (4) |
Samuel R. Allen |
|
Salaried Plan |
|
63 |
|
39.4 |
|
|
$ |
1,522,594 |
|
Contemporary Option |
|
Supplementary
Plan |
|
63 |
|
39.4 |
|
|
$ |
9,529,325 |
|
|
|
Supplemental
Plan |
|
63 |
|
17.8 |
|
|
$ |
1,605,436 |
|
|
|
Total |
|
|
|
|
|
|
$ |
12,657,355 |
|
|
|
Rajesh Kalathur |
|
Salaried Plan |
|
65 |
|
17.4 |
|
|
$ |
270,355 |
|
Contemporary
Option |
|
Supplementary Plan |
|
65 |
|
17.4 |
|
|
$ |
200,792 |
|
|
|
Supplemental Plan |
|
65 |
|
8.8 |
|
|
$ |
83,346 |
|
|
|
Total |
|
|
|
|
|
|
$ |
554,493 |
|
|
|
James M. Field |
|
Salaried Plan |
|
65 |
|
20.5 |
|
|
$ |
403,967 |
|
Contemporary Option |
|
Supplementary
Plan |
|
65 |
|
20.5 |
|
|
$ |
932,990 |
|
|
|
Supplemental
Plan |
|
65 |
|
15.7 |
|
|
$ |
348,912 |
|
|
|
Total |
|
|
|
|
|
|
$ |
1,685,869 |
|
|
|
Jean H. Gilles |
|
Salaried Plan |
|
64 |
|
26.6 |
|
|
$ |
906,259 |
|
Contemporary
Option |
|
Supplementary Plan |
|
64 |
|
26.6 |
|
|
$ |
2,800,721 |
|
|
|
Supplemental Plan |
|
64 |
|
17.8 |
|
|
$ |
827,402 |
|
|
|
Total |
|
|
|
|
|
|
$ |
4,534,382 |
|
47
Table of Contents
|
|
|
|
Assumed |
|
Number of Years |
|
Present Value of |
Name |
|
Plan Name (1) |
|
Retirement Age (2) |
|
of Credited Service (3) |
|
Accumulated Benefit (4) |
Michael J. Mack,
Jr. |
|
Salaried Plan |
|
65 |
|
28.3 |
|
|
$ |
792,051 |
|
Contemporary Option |
|
Supplementary
Plan |
|
65 |
|
28.3 |
|
|
$ |
2,255,345 |
|
|
|
Supplemental
Plan |
|
65 |
|
17.8 |
|
|
$ |
634,938 |
|
|
|
Total |
|
|
|
|
|
|
$ |
3,682,334 |
|
(1) Benefits are provided under the
Salaried Plan, the Supplementary Plan, and the Supplemental Plan as described in
the narrative preceding the table. A portion of Mr. Gilles benefits will be
provided by certain German pension plans in which he participated during his
period of employment at Deeres European Office in Germany. Any benefits
received from these German plans will offset benefits that would have otherwise
been provided under the Salaried Plan. Mr. Gilles total pension benefits are
calculated for all purposes as if he had been a participant in the U.S. pension
plans his entire career.
(2) The assumed retirement age is the earliest age at
which the NEO could retire without any benefit reduction due to age or normal
retirement age, if earlier. The assumed retirement age may vary depending on
whether the NEO is covered by the Traditional Option or the Contemporary Option,
as explained in the narrative preceding the table.
(3) Years and months of service credit
under each plan as of October 31, 2014. The years of credited service are equal
to years of eligible service with Deere for the Salaried and Supplementary Plan.
Service credit under the Supplemental Plan is based on service at grade 13 or
above, beginning January 1, 1997.
(4) The actuarial present value of the
accumulated benefit is shown as of October 31, 2014, and is provided as a
straight-life annuity for the qualified pension plan and a lump sum for
nonqualified pension plan benefits. Pension benefits are not reduced for any
social security benefits or other offset amounts that the NEO may receive. A
portion of the benefit for Mr. Gilles will be provided under certain German
pension plans as described in footnote (1) above.
The actuarial present value is calculated
by estimating expected future payments starting at an assumed retirement age,
weighting the estimated payments by the estimated probability of surviving to
each post-retirement age, and discounting the weighted payments at an assumed
discount rate to reflect the time value of money. The actuarial present value
represents an estimate of the amount which, if invested today at the discount
rate, would be sufficient on an average basis to provide estimated future
payments based on the current accumulated benefit. Actual benefit present values
will vary from these estimates depending on many factors, including actual
retirement age.
The following assumptions were used to
calculate the present value of the accumulated benefit:
|
Each of the NEOs
continues as an executive until the earliest age at which he could retire
without any benefit reduction due to age or normal retirement age,
whichever is earlier, as defined in the Salaried
Plan; |
|
Present value amounts
were determined based on the financial accounting discount rate for U.S.
pension plans of 4.20%; |
|
Benefits subject to a
lump sum distribution were determined using an interest rate of
3.26%; |
|
The mortality table
used for the Salaried Plan was the RP2000 table (with mortality projection
scale BB, as published by the Society of Actuaries), while the mortality
table used for the Supplementary and Supplemental Plans was the RP 2021
table, each table as published by the IRS; and |
|
Pensionable earnings
are calculated for the most recently completed fiscal year using base pay
as an estimate (assuming one base pay increase of 3.5% - 4.5% depending on
age) with no future increase and the STI bonus at target. Pensionable
earnings for prior years are calculated based on actual base pay and
actual STI earned for prior years. |
Nonqualified Deferred
Compensation
The Fiscal 2014 Nonqualified
Deferred Compensation Table below shows information about four programs:
(1) the John Deere Voluntary Deferred
Compensation Plan (Deferred Plan), a nonqualified deferred compensation plan;
(2) the Deere & Company European
Office Vorsorgeplan 2001 (German Deferral Plan), a voluntary deferral plan;
(3) the John Deere Defined Contribution
Restoration Plan (DCRP), a nonqualified savings plan; and
(4) deferred RSUs.
Deferred Plan
Under the Deferred Plan, through fiscal 2008, NEOs could defer
their base salary, STI, and/or MTI in 5% increments up to 95%. For deferrals
elected after 2008, up to 70% of base salary can be deferred while STI and MTI
awards can be deferred up to 95%. On the first day of each calendar quarter, the
balance in each account under the Deferred Plan is credited with interest. For
deferrals made through calendar 2009, interest is credited at the prime rate (as
determined by the Federal Reserve Statistical Release for the prior month) plus
2% as of the last day of the preceding quarter. For deferrals made after
December 31, 2009, the deferred amounts
48
Table of Contents
earn interest based on the Moodys A
rated Corporate Bond Rate. During fiscal 2014, amounts deferred under the
Deferred Plan were credited with interest at the following rates:
Earnings Under Deferred
Plan |
|
|
Deferrals through |
|
Deferrals after 2009 |
|
|
calendar 2009 |
|
Moodys A Corporate |
|
|
Prime plus 2% |
|
Bond Rate |
November-13 |
|
5.25% |
|
4.82% |
February-14 |
|
5.25% |
|
4.60% |
May-14 |
|
5.25% |
|
4.31% |
August-14 |
|
5.25% |
|
4.20% |
An election to defer salary must be made
prior to the beginning of the calendar year in which deferral occurs. An
election to defer STI must be made prior to the beginning of the fiscal year
upon which the award is based. An election to defer MTI must be made prior to
the close of the fiscal year preceding the calendar year of payment.
Participants may elect to receive the deferred funds in a lump sum or in equal
annual installments not to exceed ten years. Distribution must be completed
within ten years following retirement. All deferral elections and associated
distribution schedules are irrevocable. This plan is unfunded and participant
accounts are at-risk in the event of the Companys bankruptcy.
German Deferral
Plan
Mr. Gilles participated in the German
Deferral Plan during his period of employment at Deeres European Office in
Germany. The German Deferral Plan was available to all salaried employees in
Germany and permitted participants to defer up to 100% of their base salary,
STI, and/or MTI. Interest on deferrals is determined on the basis of
transforming factors specified in the plan documentation. All distributions
are paid in a lump sum in the January following the year in which the
participant retires or, if the participant retires prior to age 65, no later
than the January following the year the participant turns 65.
DCRP
The DCRP is designed to allow executives participating in our
Contemporary Option to defer employee contributions and receive employer
matching contributions on up to 6% of eligible earnings that are otherwise
limited by the IRC. For DCRP purposes, eligible earnings include base salary,
STI, and commission compensation. None of the NEOs receive commission
compensation. The 401(k) deferral percentage selected by the employee in place
each October 31st is used during the following calendar year to calculate the
DCRP employee contribution. This plan is unfunded and participant accounts are
at-risk in the event of the Companys bankruptcy.
Two investment options are available under
the DCRP: the prime rate (as determined by the Federal Reserve Statistical
Release for the prior month) plus 2%; or a rate of return based on the S&P
500 Index for the prior month. Participants may choose either investment option
for any portion of their account. Participants can change investment options
between the 1st and 10th day of any month. During fiscal 2014, the annualized
rates of return under the two options were as follows:
Earnings For DCRP |
|
|
Prime plus 2% |
|
S&P 500 Index |
November-13 |
|
5.25% |
|
|
23.37% |
|
December-13 |
|
5.25% |
|
|
44.31% |
|
January-14 |
|
5.25% |
|
|
16.31% |
|
February-14 |
|
5.25% |
|
|
9.68% |
|
March-14 |
|
5.25% |
|
|
-3.51% |
|
April-14 |
|
5.25% |
|
|
30.70% |
|
May-14 |
|
5.25% |
|
|
0.48% |
|
June-14 |
|
5.25% |
|
|
16.42% |
|
July-14 |
|
5.25% |
|
|
36.40% |
|
August-14 |
|
5.25% |
|
|
16.03% |
|
September-14 |
|
5.25% |
|
|
-7.04% |
|
October-14 |
|
5.25% |
|
|
19.39% |
|
Distribution options under the DCRP
consist of a lump sum distribution one year following the date of separation,
or, in the case of retirement, five annual installments beginning one year
following the retirement date.
Deferred RSUs
There are two scenarios under which deferred RSUs can appear
in the Fiscal 2014 Nonqualified Deferred Compensation Table:
|
Certain RSUs are
required to be held for a defined period of time after they vest three
years from the grant date. The following tranches of RSUs have vested but
remain subject to mandatory restriction as described in the following
chart: |
Grant Date |
|
Date Vested |
|
Restriction Period |
December
2002 |
|
December 2005 |
|
Until retirement or no longer
active
employee |
December 2007 |
|
December
2010 |
|
Until retirement
or no longer
active employee |
December
2008 |
|
December 2011 |
|
Until retirement or no longer
active
employee |
December 2009 |
|
December
2012 |
|
Until retirement
or no longer
active employee |
December
2010 |
|
December 2013 |
|
5 years (until December
2015) |
49
Table of Contents
|
For RSUs granted
starting in December 2003, NEOs may elect deferral of settlement for a
minimum of five years. If a deferral election is made, the RSUs will be
settled in shares of Deere common stock five or more years after the
originally scheduled conversion
date. |
Deferred RSUs will not be settled in Deere
common stock until either the election period or the restriction period
expires.
Fiscal 2014 Nonqualified
Deferred Compensation Table
|
|
|
|
Executive |
|
Registrant |
|
Aggregate |
|
|
|
|
|
|
|
|
|
Contributions |
|
Contributions |
|
Earnings in Last |
|
Aggregate Balance
at |
|
|
|
|
in
Last FY |
|
in Last FY |
|
Fiscal Year |
|
Last FYE |
Name |
|
Plan |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
Samuel R. Allen |
|
DCRP |
|
|
$ |
279,155 |
|
|
|
$ |
465,259 |
|
|
|
$ |
224,791 |
|
|
|
$ |
4,589,204 |
|
|
|
Deferred RSUs |
|
|
$ |
|
|
|
|
$ |
2,212,092 |
|
|
|
$ |
275,134 |
|
|
|
$ |
8,446,733 |
|
|
|
Total |
|
|
$ |
279,155 |
|
|
|
$ |
2,677,350 |
|
|
|
$ |
499,925 |
|
|
|
$ |
13,035,937 |
|
Rajesh Kalathur |
|
DCRP |
|
|
$ |
61,375 |
|
|
|
$ |
102,291 |
|
|
|
$ |
17,648 |
|
|
|
$ |
387,666 |
|
|
|
Total |
|
|
$ |
61,375 |
|
|
|
$ |
102,291 |
|
|
|
$ |
17,648 |
|
|
|
$ |
387,666 |
|
James M. Field |
|
DCRP |
|
|
$ |
83,660 |
|
|
|
$ |
139,434 |
|
|
|
$ |
73,649 |
|
|
|
$ |
1,502,279 |
|
|
|
Deferred RSUs |
|
|
$ |
|
|
|
|
$ |
420,798 |
|
|
|
$ |
95,879 |
|
|
|
$ |
2,613,418 |
|
|
|
Total |
|
|
$ |
83,660 |
|
|
|
$ |
560,232 |
|
|
|
$ |
169,528 |
|
|
|
$ |
4,115,697 |
|
Jean H. Gilles |
|
German Deferral Plan |
|
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
19,718 |
|
|
|
$ |
310,958 |
|
|
|
DCRP |
|
|
$ |
74,581 |
|
|
|
$ |
124,302 |
|
|
|
$ |
67,509 |
|
|
|
$ |
1,374,612 |
|
|
|
Deferred RSUs |
|
|
$ |
|
|
|
|
$ |
394,520 |
|
|
|
$ |
60,787 |
|
|
|
$ |
1,777,350 |
|
|
|
Total |
|
|
$ |
74,581 |
|
|
|
$ |
518,821 |
|
|
|
$ |
148,014 |
|
|
|
$ |
3,462,920 |
|
Michael J. Mack,
Jr. |
|
Deferred Plan |
|
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
93,422 |
|
|
|
$ |
1,838,237 |
|
|
|
DCRP |
|
|
$ |
85,896 |
|
|
|
$ |
143,160 |
|
|
|
$ |
284,742 |
|
|
|
$ |
2,355,665 |
|
|
|
Deferred RSUs |
|
|
$ |
|
|
|
|
$ |
413,290 |
|
|
|
$ |
118,863 |
|
|
|
$ |
3,137,693 |
|
|
|
Total |
|
|
$ |
85,896 |
|
|
|
$ |
556,450 |
|
|
|
$ |
497,027 |
|
|
|
$ |
7,331,595 |
|
(1) The amounts in this column represent
employee compensation deferrals that are included in the Fiscal 2014 Summary
Compensation Table under the Salary and Non-Equity Incentive Plan
Compensation columns.
(2) The amounts in this column associated
with the DCRP represent Deeres contributions during the fiscal year as included
in the Fiscal 2014 Summary Compensation Table under the All Other Compensation
column. The amounts in this column associated with deferred RSUs represent RSUs
that vested in the current fiscal year but have not been converted into Deere
common stock, and are included in the Fiscal 2014 Option Exercises and Stock
Vested table under the column Value Realized on Vesting.
(3) For rates of return on account
balances under the Deferred Plan and DCRP, see the applicable earnings charts in
the narrative preceding this table. The notional rate of return on amounts
deferred by Mr. Gilles under the German Deferral Plan was 6.77%. For the
deferred RSU accounts, the earnings represent the change in the intrinsic value
of the RSUs. The above-market portions of the amounts shown in this column are
reported in the Fiscal 2014 Summary Compensation Table under the Change in
Pension Value and Nonqualified Deferred Compensation Earnings column and are
quantified in footnote (5) to that table.
(4) Of the aggregate balance, the
following amounts were reported as compensation to each respective NEO in the
Summary Compensation Table in prior years: $6,950,905 (Allen); $84,464
(Kalathur); $1,746,973 (Field); $264,981 (Gilles); and $4,285,620
(Mack).
50
Table of Contents
Fiscal 2014 Potential
Payments upon Change in Control
The CIC
Program includes a double trigger approach, under which participants will
receive severance benefits only if both a change in control and qualifying
termination occur. A qualifying termination is either:
|
Deeres termination of
an executives employment within the six months preceding or within 24
months following a change in control for reasons other than termination
for death, disability, or cause (defined as an executives willful and
continued nonperformance of duties after written demand; willful conduct
that is demonstrably and materially injurious to Deere; or illegal
activity); or |
|
An executives
termination of his or her own employment for good reason (defined as
material reductions or alterations in an executives authorities, duties,
or responsibilities; change in office location of at least 50 miles from
current residence; material reductions in an executives participation in
certain Deere compensation plans; or certain other breaches of the
covenants in the CIC Program) within 24 months following a change in
control. |
The CIC Program defines the following as
change in control events:
|
any person, as
defined in the Exchange Act (with certain exceptions), acquires 30% or
more of Deeres voting securities; |
|
a majority of Deeres
directors are replaced without the approval of at least two-thirds of the
existing directors or directors previously approved by the then-existing
directors; |
|
any merger or business
combination of Deere and another company, unless the outstanding voting
securities of Deere prior to the transaction continue to represent at
least 60% of the voting securities of the new company;
or |
|
Deere is completely
liquidated or all, or substantially all, of Deeres assets are sold or
disposed. |
Benefits provided under the CIC program
and other benefit plans are described in the footnotes to the table. Although
not reflected in the table, the CIC Program provides that Deere will pay the
executives reasonable legal fees and expenses if the executive must enforce the
program terms. Under the CIC Program, the executives agree: (a) not to disclose
or use for their own purposes confidential and proprietary Deere information;
and (b) for a period of two years following termination of employment, not to
induce Deere employees to leave Deere, or to interfere with Deeres
business.
In addition, the Omnibus Plan, the MTI
plan, and the Deferred Plan each contain change in control provisions that may
trigger payments under these plans. Under the Omnibus Plan, unless the Board or
the Committee determines otherwise, and regardless of whether the employee was
terminated or not, all then-outstanding equity awards that were granted before
February 24, 2010 would vest and restriction periods would end upon a change in
control. All outstanding RSUs would be cashed out as of the date of the change
in control and the employee would have the right to exercise all outstanding
options. Such potential payments are disclosed in the table below adjacent to
Change in Control only. For awards made under the Omnibus Plan on and after
February 24, 2010, the foregoing provisions will apply only if there is both a
change in control and the employee experiences a qualifying termination. The MTI
plan provides for payment upon a change in control based on actual performance
results to date for all performance periods then in progress. Under the Deferred
Plan, in the event of certain changes in control, the Committee may elect to
terminate the plan within 12 months following the change in control and
distribute all account balances, or the Committee may decide to keep the
Deferred Plan in effect and modify it to reflect the impact of the change in
control.
The following table includes estimated
potential payments that would have been due to each NEO if a change in control
event had occurred and, if applicable, the NEO experienced a qualifying
termination as of October 31, 2014. Although the calculations are intended to
provide reasonable estimates of the potential payments, they are based on
numerous assumptions, as described in the footnotes, and may not represent the
actual amount each NEO would receive if a change in control occurred. As
explained in the footnotes, the payments listed represent the incremental
amounts due to NEOs beyond what the NEOs would have received without the change
in control. Not included in this table are the following payments to which the
NEOs are already entitled and which are reported in previous sections of this
Proxy Statement:
|
amounts already earned
under the STI and MTI plans as of October 31, 2014 (reported in the Fiscal
2014 Summary Compensation Table); |
|
the exercise of
outstanding vested options (reported in the Outstanding Equity Awards at
Fiscal 2014 Year-End table); and |
|
distribution of
nonqualified deferred compensation (reported in the Fiscal 2014
Nonqualified Deferred Compensation
Table). |
51
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Stock |
|
Welfare |
|
Defined |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
Options |
|
Benefits |
|
Contribution |
|
Total |
Name |
|
Salary (1) |
|
STI (2) |
|
MTI (3) |
|
(4) |
|
(5) |
|
(6) |
|
Plans (7) |
|
Payments |
Samuel R. Allen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control only |
|
$ |
|
|
$ |
|
|
$ |
4,986,261 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
4,986,261 |
Change in Control and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination |
|
$ |
4,500,000 |
|
$ |
5,607,015 |
|
$ |
4,986,261 |
|
$ |
10,909,943 |
|
$ |
|
|
$ |
34,386 |
|
$ |
1,472,277 |
|
$ |
27,509,882 |
Rajesh Kalathur |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control only |
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
Change in
Control and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying Termination |
|
$ |
1,583,784 |
|
$ |
1,339,864 |
|
$ |
1,401,378 |
|
$ |
1,953,819 |
|
$ |
29,821 |
|
$ |
38,418 |
|
$ |
383,373 |
|
$ |
6,730,457 |
James M. Field |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control only |
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
Change in Control and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination |
|
$ |
1,945,296 |
|
$ |
1,648,200 |
|
$ |
1,401,378 |
|
$ |
3,221,265 |
|
$ |
94,694 |
|
$ |
39,234 |
|
$ |
494,802 |
|
$ |
8,844,869 |
Jean H. Gilles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Control only |
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
Change in
Control and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying Termination |
|
$ |
1,779,228 |
|
$ |
1,506,341 |
|
$ |
1,401,378 |
|
$ |
1,967,078 |
|
$ |
|
|
$ |
38,859 |
|
$ |
517,872 |
|
$ |
7,210,756 |
Michael J. Mack,
Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control only |
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1,401,378 |
Change in Control and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination |
|
$ |
1,973,232 |
|
$ |
1,673,175 |
|
$ |
1,401,378 |
|
$ |
1,905,318 |
|
$ |
|
|
$ |
39,297 |
|
$ |
505,980 |
|
$ |
7,498,380 |
(1) In the event of a change in control
and qualifying termination, the CIC Program provides for a lump sum payment of
three times the annual base salary.
(2) In the event of a change in control
and qualifying termination, the CIC Program provides for a lump sum payment of
three times the target STI bonus amount for the fiscal year in which the
termination occurs. In addition, the NEO is entitled to a prorated STI award for
the current year. Since the change in control calculations in this table are
made as of the end of the fiscal year, the prorated award for the current year
is equal to the STI earned for the current fiscal year as reported in the Fiscal
2014 Summary Compensation Table under the column Non-Equity Incentive Plan
Compensation and is not duplicated in this table.
(3) The MTI plan contains a change in
control provision that entitles participants, as of the date of a change in
control, to a lump sum MTI payment based on actual performance results to date
for all performance periods then in progress. The payout for the three-year
performance period ended October 31, 2014 is reported in the Fiscal 2014 Summary
Compensation Table under the column Non-Equity Incentive Plan Compensation and
is not duplicated in this table. For each of the NEOs, the amount shown in this
table represents the payout for the two remaining performance
periods.
(4) Vesting of unvested RSUs and PSUs does
not accelerate in the event of a change in control only. In the event of a
change in control and qualifying termination:
|
For unvested RSUs, the
vesting and restriction requirements no longer apply and the awards are
cashed out; and |
|
For unvested PSUs, the
vesting and restriction requirements no longer apply and the awards are
cashed out at a target award level. |
For purposes of the table, all unvested
PSUs and RSUs are valued based on the closing price for Deere common stock on
the NYSE on October 31, 2014, which was $85.54. Since Messrs. Allen, Gilles, and
Mack are eligible for retirement and all currently unvested RSUs would vest
immediately on the date of such event, there is no incremental benefit of the
accelerated vesting for these individuals. Vested RSUs are not included since
they have been earned and are included on the Fiscal 2014 Nonqualified Deferred
Compensation Table. Unvested PSUs and RSUs are included in the Outstanding
Equity Awards at Fiscal 2014 Year-End table.
(5) Vesting of outstanding stock options
does not accelerate in the event of a change in control only. Instead,
outstanding stock options will continue to vest over the three-year vesting
period, subject to continued employment conditions.
52
Table of Contents
In the event of a change in control and
qualifying termination, all outstanding stock options vest and can be exercised
immediately. Since Messrs. Allen, Gilles, and Mack are eligible for retirement
and all currently unvested stock options would vest immediately on the date of
such event, there is no incremental benefit of the accelerated vesting for these
individuals. For Messrs. Kalathur and Field, who are not eligible for
retirement, the amount represents the number of outstanding, unexercisable
options multiplied by the difference between the closing price for Deere common
stock on the NYSE on October 31, 2014, which was $85.54, and the option exercise
prices. These amounts are included in the Outstanding Equity Awards at Fiscal
2014 Year-End table.
(6) In the event of a change in control
and qualifying termination, the CIC Program provides for continuation of health
care, life, accidental death and dismemberment, and disability insurance for
three full years at the same premium cost and coverage. This benefit will be
discontinued if the NEO receives similar benefits from a subsequent employer
during this three-year period.
(7) In the event of a change in control
and qualifying termination, the CIC Program includes cash payment equal to three
times Deeres contributions on behalf of each of the NEOs under our defined
contribution plans for the plan year preceding termination (or, if greater, for
the plan year immediately preceding the change in control). The amount reported
for Mr. Gilles also includes the amount by which the value of his account
balance under the German Deferral Plan would have increased had he remained
employed for an additional three years following a change in control and his
qualifying termination.
Fiscal 2014 Potential
Payments upon Termination of Employment Other than Following a Change in
Control
The following table summarizes the
estimated payments to be made to the NEOs under our plans or established
practices in the event of termination of employment for death, disability,
retirement, termination without cause, termination for cause, and voluntary
separation. Although the calculations are intended to provide reasonable
estimates of the potential payments, they are
based on numerous assumptions, as
described in the footnotes, and may not represent the actual amounts the NEOs
would receive in the event of an eligible termination.
The amounts shown assume the termination
event occurred on, and the NEO was actively employed until, October 31,
2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred |
|
Pension |
|
|
|
|
|
Salary |
|
STI |
|
MTI |
|
Stock Awards |
|
Stock Options |
|
Compensation |
|
Benefit |
|
Total |
Name |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
(7) |
|
Payments |
Samuel R. Allen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
$ |
|
|
$ |
2,779,846 |
|
$ |
2,618,045 |
|
$ |
18,005,400 |
|
$ |
13,942,210 |
|
$ |
4,589,204 |
|
$ |
8,243,294 |
|
$ |
50,177,999 |
Disability |
|
$ |
14,050,508 |
|
$ |
2,779,846 |
|
$ |
2,618,045 |
|
$ |
18,005,400 |
|
$ |
13,942,210 |
|
$ |
4,589,204 |
|
$ |
14,824,294 |
|
$ |
70,809,507 |
Retirement |
|
$ |
|
|
$ |
2,779,846 |
|
$ |
2,618,045 |
|
$ |
18,005,400 |
|
$ |
13,942,210 |
|
$ |
4,589,204 |
|
$ |
14,924,084 |
|
$ |
56,858,789 |
Termination Without
Cause |
|
$ |
1,500,000 |
|
$ |
2,779,846 |
|
$ |
2,618,045 |
|
$ |
8,446,733 |
|
$ |
|
|
$ |
4,589,204 |
|
$ |
14,924,084 |
|
$ |
34,857,912 |
Termination For
Cause |
|
$ |
|
|
$ |
2,779,846 |
|
$ |
2,618,045 |
|
$ |
8,446,733 |
|
$ |
|
|
$ |
4,589,204 |
|
$ |
14,924,084 |
|
$ |
33,357,912 |
Voluntary
Separation (8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rajesh Kalathur |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
$ |
|
|
$ |
885,729 |
|
$ |
994,022 |
|
$ |
879,180 |
|
$ |
1,481,221 |
|
$ |
387,666 |
|
$ |
397,021 |
|
$ |
5,024,839 |
Disability |
|
$ |
9,721,838 |
|
$ |
885,729 |
|
$ |
994,022 |
|
$ |
879,180 |
|
$ |
1,481,221 |
|
$ |
387,666 |
|
$ |
1,782,554 |
|
$ |
16,132,210 |
Retirement (9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without
Cause |
|
$ |
373,949 |
|
$ |
885,729 |
|
$ |
994,022 |
|
$ |
|
|
$ |
|
|
$ |
387,666 |
|
$ |
724,919 |
|
$ |
3,366,285 |
Termination For Cause |
|
$ |
|
|
$ |
885,729 |
|
$ |
994,022 |
|
$ |
|
|
$ |
|
|
$ |
387,666 |
|
$ |
724,919 |
|
$ |
2,992,336 |
Voluntary Separation |
|
$ |
|
|
$ |
885,729 |
|
$ |
994,022 |
|
$ |
|
|
$ |
|
|
$ |
387,666 |
|
$ |
724,919 |
|
$ |
2,992,336 |
James M. Field |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
$ |
|
|
$ |
1,089,557 |
|
$ |
994,022 |
|
$ |
4,357,835 |
|
$ |
4,208,442 |
|
$ |
1,502,279 |
|
$ |
1,032,119 |
|
$ |
13,184,254 |
Disability |
|
$ |
13,819,121 |
|
$ |
1,089,557 |
|
$ |
994,022 |
|
$ |
4,357,835 |
|
$ |
4,208,442 |
|
$ |
1,502,279 |
|
$ |
3,507,530 |
|
$ |
29,478,786 |
Retirement
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without
Cause |
|
$ |
540,360 |
|
$ |
1,089,557 |
|
$ |
994,022 |
|
$ |
2,613,418 |
|
$ |
|
|
$ |
1,502,279 |
|
$ |
1,880,495 |
|
$ |
8,620,131 |
Termination For
Cause |
|
$ |
|
|
$ |
1,089,557 |
|
$ |
994,022 |
|
$ |
2,613,418 |
|
$ |
|
|
$ |
1,502,279 |
|
$ |
1,880,495 |
|
$ |
8,079,771 |
Voluntary
Separation |
|
$ |
|
|
$ |
1,089,557 |
|
$ |
994,022 |
|
$ |
2,613,418 |
|
$ |
|
|
$ |
1,502,279 |
|
$ |
1,880,495 |
|
$ |
8,079,771 |
53
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred |
|
Pension |
|
|
|
|
|
Salary |
|
STI |
|
MTI |
|
Stock Awards |
|
Stock Options |
|
Compensation |
|
Benefit |
|
Total |
Name |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
(7) |
|
Payments |
Jean H. Gilles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
$ |
|
|
$ |
995,780 |
|
$ |
994,022 |
|
$ |
3,485,669 |
|
$ |
2,032,348 |
|
$ |
1,752,891 |
|
$ |
3,101,546 |
|
$ |
12,362,256 |
Disability |
|
$ |
8,068,240 |
|
$ |
995,780 |
|
$ |
994,022 |
|
$ |
3,485,669 |
|
$ |
2,032,348 |
|
$ |
1,685,570 |
|
$ |
6,488,817 |
|
$ |
23,750,446 |
Retirement |
|
$ |
|
|
$ |
995,780 |
|
$ |
994,022 |
|
$ |
3,485,669 |
|
$ |
2,032,348 |
|
$ |
1,685,570 |
|
$ |
5,628,783 |
|
$ |
14,822,172 |
Termination Without
Cause |
|
$ |
593,076 |
|
$ |
995,780 |
|
$ |
994,022 |
|
$ |
1,777,350 |
|
$ |
|
|
$ |
1,685,570 |
|
$ |
5,628,783 |
|
$ |
11,674,581 |
Termination For
Cause |
|
$ |
|
|
$ |
995,780 |
|
$ |
994,022 |
|
$ |
1,777,350 |
|
$ |
|
|
$ |
1,685,570 |
|
$ |
5,628,783 |
|
$ |
11,081,505 |
Voluntary
Separation (8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Mack,
Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death |
|
$ |
|
|
$ |
1,106,067 |
|
$ |
994,022 |
|
$ |
4,806,065 |
|
$ |
367,209 |
|
$ |
4,193,902 |
|
$ |
2,509,302 |
|
$ |
13,976,567 |
Disability |
|
$ |
8,566,269 |
|
$ |
1,106,067 |
|
$ |
994,022 |
|
$ |
4,806,065 |
|
$ |
367,209 |
|
$ |
4,193,902 |
|
$ |
5,287,994 |
|
$ |
25,321,528 |
Retirement |
|
$ |
|
|
$ |
1,106,067 |
|
$ |
994,022 |
|
$ |
4,806,065 |
|
$ |
367,209 |
|
$ |
4,193,902 |
|
$ |
4,549,959 |
|
$ |
16,017,224 |
Termination Without Cause |
|
$ |
657,744 |
|
$ |
1,106,067 |
|
$ |
994,022 |
|
$ |
3,137,693 |
|
$ |
|
|
$ |
4,193,902 |
|
$ |
4,549,959 |
|
$ |
14,639,387 |
Termination For Cause |
|
$ |
|
|
$ |
1,106,067 |
|
$ |
994,022 |
|
$ |
3,137,693 |
|
$ |
|
|
$ |
4,193,902 |
|
$ |
4,549,959 |
|
$ |
13,981,643 |
Voluntary Separation (8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Our NEOs do not have employment
agreements. However, we have severance guidelines that provide compensation if
termination is initiated by Deere for reasons other than cause. Our severance
guidelines provide for payment of one-half month of salary for each complete
year of employment, up to a maximum of one years salary. We may elect to pay
severance in either a lump sum or via salary continuance, unless the amount of
severance exceeds two times the applicable limit under Section 401(a)(17) of the
IRC, in which case severance will be paid in a lump sum.
Under our Long-Term Disability Plan, if
disabled before age 62, NEOs receive monthly benefits until age 65 equal to 60%
of their salary plus the average of the three STI awards received immediately
prior to the start of disability. The amount shown for disability represents the
present value of the monthly benefit from the time of the disability, assumed to
be October 31, 2014, until the time the NEO attains age 65.
(2) Under all termination events, the
amount of STI earned for the fiscal year ended October 31, 2014 would be payable
in a lump sum generally within two months after the end of the fiscal year, but
in no event later than March 15th of the calendar year following the end of the
fiscal year. This amount is also reported in the Fiscal 2014 Summary
Compensation Table under the column Non-Equity Incentive Plan
Compensation.
(3) Under all termination events, the
amount of MTI earned for the performance period ended October 31, 2014 would be
payable in a lump sum generally within two months after the end of the fiscal
year, but in no event later than March 15th of the calendar year following the
end of the fiscal year. This amount is also reported in the Fiscal 2014 Summary
Compensation Table under the column Non-Equity Incentive Plan Compensation.
(4) In the event of death, disability, or
retirement, the most recent RSU and PSU awards are prorated based on the number
of months the NEOs remain active in the year of grant, meaning that the NEOs
retain 1/12th of the RSUs and PSUs awarded during the year for each month of
active employment. The remaining units are forfeited. All unvested and
non-forfeited RSUs will vest on the date of separation from service, while PSUs
that are not forfeited will continue to convert to shares at the end of the
three-year performance period based on the performance metrics. Upon lapse of
the applicable restrictions, vested RSUs will be converted to shares of common
stock. Restrictions on vested RSUs will lapse as provided in the following
table:
Type of Separation from Service |
|
Fiscal Year of RSU Award |
|
Lapse of Restrictions |
Death |
|
2010 and
prior |
|
First business
day of January following death |
|
|
2011 and
2012 |
|
First business
day in the later of January or July following death |
|
|
2013 and
2014 |
|
Third anniversary
of grant date |
Disability or
Retirement |
|
2012 and prior
After 2012 |
|
First business day in the later
of January or July following separation from service
Third anniversary of grant
date |
In the event of termination with or
without cause or voluntary separation, any vested RSUs will be cashed out. All
unvested PSUs and RSUs will be forfeited. The amounts shown in the table
correspond to vested RSUs (including RSUs that vest as a result of the
termination of employment).
54
Table of Contents
The value of PSUs for each outstanding
tranche represents actual achievement relative to the S&P Industrial Sector
assuming, in the case of PSUs granted in fiscal years 2013 and 2014, truncated
performance measurement periods. The performance period for PSUs granted in
fiscal year 2012 ended on October 31, 2014. The final number of shares earned,
if any, will be based upon performance as determined by revenue growth and TSR
relative to the S&P Industrial Sector at the end of the applicable
performance period. See footnotes (4) and (6) to the Outstanding Equity Awards
at Fiscal 2014 Year-End table for performance information relating to each
outstanding tranche of PSUs.
All amounts shown in the table are based
on the closing price for Deere common stock on the NYSE on October 31, 2014,
which was $85.54.
(5) In the event of death, all outstanding
stock options vest immediately. In the event of disability or retirement,
vesting accelerates for all outstanding stock options but occurs no sooner than
six months following the grant date. In the case of death, the heirs have one
year to exercise options. In the case of disability or retirement, options
expire within five years. In the event of retirement, the most recent stock
option awards granted to the NEOs are prorated based on the number of months the
NEOs remain active in the year of grant, meaning that the NEOs retain 1/12th of
the options awarded during the year for each month of active employment. The
remaining options are forfeited. The amount shown in this table represents the
number of stock options multiplied by the difference between the closing price
for Deere common stock on the NYSE on October 31, 2014, which was $85.54, and
the option exercise prices. These outstanding stock options are reported in the
Outstanding Equity Awards at Fiscal 2014 Year-End table. In the event of a
termination other than for death, disability, or retirement, all outstanding
stock options are forfeited.
(6) In all cases, balances held in the
U.S. nonqualified deferred compensation plans and the German Deferral Plan are
payable to the employee. These amounts are reported in the Fiscal 2014
Nonqualified Deferred Compensation Table under Deferred Plan, German Deferral
Plan, and DCRP. Under the German Deferral Plan, the amount payable in the event
of death differs from the amount payable under the other scenarios based on the
application of the transforming factors specified in the plan documentation.
The deferred RSUs reported in the Fiscal 2014 Nonqualified Deferred Compensation
Table are reported in this table under the column Stock Awards.
(7) The present value of the accumulated
pension benefit was calculated using the following assumptions:
|
present value amounts were determined
based on a discount rate of 4.20%; |
|
|
|
lump sum distribution amounts were
determined using an interest rate of 3.26% for the Supplementary and
Supplemental Plans; |
|
|
|
the mortality table used for the
Salaried Plan was RP2000 with mortality projection scale
BB; |
|
the mortality table used for the
Supplementary and Supplemental Plans was RP2021; and |
|
|
|
pensionable earnings earned were
based on actual base salary and forecasted STI for fiscal
2014. |
Following are additional
explanations related to the various scenarios:
|
Death: This amount represents the
present value of the accrued survivor benefit as of October 31,
2014. |
|
|
|
Disability: This amount assumes
service through age 65 and includes service credit for time on long-term
disability. |
|
|
|
Retirement: For the NEOs eligible to
retire, this amount represents the present value of the accrued benefits
if they were to retire as of October 31,
2014. |
|
Termination Without Cause,
Termination For Cause, and Voluntary Separation: This amount represents
the present value of the accrued benefit as of October 31,
2014. |
(8) Since Messrs. Allen, Gilles, and Mack
are eligible for early retirement, the scenario for Voluntary Separation is not
applicable. Under this scenario, these NEOs would retire.
(9) Since Messrs.
Kalathur and Field are not eligible for normal or early retirement, this
scenario is not applicable.
55
Table of Contents
Equity Compensation
Plan Information
The following table shows the total number
of outstanding options and shares available for future issuances under our
equity compensation plans as of October 31, 2014:
|
Number of |
|
Weighted- |
|
Number of Securities |
|
Securities to be Issued Upon |
|
Average |
|
Remaining Available |
|
|
Exercise Price of |
|
for Future Issuance |
|
Exercise of |
|
Outstanding |
|
Under Equity |
|
Outstanding |
|
Options, |
|
Compensation Plans |
|
Options, Warrants, |
|
Warrants, and |
|
(excluding securities |
|
and Rights |
|
Rights |
|
reflected in column (a)) |
Plan Category |
(a) |
|
(b) |
|
(c)
|
Equity Compensation Plans
Approved by Security Holders |
|
16,069,393 |
(1) |
|
|
|
$ |
71.64 |
|
|
|
7,211,684 |
(2) |
|
Equity Compensation Plans Not Approved by
Security Holders |
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Total |
|
16,069,393 |
|
|
|
|
$ |
71.64 |
|
|
|
7,211,684 |
|
|
(1) This amount includes 1,073,937 PSUs
and RSUs awarded under the Omnibus Plan and 102,254 RSUs awarded under the
Nonemployee Director Stock Ownership Plan. Under the Omnibus Plan, the PSUs are
payable only in stock after the three-year performance period is ended and the
RSUs are payable only in stock three to five years after the award is granted or
upon retirement. Under the Nonemployee Director Stock Ownership Plan, RSUs are
payable only in stock upon retirement. The weighted-average exercise price
information in column (b) does not include these units.
(2) This amount includes 455,203 shares
available under the Nonemployee Director Stock Ownership Plan for future awards
of restricted stock or RSUs and 6,756,481 shares available under the Omnibus
Plan. Under the Omnibus Plan, Deere may award shares in connection with stock
options and stock appreciation rights, performance awards, restricted stock or
restricted stock equivalents, or other awards consistent with the purposes of
such plan as determined by the Committee. In addition, shares covered by
outstanding awards become available for new awards if the award is forfeited or
expires before delivery of the shares.
(3) Deere currently has no equity
compensation plans that have not been approved by stockholders.
56
Table of Contents
Item 4 Amendment of
the John Deere Omnibus Equity and Incentive Plan
Summary of the
Proposal
The Board has amended the
John Deere Omnibus Equity and Incentive Plan (referred to in this section of the
Proxy Statement as the Plan). The amendments were recommended to the Board by
the Compensation Committee and are subject to the approval of our stockholders.
We are asking our stockholders to approve the following amendments to the
Plan:
● |
Increase by 13,000,000 the number of shares authorized
for making awards under the Plan; and |
|
|
● |
Extend the period during which we
may make grants to eligible employees to December 31,
2020. |
Stockholder approval of these amendments
is required under the Plan which, both currently and as amended, in alignment
with NYSE rules, requires stockholder approval (to the extent required by law,
agreement, or stock exchange rules) of any amendments that:
● |
materially increase the
number of shares authorized for Plan awards; |
|
|
● |
expand the types of
awards available; |
|
|
● |
materially expand
the class of employees eligible to participate; |
|
|
● |
materially extend
the term of the Plan; |
|
|
● |
materially change
the method of determining the strike price of options; or |
|
|
● |
delete or limit
provisions prohibiting repricing of stock
options. |
In addition to the amendments described
above, the Board has also amended the Plan to modify various other provisions to
conform to regulatory changes and current market practices as well as other
matters related to the administration and interpretation of the Plan.
A copy of
the Plan as amended is attached as Appendix D to this Proxy Statement. The
description that follows is qualified in its entirety by reference to the full
text of the Plan as set forth in Appendix D.
The purpose of the Plan, as discussed in
the Long-Term Incentive (LTI) portion of the CD&A section of this Proxy
Statement, is to foster and promote the long-term financial success of the
Company and materially increase stockholder value by: (a) strengthening the
Companys capability to develop, maintain, and direct an outstanding employee
team; (b) motivating superior performance by means of long-term performance
related incentives; (c) encouraging and providing the means for employees to
obtain an ownership interest in the Company; (d) attracting and retaining
outstanding talent by providing incentive compensation
opportunities competitive with other major
companies; and (e) enabling eligible employees to participate in the long-term
growth and financial success of the Company.
Our stockholders originally approved the
Plan in 2000 and approved amendments to the Plan in 2003, 2006, and 2010. The
Plan allows us to grant our salaried employees a range of compensation awards
based on or related to Deere common stock, including stock options, stock
appreciation rights, restricted stock and stock units, performance awards, and
substitute awards. The amount of compensation realized by employees with respect
to certain awards may be reduced or eliminated unless certain performance goals
are met or restrictions are removed. We may use previously unissued common stock
or common stock held in treasury for awards under the Plan.
At its inception in 2000, the Plan
reserved 19,000,000 shares of common stock plus approximately 9,800,000 unused
shares authorized under prior plans. The amendment approved in 2003 authorized
an additional 18,000,000 shares for grants of options and stock appreciation
rights, while the 2006 and 2010 amendments authorized an additional 29,500,000
shares in total for the grant of awards of all types. As of December 31, 2014,
approximately 3,233,728 of these previously-approved shares remained available
for new awards under the Plan. The market closing price for Deere common stock
on December 31, 2014 was $88.47.
The amendments authorize an additional
13,000,000 shares for awards under the Plan (representing approximately 3.6% of
all currently outstanding shares of Deere common stock). In setting and
recommending to stockholders the number of additional shares to authorize, the
Compensation Committee and the Board considered the historical number of equity
awards granted under the Plan, as well as the Companys three-year average burn
rate (2012-2014) of approximately 0.72% (which is significantly below the median
of the Companys peer group). Based on historical granting practices and the
recent trading price of the Companys common stock, the Company currently
expects future awards under the amended Plan to utilize annually approximately
0.93% of fully diluted shares outstanding. Based on the same assumptions, the
additional shares (if approved and remaining available for grant), in
combination with the remaining authorized and unused shares, should be
sufficient to provide for approximately 4 to 5 years of awards under the Plan.
Consistent with existing Plan provisions, the number of shares authorized for
the Plan will be reduced by one share for each stock option or stock
appreciation right granted, and by 2.5 shares for each share awarded in
connection with full value awards, such as restricted stock, restricted stock
units, and performance awards (generally, full value awards are any awards other
than stock options and stock appreciation rights). The
57
Table of Contents
number of authorized shares is reduced by
a greater amount for full value awards in recognition of the greater initial
value of these types of awards.
The Plan is currently scheduled to expire
on December 31, 2015. The amendments extend the term of the Plan by five years,
until December 31, 2020.
The amendments will enable us to continue
an equity-based long-term incentive program that has been in effect since 1960.
The Board believes that the program and the Plan have helped Deere compete for,
motivate, and retain high caliber executive, administrative, and professional
employees. The Board believes that it is in the best interests of Deere and its
stockholders to amend the Plan as proposed. Consistent with our compensation
objectives, rewards under the Plan primarily depend on factors that directly
benefit our stockholders: dividends paid and appreciation in the market value of
our common stock.
The affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote at the Annual Meeting
is required to approve the proposed amendments to the Plan. If our stockholders
fail to approve these amendments, they will not be given effect, and the Plan
will continue as in effect prior to amendment. Stockholder approval of the Plan
as amended will also constitute approval of the material terms of the
performance goals contained in the Plan for purposes of enabling Deere to meet
the requirements under Section 162(m) of the IRC (Section 162(m)) for amounts
paid under the Plan to certain of our executive officers to be tax deductible to
the Company.
THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENTS TO THE JOHN DEERE OMNIBUS EQUITY AND INCENTIVE
PLAN. |
Principal Features
of the Plan
We describe below the
other principal terms of the Plan.
Administration
The Plan is
administered by the Compensation Committee or a subcommittee thereof (the
Committee), which Committee, for purposes of the Plan, is required to be
composed of at least two members of the Board who qualify as outside directors
within the meaning of Section 162(m) and as non-employee directors within the
meaning of Rule 16b-3 under the Exchange Act. The Committee is responsible for
interpreting and administering the Plan and for selecting those salaried
employees (including executive officers) who will receive awards. The Committee
may delegate any of its authority under the Plan to other persons, including
officers of the
Company, except for its authority to
amend, suspend, or terminate the Plan or as may otherwise be prohibited by law,
regulation, or stock exchange rule.
Eligibility and
Participation
Salaried employees,
including executive officers, of Deere and its subsidiaries are eligible to
receive awards under the Plan. The Committee, in its discretion, selects those
eligible employees who will receive awards. Deere is not obligated to make
awards under the Plan at any time or to any person. During the fiscal year ended
October 31, 2014, we granted stock options under the Plan covering 2,453,941
shares to 998 employees and restricted stock units equivalent to 84,176 shares
and performance stock units equivalent to 134,678 shares to 24 executives. In
December 2014, we granted for fiscal 2015 compensation purposes stock options
under the Plan covering 3,069,030 shares to 983 employees and restricted stock
units equivalent to 78,587 shares and performance stock units equivalent to
125,732 shares to 23 executives.
We cannot at this time identify the class of
persons to whom we will grant awards in the future, nor can we state the form or
value of any future awards.
Individual
Limits
During any fiscal year, no
participant may receive awards of stock options and stock appreciation rights
covering more than 1,000,000 shares of Deere common stock. In addition, no
participant may receive more than the equivalent of 400,000 shares of our common
stock in any fiscal year pursuant to performance awards, restricted stock
awards, restricted stock equivalent awards, other awards, and/or substitute
awards.
Options and Stock Appreciation
Rights
The per share exercise price of
options granted under the Plan may not be less than the fair market value of a
share of Deere common stock on the date of grant, and may not be modified once
it is established except pursuant to anti-dilution adjustments (see Amendment
and Adjustment below). For purposes of the Plan, the fair market value of a
share on any date is the closing price on the NYSE at the conclusion of regular
trading hours on that date (or the last date on which this information was
reported). With certain exceptions, option holders may pay the exercise price of
options in cash, in Deere common stock, in a combination of cash and stock,
through a cashless exercise program, or through a net share settlement
procedure established by the Committee.
58
Table of Contents
The Committee may designate options
awarded under the Plan as incentive stock options (ISOs), a type of option
authorized under the IRC. Options not designated as ISOs are referred to as
nonqualified options. In recent years, Deere has issued only nonqualified
options.
The Plan also authorizes the Committee to
grant stock appreciation rights. A stock appreciation right entitles the grantee
to receive, upon exercise of the right, an amount equal to the excess of (a) the
fair market value on the exercise date of a specified number of shares of Deere
common stock over (b) the exercise price of the right. The exercise price may
not be less than the fair market value of Deere common stock on the date the
right is granted. We may pay the amount due to the holder of a stock
appreciation right in Deere common stock, cash, or a combination of cash and
stock. Stock appreciation rights may be unrelated to a stock option or may be
granted alternative to (in tandem with) an option.
Generally, the date when stock options and
stock appreciation rights first become exercisable must be at least six months
after the date of grant. Options and stock appreciation rights may have a term
of up to ten years. Dividends and dividend equivalents may not be paid or
accrued on unexercised options or stock appreciation rights.
Options and stock appreciation rights
generally remain exercisable for a limited time following termination of
employment due to death, disability, retirement, or otherwise with the consent
of the Committee. Upon any other kind of termination, options and stock
appreciation rights immediately expire.
Except in connection with certain
corporate transactions, the exercise and base prices of options and stock
appreciation rights may not be lowered and out-of-the-money options and rights
may not be repurchased or exchanged without stockholder approval.
Performance
Awards
The Committee may grant
performance awards either as performance shares (with each performance share
representing one share of Deere common stock) or performance units (representing
a value established by the Committee at the time of the award). Performance
awards are earned over a performance period of at least one year. There may be
more than one performance award in existence at any one time, and the
performance periods may differ or overlap.
The Committee establishes minimum, target,
and maximum performance goals when it grants performance awards, and determines
the portion of the performance award to be earned by the participant based on
the degree to which the performance
goals are achieved over the relevant
performance period. A participant will not earn any portion of a performance
award unless the minimum performance goals are met. When earned, performance
awards may be paid in cash, Deere common stock, or a combination of cash and
stock, and in lump sums or installments. The Committee determines the form and
manner of payment. Dividends may be accrued but not paid on performance shares
while they are subject to performance targets.
The Committee, as it deems appropriate,
may establish performance goals for each performance period from among any of
the following factors, or any combination of the following:
● |
total stockholder return; |
|
|
● |
growth in revenues, sales,
settlements, market share, customer conversion, net income, operating
income, cash flow, stock price, and/or earnings per
share; |
|
|
● |
return on assets, net assets, and/or
capital; |
|
|
● |
return on stockholders
equity; |
|
|
● |
economic or shareholder value
added; |
|
|
● |
improvements in costs and/or
expenses; or |
|
|
● |
except with respect to executives
subject to Section 162(m), any other performance measure established by
the Committee. |
Performance goals may be measured on an
absolute basis or relative to selected peer companies or market indices. The
Plan also authorizes the Committee, subject to the restrictions of Section
162(m), to reduce grants or adjust performance goals if Deere acquires or
disposes of certain assets or securities.
Restricted Stock and Restricted
Stock Equivalents
Restricted stock and
restricted stock equivalents have restriction periods and/or price goals that
the Committee designates at the time of the award. Restriction periods must be
at least three years for time-based restrictions and at least one year for
performance-based restrictions. A maximum of 5% of the aggregate shares
authorized for the Plan may be awarded in the form of restricted stock or stock
equivalents with no minimum vesting periods.
Each restricted stock equivalent
represents the right to receive either shares or an amount determined by the
Committee at the time of the award. The value of a restricted stock equivalent
may be equal to the full monetary value of one share of our common stock. Any
award of restricted stock or stock equivalents to an executive officer intended
to qualify as performance-based compensation must include a stock price goal
during the restriction period.
59
Table of Contents
Other Awards
The Committee may grant other forms of equity-based awards
consistent with the purposes of the Plan. The Committee may base other awards on
the value of Deere common stock or other criteria. Other awards with a
performance goal may not vest in less than one year while those without a
performance goal may not vest in less than three years. Other awards include the
restricted stock units and performance stock units we have awarded in the past
to certain executives (as described below under the heading Plan Benefits that
follows Item 5, Re-Approval of the John Deere Short-Term Incentive Bonus
Plan).
The Plan also authorizes the Committee to
grant awards in substitution for awards granted by an entity that Deere acquires
or that combines with Deere. Substitute awards are not subject to the minimum
holding period and minimum exercise price provisions of the Plan, and do not
count towards the Plans authorized share limits.
Stockholder
Rights
During the performance or
restriction periods applicable to restricted stock or performance share awards,
participants generally have the right to receive dividends on and vote the
shares of common stock that they have been awarded, provided that in the case of
performance share awards, dividends may be accrued but not paid while these
awards are subject to performance targets. Holders of stock options do not have
rights as a stockholder prior to exercise. Holders of restricted stock units,
restricted stock equivalents, and performance stock units also generally do not
have rights as a stockholder prior to vesting and payment in shares, although
holders of restricted stock equivalents and restricted stock units may receive
dividend equivalents in cash at the same time as dividends are paid on Deeres
common stock (which has been the Companys practice with respect to restricted
stock units awarded in the past). With limited exceptions, participants may not
transfer, assign, pledge, or encumber awards under the Plan.
Cash Equivalents and
Deferral
The Committee may permit
participants to elect to receive performance awards and restricted stock in cash
instead of shares. The Committee may also award cash equivalent awards or other
alternative forms of awards to employees of non-U.S. subsidiaries or branches.
Payments of cash equivalent awards are applied against the Plans authorized
share limits based on the number of shares that would have been paid had the
award been settled in stock. The Committee may also permit participants eligible
for our voluntary deferred compensation plan to elect within certain time limits
to defer the payment or settlement of performance and restricted
awards.
Obligations to
Deere
Participants who leave Deere may
lose their unexercised stock options and stock appreciation rights, unearned
performance awards, and restricted stock and stock equivalent awards if they
fail to honor certain consulting or noncompetition obligations to Deere or
otherwise fail to satisfy the terms specified in the awards.
Change in
Control
Awards granted under the Plan
on or after February 24, 2010 do not vest solely as a result of a change in
control of Deere. Instead, if there is a change in control of Deere, the
restrictions and vesting requirements of awards may, subject to certain
regulatory restrictions, lapse and the value of other awards may be paid to the
participants in cash (at the change in control price defined in the Plan) only
if the participant also experiences a qualifying termination of employment. For
awards granted prior to February 24, 2010 that remain outstanding, these
provisions may apply if there is a change in control or potential change in
control of Deere without the need for a qualifying termination of employment.
For purposes of the Plan, change in
control and qualifying termination have the same meanings as in the CIC
Program, as described above under Fiscal 2014 Potential Payments upon Change in
Control.
A potential change in control is defined
generally to include the entering into of an agreement the consummation of which
would result in a change in control, or the acquisition by a third party of
securities representing 15% or more of the combined voting power of the Company
accompanied by a determination by the Board that a potential change in control
has occurred for purposes of the Plan. Awards made on or after February 24, 2010
do not contain any provisions triggered by a potential change in
control.
The double trigger provisions of the
Plan will not preclude participants from participating at the discretion of the
Committee or the Board on the same terms as stockholders generally in a change
in control transaction in which Deere shares are cancelled in exchange for other
consideration (such as cash).
The lapse of limitations and payment of
the value of equity incentive compensation in the event of a change in control
or potential change in control may increase the net cost of the change in
control and thus theoretically could render more difficult or discourage a
change in control, even if the change in control would benefit Deere
stockholders generally.
60
Table of Contents
Repayment of
Awards
Awards paid under the Plan to certain
executives may be recovered by the Company pursuant to the terms of the
Recoupment Policy or otherwise as required by law.
Amendment and
Adjustment
The Committee may suspend or terminate the
Plan or any portion thereof at any time, but, as described under Summary of the
Proposal above, stockholder approval is required for certain amendments that
materially revise the Plan.
No amendment, suspension, or termination
of the Plan may materially and adversely affect the rights of any participant
under any outstanding awards without the consent of the participant.
If there is a stock dividend or stock
split, a combination, or another kind of increase or reduction in the number of
issued shares of Deere common stock, the Board or the Committee will adjust the
number and type of shares authorized under the Plan and covered by outstanding
awards and the exercise price of outstanding awards, as appropriate, to prevent
the dilution or enlargement of rights under Plan awards.
Federal Income Tax Consequences of
Stock Options
The following summarizes the consequences
under existing U.S. federal income tax rules of the award and exercise of stock
options under the Plan.
ISOs
ISOs are intended to qualify as incentive
stock options under Section 422 of the IRC. We understand that under current
federal income tax law:
● |
Our employees do not
recognize income when we grant them ISOs. |
|
|
● |
An optionee does not recognize
income when an ISO is exercised, although the difference between the
option price and the fair market value of the shares acquired upon
exercise is a tax preference item which, under certain circumstances,
may give rise to alternative minimum tax liability on the part of the
optionee. |
|
|
● |
If the optionee holds shares
purchased pursuant to the exercise of an ISO for cash for at least two
years from the option grant date and at least one year after the transfer
of the shares to the optionee, then: |
|
|
|
° |
The optionee will recognize gain or
loss only upon ultimate disposition of the shares. Any gain or loss
generally will be treated as long-term capital gain or loss.
|
|
° |
Deere will not be entitled to a
federal income tax deduction in connection with the grant or exercise of
the option. |
|
|
|
● |
If the optionee disposes of the
shares purchased pursuant to the exercise of an ISO before the expiration
of the required holding period, then: |
|
|
|
° |
The optionee will recognize ordinary
income in the year of the disposition in an amount equal to the difference
between the option price and the lesser of the fair market value of the
shares on the exercise date or the selling price. The balance of any gain
the optionee realizes on the disposition will be taxed as capital gain.
|
|
|
|
|
° |
Deere will be entitled to a
deduction in the year of the disposition equal to the amount of ordinary
income recognized by the optionee. |
Nonqualified
Options
Nonqualified stock options
are stock options that do not qualify as ISOs. We understand that under existing
U.S. federal income tax law:
● |
Our employees do not recognize income when we grant them
nonqualified stock options. |
|
|
● |
Upon exercise of a nonqualified
option, the optionee recognizes ordinary income in the amount by which the
fair market value of the shares purchased exceeds the exercise price of
the option. Deere generally is entitled to a deduction in an equal
amount. |
Other Tax
Matters
Certain additional rules apply
if an optionee pays the exercise price of an option in shares he or she already
owns.
To the extent permitted by applicable law,
we may permit an optionee to have us withhold all or a portion of the shares
that the optionee acquires upon the exercise of an option to satisfy all or part
of the minimum withholding requirements for federal, state, and local income
taxes. We may also permit the optionee to deliver other previously acquired
shares (other than restricted stock) for the purpose of tax
withholding.
Since awards under the Plan are determined
by the Committee in its sole discretion, we cannot determine the benefits or
amounts that will be received or allocated in the future under the Plan. For an
explanation of the stock options, restricted stock units, and performance stock
units granted in December 2014, see the Plan Benefits section that follows
Item 5, Re-Approval of the John Deere Short-Term Incentive Bonus
Plan.
61
Table of Contents
Item 5 Re-approval
of the John Deere Short-Term Incentive Bonus Plan
Summary of the
Proposal
We are submitting the John
Deere Short-Term Incentive Bonus Plan (referred to in this section of the Proxy
Statement as the STI Plan) for stockholder re-approval to meet the
requirements under Section 162(m) for amounts paid under the STI Plan to certain
of our executive officers to be tax deductible to the Company. The STI Plan
provides for cash payments to executive, administrative, and professional
employees based on the achievement of pre-established performance goals over a
performance period of one fiscal year. Amounts paid to our executive officers
under the STI Plan are intended to qualify as performance-based compensation
for purposes of Section 162(m).
A copy of the STI Plan is attached as
Appendix E to this Proxy Statement. The description that follows is qualified in
its entirety by reference to the full text of the STI Plan as set forth in
Appendix E.
The affirmative vote of a majority of the shares present in person
or by proxy and entitled to vote at the meeting is required to re-approve the
STI Plan. If our stockholders fail to re-approve the STI Plan, no further awards
will be made under the STI Plan, although the Committee will retain the right to
consider adopting other short-term incentive arrangements that do not benefit
from Section 162(m). Failure to approve the STI Plan, however, will not affect
the validity of, or our obligations under, awards made prior to the Annual
Meeting.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE RE-APPROVAL OF THE JOHN DEERE
SHORT-TERM INCENTIVE BONUS PLAN. |
Description of the
STI Plan and Performance Goals
Purpose
The purpose of the STI Plan is to provide participants with a
meaningful annual incentive opportunity conditioned on the achievement of
specific performance goals.
Administration
The STI Plan is
administered by the Compensation Committee or a subcommittee thereof (the
Committee), which Committee, for purposes of the STI Plan, is required to be
composed of at least two members of the Board who qualify as outside directors
within the meaning of Section 162(m). The Committee has authority to interpret
the STI Plan and maintain administrative guidelines relating to the STI Plan.
The Committee may delegate to the Company responsibility for the day-to-day
administration of the STI Plan.
Eligibility and
Participation
All full-time or
part-time executive, administrative, and professional employees who are actively
employed by Deere or its subsidiaries during any fiscal year will be eligible to
participate in the STI Plan for that fiscal year. Each year, the Committee will
determine those eligible employees who will participate in the STI Plan. Based
on current eligibility levels, approximately 30,300 executive, administrative,
and professional employees will be eligible to participate in the STI Plan on
the date of the Annual Meeting.
To meet the requirements of Section 162(m),
certain more restrictive provisions of the STI Plan apply only to executive
officers. For purposes of the STI Plan, executive officers are those
employees whom the Committee designates from year to year for purposes of
qualifying payouts under the STI Plan for exemption under Section 162(m). The
Committee designated ten executives as executive officers under the STI Plan
for the fiscal year ended October 31, 2014.
Award
Determination
Prior to the beginning
of each fiscal year, or as soon as practicable thereafter, the Committee will
establish performance goals for that fiscal year. The goals may be based on any
combination of consolidated Company, business unit, division, product line,
other segment, and individual performance measures, except that an award to an
executive officer may not be increased to reflect individual performance. Goals
may be measured either on an absolute basis or relative to selected peer
companies or a market index. Performance measures with respect to executive
officers, as designated by the Committee, will be determined annually from among
the following factors, or any combination of the following, as the Committee
deems appropriate:
● |
total stockholder return; |
|
|
● |
growth in revenues, sales,
settlements, market share, customer conversion, net income, operating
income, cash flow, stock price, and/or earnings per
share; |
|
|
● |
return on assets, net assets, and/or
capital; |
|
|
● |
return on stockholders
equity; |
|
|
● |
economic or shareholder value added;
or |
|
|
● |
improvements in costs and/or
expenses. |
Prior to the beginning of each fiscal
year, or as soon as practicable thereafter, the Committee will also establish,
for each job classification, various levels of award payments depending upon the
level of achievement of the performance goals.
62
Table of Contents
Final awards will be based on the level of
achievement of the performance goals, the participants job classification and
eligible earnings, and the predetermined award payout levels. Except with
respect to executive officers, the Committee has the discretion to adjust
performance goals and payout levels during a fiscal year under certain
circumstances. With respect to executive officers, the Committee can reduce or
eliminate the amount of the final award and can exercise such other discretion
under certain circumstances as tax counsel advises will not adversely affect
Deeres ability to deduct amounts paid under the STI Plan for federal income tax
purposes.
No participant may receive an award for
any fiscal year under the STI Plan of more than $5,000,000. This maximum award
amount has not been increased since the stockholders re-approved the STI Plan at
the February 2005 annual meeting.
Payments
Deere will pay all awards under the STI Plan in cash in one
lump sum on or before the March 15th following the end of the fiscal year to which
the award relates after the Committee certifies in writing that the performance
goals and any other relevant terms of the awards have been satisfied. The
Committee may permit participants to defer payments of awards.
Termination of
Employment
In the event a
participants employment is terminated by reason of death, disability, or
retirement, or a transfer to a non-participating business unit of the Company,
such participants final award will be reduced to reflect participation prior to
the termination or transfer only. In the event of any other kind of termination
of employment, including divestiture of the business unit that employs the
participant, the participants award for the fiscal year of termination is
forfeited. The Committee, however, has discretion to pay a partial award for the
portion of the year that the participant was employed by Deere.
Change in
Control
In the event of a change in
control of Deere, non-executive participants employed as of the date of the
change in control will be entitled to an award based on target performance. The
rights of executive participants are determined under our CIC Program, as
described above under Fiscal 2014 Potential Payments upon Change in Control.
Awards will be paid by the March 15th following the calendar year in which the
change in control occurs.
For purposes of the STI Plan, change in
control has the same meaning as in the CIC Program, as described above under
Fiscal 2014 Potential Payments upon Change in Control.
The payment of awards
in the event of a change in control may increase the net cost of the change in
control and thus theoretically could render more difficult or discourage a
change in control, even if the change in control would benefit Deere
stockholders generally.
Repayment of Final
Awards
Final awards paid under the STI
Plan to certain executives may be recovered by the Company pursuant to the terms
of the Recoupment Policy or otherwise as required by law.
Duration of the STI
Plan
The STI Plan will remain in
effect until it is terminated by the Committee or the Board.
Amendment
The Committee may suspend or terminate the STI Plan or any
portion thereof at any time, or may modify or amend it in whole or in part,
subject to any requirement for stockholder approval imposed by applicable law,
including Section 162(m) and the listing requirements of the NYSE. No amendment,
suspension, or termination of the STI Plan may materially and adversely affect
the rights of a participant to a payment or distribution to which the
participant is entitled without the participants consent.
STI Plan
Philosophy
For a description of the
STI Plan Philosophy, see the discussion in the Short-Term Incentive (STI)
section of the CD&A in this Proxy Statement.
63
Table of Contents
Plan
Benefits
Since awards under the John Deere
Omnibus Equity and Incentive Plan are determined by the Committee in its sole
discretion and awards under the John Deere Short-Term Incentive Bonus Plan are
based on the future achievement of performance goals to be established by the
Committee, we cannot determine the benefits or amounts that will be received or
allocated in the future under these plans. The table below shows, for the
individuals and groups described, stock options, RSUs, and PSUs granted in
December 2014 for fiscal 2015 compensation purposes and final STI awards earned in fiscal 2014. These awards are not
necessarily indicative of awards we may make in the future.
|
|
December 2014 |
|
Fiscal 2014 |
|
|
|
|
|
|
|
|
|
Performance
Stock |
|
|
|
|
|
|
|
|
Restricted Stock Units |
|
Units |
|
STI Bonus |
|
|
Stock |
|
Dollar Value |
|
# of |
|
Dollar Value |
|
# of |
|
Dollar Value |
Name and Position |
|
Options (1) |
|
$ (2) |
|
RSUs |
|
$ (3) |
|
PSUs |
|
$ (4) |
Samuel R. Allen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman and Chief Executive Officer |
|
135,263 |
|
$ |
1,899,946 |
|
21,545 |
|
3,373,915 |
|
34,472 |
|
$ |
2,779,846 |
(5) |
Rajesh Kalathur |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice
President and Chief Financial Officer |
|
27,800 |
|
$ |
390,483 |
|
4,428 |
|
693,340 |
|
7,084 |
|
$ |
885,729 |
|
James M. Field |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Agricultural Equipment Operations |
|
25,273 |
|
$ |
354,945 |
|
4,025 |
|
630,309 |
|
6,440 |
|
$ |
1,089,557 |
|
Jean H. Gilles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice
President, JDPS/Adv Tech & Eng |
|
27,800 |
|
$ |
390,483 |
|
4,428 |
|
693,340 |
|
7,084 |
|
$ |
995,780 |
|
Michael J. Mack,
Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group President, John Deere Financial Services |
|
30,327 |
|
$ |
425,934 |
|
4,830 |
|
756,371 |
|
7,728 |
|
$ |
1,106,067 |
|
Non-NEO Executive Group |
|
136,473 |
|
$ |
1,916,789 |
|
21,736 |
|
3,403,669 |
|
34,776 |
|
$ |
11,493,408 |
|
Non-Executive Director
Group (6) |
|
None |
|
|
None |
|
None |
|
None |
|
None |
|
|
None |
|
Non-Executive Officer Employee
Group |
|
2,686,094 |
|
$ |
1,551,615 |
|
17,595 |
|
2,754,960 |
|
28,148 |
|
$ |
522,579,977 |
|
(1) Market-priced options that vest over
three years (or upon retirement, if earlier) and have a ten-year term.
(2) The dollar value is based on the
average of the high and low price of Deere common stock on the NYSE on the grant
date (which was $88.19).
(3) The dollar value for PSUs subject to
the TSR metric is $113.97 based on a lattice valuation model excluding dividends
and for PSUs subject to the revenue growth metric is $81.78 based on the market
price of a share of underlying common stock excluding dividends.
(4) Represents the amount earned for
fiscal 2014 under the John Deere Short-Term Incentive Bonus Plan.
(5) At Mr. Allens request, the Board
agreed to exercise its discretion to reduce his STI compensation by 25% below
the amount he would have otherwise earned for fiscal 2014 based on
previously-approved plan metrics and goals and actual performance results.
(6) Non-employee directors are not
eligible to participate in either plan.
64
Table of Contents
Item 6
Ratification of Independent
Registered Public Accounting Firm
The Audit Review Committee has approved
the selection of Deloitte & Touche LLP to serve as the independent
registered public accounting firm to audit Deeres financial statements and
internal controls over financial reporting for fiscal 2015. The Audit Review
Committee and the Board are requesting that stockholders ratify this appointment
as a means of soliciting stockholders opinions and as a matter of good
corporate practice.
The affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote at the meeting is
required to ratify the selection of Deloitte & Touche LLP. If the
stockholders do not ratify the selection, the Audit Review Committee will
consider any information submitted by the stockholders in connection with the
selection of the independent registered public accounting firm for the next
fiscal year. Even if the selection is ratified, the Audit Review Committee, in
its discretion, may direct the appointment of a different independent registered
public accounting firm at any time during the year if the Audit Review Committee
believes such a change would be in the best interests of the Company and its
stockholders.
We expect that a representative of
Deloitte & Touche LLP will be in attendance at the Annual Meeting. This
representative will have an opportunity to make a statement and will be
available to respond to appropriate questions.
THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM. |
Pre-approval of Services
by the Independent Registered Public Accounting Firm
The Audit Review Committee has adopted a policy for
pre-approval of audit and permitted non-audit services provided by Deeres
independent registered public accounting firm. The Audit Review Committee will
consider annually and, if appropriate, approve the provision of audit services
by its independent registered public accounting firm and consider and, if
appropriate, pre-approve the provision of certain defined audit and non-audit
services. The Audit Review Committee will also consider on a case-by-case basis
and, if appropriate, approve specific services that are not otherwise
pre-approved.
Any proposed engagement that does not fit
within the definition of a pre-approved service may be presented to the Audit
Review Committee for consideration at its next regular meeting or, if earlier
consideration is required, to the Audit Review Committee or one or more of its
members between regular meetings. The member or members to whom authority is
delegated to approve such services between regular meetings shall report any
specific approvals of services to the Audit Review Committee at its next regular
meeting. The Audit Review Committee will regularly review summary reports
detailing all services being provided to Deere by its independent registered
public accounting firm.
Fees Paid to the
Independent
Registered Public Accounting Firm
The following table summarizes the aggregate fees billed for professional
services by Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu, Limited, and their respective affiliates (collectively, Deloitte
& Touche), for the fiscal years ended October 31, 2014 and 2013:
|
|
2014 |
|
2013 |
Audit Fees(1) |
|
$ |
15,759,000 |
|
$ |
16,335,000 |
Audit-Related Fees(2) |
|
$ |
771,000 |
|
$ |
1,919,000 |
Tax Fees |
|
|
|
|
|
|
All Other Fees |
|
|
|
|
|
|
Total Fees |
|
$ |
16,530,000 |
|
$ |
18,254,000 |
(1) Audit fees include amounts charged in
connection with the audit of Deeres annual financial statements and reviews of
the financial statements included in Deeres Quarterly Reports on Form 10-Q,
including services related thereto such as comfort letters, statutory audits,
attest services, consents, and accounting consultations.
(2) Audit-related fees reflect fees
charged for assurance and related services that are reasonably related to the
performance of the audit of our financial statements. These services included
audits of financial statements of employee benefit plans, various attestation
services, and other consultations.
65
Table of Contents
Audit Review Committee
Report
To the Board of
Directors:
The Audit Review Committee
consists of the following members of the Board of Directors:
Charles O. Holliday, Jr. (Chair), Dipak C.
Jain, Joachim Milberg, Gregory R. Page, Thomas H. Patrick, and Sherry M. Smith.
Each of the members is independent as defined under the rules of the New York
Stock Exchange (NYSE). The Audit Review Committee is responsible for assisting
the Board of Directors in fulfilling its oversight responsibilities pertaining
to the accounting, auditing, and financial reporting processes of Deere.
Management is responsible for establishing and maintaining Deeres internal
control over financial reporting and for preparing financial statements in
accordance with accounting principles generally accepted in the United States of
America. The Audit Review Committee is directly responsible for the appointment,
oversight, compensation, and retention of Deloitte & Touche LLP, the
independent registered public accounting firm for Deere. Deloitte & Touche
LLP is responsible for performing an independent audit of Deeres annual
consolidated financial statements and internal control over financial reporting,
and expressing opinions on (i) the conformity of Deeres financial statements
with accounting principles generally accepted in the United States of America;
and (ii) Deeres internal control over financial reporting.
All members of the Audit Review Committee
are financially literate under the applicable NYSE rules, and the following
members of the Audit Review Committee Mr. Holliday, Mr. Page, Mr. Patrick, and
Ms. Smith are audit committee financial experts within the meaning of that
term as defined by the Securities and Exchange Commission (SEC) in Regulation
S-K under the Securities Exchange Act of 1934, as amended. The Audit Review
Committee has a written charter describing its responsibilities, which has been
approved by the Board of Directors and is available on Deeres website at
www.deere.com/corpgov. The Audit Review Committees responsibility is one of
oversight. Members of the Audit Review Committee rely on the information
provided and the representations made to them by: management, which has primary
responsibility for establishing and maintaining appropriate internal control
over financial reporting and for Deeres financial statements and reports; and
by the independent registered public accounting firm, which is responsible for
performing an audit in accordance with Standards of the Public Company
Accounting Oversight Board (United States) (PCAOB) and expressing opinions on
(i) the conformity of Deeres financial statements with accounting principles
generally accepted in the United States; and (ii) Deeres internal control over
financial reporting.
In this context, we have reviewed and
discussed with management Deeres audited financial statements as of and for the
fiscal year ended October 31, 2014. We have discussed with Deloitte & Touche
LLP, the independent registered public accounting firm for Deere, the matters
required to be discussed by PCAOB Auditing Standard No. 16, Communications with
Audit Committees.
We have received and reviewed the written
disclosures and the letter from Deloitte & Touche LLP required by applicable
requirements of the PCAOB regarding the independent registered public accounting
firms communications with the Audit Review Committee concerning independence,
and have discussed with them their independence. We have concluded that Deloitte
& Touche LLPs provision of audit and non-audit services to Deere is
compatible with their independence.
Based on the reviews and discussions
referred to above, and exercising our business judgment, we recommend to the
Board of Directors that the financial statements referred to above be included
in Deeres Annual Report on Form 10-K for the fiscal year ended October 31, 2014
for filing with the SEC. We have selected Deloitte & Touche LLP as Deere
& Companys independent registered public accounting firm for fiscal 2015,
and have approved submitting the selection of the independent registered public
accounting firm for ratification by the stockholders.
Audit Review Committee
Charles O. Holliday, Jr. (Chair)
Dipak
C. Jain
Joachim Milberg
Gregory R. Page
Thomas H. Patrick
Sherry
M. Smith
66
Table of Contents
Other
Matters
We do not know of any other matters that
will be considered at the Annual Meeting. If, however, any other appropriate
business should properly come before the meeting, the Board will have
discretionary authority to vote according to its best judgment.
2016
Stockholder Proposals and
Nominations
Next years annual meeting of stockholders
will be held on February 24, 2016. If you intend to present a proposal at next
years annual meeting, and you wish to have the proposal included in the proxy
statement for that meeting, you must submit the proposal in writing to the
Corporate Secretary at the address below. The Secretary must receive this
proposal no later than September 16, 2015.
If you would like to present a proposal at
next years annual meeting or if you would like to nominate one or more
directors without inclusion in the proxy statement, you must provide written
notice to the Corporate Secretary at the address below. The Secretary must
receive this notice not earlier than October 28, 2015, and not later than
November 27, 2015. Nominations of directors may be made at the annual meeting of
stockholders only by or at the direction of or authorization by the Board (or
any authorized committee of the Board), or by any stockholder entitled to vote
at the meeting who complies with the notice procedure described
above.
Notice of a proposal must include for each
matter: (1) a brief description of the business to be brought before the
meeting; (2) the reasons for bringing the matter before the meeting; (3) your
name and address; (4) the class and number of Deeres shares owned beneficially
or of record by you; (5) whether and the extent to which any derivative or other
instrument, transaction, agreement, or arrangement has been entered into by you
or on your behalf with respect to Deeres stock; (6) any material interest you
may have in the proposal; and (7) any other information related to you as
required to be disclosed in connection with the solicitation of proxies with
respect to such business under federal securities laws, as amended from time to
time.
Notice of a nomination must include: (1)
your name and address; (2) the name, age, business address, residence address,
and principal occupation of the nominee; (3) the class, series, and number of
Deeres shares owned beneficially or of record by you and the nominee; (4)
whether and the extent to which any derivative or other instrument, transaction,
agreement, or arrangement has been entered into by you or on your behalf with
respect to Deeres stock; (5) a description of all agreements or arrangements
between you and the nominee regarding the nomination; (6) the nominees consent
to be elected and to serve; and (7) any other information related to you as is
required to be disclosed in the solicitation of proxies for election of
directors under federal securities laws, as amended from time to time. We may
require any nominee to furnish any other information, within reason, that may be
needed to determine the eligibility of the nominee.
Proponents must submit stockholder
proposals and recommendations for nomination as a director in writing to the
following address:
Corporate Secretary
Deere &
Company
One John Deere Place
Moline, Illinois 61265-8098
The Secretary will forward the proposals
and recommendations to the Corporate Governance Committee for
consideration.
67
Table of Contents
Cost of
Solicitation
The Company pays for the Annual Meeting
and the solicitation of proxies. In addition to soliciting proxies by mail, the
Company has made arrangements with banks, brokers, and other holders of record
to send proxy materials to you, and the Company will reimburse them for their
expenses in doing so.
We have retained Georgeson Inc., a proxy
soliciting firm, to assist in the solicitation of proxies, for an estimated fee
of $20,000 plus reimbursement of certain out-of-pocket expenses. In addition to
their
usual duties, directors, officers, and
certain other employees of Deere may solicit proxies personally or by telephone,
fax, or e-mail. They will not receive special compensation for these
services.
For the Board of Directors,
Todd E. Davies
Secretary
Moline, Illinois
January 14,
2015
68
Table of Contents
Appendix
A
Director Independence
Categorical Standards of Deere & Company Corporate Governance Policies
NYSE Standards of
Independence
A director may not be
considered independent if the director does not meet the criteria for
independence established by the New York Stock Exchange (NYSE) and applicable
law. A director is considered independent under the NYSE criteria if the Board
finds that the director has no material relationship with the Company. Under the
NYSE rules, a director will not be considered independent if, within the past
three years:
|
the director has been
employed by Deere, either directly or through a personal or professional
services agreement; |
|
an immediate family
member of the director was employed by Deere as an executive
officer; |
|
the director receives
more than $120,000 during any twelve-month period in direct compensation
from Deere, other than for service as an interim chairman or CEO and other
than director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service); |
|
an immediate family
member of the director receives more than $120,000 during any twelve-month
period in direct compensation from Deere, other than for service as a
non-executive employee and other than director and committee fees and
pension or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on continued
service); |
|
the director was
affiliated with or employed by Deeres independent
auditor; |
|
an immediate family
member of the director was a partner of Deeres independent auditor, or
was affiliated with or employed in a professional capacity by Deeres
independent auditor and personally worked on Deeres
audit; |
|
a Deere executive
officer has served on the compensation committee of a company that, at the
same time, employed the director or an immediate family member of the
director as an executive officer; or |
|
the director is
employed, or an immediate family member of a director is employed, as an
executive officer of another company and the annual payments to or
received from Deere exceed in any single fiscal year the greater of $1
million or 2% of such other companys consolidated gross annual
revenues. |
In addition, in determining the
independence of any director who will serve on the Compensation Committee, the
Board must consider all factors specifically relevant to determining whether
the director has a relationship to Deere
which is material to that director's ability to be independent from management
in connection with the duties of a Compensation Committee member, including but
not limited to:
|
the source of
compensation of such director, including any consulting, advisory, or
other compensatory fee paid by Deere to such director;
and |
|
whether such director
is affiliated with Deere or an affiliate of
Deere. |
Categorical Standards of
Independence
The Board has established the
following additional categorical standards of independence to assist it in
making independence determinations:
Business
Relationships. Any payments by Deere to a
business employing, or 10% or more owned by, a director or an immediate family
member of a director for goods or services, or other contractual arrangements,
must be made in the ordinary course of business and on substantially the same
terms as those prevailing at the time for comparable transactions with
non-affiliated persons. The following relationships are not considered material
relationships that would impair a directors independence:
|
if a director (or an
immediate family member of the director) is an officer of another company
that does business with Deere and the annual sales to, or purchases from,
Deere during such companys preceding fiscal year are less than one
percent of the gross annual revenues of such
company; |
|
|
|
if a director is a
partner of or of counsel to a law firm, the director (or an immediate
family member of the director) does not personally perform any legal
services for Deere, and the annual fees paid to the firm by Deere during
such firms preceding fiscal year do not exceed $100,000;
and |
|
|
|
if a director is a
partner, officer, or employee of an investment bank or consulting firm,
the director (or an immediate family member of the director) does not
personally perform any investment banking or consulting services for
Deere, and the annual fees paid to the firm by Deere during such firms
preceding fiscal year do not exceed $100,000. |
Relationships with Not-for-Profit
Entities. A directors independence will not
be considered impaired solely for the reason that the director or an immediate
family member is an officer, director, or trustee of a foundation, university,
or other not-for-profit organization that receives from Deere or its foundation
during any of the prior three fiscal years contributions in an amount
not
A-1
Table of Contents
exceeding the greater of $1 million or two
percent of the not-for profit organizations aggregate annual charitable
receipts during the entitys fiscal year. (Any automatic matching of employee
charitable contributions by Deere or its foundation is not included in Deeres
contributions for this purpose.) All contributions by Deere in excess of
$100,000 to not-for-profit entities with which the director is affiliated shall
be reported to the Corporate Governance Committee and may be considered in
making independence determinations.
For purposes of these standards, Deere
shall mean Deere & Company and its direct and indirect subsidiaries, and
immediate family member shall have the meaning set forth in the NYSE
independence rules, as may be amended from time to time.
A-2
Table of Contents
Appendix B
Proposed Amendment to
Article II, Section 4 of
Deere & Company Bylaws
Section 4. SPECIAL
MEETINGS.
(a) Special meetings of the
stockholders may be called by (i) the Chairman, (ii) the Chief Executive Officer
or (iii) resolution of the Board of Directors, and shall be held at such
place, on such date, and at such time as the Board of Directors shall fix.
Stockholders ability to cause a special meeting to be held is described in
Section 4(b) below.
(b) Subject to the provisions of this
Section 4(b) and all other applicable sections of these bylaws, a special
meeting of stockholders shall be called by the Secretary upon written request in
proper form (a Special Meeting Request) of one or more record holders of
shares of stock of the Company representing not less than 25% of the voting
power of all outstanding shares of stock of the Company (the Requisite
Percentage) who have held such shares continuously for at least one year prior
to the date such request is delivered to the Company (the One-Year Period).
For purposes of this Section 4(b) and for determining the Requisite Percentage,
a stockholder of record or a beneficial owner, as the case may be, shall be
deemed to own the shares of stock of the Company that such stockholder or, if
such stockholder is a nominee, custodian or other agent that is holding the
shares on behalf of another person (the beneficial owner), that such
beneficial owner would be deemed to own pursuant to Rule 200(b) under the
Securities Exchange Act of 1934, as amended, excluding any shares as to which
such stockholder or beneficial owner, as the case may be, does not have the
right to vote or direct the vote at the special meeting or as to which such
stockholder or beneficial owner, as the case may be, has entered into a
derivative or other agreement, arrangement or understanding that hedges or
transfers, in whole or in part, directly or indirectly, any of the economic
consequences of ownership of such shares. The Board of Directors shall determine
in good faith whether all requirements set forth in this Section 4(b) have been
satisfied and such determination shall be binding on the Company and its
stockholders.
(i) A Special Meeting Request must be
delivered by hand or by registered U.S. mail, postage prepaid, return receipt
requested, or courier service, postage prepaid, to the attention of the
Secretary at the principal executive offices of the Company. A Special Meeting
Request shall be valid only if it is signed and dated by each stockholder of
record submitting the Special Meeting Request and the beneficial owners, if any,
on whose behalf the Special Meeting Request is being made, or such stockholders
or beneficial owners duly authorized agent (each, a Requesting Stockholder),
collectively representing the Requisite Percentage, and includes both the
information required by Section 4(b)(ii) below and: (A) (x) the class, series
and number of all shares of stock
of the Company which are owned beneficially or of record by the Requesting Stockholder,
(y) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest
has been entered into by or on behalf of such Requesting Stockholder with respect to stock of the Company and (z) whether any
other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares
of stock) has been made by or on behalf of such Requesting Stockholder, the effect or intent of which is to mitigate loss to,
or to manage risk or benefit of stock price changes for, such Requesting Stockholder or to increase or decrease the voting power
or pecuniary or economic interest of such Requesting Stockholder with respect to stock of the Company; (B) a statement of the
specific purpose(s) of the special meeting and the reasons for conducting such business at the special meeting and the text of
any resolutions proposed for consideration; (C) an agreement by the Requesting Stockholders to notify the Company promptly in
the event of any disposition prior to the record date for the special meeting of shares of the Company owned of record and an
acknowledgement that any such disposition shall be deemed to be a revocation of such Special Meeting Request with respect to such
disposed shares; and (D) appropriate evidence that the Requesting Stockholders own the Requisite Percentage as of the date on
which the Special Meeting Request is delivered to the Secretary and have held such shares continuously for the One-Year Period;
provided, however, that if the Requesting Stockholders are not the beneficial owners of the shares representing
the Requisite Percentage, then to be valid, the Special Meeting Request must also include documentary evidence (or, if not simultaneously
provided with the Special Meeting Request, such documentary evidence must be delivered to the Secretary within 10 days after the
date on which the Special Meeting Request is delivered to the Secretary) that the beneficial owners on whose behalf the Special
Meeting Request is made beneficially own the Requisite Percentage as of the date on which such Special Meeting Request is delivered
to the Secretary and have held such shares continuously for the One-Year Period. In addition, the Requesting Stockholders and
the beneficial owners, if any, on whose behalf the Special Meeting Request is being made shall (x) further update and supplement
the information provided in the Special Meeting Request, if necessary, so that the information provided or required to be provided
therein shall be true and correct as of the record date for the special meeting, and such update and supplement shall be delivered
to, or mailed and received by, the Secretary at the principal executive offices of the Company not later than five business days
after the record date for the meeting and (y) promptly provide any other information reasonably requested by the Company.
B-1
Table of Contents
(ii) In addition to compliance with
Section 4(b)(i), to be valid, a Special Meeting Request shall also include as to
each Soliciting Stockholder (defined below): (A) in the case of any director
nominations proposed to be presented at the special meeting, the information
required by Section 3(a) of this Article II; and (B) in the case of any matter
(other than a director nomination) proposed to be conducted at the special
meeting, the information that would be required by Section 3(b) of this Article
II in order to propose at an annual meeting of stockholders the matters proposed
to be brought before the special meeting. Soliciting Stockholder shall mean,
with respect to any Special Meeting Request, any of the following persons: (x)
if the number of stockholders signing the Special Meeting Request delivered to
the Company pursuant to Section 4(b)(i) is 10 or fewer, each stockholder signing
such Special Meeting Request; (y) if the number of stockholders signing the
Special Meeting Request delivered to the Company pursuant to Section 4(b)(i) is
more than 10, each person who either was a participant in any solicitation of
such Special Meeting Request or, at the time of the delivery to the Company of
the Special Meeting Request, had engaged or intended to engage in any
solicitation of proxies for the calling of such special meeting or for use at
such special meeting (other than a solicitation of proxies on behalf of the
Company); or (z) any affiliate of a person described in (x) or (y) above.
(iii) A Special Meeting Request shall not
be valid, and a special meeting requested by stockholders shall not be held, if:
(A) the Special Meeting Request does not comply with this Section 4(b); (B) the
Special Meeting Request relates to an item of business that is not a proper
subject for stockholder action under applicable law; (C) the Special Meeting
Request is delivered during the period commencing 120 days prior to the first
anniversary of the date of the immediately preceding annual meeting of
stockholders and ending on the earlier of (x) the date of the next annual
meeting and (y) 30 days after the first anniversary of the date of the previous
annual meeting; (D) an identical or substantially similar item (as determined in
good faith by the Board, a Similar Item), other than the election of
directors, was presented at an annual or special meeting of stockholders held
not more than 12 months before the Special Meeting Request is delivered; (E) a
Similar Item was presented at an annual or special meeting of stockholders held
not more than 120 days before the Special Meeting Request is delivered (and, for
purposes of this clause (E), the election of directors shall be deemed to be a
Similar Item with respect to all items of business involving the election or
removal of directors, changing the size of
the Board of Directors and the filling of vacancies and/or newly created
directorships resulting from any increase in the authorized number of
directors); (F) a Similar Item is included in the Companys notice of meeting as
an item of business to be brought before an annual or special meeting of
stockholders that has been called but not yet held or that is called for a date
within 120 days of the receipt by the Company of a Special Meeting Request (and,
for purposes of this clause (F), the election of directors shall be deemed to be
a Similar Item with respect to all items of business involving the election or
removal of directors, changing the size of the Board of Directors and the
filling of vacancies and/or newly created directorships resulting from any
increase in the authorized number of directors); or (G) the Special Meeting
Request was made in a manner that involved a violation of Regulation 14A under
the Securities Exchange Act of 1934, as amended, or other applicable
law.
(iv) Special meetings of stockholders called pursuant
to this Section 4(b) shall be held at such place, on such date, and at such time as the Board of Directors shall fix; provided,
however, that the special meeting shall not be held more than 120 days after receipt by the Company of a valid Special
Meeting Request.
(v) The Requesting Stockholders may revoke
a Special Meeting Request by written revocation delivered to the Secretary at the
principal executive offices of the Company at any time prior to the special
meeting. If, following such revocation (or deemed revocation pursuant to clause
(C) of Section 4(b)(i)), there are unrevoked requests from Requesting
Stockholders holding in the aggregate less than the Requisite Percentage, the
Board, in its discretion, may cancel the special meeting.
(vi) If none of the Requesting
Stockholders appear or send a duly authorized agent to present the business to
be presented for consideration specified in the Special Meeting Request, the
Company need not present such business for a vote at the special meeting,
notwithstanding that proxies in respect of such matter may have been received by
the Company.
Business transacted at any special meeting
called pursuant to this Section 4(b) shall be limited to (A) the purpose(s)
stated in the valid Special Meeting Request received from the Requisite
Percentage of stockholders and (B) any additional matters that the Board
determines to include in the Companys notice of the special
meeting.
B-2
Table of Contents
Appendix
C
Deere & Company
Reconciliation of Non-GAAP Measures
Short-Term Incentive:
As described in the CD&A under
Short-Term Incentive (STI), Operating Return on Operating Assets (OROA)
and Return on Equity (ROE) are the metrics used to measure performance for the
STI program. Management believes for the fiscal year ended October 31, 2014 OROA and ROE are appropriate measures for the
performance of the businesses over a short-term period. The OROA and ROE
calculations can be summarized as follows, with dollar figures in
millions:
|
|
|
|
|
|
Agriculture |
|
Construction |
(Millions of $) |
|
Equipment |
|
and Turf |
|
and Forestry |
OROA Calculation for Equipment Operations: |
|
Operations |
|
Operations |
|
Operations |
Operating Profit |
|
$ |
4,297 |
|
|
$ |
3,649 |
|
|
$ |
648 |
|
Average Identifiable
Assets With Inventories at Standard Cost (1) |
|
$ |
15,493 |
|
|
$ |
11,813 |
|
|
$ |
3,680 |
|
Operating Return On Assets With Inventories
at Standard Cost (1) |
|
|
27.7 |
% |
|
|
30.9 |
% |
|
|
17.6 |
% |
|
ROE
Calculation for Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Deere &
Company |
|
$ |
624 |
|
|
|
|
|
|
|
|
|
Average Equity
(1) |
|
$ |
4,575 |
|
|
|
|
|
|
|
|
|
Return on Equity |
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
(1) In the event of an acquisition where
goodwill exceeds $50 million, goodwill is excluded for two years to allow time
for integration of the new business. There was no adjustment for goodwill for
STI purposes for the fiscal year ended October 31, 2014. Average Identifiable
Assets with Inventories at LIFO were $14,113, $10,668, and $3,445 for Equipment
Operations, Agriculture and Turf Operations, and Construction and Forestry
Operations, respectively. OROA with Inventories at LIFO was 30.4%, 34.2%, and
18.8% for Equipment Operations, Agriculture and Turf Operations, and
Construction and Forestry Operations, respectively.
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Table of Contents
Mid-Term
Incentive:
As described in the CD&A
under Mid-Term Incentive (MTI), Shareholder Value Added (SVA) is the
metric used to measure performance for the MTI program. Management believes SVA
is an appropriate measure for the performance of the businesses over a mid-term
period. SVA is, in effect, the pretax profit remaining after subtracting the
cost of enterprise capital. The computation of SVA can be summarized as follows
for the performance period ended October 31, 2014, with dollar figures in
millions:
|
|
Fiscal Year |
|
Fiscal Year |
|
Fiscal Year |
(Millions of $) |
|
2012 |
|
2013 |
|
2014 |
SVA Calculation for
Equipment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit |
|
$ |
4,397 |
|
|
$ |
5,058 |
|
|
$ |
4,297 |
|
Average Identifiable
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO |
|
$ |
13,594 |
|
|
$ |
14,569 |
|
|
$ |
14,113 |
|
With Inventories at Standard Cost |
|
$ |
14,965 |
|
|
$ |
15,924 |
|
|
$ |
15,493 |
|
Less Estimated Cost of Assets (1)
(3) |
|
$ |
(1,795 |
) |
|
$ |
(1,911 |
) |
|
$ |
(1,860 |
) |
SVA |
|
$ |
2,602 |
|
|
$ |
3,147 |
|
|
$ |
2,437 |
|
|
SVA Calculation for
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to
Deere & Company |
|
$ |
460 |
|
|
$ |
565 |
|
|
$ |
624 |
|
Operating Profit |
|
$ |
712 |
|
|
$ |
870 |
|
|
$ |
921 |
|
Average Equity
(3) |
|
$ |
3,470 |
|
|
$ |
4,073 |
|
|
$ |
4,575 |
|
Less Cost of Equity (2) |
|
$ |
(538 |
) |
|
$ |
(627 |
) |
|
$ |
(664 |
) |
SVA |
|
$ |
174 |
|
|
$ |
243 |
|
|
$ |
257 |
|
|
Deere Enterprise
SVA |
|
$ |
2,776 |
|
|
$ |
3,390 |
|
|
$ |
2,694 |
|
Total SVA for Three-Year Performance Period Ending
2014 |
|
|
|
|
|
|
|
|
|
$ |
8,860 |
|
(1) For purposes of determining SVA, the
equipment segments are assessed a pretax cost of assets, which on an annual
basis is generally 12% of the segments average identifiable operating assets
during the applicable period with inventory at standard cost (believed to more
closely approximate the current cost of inventory and the Companys investment
in the asset).
(2) For SVA, Financial Services is
assessed an annual pretax cost of average equity of approximately
15%.
(3) In the event of an acquisition where
goodwill exceeds $50 million, goodwill is excluded for two years to allow time
for integration of the new business. There was no adjustment for goodwill for
MTI purposes for the fiscal years ended October 31, 2012, 2013, or
2014.
C-2
Table of Contents
Appendix D
JOHN DEERE
OMNIBUS EQUITY AND INCENTIVE PLAN |
(As Amended February 25,
2015) |
Article I: General
1.1 Purpose
Deere & Company, a Delaware
corporation (the Corporation), hereby adopts, subject to stockholder approval,
this plan, which shall be known as the JOHN DEERE OMNIBUS EQUITY AND INCENTIVE
PLAN (the Plan). The Corporation and its Subsidiaries are severally and
collectively referred to hereinafter as the Company. The purpose of the Plan
is to foster and promote the long-term financial success of the Company and
materially increase stockholder value by: (a) strengthening the Companys
capability to develop, maintain, and direct an outstanding employee team; (b)
motivating superior performance by means of long-term performance related
incentives; (c) encouraging and providing the means for employees to obtain an
ownership interest in the Company; (d) attracting and retaining outstanding
talent by providing incentive compensation opportunities competitive with other
major companies; and (e) enabling eligible employees to participate in the
long-term growth and financial success of the Company.
1.2 Administration
(a) The Plan shall be administered by and
under the direction of the Compensation Committee of the Board of Directors of
the Corporation (the Board of Directors) or such other committee of directors
as may be designated by the Board of Directors from time to time (the
Committee), which shall consist of two or more members who are not current or
former officers or employees of the Company, who are outside directors to the
extent required by and within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as it may be amended from time to time, and the rules,
regulations and guidance thereunder (the Code), who are non-employee
directors to the extent required by and within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934 (the Exchange Act) or any similar rule
which may subsequently be in effect (Rule 16b-3), and who are independent
directors pursuant to New York Stock Exchange (NYSE) rules. The members shall
be appointed by the Board of Directors, and any vacancy on the Committee shall
be filled by the Board of Directors.
(b) Subject to the limitations of the
Plan, the Committee shall have the sole and complete authority to: (i) select
from eligible employees of the Company those who shall participate in the Plan
(a Participant or Participants); (ii) make awards in such forms
and amounts as it shall determine; (iii)
impose such limitations, restrictions and conditions upon such awards as it
shall deem appropriate; (iv) interpret the Plan and adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan;
(v) correct any defect or omission or reconcile any inconsistency in this Plan
or in any award granted hereunder; and (vi) make all other determinations and
take all other actions deemed necessary or advisable for the implementation and
administration of the Plan. The Committees determinations on matters within its
authority shall be conclusive and binding upon the Company and all other
persons. The inadvertent failure of any member of the Committee to meet the
qualification requirements of an outside director under Section 162(m) of the
Code or a non-employee director under Rule 16b-3 shall not invalidate or
otherwise impair any actions taken or awards granted by the
Committee.
(c) Except as provided below, the
Committee may, to the extent that any such action will not prevent the Plan or
any award under the Plan from complying with Rule 16b-3, the outside director
requirement of Section 162(m) of the Code, the rules of the NYSE applicable to
companies listed for trading thereon, or any other law, delegate any of its
authority hereunder to such persons as it deems appropriate. The Committee shall
not delegate its authority to amend, suspend, or terminate the Plan.
(d) The provisions of this Plan are
intended to qualify awards made to certain Participants (hereinafter identified
as Covered Participants) under the Plan as performance-based compensation
exempt from the deduction limitation of Section 162(m) of the Code (Section
162(m)).
1.3 Types of Awards Under the Plan
Awards under the Plan may be in the form
of any one or more of the following: (a) Statutory Stock Options (ISOs, which
term shall be deemed to include ISOs as such term is defined in Section 422 of
the Code and any future type of tax-qualified option which may subsequently be
authorized), Non-statutory Stock Options (NSOs and, collectively with ISOs,
Options), and Stock Appreciation Rights (SARs) as described in Article II;
(b) Performance Units and Performance Shares (Performance Units and
Performance Shares) as described in Article III; (c) Restricted Stock and
Restricted Stock Equivalents (Restricted Stock and Restricted Stock
Equivalents) as described in Article IV; (d) Other Awards (Other Awards) as
described in Article V; and (e) Substitute Awards as defined in Article IX
(collectively, Awards).
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Table of Contents
1.4 Shares Subject to the Plan
(a) Shares of stock covered by Awards
under the Plan may be authorized and unissued or treasury shares of the
Corporations common stock, $1.00 par value per share, or such other shares as
may be substituted pursuant to Section 1.6 (Common Stock).
(b) Effective February 25, 2015, the
maximum number of shares of Common Stock which may be awarded for all purposes
under the Plan shall be the aggregate of:
(i) 13,000,000
shares;
(ii) the number
of shares previously authorized for Awards under the Plan but not reserved for
outstanding Awards as of the date the Plan as amended is approved by the
Corporations stockholders; and
(iii) any
shares corresponding to Awards under the Plan that are forfeited after the date
the amended Plan is approved.
(c) Effective for Awards made after
February 22, 2006, awards of Performance Awards, Restricted Stock, Restricted
Stock Equivalents and Other Awards shall reduce the maximum number of available
authorized shares of Common Stock under the Plan by 2.5 shares for each share
awarded. Awards of Options and SARs shall reduce the maximum number of available
authorized shares of Common Stock under the Plan by one share for each share
awarded. Shares subject to Substitute Awards shall not reduce the maximum number
of available authorized shares of Common Stock under the Plan. The full number
of shares underlying any Award (other than a Substitute Award) that is settled
by the issuance of shares shall be counted against the number of shares
available under the Plan in accordance with the first two sentences of this
Section 1.4(c), regardless of the number of shares actually issued upon
settlement of such Award.
(d) Any shares of Common Stock subject to
an Option, or any portion of an Option, which for any reason is cancelled
(excluding shares subject to an Option cancelled upon the exercise of a related
SAR to the extent shares are issued upon exercise of such SAR) or terminated
without having been exercised, or any shares corresponding to any other Award or
portion of an Award under the Plan which is cancelled or terminated before
delivery of such shares, shall again be available for Awards under the Plan. For
the avoidance of doubt, however, none of the following types of shares shall be
available for use in connection with future Awards under the Plan: (i) shares
not issued or delivered as a result of the net settlement of an Option or SAR;
(ii) shares used to pay the exercise price of an Option or SAR or the
withholding taxes related to the exercise or settlement of any Award; or (iii)
shares repurchased on the open market with the proceeds of the exercise price of
an Option.
(e) No fractional shares shall be issued,
and the Committee shall determine the manner in which fractional share value
shall be treated.
1.5 Maximum Awards Per Participant
(a) The aggregate number of shares of
Common Stock (including any cash equivalents thereof) that may be subject to
Options and SARs awarded during any fiscal year to a Participant shall not
exceed 1,000,000.
(b) The aggregate number of all (i)
Performance Awards; (ii) Restricted Stock and Restricted Stock Equivalents;
(iii) Other Awards; and (iv) Substitute Awards awarded to a Participant in any
fiscal year shall not exceed the equivalent of 400,000 shares or the cash
equivalent thereof (based on the Fair Market Value of Common Stock as of the
date of the Award).
1.6 Adjustments Upon Certain Changes
In the event of a stock dividend or stock
split, recapitalization, extraordinary cash dividend, merger, consolidation,
combination, exchange of shares, or other increase or reduction in the number of
issued shares of Common Stock, the Board of Directors or the Committee shall, in
order to prevent the dilution or enlargement of rights under Awards (including
Deferred Amounts), make such adjustments in the number and type of shares
authorized by this Plan, the number and type of shares covered by, or with
respect to which payments are measured under, outstanding Awards, and the
exercise prices specified therein as may be determined to be appropriate and
equitable to prevent dilution or enlargement of rights. The determination of the
Board of Directors or the Committee as to what adjustments shall be made, and
the extent thereof, shall be final.
1.7 Eligible Participants
Participants shall be selected by the
Committee from among the salaried employees of the Company.
Article II: Stock Options and Stock
Appreciation Rights
2.1 Award of Stock Options
The Committee may, from time to time,
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award to any Participant ISOs and/or NSOs to purchase
Common Stock.
2.2 Documentation of Stock Option Awards
The award of an Option may be evidenced by
a signed written agreement, a certificate, or an electronic record containing
such terms and conditions as the Committee may from time to time
determine.
D-2
Table of Contents
2.3 Option Price
The purchase price of Common Stock under
each Option (the Option Price) shall be fixed by the Committee and except for
Substitute Awards, shall be not less than the Fair Market Value of the Common
Stock on the date the Option is awarded.
2.4 Exercise and Term of Options
(a) Options awarded under the Plan shall
be exercisable at such times and be subject to such restrictions and conditions
as the Committee shall approve, either at the time of grant of such Options or
pursuant to a general determination, and which need not be the same for all
Participants, provided that no such Option (other than Substitute Awards) shall
be exercisable within the first six months of its term (except in the event of
the death of the Participant, in which event Section 2.8(b) shall control
without regard to the six-month or other holding period requirements) and the
term of each Option shall not extend later than ten years after the date of
grant of the Option. Each Option which is intended to qualify as an ISO pursuant
to Section 422 of the Code, and each Option which is intended to qualify as
another type of Statutory Stock Option which may subsequently be authorized by
law, shall comply with the applicable provisions of the Code pertaining to such
Options.
(b) The Committee shall establish
procedures governing the exercise of Options and shall require that written or
electronic notice of exercise be given and that the Option Price be paid in full
in cash (including check, bank draft, or money order) at the time of exercise;
provided, however, the Participant may instruct the Corporation to sell shares
delivered on exercise as the Participants agent pursuant to a cashless
exercise program or other similar program established or recognized by the
Committee or may exercise Options using a net share settlement procedure
established or recognized by the Committee. The Committee may permit a
Participant, in lieu of part or all of the cash payment, to make payment in
Common Stock already owned by that Participant, valued at Fair Market Value on
the date of exercise, as partial or full payment of the Option Price; provided,
however, that the Committee may, in any instance, in order to prevent any
possible violation of law, require the Option Price to be paid in cash. As soon
as practicable after receipt of each notice and full payment, the Company shall
deliver the acquired shares of Common Stock to the Participant. The exercise of
an Option shall cancel any related SAR to the extent of the number of shares as
to which the Option is exercised.
(c) Notwithstanding the foregoing, in
respect of Participants who at the time of award, vesting, or exercise of
Options are located in a jurisdiction that would but for this Section 2.4(c)
subject such Options to tax prior to exercise, any exercise shall be subject to
the prior written approval of the Manager, Global Compensation or an officer of
the Corporation. Such approval shall
be at the sole discretion of the Manager,
Global Compensation or the officer. If and when granted, such approval will
constitute the notice to the Corporation referred to above in Section 2.4(b).
2.5 Limitations
on ISOs
Notwithstanding anything in the Plan to
the contrary, to the extent required from time to time by the Code, the
following additional provisions shall apply to the grant of Options which are
intended to qualify as ISOs:
(a) The aggregate Fair Market Value (determined as
of the date the Option is granted) of the shares of Common Stock with respect to
which ISOs are exercisable for the first time by any Participant during any
calendar year (under all plans of the Company) shall not exceed $100,000 or such
other amount as may subsequently be specified by the Code; provided that, to the
extent that such limitation is exceeded, any excess Options (as determined under
the Code) shall be deemed to be NSOs.
(b) Any ISO authorized under the Plan
shall contain such other provisions as the Committee shall deem advisable, but
shall in all events be consistent with and contain or be deemed to contain all
provisions required in order to qualify the Options as ISOs.
(c) All ISOs must
be granted within ten years from the earlier of the date on which this amended
Plan was adopted by the Board of Directors or the date this amended Plan was
approved by the stockholders.
(d) Unless sooner exercised, terminated,
or cancelled, all ISOs shall expire no later than ten years after the date of
grant.
2.6 Advances
Subject to applicable laws and
regulations, the Committee may provide for the Corporation or any Subsidiary to
advance to a Participant amounts needed to finance the exercise price of any
Option and/or the estimated or actual amount of any taxes payable by the holder
as a result of the exercise or payment of any Option or other Award and may
prescribe, or may empower the Corporation or such Subsidiary to prescribe, the
other terms and conditions of such advance.
2.7 Award of Stock Appreciation Rights
(a) General. A SAR is a right to receive,
without payment (except for applicable withholding taxes) to the Company, a
number of shares of Common Stock, cash, or a combination thereof, the amount of
which is determined pursuant to the formula set forth in Section 2.7(e). A SAR
may be granted (i) in tandem with any Option granted under this Plan, either
concurrently with the grant of such Option, or at such later time as determined
by the Committee (as to all or any portion of the shares of Common Stock subject
to the Option); or (ii) alone, without reference to any related Option. Each SAR
granted by the Committee under this Plan shall be subject to the terms and
conditions of this Section 2.7.
D-3
Table of Contents
(b) Number. Each SAR granted to any
Participant shall relate to such number of shares of Common Stock as shall be
determined by the Committee, subject to adjustment as provided in Section 1.6.
In the case of a SAR granted with respect to an Option, the number of shares of
Common Stock to which the SAR pertains shall be reduced in the same proportion
that the holder of the Option exercises the related Option.
(c) Duration. The term of each SAR shall
be determined by the Committee but in no event shall a SAR (other than a
Substitute Award) be exercisable during the first six months of its term (except
in the event of the death of the Participant, in which event Section 2.8(b)
shall control without regard to the six-month or other holding period
requirements) and the term of each SAR shall not extend later than ten years
after the date of grant of the SAR. Subject to the foregoing, unless otherwise
provided by the Committee, each SAR shall become exercisable at such time or
times, to such extent and upon such conditions as the Option, if any, to which
it relates is exercisable, or if the SAR is not granted in tandem with an
Option, as determined by the Committee.
(d) Exercise. A SAR may be exercised, in
whole or in part, by giving written or electronic notice to the Company,
specifying the number of SARs which the holder wishes to exercise. As soon as
practicable upon receipt of such notice, the Company shall deliver to the
exercising holder the shares of Common Stock or cash or both, as determined by
the Committee, to which the holder is entitled.
(e) Payment. Subject to the right of the
Committee to deliver cash in lieu of shares of Common Stock, the number of
shares of Common Stock which shall be issuable upon the exercise of a SAR shall
be determined by dividing:
(i) the number
of shares of Common Stock as to which the SAR is exercised multiplied by the
amount of the appreciation in such shares (for this purpose, the appreciation
shall be the amount by which the Fair Market Value of a share of Common Stock
subject to the SAR on the exercise date exceeds a base price equal to (A) in the
case of a SAR related to an Option, the purchase price of a share of Common
Stock under the Option or (B) in the case of a SAR granted alone, without
reference to a related Option, an amount which shall be determined by the
Committee at the time of grant, provided, however, such amount is at least equal
to the Fair Market Value of the Common Stock on the date the SAR is awarded,
(subject to adjustment under Section 1.6)); by
(ii) the Fair
Market Value of a share of Common Stock on the exercise date.
In lieu of issuing shares of Common Stock
upon the exercise of a SAR, the Committee may elect to pay the holder of the SAR
cash equal to the appreciation (such appreciation to be determined
as set forth in Section 2.7(e)(i) above)
on the exercise date of any or all of the shares which would otherwise be
issuable. No fractional shares of Common Stock shall be issued upon the exercise
of a SAR; instead, the holder of the SAR shall be entitled to receive a cash
adjustment equal to the same fraction of the Fair Market Value of a share of
Common Stock on the exercise date.
(f) Documentation of SAR Awards. SARs
awarded under the Plan may be evidenced by a signed written agreement, a
certificate, or an electronic record containing such terms and conditions as the
Committee may from time to time determine.
2.8 Termination of Employment
(a) Unless the Committee establishes
otherwise at the time of the Award, in the event the Participant ceases to be an
employee of the Company with the consent of the Committee or upon the
Participants death, or retirement or disability pursuant to applicable
disability or retirement plans of the Company, each of the Participants
outstanding Options and SARs shall be exercisable by the Participant (or the
Participants legal representative or designated beneficiary), subject to the
vesting requirements of the Options and SARs, at any time prior to an expiration
date established by the Committee (which may be the original expiration date of
such Option or such earlier time as the Committee may establish) or as set forth
in Section 2.8(b) or (c), but in no event after its respective expiration date.
If the Participant ceases to be an employee of the Company for any other reason
and without such consent, all of the Participants then outstanding Options and
SARs shall terminate immediately. A discontinuation of employment with the
Company due to the divestiture of all or part of an entity, business unit, or
division resulting in less than majority direct or indirect ownership of such
entity, business unit, or division by the Corporation shall be considered a
termination of employment for purposes of the Plan.
(b) Unless the Committee establishes
otherwise at the time of the Award, in the event of termination of employment
because of death, the Participants outstanding Options and SARs may be
exercised by the legal representative or designated beneficiary of the holder,
as the case may be, within twelve months after the Participants death. Such
exercise shall be upon the same terms at the time of exercise as would have been
available to the original holder, had he or she remained in the continuous
employ of the Company, except that such legal representative or designated
beneficiary may exercise any Options and SARs held at the date of the
Participants death without regard to the holding period established pursuant to
Section 2.4(a) or 2.7(c) above.
Unless the Committee establishes otherwise at
the time of the Award, in the event of termination of employment of the holder
of an Option or SAR with the consent of the Committee or because of disability
or retirement pursuant to applicable disability or retirement plans of the
Company, an Option or SAR may be
D-4
Table of Contents
exercised by such holder, within five
years after such termination, to the same extent and upon the same terms
(including among other things, the holding period requirement established
pursuant to Section 2.4(a) or 2.7(c) above) at the time of exercise as would
have been available had such holder remained in the continuous employ of the
Company. In the event of the death of such holder of an Option or SAR prior to
the expiration of the five-year period specified in the preceding sentence, an
Option or SAR held at death by such holder may be exercised by the holders
heirs, legatees, or legal representatives, as the case may be (without regard to
the holding period requirement established pursuant to Section 2.4(a) or 2.7(c)
above), within one year after death or within five years following such
termination, whichever is later, but only if and to the extent the Option or SAR
would have been exercisable by the holder of the Option or SAR at the
date of death.
(c) In the event of a termination of
employment of a Participant with the consent of the Committee or because of the
Participants death, or retirement or disability pursuant to applicable
disability or retirement plans of the Company, the Committee in its sole
discretion may elect to accelerate the date on which certain of the Options and
SARs issued to such Participant become exercisable, which acceleration may be
conditioned on the forfeiture of other Awards issued to such Participant. It is
expressly provided, however, that, other than in the case of death, no such
acceleration may permit the exercise of any Option or SAR within six months of
the date of grant.
(d) Nothing in Section 2.8(b) and 2.8(c)
shall make an Option or SAR exercisable after the stated expiration date of such
Option or SAR.
2.9 Dividends
Dividends and dividend equivalents shall
not be paid or accrued with respect to unexercised Options or unexercised SARs.
2.10 Restrictions on Repricings
Subject to adjustments pursuant to Section
1.6, without stockholder approval:
(i) the Option
Price and SAR base price for determining appreciation fixed by the Committee at
the time of grant shall not be lowered;
(ii) Options
and SARs shall not be repurchased or exchanged for cash or other Awards or
Options when the Option Price or base price for determining appreciation exceeds
the Fair Market Value of the Common Stock; and
(iii) no other
action shall be taken that is treated as a repricing of Options or SARs under
generally accepted accounting principles applicable to the Corporation.
Article III: Performance Shares and
Units
3.1 Award of Performance Units and Performance Shares
The Committee may award to any Participant
Performance Shares and/or Performance Units (Performance Awards). Each
Performance Share shall represent one share of Common Stock. Each Performance
Unit shall represent the right of a Participant to receive an amount equal to
the value determined in the manner established by the Committee at the time of
award, which value may, without limitation, be one share of Common Stock or
equal to the Fair Market Value of one share of Common Stock.
3.2 Documentation of Performance Awards
Each Performance Award under the Plan may
be evidenced by a signed written agreement, a certificate, or an electronic
record containing such terms and conditions as the Committee may from time to
time determine. Dividends or dividend equivalents may be accrued on Performance
Awards while they are subject to performance targets. Such accrued dividends or
dividend equivalents may be paid with respect to Performance Awards only if and
when the performance targets are met. Performance Shares shall be held by the
Corporation while subject to performance targets. Except for restrictions on
transfer and as described above, the Participant as owner of such Performance
Shares shall have all the rights of a holder of Common Stock.
3.3 Performance Period and Targets
(a) The performance period for each award
of Performance Shares and Performance Units shall be of such duration as the
Committee shall establish at the time of award; provided, however, that in no
event will the performance period be less than one year (which may be a calendar
year or a fiscal year, as determined by the Committee) (the Performance
Period). There may be more than one award in existence at any one time and
Performance Periods may differ.
(b) The Committee shall set performance
targets relating to Performance Units and Performance Shares which shall be
based on one or more of the following performance measures, or any combination
of the following: (i) total stockholder return; (ii) growth in revenues, sales,
settlements, market share, customer conversion, net income, operating income,
cash flow, stock price, and/or earnings per share; (iii) return on assets, net
assets, and/or capital; (iv) return on stockholders equity; (v) economic or
shareholder value added; (vi) improvements in costs and/or expenses; or (vii) in
the case of Awards to Participants who are not Covered Participants, any other
performance measure established by the Committee. Such performance targets shall
be established in writing by the Committee no later than the earlier of (i) 90
days after the commencement of the Performance Period with respect to which the
award of Performance Units or Performance Shares is made and (ii) the date as of
which twenty-five percent (25%) of such
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Performance Period has elapsed. For
purposes of establishing performance targets, any of the factors set forth above
may, as applicable, be measured either before or after income taxes, and on a
corporate, division, subsidiary, or individual basis, and may include or exclude
interest, depreciation and amortization, goodwill, extraordinary items and other
material non-recurring gains or losses, discontinued or added operations, the
cumulative effect of changes in accounting policies, and the effect of any tax
law changes. Performance targets may be measured on an absolute basis or
relative to selected peer companies or one or more market indices as determined
by the Committee. At the time of setting performance targets, the Committee
shall establish minimum, target and maximum performance targets to be achieved
within the Performance Period. Failure to meet the minimum performance target
will earn no Performance Award. Performance Awards will be earned as determined
by the Committee in respect of a Performance Period in relation to the degree of
attainment of performance between the minimum and maximum performance targets.
(c) If the Committee shall determine that
(i) an acquisition or disposition of assets or securities by the Company or (ii)
a significant change to the basis of the Companys financial reporting due to
the Companys adoption during the Performance Period of new or revised
accounting standards or International Financial Reporting Standards shall have a
material effect (whether positive or negative) on the Companys ability to meet
its performance target(s) for the applicable Performance Period(s), the
Committee shall have the discretion to take any action that would reduce the
amount of an Award, or to adjust a performance target for a Performance Period,
subject, in the case of Awards to Covered Participants, to the limitations of
Section 162(m).
(d) Except as provided in Section 3.3(c)
above, once established, performance targets for Awards to Covered Participants
shall not be changed during the Performance Period; provided, however, that the
Committee retains the discretion to eliminate or decrease the amount of an Award
otherwise payable to any Participant.
3.4 Payment Respecting Performance Awards
(a) Performance Awards shall be earned to
the extent that their terms and conditions are met. Notwithstanding the
foregoing, Performance Awards shall be payable to the Participant only in
accordance with the terms thereof or otherwise when, if, and to the extent that
the Committee determines to make such payment. All payment determinations shall
be made by the Committee during the first four months following the end of the
Performance Period. Anything in the preceding two sentences to the contrary
notwithstanding and subject to Section 3.4(b) below, all payments
under a Performance Award shall be made no
later than (i) the 15th day of the third month following the end of
the calendar year in which the applicable Performance Period ends or (ii) the
15th day of the third month following the end of the Companys
taxable year in which the applicable Performance Period ends, whichever is
later.
(b) The Participant may elect to defer
payment or settlement of a Performance Award pursuant to Section 5.3 hereof.
(c) Payment for Performance Awards may be
made in a lump sum or in installments. Performance Awards may be paid in cash,
Common Stock, or in a combination thereof as the Committee may determine.
3.5 Termination of Employment
Unless the Committee establishes otherwise
at the time of the Award, in the event the Participant ceases to be an employee
of the Company before the end of any Performance Period with the consent of the
Committee, or upon the Participants death, or retirement or disability pursuant
to applicable disability or retirement plans of the Company before the end of
any Performance Period: (a) each Performance Award previously granted to the
participant shall continue to be subject to the performance targets for the
Performance Period until such Awards are forfeited or earned pursuant to their
terms and conditions; or (b) except with respect to Awards to Covered
Participants, the Committee, in its absolute discretion, may authorize the
payment to such Participant (or the Participants legal representative or
designated beneficiary) of any of the Performance Units and Performance Shares
which would have been paid to the Participant had the Participant continued as
an employee of the Company to the end of the Performance Period, provided that
the number of Performance Units and Performance Shares paid early shall be
discounted to reasonably reflect the time value of money and shall be based on
the Companys progress, measured as of the date of acceleration, with regard to
reaching the applicable performance targets. In the event a Participant ceases
to be an employee of the Company for any other reason and without such consent
before the end of the Performance Period, all of the Participants Awards
relating to outstanding Performance Periods shall be forfeited.
Article IV: Restricted Stock and
Restricted Stock Equivalents
4.1 Award of Restricted Stock
The Committee may award to any Participant
shares of Common Stock, subject to this Article IV and such other terms and
conditions as the Committee may prescribe (such shares being herein called
Restricted Stock). Restricted Stock shall be held by the Corporation while
subject to restrictions. As restrictions lapse, the shares will be delivered to
the Participant.
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4.2 Documentation of Restricted Stock Awards
Awards of Restricted Stock and Restricted
Stock Equivalents under the Plan may be evidenced by a signed written agreement,
a certificate, or an electronic record containing such terms and conditions as
the Committee may from time to time determine.
4.3 Restriction Period
At the time of award there shall be
established for each Participant, subject to Section 4.6, a restriction period
(the Restriction Period) which shall lapse (a) upon the completion of a period
of time (Time Goal) as shall be determined by the Committee, or (b) upon the
achievement of stock price goals within certain time limitations (Price/Time
Goal) as shall be determined by the Committee; provided, however, that, except
for maximum aggregate Restricted Stock or Restricted Stock Equivalent awards of
5% of the aggregate shares authorized by Section 1.4(b), the Restriction Period
on Awards with a Price/Time Goal shall not be less than one year and the
Restriction Period on Awards with only a Time Goal shall not be less than three
years. Except for restrictions on transfer, the Participant as owner of such
shares of Restricted Stock shall have all the rights of a holder of Common
Stock. With respect to shares of Restricted Stock which are issued subject to a
Time Goal, the Corporation shall deliver to the Participant (or the
Participants legal representative or designated beneficiary) the shares at the
expiration of the Restriction Period. With respect to shares of Restricted Stock
which are issued subject to a Price/Time Goal, the Corporation shall deliver to
the Participant (or the Participants legal representative or designated
beneficiary) the shares upon the achievement of the Price/Time Goal on or before
the close of the Restriction Period. With respect to shares of Restricted Stock
which are issued subject to a Price/Time Goal which fail to meet the goal before
the end of the Restriction Period, all such shares shall be forfeited.
4.4 Termination of Employment
In the event the Participant ceases to be
an employee of the Company before the end of any Restriction Period with the
consent of the Committee, or upon the Participants death, or retirement or
disability pursuant to applicable disability or retirement plans of the Company
before the end of any Restriction Period, the Committee shall have the absolute
discretion to waive all or a portion of the Time Goals and Price/Time Goals
established under Section 4.3 provided that the Price/Time Goals with respect to
any Restricted Stock or Restricted Stock Equivalent awarded to Covered
Participants pursuant to Section 4.6 shall not be subject to waiver or
modification after such goals are established. The shares thereby released, if
any, shall thereafter be delivered to such Participant (or the Participants
legal representative or designated beneficiary). In the event and to the extent
the Committee does not exercise its discretion to waive the Time Goals and
Price/Time Goals or a Participant ceases to be an employee of the Company for
any other
reason and without such consent before
achievement of the Time Goal or Price/Time Goal, each Award to such Participant
upon which the Restriction Period has not lapsed shall automatically be
forfeited.
4.5 Award of Restricted Stock Equivalents
In lieu of or in addition to the foregoing
Restricted Stock Awards, the Committee may award to any Participant restricted
stock equivalents, subject to the terms and conditions of Sections 4.2, 4.3, and
4.4 being applied to such Awards as if those Awards were for Restricted Stock
and subject to such other terms and conditions as the Committee may prescribe
(Restricted Stock Equivalents); provided, however, that other than the right
to receive dividend equivalents in cash at the same time as dividends are paid
on Common Stock, which right the Committee may grant in its discretion, a
Participant will not have any of the rights of a holder of Common Stock unless
and until shares subject to such Restricted Stock Equivalents are delivered to
the Participant. Each Restricted Stock Equivalent shall represent the right of
the Participant to receive either shares or an amount determined in the manner
established by the Committee at the time of award, which value may, without
limitation, be equal to the Fair Market Value of one share of Common Stock.
Payment for Restricted Stock Equivalents may be made in shares or in cash, in a
lump sum, or in installments, as the Committee may determine.
4.6 Restricted Stock and Restricted Stock Equivalents Awarded to Covered
Participants
Any Restricted Stock or Restricted Stock
Equivalent awarded to a Covered Participant which the Committee intends to
qualify for the performance-based exception under Section 162(m) shall be
subject to a Price/Time Goal.
Article V: Other Awards, Cash
Equivalent Awards and Deferral
5.1 Other Awards
The Committee shall have the authority to
specify the terms and provisions of other forms of equity-based or
equity-related awards not described above which the Committee determines to be
consistent with the purpose of the Plan and the interests of the Company, which
awards may provide for cash payments based in whole or in part on the value or
future value of Common Stock, for the acquisition or future acquisition of
Common Stock, or any combination thereof (Other Awards); provided, that such
Other Awards with a performance goal shall not vest in less than one year and
Other Awards without one or more performance goals shall not vest in less than
three years. Performance goals shall be based on one or more or any combination
of the measures described in Section 3.3(b), including in the case of
Participants who are not Covered Participants, any other performance measure
established by the Committee. Other Awards shall also include cash payments
(including the cash payment of dividend equivalents) under the Plan
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which may be based on one or more criteria
determined by the Committee which are unrelated to the value of Common Stock and
which may be granted in tandem with, or independent of, other Awards under the
Plan.
5.2 Cash
Equivalent Awards
The Committee may permit Participants, on
such terms and conditions as the Committee may prescribe, to elect to receive
Performance Share and Restricted Stock Awards in cash in lieu of Common Stock
provided such election is made prior to the earlier of: (i) the date the shares
are issued for the benefit of the Participant (including when held by the
Corporation subject to restrictions); or (ii) the day prior to the beginning of
the calendar year in which the Award would become payable. Any such cash
equivalent payments shall be based on the Fair Market Value of the Common Stock
on the date determined by the Committee and be on such terms as shall not
represent an increase in benefits. Such cash equivalent payments shall be
applied against the limits on the maximum number of shares of Common Stock
pursuant to Sections 1.4 and 1.5 as if the Award in lieu of which such cash
equivalent payment was elected had been settled in stock.
5.3 Election To Defer
Participants eligible to participate in
the Deere & Company Voluntary Deferred Compensation Plan or any successor
plan thereto may elect, with the consent of the Committee and on such terms and
conditions as the Committee may prescribe, no later than the day prior to the
beginning of the last calendar year of the Performance Period (and in any event
no later than the date that is six months before the end of the Performance
Period) or such other date as may be specified by the Committee, to defer the
payment or settlement of all or a portion of the Participants Performance
Award, Restricted Stock Equivalent Award, or Other Award (the Deferred
Amount). All Deferred Amounts that are payable in cash will be subject to the
terms and conditions of the Deere & Company Voluntary Deferred Compensation
Plan or any successor plan thereto. For the avoidance of doubt, Participants are
not permitted to make a deferral election with respect to Options or SARs.
Article VI: Non-Transferability
6.1 Non-Transferability
Except as provided below, no Award under
the Plan (including any Deferred Amount), and no interest therein, shall be
transferable by the Participant otherwise than by will or, if the Participant
dies intestate, by the laws of descent and distribution and no Award may be
sold, transferred, assigned, pledged, hypothecated, or otherwise encumbered in
any way (whether by operation of law or otherwise) or be subject to execution,
attachment, or similar process. Upon any attempt to so transfer, assign, pledge,
hypothecate or otherwise dispose of, or subject to execution, attachment or
similar process, any Award, or any right thereunder, contrary to the
provisions hereof, the Award shall
immediately become null and void. Except as provided below, all Awards shall be
exercisable or received during the Participants lifetime only by the
Participant or his legal representatives.
6.2 Permitted Transfers
Notwithstanding the foregoing, the Committee may from time to time permit Awards
to be transferable subject to such terms and conditions as the Committee may impose, provided, however, no Award may be transferred
for value (within the meaning of the General Instructions to Securities and Exchange Commission Form S-8). Notwithstanding the
foregoing or anything else in the Plan, and in addition to the Companys rights under Section 8.5 (Tax Withholding),
the Company shall have the right to deduct from the final amount realized by any Participant upon the exercise, settlement, or
payment of any Award any amount that the Participant owes the Company (pursuant to contract, debt obligation or otherwise) at
the time the Award is scheduled for settlement, provided, that no such deduction shall be made to the extent it is prohibited
by Section 409A of the Code or would cause a Participant to recognize income for United States federal income tax purposes before
an Award is settled or to incur additional tax or interest under Section 409A of the Code.
6.3 Transferability of Stock Options and SARs
Notwithstanding the foregoing, the
Committee may, in its discretion, authorize all or a portion of Options and SARs
granted or to be granted to a Participant to be on terms which permit transfer
by gift or domestic relations orders (i) by such Participant to family members,
(ii) by family members to other family members, and (iii) to such other persons
or entities as may be permitted under Form S-8 under the Securities Act of 1933,
as amended from time to time or any successor form thereto. Following transfer,
any such Options and SARs shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer. The events of
termination of employment of Section 2.8 hereof shall continue to be applied
with respect to the employee, following which the Options shall be exercisable
by the transferee only to the extent and for the periods established pursuant to
Section 2.8. Family members, for purposes of this Section, has the meaning
expressed in the instructions to Form S-8 under the Securities Act or 1933, as
amended from time to time, or any successor form thereto.
6.4 Beneficiary Designation
Each Participant under the Plan may name,
from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of the Participants death before the Participant receives any or all of
such benefit. Each designation will revoke all prior designations for the Plan
by the same Participant, shall be in a form prescribed by the Corporation, and
will be effective only when
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executed and filed by the Participant in
writing during the Participants lifetime with
the Corporation at such address specified on the designation form. In the
absence of any such designation, benefits remaining unpaid at the Participants
death shall be paid to the Participants estate.
Article VII: Change of Control
The following acceleration and valuation
provisions shall apply: (i) in the case of Awards made prior to February 24,
2010, in the event of a Change of Control or Potential Change of Control, as
defined in this Article VII and; (ii) in the case of Awards made on or after
February 24, 2010 (Contemporary Awards), in the event of both (x) a Change of
Control and (y) a Qualifying Termination, each as defined in this Article
VII.
(a) In the
event that:
(i) a Change
of Control as defined in paragraph (b) of this Article VII occurs;
or
(ii) in the
case of Awards made prior to February 24, 2010, a Potential Change of Control
as defined in paragraph (c) of this Article VII occurs and the Committee or the
Board of Directors determines that the provisions of this paragraph (a) should
be invoked; and
(iii) in the
case of Contemporary Awards a Qualifying Termination occurs;
then, unless otherwise determined by the Committee or the Board of Directors in
writing at or after the making of an Award, but prior to the occurrence of such Change of Control, all restrictions and vesting
requirements applicable to any Award shall terminate; all Options and SARs granted hereunder shall become immediately exercisable
and shall remain exercisable throughout their entire term; and, to the extent permitted under Section 409A, the value of all other
Awards hereunder shall, to the extent determined by the Committee at or after grant, be cashed out on the basis of the Change
of Control Price (as defined in paragraph (e) of this Article VII), provided, however, that no Award that
provides for a deferral of compensation within the meaning of Section 409A shall be cashed out upon the occurrence of a Change
of Control or Potential Change of Control unless the event or circumstances constituting the Change of Control or Potential Change
of Control also constitute a change in the ownership of the Corporation, a change in the effective control
of the Corporation or a change in the ownership of a substantial portion of the assets of the Corporation, in each
case as determined under Section 409A; and provided, further, that to the extent the original terms of an Award
do not provide for the Award to be cashed out upon the occurrence of a Change of Control or Potential Change of Control, the Committee
may subsequently provide for such a cash out only to the extent permitted under Section 409A. This Article VII shall not preclude
Participants from participating at the discretion of the Committee or the Board of Directors on the same terms as
stockholders generally (or in the case of
Participants who hold Options, SARs, or similar awards, on terms intended to
achieve the same economic result as will apply to stockholders generally) in any
Change of Control transaction in which shares of Common Stock are cancelled or
exchanged for other consideration.
The term Section 409A shall mean Section
409A of the Code.
(b) For purposes of paragraph (a) of this
Article VII, a Change of Control means a change in control of a nature that
would be required to be reported in response to Schedule 14A of Regulation 14A
promulgated under the Exchange Act whether or not the Corporation is then
subject to such reporting requirement, provided that, without limitation, such a
Change of Control shall be deemed to have occurred if:
(i) any
person (as defined in Sections 13(d) and 14(d) of the Exchange Act) (other
than a Participant or group of Participants, the Corporation or a Subsidiary,
any employee benefit plan of the Corporation including its trustee, or any
corporation or similar entity which becomes the beneficial owner of securities
of the Corporation in connection with a transaction excepted from the provisions
of clause (iii) below) is or becomes the beneficial
owner (as defined in Rule 13(d-3) under the Exchange Act), directly or
indirectly, of securities of the Corporation (not including the securities
beneficially owned or any securities acquired directly from the Corporation)
representing thirty percent (30%) or more of the combined voting power of the
Corporations then outstanding securities;
(ii) the following individuals shall
cease to constitute a majority of the Board of Directors: individuals who upon
approval of the Plan by the stockholders constitute the Board of Directors and
any new director(s) whose appointment or election by the Board of Directors or
nomination for election by the Corporations stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the time of approval of the amended Plan by the stockholders
or whose appointment or election or nomination for election was previously so
approved but excluding, for this purpose, any such new director whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board of Directors;
(iii) there is consummated a merger,
consolidation or similar business combination transaction of the Corporation
(including, for the avoidance of doubt, any business combination structured as a
forward or reverse triangular merger involving any direct or indirect subsidiary
of the
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Corporation)
with any other company, other than a merger, consolidation or similar business
combination transaction which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least sixty percent (60%) of the
combined voting power of the voting securities of the Corporation or such
surviving entity or parent outstanding immediately after such merger,
consolidation, or similar business combination transaction; or
(iv) the
stockholders of the Corporation approve a plan of complete liquidation of the
Corporation or there is consummated an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporations assets.
(c) For purposes of paragraph (a) of this
Article VII, a Potential Change of Control means the happening of any of the
following:
(i) the
entering into an agreement by the Corporation, the consummation of which would
result in a Change of Control as defined in paragraph (b) of this Article VII;
or
(ii) the
acquisition of beneficial ownership, directly or indirectly, by any entity,
person, or group (other than a Participant or group of Participants, the
Corporation or a Subsidiary, or any employee benefit plan of the Corporation
including its trustee) of securities of the Corporation representing fifteen
percent (15%) or more of the combined voting power of the Corporations
outstanding securities and the adoption by the Board of Directors of a
resolution to the effect that a Potential Change of Control has occurred for
purposes of the Plan.
(d) For purposes of paragraph (a) of this
Article VII,
(i) Qualifying Termination. The
occurrence of any one or more of the following events shall constitute a
Qualifying Termination:
(a) An
involuntary termination of the Participants employment by the Corporation for
reasons other than Cause within six (6) months preceding or within twenty-four
(24) months following a Change of Control; any such involuntary termination
shall be pursuant to a Notice of Termination (specifying the Effective Date of
Termination which shall be not less than five days from the date of the Notice
of Termination) delivered to the Participant by the Corporation;
or
(b) A voluntary termination of the
Participants employment by the Participant for Good Reason within twenty-four
(24) months following a Change of Control pursuant to a Notice of Termination
delivered to the Corporation by the Participant.
For purposes of the Plan, a Participants
employment will be considered to have terminated upon (and only upon) such
Participants separation from service from the Corporation and its 409A
Affiliates as determined under the default provisions in Treasury Regulation
Section 1.409A-1(h).
Without limiting the generality of the
foregoing, if a Divestiture occurs within six (6) months preceding or within
twenty-four (24) months following a Change of Control, then the Divestiture
itself will not be considered to cause a termination of the Participants
employment, and whether the Participant experiences a Qualifying Termination
following such Divesture will be determined by reference to the Participants
employment with the Participants employer immediately following the Divestiture
(including all entities that are considered to be a single employer with such
party under the default provisions in Treasury Regulations Section 1.409A-1(h))
(so that, for example, an involuntary termination of the Participants
employment with the Participants employer immediately following the Divestiture
(including all entities that are considered to be a single employer with such
party under the default provisions in Treasury Regulations Section 1.409A-1(h))
for reasons other than Cause within 24 months following a Change of Control will
trigger the acceleration and valuation provisions).
(ii) Cause means (a) the Participants
willful and continued failure to substantially perform his duties with the
Corporation (other than any such failure resulting from disability or occurring
after issuance by the Participant of a Notice of Termination for Good Reason),
after a written demand for substantial performance is delivered to the
Participant that specifically identifies the manner in which the Corporation
believes that the Participant has willfully failed to substantially perform his
duties, and after the Participant has failed to resume substantial performance
of his duties on a continuous basis within thirty (30) calendar days of
receiving such demand; (b) the Participants willfully engaging in conduct
(other than conduct covered under (a) above) which is demonstrably and
materially injurious to the Corporation, monetarily or otherwise; or (c) the
Participants having been convicted of, or having entered a plea of nolo
contendere to, a felony. For purposes of this subparagraph, no act, or failure
to act, on the Participants part shall be deemed willful unless done, or
omitted to be done, by the Participant not in good faith and without reasonable
belief that the action or omission was in the best interests of the Corporation.
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(iii) Notice
of Termination shall mean a written notice which shall indicate the specific
termination provision in this Plan relied upon, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Participants employment under the provision so
indicated.
(iv) Effective
Date of Termination means the date on which a Qualifying Termination occurs
which triggers the termination of vesting requirements and restrictions and
cash-outs if applicable hereunder.
(v) Good
Reason shall mean, without the Participants express written consent, the
occurrence of any one or more of the following:
(a) The
assignment of the Participant to duties materially inconsistent with the
Participants authorities, duties, responsibilities, and status (including
offices and reporting requirements) as an employee of the Corporation, or a
reduction or alteration in the nature or status of the Participants
authorities, duties, or responsibilities from the greater of (i) those in effect
during the fiscal year immediately preceding the year of the Change of Control;
or (ii) those in effect immediately preceding the Change of Control;
(b) The
Corporations requiring the Participant to be based at a location which is at
least fifty (50) miles further from the current primary residence than is such
residence from the Corporations current headquarters, except for required
travel on the Corporations business to an extent substantially consistent with
the Participants business obligations in effect immediately preceding the
Change of Control;
(c) A reduction
by the Corporation in the Participants Base Salary as in effect immediately
preceding the Change of Control or as the same shall be increased from time to
time;
(d) A material
reduction in the Participants level of participation in any of the
Corporations short-, mid- and/or long-term incentive compensation plans, or
employee benefit or retirement plans, policies, practices, or arrangements in
which the Participant participates from the levels in place during the fiscal
year immediately preceding the Change of Control; provided, however, that
reductions in the levels of participation in any such plans shall not be deemed
to be Good Reason if the Participants reduced level of participation in each
such program remains
substantially
consistent with the average level of participation of other participants who
have positions commensurate with the Participants position;
(e) The failure
of the Corporation to obtain a satisfactory agreement from any successor to the
Corporation to assume and agree to perform the obligations under this Plan;
or
(f) Any
involuntary termination of Participants employment that is not effected
pursuant to a Notice of Termination.
The existence of Good Reason shall not be
affected by the Participants temporary incapacity due to physical or mental
illness not constituting a disability. The Participants continued employment
shall not constitute a waiver of the Participants rights with respect to any
circumstance constituting Good Reason.
(vi) Base
Salary means a Participants annual rate of salary, excluding amounts received
under incentive or other bonus plans, whether or not deferred.
(vii)
Divestiture means a transaction in which (x) the entity that employs a
Participant is sold, spun-off or otherwise disposed of by the Corporation with
the result that such entity is no longer a 409A Affiliate, or (y) the business
unit or division in which the Participant is employed is spun-off as a separate
entity that is not a 409A Affiliate or is sold or otherwise transferred to a
third party that is not a 409A Affiliate.
(viii) 409A
Affiliate means any corporation that is included in a controlled group of
corporations (within the meaning of Section 414(b) of the Code) that includes
the Corporation and any trade or business (whether or not incorporated) that is
under common control with the Corporation (within the meaning of Section 414(c)
of the Code).
(e) For purposes of this Article VII,
Change of Control Price means the highest price per share of Common Stock paid
in any transaction reported on the New York Stock Exchange Composite Tape, or
offered in any transaction related to a Potential or actual Change of Control
at:
(i) the date
the Change of Control occurs;
(ii) the date
the Potential Change of Control is determined to have occurred; or
(iii) such
other date as the Committee may determine at or after grant but before the
Change of Control occurs or the Potential Change of Control is determined to
have occurred;
or at any time selected by the Committee
during the sixty (60) day period preceding such date.
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Article VIII: Miscellaneous
8.1 Participant Agreement to Plan Provisions
The Participant shall notify the Manager,
Global Compensation or the Secretary of the Corporation of any issues or
disagreements regarding the terms and conditions of the Award within the number
of days specified in the notice of the terms of the Award to the Participant.
Upon resolution of such issues as determined by the Company or, no such notice
having been received, upon the expiration of such number of days, the
Participant (and the Participant on behalf of his legal representative and
designated beneficiary) shall be deemed to have agreed to comply with all the
terms and conditions of the Award and the Plan (including without limitation,
the conditions of Section 8.2 below) and any agreements, certificates, and
records issued in connection herewith.
8.2 Conditions on Awards
In the event that the employment of a
Participant holding any unexercised Option or SAR, any unearned Performance
Award, any unearned shares of Restricted Stock, or any unearned Restricted Stock
Equivalents shall terminate with the consent of the Committee or by reason of
retirement or disability, the rights of such Participant to any such Award shall
be subject to the conditions that until any such Option or SAR is exercised, or
any such Performance Award, share of Restricted Stock, or Restricted Stock
Equivalent is earned, the Participant shall (a) not engage, either directly or
indirectly, in any manner or capacity as advisor, principal, agent, partner,
officer, director, employee, member of any association or otherwise, in any
business or activity which is at the time competitive with any business or
activity conducted by the Company and (b) be available, unless the Participant
shall have died, at reasonable times for consultations (which shall not require
substantial time or effort) at the request of the Companys management with
respect to phases of the business with which the Participant was actively
connected during the Participants employment, but such consultations shall not
(except in the case of a Participant whose active service was outside of the
United States) be required to be performed at any place or places outside of the
United States of America or during usual vacation periods or periods of illness
or other incapacity. In the event that either of the above conditions is not
fulfilled, the Participant shall forfeit all rights to any unexercised Option or
SAR, Performance Award, shares of Restricted Stock, or Restricted Stock
Equivalents held on the date of the breach of the condition. Any determination
by the Board of Directors, which shall act upon the recommendation of the
Chairman, that the Participant is, or has, engaged in a competitive business or
activity as aforesaid or has not been available for consultations as aforesaid
shall be conclusive.
8.3 Effect on Other Plans
(a) Participation in the Plan shall not
affect a Participants eligibility to participate in any other benefit or
incentive plan of the Company.
(b) Any Awards made pursuant to the Plan
shall not be included in the Participants remuneration for the purposes of
determining the benefits provided under any other plan of the Company unless
specifically provided in such other plan.
(c) The adoption of the Plan shall not
preclude the adoption by appropriate means of any other stock option or other
incentive plan for employees of the Company.
8.4 Rights of Participants
Nothing in the Plan shall interfere with
or limit in any way the right of the Company to terminate any Participants
employment at any time, nor confer upon any Participant any right to continue in
the employ of the Company for any period of time or to continue the
Participants present or any other rate of compensation. No employee shall have
a right to be selected as a Participant, or, having been so selected, to be
selected again as a Participant.
8.5
Tax Withholding
(a) The Company shall have the power to
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy any withholding or other tax due from the Company with respect to any
amount payable and/or shares issuable under the Plan, and, to the extent
permitted by Section 409A, the Company may defer such payment or issuance unless
indemnified to its satisfaction.
(b) Subject to the consent of the
Committee, in connection with (i) the exercise of a NSO, (ii) lapse of
restrictions on a Restricted Stock Award, or (iii) the issuance or settlement of
any other stock Award under the Plan, a Participant may make an irrevocable
election (an Election) to (A) have shares of Common Stock otherwise issuable
under (i) withheld, or (B) tender back to the Corporation shares of Common Stock
received pursuant to (i), (ii), or (iii), or (C) deliver back to the Corporation
pursuant to (i), (ii), or (iii) previously-acquired shares of Common Stock of
the Corporation, in each case having a Fair Market Value sufficient to satisfy
all or part of the minimum federal, state, and local statutory withholding
requirements applicable to the Participant.
(c) Such Election must be made by a
Participant prior to or on the date on which the relevant tax obligation arises
(the Tax Date). The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with respect to any Award
under this Plan that the right to make Elections shall not apply to such Awards.
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8.6 Foreign Alternatives
Notwithstanding the other provisions of
the Plan, in the case of any Award (including any Deferred Amount) to any
Participant who is an employee of a foreign Subsidiary or foreign branch of the
Company or held by a Participant who is in any other category specified by the
Committee, the Committee may specify that such Award shall not be represented by
shares of Common Stock or other securities but shall be represented by rights
approximately equivalent (as determined by the Committee) to the rights that
such Participant would have received if shares of Common Stock or other
securities had been issued in the name of such Participant otherwise in
accordance with the Plan (such rights being hereinafter called Stock
Equivalents). The Stock Equivalents representing any such Award may
subsequently, at the option of the Committee, be converted into cash or an
equivalent number of shares of Common Stock or other securities under such
circumstances and in such manner as the Committee may determine. Stock
Equivalents shall be applied against the limits on the maximum number of shares
of Common Stock pursuant to Sections 1.4 and 1.5.
8.7 Non-Uniform Determinations
The Committees determinations under the
Plan, including without limitation, (a) the determination of the Participants to
receive Awards, (b) the form, amount and timing of such Awards, (c) the terms
and provisions of such Awards and (d) agreements evidencing the same, need not
be uniform and may be made by it selectively among Participants who receive, or
who are eligible to receive, Awards under the Plan, whether or not such
Participants are similarly situated.
8.8 Suspensions, Leaves of Absence, and Transfers
The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any suspension of employment or leave of absence from the
Company granted to a Participant whether such suspension or leave is paid or
unpaid and whether due to a disability or otherwise. Without limiting the
generality of the foregoing, the Committee shall be entitled to determine (a)
whether or not any such suspension or leave of absence shall be treated as if
the Participant ceased to be an employee of the Company and (b) the impact, if
any, of any such suspension or leave of absence on Awards under the Plan. In the
event a Participant transfers within the Company, such Participant shall not be
deemed to have ceased to be an employee of the Company for purposes of the Plan.
With respect to Participants who are not officers of the Corporation subject to
Section 16 of the Exchange Act, each of the Senior Vice President or President
of the Corporation with oversight of Human Resources, the Senior Vice President
and General Counsel and the Vice President, Global Human Resources of the
Corporation, individually, shall be entitled to exercise all of the power and
authority of the Committee under this Section 8.8.
8.9 Requirements of Law, Governing Law
(a) The granting of Awards and the
issuance of shares of Common Stock shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required. The Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the laws of the
State of Illinois, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of such agreement to
the substantive law of another jurisdiction.
(b) Each Award (including Deferred
Amounts) shall be subject to the requirement that if at any time the Committee
shall determine, in its discretion, that the listing, registration, or
qualification of such Award, or any shares of Common Stock or other property
subject thereto, upon any securities exchange or under any foreign, federal, or
state securities or other law or regulation, or the consent or approval of any
governmental body or the taking of any other action to comply with or otherwise
with respect to any such law or regulation, is necessary or desirable as a
condition to or in connection with the granting of such Award or the issue,
delivery or purchase of shares of Common Stock or other property thereunder, no
such Award may be exercised or paid in Common Stock or other property unless
such listing, registration, qualification, consent, approval, or other action
shall have been effected or obtained free of any conditions not acceptable to
the Committee and the holder of the Award will supply the Corporation with such
certificates, representations, and information as the Corporation shall request
and shall otherwise cooperate with the Corporation in effecting or obtaining
such listing, registration, qualification, consent, approval or other action. In
the case of officers and other persons subject to Section 16 of the Exchange
Act, the Committee may at any time impose any limitations upon the exercise,
delivery, or payment of any Award (including Deferred Amounts) which, in the
discretion of the Committee, are necessary or desirable in order to qualify such
exercise, delivery or payment for any available exemption under Section 16(b) of
the Exchange Act and the rules and regulations thereunder. If the Corporation,
as part of an offering of securities or otherwise, finds it desirable because of
foreign, federal, or state legal or regulatory requirements to reduce the period
during which Options or SARs may be exercised, the Committee may, in its
discretion and without the holders consent, so reduce such period on not less
than 15 days written notice to the holders thereof.
(c) It is the intent of the Corporation
that the Plan comply in all respects with Section 162(m), that any ambiguities
or inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Section 162(m), such provision shall be deemed null and void to
the extent required to permit the Plan to comply with Section 162(m).
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8.10 Amendment, Suspension and Termination of Plan
The Committee may suspend or terminate the
Plan or any portion thereof at any time and may amend it from time to time in
such respects as the Committee may deem advisable in order that any Awards
thereunder shall conform to or otherwise reflect any change in applicable laws
or regulations, or to permit the Company or its employees to enjoy the benefits
of any change in applicable laws or regulations, or in any other respect the
Committee may deem to be in the best interests of the Company; provided,
however, that no such amendment shall, without the approval of the stockholders
of the Corporation to the extent required by law, agreement, or the rules of any
exchange upon which the Common Stock is listed, (i) materially increase the
number of shares of Common Stock which may be issued under the Plan (except as
provided in Section 1.6), (ii) materially expand the class of employees eligible
to participate in the Plan, (iii) expand the types of Awards available under the
Plan, (iv) materially extend the termination date of the Plan, (v) materially
change the method of determining the exercise price of Options under the Plan,
or (vi) delete or limit any provision prohibiting repricing of Options under the
Plan. No such amendment, suspension or termination shall materially and
adversely affect the rights of Participants under outstanding Options, SARs,
Performance Awards, awards of Restricted Stock or Restricted Stock Equivalents,
Other Awards, or Deferred Amounts without the consent of the Participants
affected thereby.
8.11 Effective Date
The Plan in its original form became
effective upon approval by the stockholders of the Corporation at the annual
meeting held on February 23, 2000. The Plan as amended herein shall become
effective upon approval by the stockholders of the Corporation.
8.12 Duration of the Plan
The Plan shall remain in effect until all
Awards under the Plan are free of all restrictions imposed by the Plan, but no
Awards shall be made hereunder after December 31, 2020.
8.13 Recoupment of Awards
All Awards granted under the Plan shall be
subject to the terms of the Companys Executive Incentive Award Recoupment
Policy, as amended from time to time, or any successor policy thereto (the
Recoupment Policy). The Company shall have the right to recover any amount
realized by a Participant upon the exercise, settlement, or payment of any Award
paid under the Plan pursuant to the terms of the Recoupment Policy or otherwise
as required by law.
Article IX: Definitions and Other
General Provisions
(a) The term Fair Market Value as it
relates to Common Stock on any given date means (i) the closing price of the
Corporations Common Stock on the NYSE at the conclusion of
regular trading hours on such date, as reported by the NYSE
(or, if not so reported, as reported by a successor reporting service selected
by the Corporation, or if not reported by any successor service, as reported on
any domestic stock exchanges on which the Common Stock is then listed); or (ii)
if the Common Stock is not listed on any domestic stock exchange, the closing
price of the Corporations Common Stock as reported in the domestic
over-the-counter market on such date or the last previous date reported (or, if
not so reported, by the system then regarded as the most reliable source of such
quotations) or, if there are no reported sales on such date, the mean of the
closing bid and asked prices as so reported; or (iii) if the Common Stock is
listed on a domestic exchange or quoted in the domestic over-the-counter market,
but there are not reported sales or quotations, as the case may be, on the given
date, the value determined pursuant to (i) or (ii) above using the reported
closing prices or quotations on the last previous date on which so reported; or
(iv) if none of the foregoing clauses applies, the fair value as determined in
good faith by the Board of Directors or the Committee.
(b) The term fiscal year means the
12-month period beginning each November 1 and ending October 31 of the following
year.
(c) The terms retirement and
disability as used under the Plan shall be construed by reference to the
provisions of the pension plan or other similar plan or program of the Company
applicable to a Participant. Unless the Committee establishes otherwise, the
terms retirement and disability mean normal retirement, early retirement,
and total and permanent disability, each as defined in the John Deere Pension
Plan for Salaried Employees and the John Deere Long-Term Disability Plan, and
similar events under other similar plans of the Company applicable to the
Participant. Unless the Committee establishes otherwise, the terms retirement
and disability do not include Participants entitled only to a deferred vested
pension as defined in the John Deere Pension Plan for Salaried Employees, and/or
only salary continuance under the Companys salary continuance policy, and
similar events under other similar plans and policies of the Company applicable
to the Participants.
(d) The term Subsidiary means, unless
the context otherwise requires, any corporation or other legal entity (other
than the Corporation) in an unbroken chain of legal entities beginning with the
Corporation if each of the legal entities other than the last legal entity in
such chain owns equity interests possessing at least 50% of the voting power in
one of the other legal entities in such chain.
(e) The term Substitute Award shall mean
an Award granted upon assumption of, or in substitution for, outstanding awards
previously granted by a corporation or other legal entity in connection with a
business transaction, such as a merger, combination, consolidation or
acquisition of property or stock.
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(f) Except when otherwise indicated by the
context, words in the masculine gender when used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
(g) Statements in the Plan that an action
is permitted to the extent permitted by Section 409A, or similar expressions,
shall mean that such action is permitted to the extent it will not result in a
Participant being required to recognize income for United States federal income
tax purposes before exercise, payment or settlement of an Award, as applicable,
or in the Participants incurring additional tax or interest under Section
409A.
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Appendix E
JOHN DEERE SHORT-TERM
INCENTIVE BONUS PLAN
(As Amended February 25,
2015)
Section 1. Establishment and
Purpose
1.1 Establishment of the Plan
Deere & Company, a Delaware
corporation (the Company), has established an annual incentive compensation
plan known as the John Deere Short-Term Incentive Bonus Plan (the Plan), as
set forth in this document. The Plan permits the awarding of annual cash bonuses
to Employees of the Company based on the achievement of pre-established
performance goals.
The Plan was approved by the Board of
Directors of the Company and subsequently by the Companys stockholders at the
1995 annual meeting of stockholders and became effective as of November 1, 1994.
The Plan shall remain in effect, as amended from time to time, until terminated
by the Board or Committee as provided by Section 13 herein.
1.2 Purpose
The purpose of the Plan is to provide
Participants with a meaningful annual incentive opportunity geared toward the
achievement of specific performance goals.
Section 2.
Definitions
Whenever used in the Plan, the following
terms shall have the meanings set forth below (unless otherwise expressly
provided) and, when the defined meaning is intended, the term is capitalized.
(a) |
Award Opportunity means the
incentive award payout which a Participant may earn under the Plan, as
established by the Committee pursuant to Section 5.1 herein.
|
(b) |
Beneficial Owner has the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act. |
(c) |
Board or Board of Directors
means the Board of Directors of the Company. |
(d) |
Code means the Internal Revenue
Code of 1986, as amended, and the rules, regulations and guidance
thereunder. |
(e) |
Committee means a committee of two
(2) or more individuals appointed by the Board to administer the Plan
pursuant to Section 3 herein who are not current or former officers or
employees of the Company, who are outside directors to the extent
required by and within the meaning of Section 162(m) of the Code, and who
are independent directors pursuant to New York Stock Exchange rules.
|
(f) |
Company means Deere & Company,
a Delaware corporation (including any and all majority-owned
subsidiaries), and any successor thereto. |
(g) |
Corporate means Deere &
Company and its subsidiaries. |
(h) |
Disability has the meaning
ascribed to such term in applicable disability or retirement plans of the
Company. |
(i) |
Eligible Earnings means
remuneration earned during a Plan Year that is determined by the Committee
from time to time to be eligible for purposes of calculating Final Awards
under the Plan. For Executive Officers, except for increases in salary or
base pay, Eligible Earnings for any Plan Year shall not include any
increase in compensation rates in effect at the time the Committee
establishes the Target Incentive Award percentage for each Executive
Officer and performance goals for that Plan Year in accordance with
Section 11.2. |
(j) |
Employee means a full-time or
part-time executive, administrative, or professional employee of the
Company. |
(k) |
Exchange Act means the Securities
Exchange Act of 1934, as amended from time to time, or any successor act
thereto. |
(l) |
Executive Officer means any
executive officer designated by the Committee for purposes of qualifying
payouts under the Plan for exemption from Section 162(m) of the Code.
|
(m) |
Final Award means the actual award
earned during a Plan Year by a Participant, as determined by the Committee
at the end of the Plan Year. |
(n) |
Non-corporate means a specified
segment of Deere & Companys operations designated as such by the
Chief Executive Officer and approved by the Committee for purposes of the
Plan, such as a business unit, division, product line, or other such
segmentation. |
(o) |
Participant means an Employee who
is actively participating in the Plan. |
(p) |
Person has the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act and used in Sections
13(d) and 14(d) thereof, including a group as defined in Section 13(d).
|
(q) |
Plan means the John Deere
Short-Term Incentive Bonus Plan. |
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(r) |
Plan Year means the Companys
fiscal year. |
(s) |
Recoupment Policy means the
Companys Executive Incentive Award Recoupment Policy, as amended from
time to time, or any successor policy thereto. |
(t) |
Retirement has the meaning
ascribed to such term in the John Deere Pension Plan for Salaried
Employees, or any successor plan thereto, or in the other applicable
retirement plan(s) of the Company. |
(u) |
Target Incentive Award means the
award to be paid to a Participant when planned performance results are
achieved, as established by the Committee. |
Section 3.
Administration
The Plan shall be administered by the
Committee. The Committee may delegate to the Company responsibility for
day-to-day administration of the Plan, following administrative guidelines
approved from time to time by the Committee.
Subject to the limitations of the Plan,
the Committee shall: (i) select from the Employees of the Company those who
shall participate in the Plan, (ii) grant Award Opportunities in such forms and
amounts as it shall determine, (iii) impose such limitations, restrictions, and
conditions upon such Award Opportunities as it shall deem appropriate, (iv)
interpret the Plan and adopt, amend, and rescind administrative guidelines and
other rules and regulations relating to the Plan, (v) correct any defect or
omission or reconcile any inconsistency in this Plan or in any Award Opportunity
granted hereunder, and (vi) make all other necessary determinations and take all
other actions necessary or advisable for the implementation and administration
of the Plan. The Committees determinations on matters within its authority
shall be conclusive and binding upon all parties. The inadvertent failure of any
member of the Committee to meet the qualification requirements of an outside
director under Section 162(m) of the Code shall not invalidate or otherwise
impair any actions taken or awards granted by the Committee.
Section 4. Eligibility and
Participation
4.1 Eligibility
All Employees (as defined in Section 2
herein) who are actively employed by the Company in any Plan Year shall be
eligible to participate in the Plan for such Plan Year, subject to the
limitations of Section 7 herein. Eligibility does not guarantee participation,
however, and an Employee shall be considered a Participant for a given Plan Year
only to the extent provided in Section 4.2.
4.2 Participation
Participation in the Plan shall be
determined annually by the Committee based upon the criteria set forth herein.
Employees who have been designated as Participants for any Plan Year shall be
provided access to the performance goals and related Award Opportunities for
that Plan Year as soon as is practicable.
4.3 Partial Plan Year Participation
In the event an Employee becomes a
Participant in the Plan subsequent to the commencement of a Plan Year, such
Employees Final Award shall be based on the Eligible Earnings earned as an
eligible Employee during such Plan Year.
4.4 No Right to Participate
No Participant or other Employee shall at
any time have a right or entitlement to be selected for participation in the
Plan for any Plan Year, despite having previously participated in the Plan.
Section 5. Award
Determination
5.1 Performance Goals
Prior to the beginning of each Plan Year,
or as soon as practicable thereafter, the Committee shall establish performance
goals for that Plan Year. Except as provided in Section 11, the goals may be
based on any combination of Corporate, Non-corporate, and individual
performance. After the performance goals are established, the Committee will
align the achievement of the performance goals with the Award Opportunities (as
described in Section 5.2 herein), such that the level of achievement of the
preestablished performance goals at the end of the Plan Year will determine the
Final Award amounts. Except as provided in Section 11, the Committee shall also
have the authority to exercise subjective discretion in the determination of
Final Awards, as well as the authority to delegate the ability to exercise
subjective discretion in this respect.
The Committee also may establish one (1)
or more Company-wide performance goals which must be achieved for any
Participant to receive a Final Award for that Plan Year.
5.2 Award Opportunities
Prior to the beginning of each Plan Year,
or as soon as practicable thereafter, the Committee shall establish an Award
Opportunity for each Participant. The established Award Opportunity shall vary
in relation to the job classification of each Participant. Except as provided in
Section 11, in the event a Participant changes job levels during a Plan Year,
the Participants Award Opportunity may be, but is not required to be, adjusted
to reflect the amount of time at each job level during the Plan Year.
5.3 Adjustment of Performance Goals
Except as provided in Section 11, the
Committee shall have the right to adjust the performance goals and the Award
Opportunities (either up or down) during a Plan Year if it determines that
external changes or other unanticipated business conditions have materially
affected the fairness of the goals, have unduly influenced the Companys ability
to meet them, have materially affected the Companys or its divisions ability
to pay the awards, or if the adjustments are due to the Company significantly
changing the basis of its financial reporting due to the Companys adoption
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during the Plan Year of new or revised
accounting standards or International Financial Reporting Standards. Further, in
the event of a Plan Year of less than twelve (12) months, the Committee shall
have the right to adjust performance goals and Award Opportunities accordingly,
at its sole discretion.
5.4 Final Award Determinations
At the end of each Plan Year, Final Awards
shall be computed for each Participant as determined by the Committee. Except as
provided in Section 11, each individual award shall be based upon (i) the
Participants Target Incentive Award percentage multiplied by his or her
Eligible Earnings, (ii) Corporate and Non-corporate performance, and (iii)
individual performance (if applicable). Subject to Section 5.5, Final Award
amounts may vary above or below the Target Incentive Award, based on the level
of achievement of the preestablished Corporate, Non-corporate, and/or individual
performance goals.
5.5 Limitations
The amount payable to a Participant for
any Plan Year shall not exceed $5,000,000.
Section 6. Payment of Final
Awards
6.1 Form and Timing of Payment
Final Awards shall be payable in cash, in
one (1) lump sum, on or before the March 15 following the end of the relevant
Plan Year.
6.2 Payment of Partial Awards
In the event a Participant no longer meets
the eligibility criteria as set forth in the Plan during the course of a
particular Plan Year, the Committee may, in its sole discretion, pay a partial
Final Award for the portion of the Plan Year in which the Employee was a
Participant, determined in accordance with Section 5.4 herein. Any such partial
Final Award shall be evidenced in writing and shall be paid in cash, in one (1)
lump sum, on or before the March 15 following the end of the Plan Year to which
it relates.
6.3 Unsecured Interest
No Participant or any other party claiming
an interest in amounts earned under the Plan shall have any interest whatsoever
in any specific asset of the Company. To the extent that any party acquires a
right to receive payments under the Plan, such right shall be equivalent to that
of an unsecured general creditor of the Company.
6.4 Repayment of Final Awards
Final Awards paid under the Plan shall be
subject to the terms of the Companys Recoupment Policy. The Company shall have
the right to recover Final Awards paid under the Plan pursuant to the terms of
the Recoupment Policy or otherwise as required by law.
Section 7. Termination of
Employment
7.1 Termination of Employment Due to Death, Disability or Retirement, or
Transfer to Business Unit Not Included in the Plan
In the event a Participants employment
with the Company is terminated by reason of death, Disability or Retirement, or
if a Participant transfers to a business unit of the Company not included in the
Plan, the Final Award determined in accordance with Section 5.4 herein shall be
reduced to reflect participation prior to termination or transfer only. The
reduced award shall be determined in accordance with Section 5.4, but based upon
the amount of Eligible Earnings earned during the Plan Year prior to termination
or transfer. In the case of a Participants Disability, the employment
termination shall be deemed to have occurred on the date the Committee
determines the definition of Disability to have been satisfied.
The Final Award thus determined shall be
payable in cash, in one (1) lump sum, on or before the March 15 following the
end of the Plan Year to which it relates.
7.2 Termination of Employment for Other Reasons
In the event a Participants employment
with the Company is terminated prior to the last day of a Plan Year for any
reason other than death, Disability, Retirement, or transfer to a business unit
of the Company not included in the Plan, all of the Participants rights to a
Final Award for the Plan Year then in progress shall be forfeited. A
discontinuation of employment with the Company due to the divestiture of all or
part of a business resulting in less than majority direct or indirect ownership
of such business by the Company shall be considered a termination of employment
for purposes of the Plan. However, the Committee, in its sole discretion, may
pay a partial Final Award for the portion of that Plan Year that the Participant
was employed by the Company, determined in accordance with Section 5.4 herein.
Any such partial Final Award shall be evidenced in writing and shall be paid in
cash, in one (1) lump sum, on or before the March 15 following the end of the
Plan Year to which it relates.
7.3 Committee Determinations
In the event of a Participants
termination of employment, the Committee shall be the sole judge of whether
Section 7.1 or Section 7.2 applies to any given Award Opportunity that has been
established for such Participant with respect to the Plan Year during which such
Participants termination of employment occurs.
Section 8. Rights of
Participants
8.1 Employment
Nothing in the Plan shall interfere with
or limit in any way the right of the Company to terminate any Participants
employment at any time, nor confer upon any Participant any right or entitlement
to continue in the employ of the Company.
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8.2 Nontransferability
Except as permitted in Section 9, a
Participant may not assign, sell, pledge, or otherwise transfer (each, a
Transfer) any right or interest in the Plan or any award under the Plan, and
any attempt by a Participant to Transfer any right or interest in the Plan or
any award under the Plan shall be void and without effect and shall have the
further effect of terminating all of the Participants rights, entitlements and
interests in the portion of the award subject to Transfer. Notwithstanding the
foregoing or anything else in the Plan, and in addition to the Companys rights
under Section 14.2, the Company shall have the right to deduct from a Final
Award any amount the Participant owes to the Company (pursuant to contract, debt
obligation or otherwise) at the time scheduled for payment; provided, that no
such deduction shall be made to the extent it is prohibited by Section 409A of
the Code or would cause a Participant to recognize income for United States
federal income tax purposes before an award is paid or to incur additional tax
or interest under Section 409A of the Code. Except as required by law or the
final order of a court having jurisdiction with respect to the matter, no right
or interest of any Participant in the Plan or any award granted under the Plan
shall be subject to any lien, execution, levy, garnishment or attachment.
Section 9. Beneficiary
Designation
Each Participant under the Plan may,
from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of such
benefit. Each designation will revoke all prior designations by the same
Participant and will be effective only when delivered by the Participant in
writing to the designated division of the Company for such purpose during the
Participants lifetime. In the absence of any such designation, or if the
designated beneficiary is no longer living, benefits shall be paid to the
surviving member(s) of the following classes of beneficiaries, with preference
for classes in the order listed below:
(a) |
Participants spouse (unless the
parties were divorced or legally separated by court
decree); |
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Participants children (including children by
adoption); |
(c) |
Participants parents (including
parents by adoption); or |
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Participants executor or
administrator. |
Payments
of benefits, in accordance with Section 7.1, shall be made exclusively to the
member(s) of the first class, in the order listed above, which has surviving
member(s). If that class has more than one (1) member, benefit payments shall be
made in equal shares among members of that class.
Section 10.
Deferrals
The Committee may permit a
Participant to defer such Participants receipt of the payment of cash that
would otherwise be due to such Participant at the end of a Plan Year. Any such
deferral shall be made on terms and conditions established by the Committee from
time to time and intended to comply, to the extent applicable, with the
requirements of Section 409A of the Code.
Section 11. Executive
Officers
11.1 Applicability of Section 11
The provisions of this Section 11
shall apply only to Executive Officers. In the event of any inconsistencies
between this Section 11 and the other Plan provisions (other than Section 12),
the provisions of this Section 11 shall control.
11.2 Award Determination
Prior to the beginning of each Plan
Year, or as soon as practicable thereafter, the Committee shall establish the
Target Incentive Award percentage for each Executive Officer and performance
goals for that Plan Year. Performance measures to be used shall be chosen from
among the following factors, or any combination of the following, as the
Committee deems appropriate: (a) total stockholder return; (b) growth in
revenues, sales, settlements, market share, customer conversion, net income,
operating income, cash flow, stock price, and/or earnings per share; (c) return
on assets, net assets, and/or capital; (d) return on stockholders equity; (e)
economic or shareholder value added; or (f) improvements in costs and/or
expenses. Performance measures may be defined on a Corporate or Non-corporate
basis or any combination thereof, and may be measured either on an absolute
basis or relative to selected peer companies or a market index. The Committee
may select among the performance measures specified from Plan Year to Plan Year
which need not be the same for each Executive Officer in a given year.
At the end of the Plan Year and prior
to payment, the Committee shall certify in writing the extent to which the
performance goals and any other material terms were satisfied. Final Awards
shall be computed for each Executive Officer based on (i) the Participants
Target Incentive Award multiplied by his or her Eligible Earnings, and (ii)
Corporate and Non-corporate (if applicable) performance.
Final Award amounts may
vary above or below the Target Incentive Award based on the level of achievement
of the pre-established Corporate and Non-corporate performance goals.
11.3 Non-adjustment of Performance Goals
Once established, performance goals
shall not be changed during the Plan Year. Participants shall not receive any
payout when the Company or Non-corporate segment (if applicable) does not
achieve at least the minimum performance goals established by the Committee
pursuant to Section 11.2.
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11.4 Individual Performance and Discretionary Adjustments
A Final Award computed in accordance with
Section 11.2 shall not be increased to reflect individual performance. However,
the Committee retains the discretion to eliminate or decrease the amount of the
Final Award otherwise payable to a Participant.
11.5 Possible Modification
If, on advice of the Companys tax
counsel, the Committee determines that Section 162(m) of the Code and the
regulations thereunder will not adversely affect the deductibility for federal
income tax purposes of any amount paid under the Plan by applying one or more of
Sections 4.3, 5.1, 5.2, 5.3, or 5.4 to an Executive Officer without regard to
the exceptions to such Section or Sections contained in this Section 11, then
the Committee may, in its sole discretion, apply such Section or Sections to the
Executive Officer without regard to the exceptions to such Section or Sections
that are contained in this Section 11.
Section 12. Change in
Control
12.1 Change in Control
In the event of a Change in Control of the
Company, as defined in Section 12.2 below, a Participant who is an Employee as
of the date of the Change in Control and who is not then a participant in the
Companys change in control severance program or a change in control agreement
with the Company shall be entitled to, for the Plan Year in which the Change in
Control occurs, the Participants Target Incentive Award times his or her actual
Eligible Earnings rate in effect on the date of the Change in Control.
Final Awards under this Section 12.1 shall
be payable in cash to the Participant as soon as administratively possible, but
no later than the March 15 following the end of the calendar year in which the
Change in Control occurs.
12.2 Definition of a Change in Control
Change in Control means a change in
control of a nature that would be required to be reported in response to
Schedule 14A of Regulation 14A promulgated under the Exchange Act whether or not
the Company is then subject to such reporting requirement, provided that,
without limitation, such a Change in Control shall be deemed to have occurred
if:
(i) any
person (as defined in Sections 13(d) and 14(d) of the Exchange Act) (other
than a Participant or group of Participants, the Company or a subsidiary, any
employee benefit plan of the Company including its trustee, or any corporation
or similar entity which becomes the Beneficial Owner of securities of the
Company in connection with a transaction excepted from the provisions of clause
(iii) below) is or becomes the beneficial owner (as defined in Rule 13(d-3)
under the Exchange Act), directly or indirectly, of securities of the Company
(not including the securities
beneficially
owned or any securities acquired directly from the Company) representing thirty
percent (30%) or more of the combined voting power of the Companys then
outstanding securities;
(ii) the
following individuals shall cease to constitute a majority of the Board:
individuals who upon the approval of the Plan by the stockholders constitute the
Board and any new director(s) whose appointment or election by the Board or
nomination for election by the Companys stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the time of approval of the Plan by the stockholders or whose
appointment or election or nomination for election was previously so approved
but excluding, for this purpose, any such new director whose initial assumption
of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board;
(iii) there is
consummated a merger, consolidation or similar business combination transaction
of the Company (including, for the avoidance of doubt, any business combination
structured as a forward or reverse triangular merger involving any direct or
indirect subsidiary of the Company) with any other company, other than a merger,
consolidation or similar business combination transaction which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
sixty percent (60%) of the combined voting power of the voting securities of the
Company or such surviving entity or parent outstanding immediately after such
merger, consolidation or similar business combination transaction; or
(iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or there is consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Companys assets.
Section 13. Amendment and
Modification
The Committee, in its sole discretion,
without notice, at any time and from time to time, may modify or amend, in whole
or in part, any or all of the provisions of the Plan, or suspend or terminate it
entirely, subject to any requirement for shareholder approval imposed by
applicable law, including Section 162(m) of the Code, or the listing
requirements of the New York Stock Exchange; provided, however, that no such
modification, amendment, suspension, or termination may, without the consent of
a Participant (or his
E-5
Table of Contents
or her beneficiary in the case of the
death of the Participant), materially and adversely affect the rights of a
Participant (or his or her beneficiary, as the case may be) to a payment or
distribution hereunder to which he or she is otherwise entitled.
Section 14.
Miscellaneous
14.1 Governing Law
The Plan, and all agreements hereunder,
shall be governed by and construed in accordance with the laws of the State of
Delaware.
14.2 Withholding Taxes
The Company shall have the right to deduct
from all payments under the Plan any Federal, state, or local taxes required by
law to be withheld with respect to such payments.
14.3 Section 409A
All payments under the Plan are intended
to be exempt from the application of Section 409A of the Code as short-term
deferrals within the meaning of Section 409A of the Code, and the Plan shall be
interpreted and administered consistent with such intent. If, notwithstanding
the preceding sentence, any payment under the Plan is considered to provide for
a deferral of compensation subject to Section 409A of the Code, then any
provision of the Plan that contravenes any regulations or Treasury guidance
promulgated under Section 409A of the Code or that could cause a Participant to
recognize income for United States federal tax purposes in respect of any
payment under the Plan prior to the time of payment, or to be subject to any tax
or interest under Section 409A of the Code, may be modified to maintain, to the
maximum extent practicable, the original intent of the applicable provision
without the imposition of any tax or interest under Section 409A of the Code.
Moreover, any discretionary authority that the Committee may have pursuant to
the Plan shall not be applicable to a payment that is subject to Section 409A of
the Code to the extent such discretionary authority would contravene Section
409A of the Code.
14.4 Gender and Number
Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine, the
plural shall include the singular, and the singular shall include the plural.
14.5 Severability
In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.
14.6 Costs of the Plan
All costs of implementing and
administering the Plan shall be borne by the Company.
14.7 Successors
All obligations of the Company under the
Plan shall be binding upon and inure to the benefit of any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
E-6
Table of Contents
Directions to the Deere
& Company
World Headquarters
One John Deere Place,
Moline, Illinois
61265-8098
The annual meeting of stockholders on
Wednesday, February 25, 2015 will be held at 10:00 a.m. Central Standard Time in
the auditorium of the Deere & Company World Headquarters, which is located
at One John Deere Place, Moline, Illinois. John Deere Place intersects the north
side of John Deere Road east of 70th Street, Moline. The entrance to the World
Headquarters and parking are on the east side of the building.
From Chicago (or the
east)
Take I-290 (Eisenhower Expressway)
west to I-88 West (East-West Tollway) which turns into IL5/John Deere Road.
Follow IL5/John Deere Road to John Deere Place. Turn right onto John Deere
Place. Follow for about 1/4 mile. Turn left onto the World Headquarters grounds.
Follow the signs to parking on the east side of the building.
From Des Moines (or the
west)
Take I-80 east to exit number 298.
Exit onto I-74 East. Follow for about 9 1/4 miles to the IL5 East/John Deere
Road exit (Exit number 4B). Exit onto IL5 East/John Deere Road. Follow IL5/John
Deere Road east for 3.3 miles to John Deere Place. Turn left onto John Deere
Place. Follow for about 1/4 mile. Turn left onto the World Headquarters grounds.
Follow the signs to parking on the east side of the building.
From Peoria (or the
south)
Take I-74 west to the I-280 West
exit. Exit onto I-280 West. Follow for about 10 miles to exit number 18A. Exit
onto I-74 West. Follow for about 1/2 mile to the IL5 East/John Deere Road exit
(Exit number 4B). Exit onto IL5 East/John Deere Road. Follow IL5/John Deere Road
east for 3.3 miles to John Deere Place. Turn left onto John Deere Place. Follow
for 1/4 mile. Turn left onto the World Headquarters grounds. Follow the signs to
parking on the east side of the building.
Print Information (YY-MM)
Table of Contents
DEERE &
COMPANY
STOCKHOLDER RELATIONS
ONE JOHN DEERE PLACE
MOLINE, IL
61265
YOUR VOTE IS IMPORTANT.
THANK YOU
FOR VOTING!
VOTE BY TELEPHONE AND INTERNET
24
HOURS A DAY, 7 DAYS A WEEK
VOTE BY TELEPHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet
to transmit your voting instructions and for electronic delivery of information
up until 11:59 P.M. Eastern Time the day before the meeting date. Have your
proxy card in hand when you access the web site and follow the instructions to
obtain your records and to create an electronic voting instruction
form.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Deere & Company, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Your telephone or Internet vote
authorizes the named proxies to vote in the same manner as if you marked,
signed, and returned the proxy card.
If you have submitted your proxy by
telephone or the Internet there is no need for you to mail back your proxy
card.
VOTE IN PERSON
Submit your voting instructions at the meeting by filling out
a ballot which, upon request, will be provided to you during the
meeting.
TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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M79516-P57362 |
KEEP THIS PORTION FOR
YOUR RECORDS |
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DETACH AND
RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
DEERE &
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Election of
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Election of
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Election of
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Election of
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Election of
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Election of
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Election of
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Election of
Director: Sherry M. Smith |
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The Board of Directors
recommends a vote FOR items 2 through 6: |
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Approval of Bylaw amendment to
permit stockholders to call special meetings |
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Advisory
vote on executive compensation |
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Amendment to the John Deere Omnibus Equity and Incentive
Plan |
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Re-approval of the John Deere Short-Term Incentive Bonus
Plan |
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Ratification of the appointment of Deloitte & Touche
LLP as Deere's independent registered public accounting firm for fiscal
2015 |
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For address changes and/or comments, please check this
box and write them on the back where indicated. |
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(Please sign, date, and return this
proxy in the enclosed postage prepaid envelope.)
To receive your materials
electronically in the future, please enroll at
www.proxyvote.com.
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Signature
[PLEASE SIGN WITHIN BOX] |
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Signature (Joint
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Table of
Contents
Dear Stockholders:
It is a pleasure to invite you to the
2015 Annual Meeting of Stockholders of Deere & Company. The meeting will be
held at 10 A.M. Central Time on Wednesday, February 25, 2015, at the Deere &
Company World Headquarters, One John Deere Place, Moline, Illinois.
The enclosed Notice of Meeting and
Proxy Statement covers the formal business of the meeting, which includes
election of the named directors, five proposals, including the ratification
of the independent registered public accounting firm for fiscal 2015, and any
other business that properly comes before the meeting. The rules of conduct for
the meeting include the following:
1. |
No
cell phones, cameras, sound equipment, or recording devices may be brought
into the auditorium. |
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2. |
There
will be a discussion period at the end of the meeting. If you wish to
present a question or comment, please wait for an attendant to provide a
microphone, then begin by stating your name, indicating the city and state
where you reside, and confirming that you are a stockholder. |
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3. |
The
Chairman is authorized to impose reasonable time limits on the remarks of
individual stockholders and has discretion to rule on any matters that
arise during the meeting. Personal grievances or claims are not
appropriate subjects for the meeting. |
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4. |
Voting results announced at the meeting by the Inspectors of Voting
are preliminary. Voting results will be included in a Form 8-K filed with
the Securities and Exchange Commission on or around March 2,
2015. |
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5. |
Pagers and similar devices should be
silenced. |
The Proxy Statement and Annual Report to
stockholders are available on Deere's Internet site
at
www.JohnDeere.com/stock.
Detach Proxy Card Here |
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M79517-P57362 |
DEERE &
COMPANY
PROXY - ANNUAL MEETING /
FEBRUARY 25, 2015
Solicited by the Board of Directors for
use at the Annual Meeting of Stockholders of Deere & Company on February 25,
2015.
The undersigned appoints each of Samuel
R. Allen and Todd E. Davies, attorney and proxy, with full power of
substitution, on behalf of the undersigned, and with all powers the undersigned
would possess if personally present, to vote all shares of Common Stock of Deere
& Company that the undersigned would be entitled to vote at the above Annual
Meeting and any adjournment thereof.
The shares represented by this proxy
will be voted as specified and, in the discretion of the proxies, on all other
matters. The proxies will vote as the Board of Directors recommends where a
choice is not specified.
Please mark, date, and sign your name
exactly as it appears on this proxy and return this proxy in the enclosed
envelope. When signing as attorney, executor, administrator, trustee, guardian,
or officer of a corporation, please give your full title as such. For joint
accounts, each joint owner should sign.
THIS PROXY IS CONTINUED
ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN
PROMPTLY.
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Changes/Comments: |
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(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse
side.) |
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