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Transcript of SCHEDULE 14Ad18rn0p25nwr6d.cloudfront.net/CIK-0000315189/0585...BMGI 43 2016 Dipak C. Jain Director,...
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))[X] Definitive Proxy Statement[ ] Definitive Additional Materials[ ] Soliciting Material Pursuant to §240.14a-12
Deere and Company (Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):[X] No fee required.[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)
Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paidpreviously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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Notice of 2017 Annual Meeting and Proxy Statement
Deere & Company World Headquarters Moline, Illinois February 22, 2017
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Whoweare
John Deere is a world leader in providing advanced products and servicesand is committed to the success of customers whose work is linked to theland — those who cultivate, harvest, transform, enrich, and build upon theland to meet the world’s dramatically increasing need for food, fuel, shelter,and infrastructure.
OUR COMMITMENT
Wearecommittedtothoselinkedtotheland.Webelievethatbyservingthemwesupportimprovingthequalityoflifeforpeoplearoundtheworld.Throughtheexcellenceofourproductsandservices,wehelpourcustomersmeettwoofthebiggestchallengesintheworld:feedingapopulationgrowinginsizeandaffluenceanddevelopingtheinfrastructurerequiredtosupportgrowingurbanization.
JohnDeere,withagriculturalandconstructionequipmentbusinesses,isuniquelypositionedtohelpourcustomersmeetthosechallenges.
OURCOREVALUES
Inconductingourbusiness,weareguidedbyfourcorevaluesthatcompanyfounderJohnDeerewasknownfor—integrity,quality,commitment,andinnovation.
Weapplythosevaluesincreatingourproductsandservices,maintainingourrelationships,andoperatingourfactories.
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January13,2017
DEAR FELLOW STOCKHOLDERS,
OnbehalfoftheBoardofDirectorsandtheseniormanagementteam,wecordiallyinviteyoutoattendDeere&Company’sAnnualMeetingofStockholders,whichwillbeheldonWednesday,February22,2017,at10:00a.m.CentralStandardTimeatDeere&CompanyWorldHeadquarters,OneJohnDeerePlace,Moline,Illinois,61265.
Atthismeeting,youwillhaveachancetovoteonthematterssetforthintheaccompanyingNoticeofAnnualMeetingandProxyStatement,andwewillshareareportonouroperations.
Yourvoteisimportant.EvenifyouplantoattendtheAnnualMeeting,pleasevotebyinternet,telephone,ormailassoonaspossibletoensureyourvoteisrecordedpromptly.TheinstructionssetforthintheProxyStatementandontheproxycardexplainhowtovoteyourshares.
OnbehalfoftheBoardofDirectors,thankyouforyourongoingsupportofDeere&Company.
Sincerely,
Samuel R. Allen
Vance D. CoffmanChairmanandCEO PresidingDirector
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Noticeof2017AnnualMeeting
ofStockholders
Your opinion is very important. Please vote on the matters described in theaccompanying Proxy Statement as soon as possible, even if you plan to attend theAnnual Meeting. You can find voting instructions on page 82.
InadditiontotheProxyStatement,wearealsosendingyouourAnnualReport,whichincludesourfiscal2016financialstatements.Ifyouwishtoreceivefutureproxystatementsandannualreportselectronicallyratherthanreceivingpapercopiesinthemail,pleaseturntothesectionentitled“ElectronicDeliveryofProxyStatementandAnnualReport”onpage85forinstructions.
DATE Wednesday,February22,2017
TIME
10a.m.CentralStandardTime
PLACE
Deere & Company World Headquarters OneJohnDeerePlace
Moline,Illinois61265
At the 2017 Annual Meeting of Stockholders (the “Annual Meeting”), stockholders will beasked to:1. Electthetwelvedirectornomineesnamed
intheProxyStatement(seepage7). 2. ApprovethecompensationofDeere’s
namedexecutivesonanadvisorybasis(“say-on-pay”)(seepage27).
3. Vote,onanadvisorybasis,onthefrequencyoffutureadvisoryvotesregardingDeere’sexecutivecompensation(seepage76).
4. RatifytheappointmentofDeloitte&ToucheLLPasDeere’sindependentregisteredpublicaccountingfirmforfiscal2017(seepage77).
5. Voteonthestockholderproposal,ifproperlypresentedatthemeeting(seepages80).
6. Consideranyotherbusinessproperlybroughtbeforethemeeting.
PLEASE VOTE YOUR SHARES IfyouwereaDeerestockholderofrecordatthecloseofbusinessonDecember30,2016,weencourageyoutovotepromptlyinoneofthefollowingways:
BY TELEPHONE IntheU.S.orCanada,youcanvoteyoursharesbycalling1-800-690-6903.
BY INTERNET Youcanvoteyoursharesonlineatwww.proxyvote.com.Youwillneedthe16-digitcontrolnumberontheNoticeofInternetAvailabilityorproxycard.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON FEBRUARY 22, 2017: The
ProxyStatementandAnnualReport
areavailableonourwebsiteatwww.
deere.com/stock.
BY MAIL Youcanvotebymailbymarking,dating,andsigningyourproxycardorvotinginstructionformandreturningitinthepostage-paidenvelope.
IN PERSON Youcanvoteinpersonattheannualmeeting.Seepage84forinformationonhowtopre-register.
OnbehalfoftheBoardofDirectors,Ithankyouforexercisingyourrighttovoteyourshares. FortheBoardofDirectors,
Todd E. Davies, CorporateSecretary
Moline,Illinois,January13,2017
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Proxy Summary 2
Proxy Summary Election of Directors 7 Item 1 — Election of Directors15 Corporate Governance21 Compensation of Directors23 Security Ownership of Certain Beneficial Owners
and Management26 Review and Approval of Related Person
Transactions26 Section 16(a) Beneficial Ownership
Reporting Compliance Advisory Vote on Executive Compensation 27 Item 2 — Advisory Vote on Executive
Compensation28 Compensation Discussion & Analysis
29
Executive Summary33 2016 Compensation Overview35 Compensation Methodology and Process39 Direct Compensation Elements56 Indirect Compensation Elements58 Risk Assessment of Compensation Policies
and Practices59 Compensation Committee Report60 Executive Compensation Tables75 Equity Compensation Plan Information
Advisory Vote on Frequency of Future AdvisoryVotes on Executive Compensation 76 Item 3 — Advisory Vote on Frequency of Future
Advisory Votes on Executive Compensation Ratification of Independent Registered PublicAccounting Firm 77 Item 4 — Ratification of Independent Registered
Public Accounting Firm79 Audit Review Committee Report Stockholder Proposals 80 Items 5 — Stockholder Proposal Additional Information 82 Voting and Meeting Information85 Annual Report85 Householding Information85 Electronic Delivery of Proxy Statement and
Annual Report86 Information not Incorporated into this Proxy
Statement86 Other Matters86 2018 Stockholder Proposals and Nominations87 Cost of Solicitation Appendices 88 Appendix A — Director Independence Categorical
Standards of Deere & Company CorporateGovernance Policies
90 Appendix B — Deere & Company Reconciliationof Non-GAAP Measures
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TableofContentsThis Proxy Statement is issued in connection with the solicitation of proxies by the Board of Directors of Deere & Company for use atthe Annual Meeting and at any adjournment or postponement thereof. On or about January 13, 2017, we will begin distributing print orelectronic materials regarding the Annual Meeting to each stockholder entitled to vote at the meeting. Shares represented by a properlyexecuted proxy will be voted in accordance with instructions provided by the stockholder.
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ProxySummaryThissummaryhighlightsselectedinformationcontainedinthisProxyStatement,butitdoesnotcontainalltheinformationyoushouldconsider.WeurgeyoutoreadthewholeProxyStatementbeforeyouvote.YoualsomaywishtoreviewDeere’sAnnualReportonForm10-KforthefiscalyearendedOctober31,2016.
Meeting Agenda and Voting RecommendationsItem Voting Standard Vote Recommendation Page Reference 1. Annual election ofdirectors
Majorityofvotescast FOR eachnominee
7
2. Advisory vote onexecutivecompensation
Majorityofvotespresent
inpersonorbyproxy
FOR 27
3. Advisory vote onfrequency of futureadvisory votes onexecutivecompensation
Majorityofvotespresent
inpersonorbyproxy
FOR afrequency
of1YEAR
76
4. Ratification ofindependentregistered publicaccounting firm
Majorityofvotespresent
inpersonorbyproxy
FOR 77to79
5. Stockholderproposal
Majorityofvotespresent
inpersonorbyproxy
AGAINST theproposal
80to81
Director Nominees EverymemberofourBoardofDirectorsiselectedannually.Youarebeingaskedtovoteontheelectionofthesetwelvenominees,allofwhomcurrentlyserveasdirectors.
All directors other than Samuel R. Allen are INDEPENDENT.
Committee Memberships
Name
Age
Director Since
Executive
Audit Review
Compensation
Corporate Governance
Finance
Samuel R. Allen ChairmanandCEO,Deere&Company
63 2009 CHAIR
Crandall C.Bowles ChairmanEmeritus,TheSpringsCompany
69 1990–1994,
since1999
■ ■ CHAIR
Vance D.Coffman RetiredChairman,LockheedMartin
72 2004 ■ CHAIR ■
Alan C.Heuberger SeniorManager,BMGI
43 2016 ■ ■
Dipak C. Jain Director,SasinGraduateInstituteofBusiness
Administration
59 2002 ■ ■
Michael O.Johanns RetiredUnitedStatesSenatorfromNebraska
66 2015 ■ ■
Clayton M. JonesRetiredChairman,RockwellCollins
67 2007 ■ ■
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Brian M.Krzanich CEO,Intel
56 2016 ■ ■
Gregory R. Page RetiredExecutiveDirector,ChairmanandCEO,Cargill
65 2013 ■ ■ CHAIR
Sherry M. Smith FormerExecutiveVPandCFO,Supervalu
55 2011 ■ CHAIR ■
Dmitri L.Stockton SpecialAdvisortoChairmanandSeniorVP,GEand
Chairman,President,andCEO,GEAssetManagement
52 2015
■ ■
Sheila G. Talton PresidentandCEO,GrayMatterAnalytics
64 2015 ■ ■
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Proxy Summary Governance and Compensation Changes
Annual Meeting of StockholdersYouareentitledtovoteatthemeetingifyouwereaholderofrecordofourcommonstockatthecloseofbusinessonDecember30,2016.Pleaseseepage82forinstructionsonhowtovoteyoursharesandotherimportantannualmeetinginformation.Ifyouwishtoattendthemeetinginperson,weencourageyoutoregisteronorpriortoTuesday,February21,2017,inordertoobtainanadmissionticket.Seepage84foradditionalinstructions.
Governance and Compensation Changes Onethingwehavelearnedduringournearly180-yearhistoryistheimportanceofchange,whichiswhyweregularlyassesswhatwedotodeterminehowwecanadaptandimprove.Thisapproachappliestoourcorporategovernanceandcompensationplansasmuchasitdoestoourmanufacturingprocessesandproductinnovation.Hereisasummaryofthechangeswehavemadesinceourlastannualmeeting.
CORPORATE GOVERNANCE COMPENSATION
Priorto2015,wehadreceivedstrongstockholdersupportonthe“say-on-pay”advisoryvote,averagingmorethan90%approvalfrom2011through2015.Lastyear,approximately61%(71%excludingabstentions)ofourstockholdersvotedinfavorofourexecutivecompensationprograms.FollowingtheFebruary2016AnnualMeetingofStockholders,weinvitedourtop20stockholderstodiscussspecificgovernanceandcompensationmatterssowecouldunderstandthefactorsthatleadtothedeclineinthesay-on-payvote.TheoutreachtostockholderswasconductedbyDeeremanagement,bothinpersonandbyphone.Wediscussedthemostrecentrevisionstoourcompensationplansandtheproxyaccessby-lawamendmentswith17ofourtop20stockholders,representingabout48%ofourthenoutstandingshares.ThefeedbackfromtheseconversationsregardingcompensationplanswasreportedtotheCompensationCommitteeandconsideredintheirdeliberationsonsubsequentcompensationdecisions.Asaresultofthefeedbackreceivedfromstockholders,weimplementedanumberofchangestoourcompensationprogramtoensurecontinuedfocusonreturningvaluetoourstockholders.SeetheExecutiveSummaryoftheCompensationDiscussion&Analysis(“CD&A”)fordetails.
— Weadoptedaby-lawin2016allowingstockholdersmeetingcertainrequirementstonominatedirectorsandhavesuchnomineesincludedintheproxystatement—commonlyreferredtoas“proxyaccess.”
— Weincreasedtheretirementage
forboardmembersto75toreflectrecentindustrytrendsandtoprovidestabilityinthecompositionofourboard.
Fiscal 2016 Performance Highlights In2016,Deere&Companysalesandearningswereamongthe10bestinitshistory,despitedepressedvolumesduetotheglobalfarmrecessionandweakconstructionequipmentmarkets.NetincomeattributabletoDeere&Companywas$1,524millioncomparedtoearlyfiscal2016guidanceof$1,400million.Adeptexecutionandtheimpactofabroadproductportfolioaidedperformancewhilecontinuingtomakeprogressinestablishingamoreefficientcoststructure,positioningthecompanywellforthefuture.
Formoreinformationregardingourfiscalyear2016financialperformance,pleaseseeourAnnualReport,whichisavailableatwww.proxyvote.com.
Other highlights include: — Equipmentoperationsbenefitedfromimprovedprice
realizationandlowerproductioncosts
— Selling,administrative,andgeneralexpenseswerereducedby$110million
— Companyinvestednearly$1.4billioninresearchanddevelopment
— CompanycompletedstrategicacquisitionofMonosemandsecuredcontrollinginterestinHagieManufacturingCompanytoexpandDeere’sagriculturalproductportfolio
— Deerereturnednearly$1billiontostockholdersintheformofdividendsandsharerepurchases
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Proxy Summary Fiscal 2016 Performance Highlights
NET SALES AND REVENUES (Millions)
NET INCOME (Millions)
EARNINGS PER SHARE (Diluted)
DEERE SHARE PRICE (atOct.31)
Worldwidenetsalesandrevenuesdecreased8%in2016vs.2015.NetsalesforworldwideEquipmentOperationsdeclined9%in2016vs.2015,whichwastwopointslowerthanguidanceprovidedtoinvestorsearlyinfiscal2016.
Netincome*wasdown21%to$1,524million,thoughstillrepresentedthe10thhighesttotalinourhistory.Netincomeexceededguidanceof$1,400milliongiventoinvestorsearlyinfiscal2016.Employeescontrolledcosts(e.g.,reducingselling,administrative,andgeneralcostsbyalmost$100million)yetstillproducedaward-winningadvancedproductsandservicesandinvestedinfuturegrowth.
Earningspersharefell17%vs.2015,lessthanthedeclineinnetincome*,duetofewersharesoutstanding.
Investorsacknowledgedthecompany’sabilitytooperateprofitablydespiteextremelydifficultconditions.SharepriceappreciationplusdividendsgaveDeerestockholdersatotalreturnofabout17%fortheyear,comparedwithagainofabout5%fortheoverallU.S.equitymarket.
*Netincomeattributable
toDeere&Company
CASH FLOW FROM OPERATING ACTIVITIES (Millions) Consolidatedcashflowfrom
operationstotaledahealthy
$3,764million,essentiallythesameas
thepreviousyear.Cashflowfunded
importantprojectsandpaid$761
millionindividendstoourinvestors.
Deerehasraiseditscommonstock
dividend12timessince2004and
overthatperiodhasreturnedmore
thantwo-thirdsofitsconsolidated
operatingcashflowfordividend
paymentsandsharerepurchases
(netofissuances).
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Proxy Summary Fiscal 2016 Performance Highlights
PERFORMANCE IN RECENT DOWNTURNS OurEquipmentOperationsare
affectedbyeconomicfactorssuchas
pricesforcommoditiesandhealth
ofthehousingandinfrastructure
sectors.In2002,weadopteda
strategythatenablesmanagementto
quicklyrespondtochangingbusiness
conditions.Duringthismostrecent
downturnourdecreaseinnetincome
relativetothedecreaseinsalesisless
severethanwehaveexperiencedin
otherrecentcyclicaldownturns.
NET SALES AND EARNINGS PER SHARE (DILUTED)
Since2002,DeerehasmaintainedpositivedilutedEPSperformancedespitedownturnsinnetsales.AsdiscussedintheCD&Aelsewhereinthisproxy,webelieveourcompensationprogramcontributestothesefavorableresultsbyencouragingexecutivestofocusonmetricsthatcreatesustainedvalueforstockholders.
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Proxy Summary Fiscal 2016 Executive Compensation Highlights
Fiscal 2016 Executive Compensation Highlights Ourcompensationprogramsandpracticesaredesignedtocreateincentiveopportunitiesforadvancingourstockholders’long-terminterests.Weusemetricsthatalignwithourbusinessstrategyandmotivateourexecutivestocreatevalueforstockholdersatallpointsinthebusinesscycle.Wehavethreeseparatevariablepaycomponents(describedbelow)–Short-TermIncentive(“STI”),Mid-TermIncentive(“MTI”)andLong-TermIncentive(“LTI”)–whichstimulatecomplementarybehaviors.
This Metric For this type of compensation Contributes to this goalOperating return on operating assets(OROA)* Annualcashbonus
(knownwithinDeereasSTI)
exceptional operating performance forEquipment Operations
Return on equity (ROE)* exceptional operating performance forFinancial Services
Shareholder value added (SVA) Long-termcash
(knownwithinDeereasMTI)
sustainable, profitable growth
Revenue growth Long-termequity
(knownwithinDeereasLTI)
sustainable growth
Total shareholder return (TSR) LTIandMTI
exceptional equity appreciation
*TheEquipmentOperationsOROAcalculationexcludestheassetsfromourcaptivefinancialservices.ROEisbasedsolelyontheFinancialServicessegment.SeeappendixBfordetails.
Forinformationaboutthemetricsweusetomeasurecompensationandtheresultingpayouts,seetheExecutiveSummaryoftheCD&Aonpage29.
Thetablebelowhighlightsthe2016compensationfortheCEOand,onaverage,forthenamedexecutiveofficers(“NEOs”)asdisclosedinthesummarycompensationtableonpage60.Thetablealsoshowshowmuchcompensationwasdeliveredincash(versusequity)andthesignificantportionthatisperformance-based,andthereforeatrisk.
Summary Compensation Table Elements Salary STI MTI
Performance Stock Units
Restricted Stock Units and Stock Options
Retirement and Other
Compensation Total
CEOCompensation $1,500,000 $2,573,063 $1,919,363 $4,156,919 $5,016,272 $3,477,254 $18,642,871
%ofTotal 8% 14% 10% 22% 27% 19% 100%
Cashvs.Equity TotalCash32% TotalEquity49% Other19% 100%
Short-Termvs.Long-Term Short-Term22% Long-Term78% 100%
Fixedvs.PerformanceBased Fixed8% PerformanceBased73% Other19% 100%
Average NEOCompensation $649,384 $757,477 $551,672 $785,432 $947,900 $772,600 $4,464,465
%ofTotal 15% 17% 12% 18% 21% 17% 100%
Cashvs.Equity TotalCash44% TotalEquity39% Other17% 100%
Short-Termvs.Long-Term Short-Term32% Long-Term68% 100%
Fixedvs.PerformanceBased Fixed15% PerformanceBased68% Other17% 100%
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ElectionofDirectors
Item 1 - Election of Directors
How We Identify and Evaluate Director Nominees The Corporate Governance Committee of the Board is responsible for screeningcandidates and recommending director nominees to the full Board. The Board nominatesthe slate of directors for election at each annual meeting of stockholders, and also electsdirectors to fill vacancies or newly-created Board seats.
TheCorporateGovernanceCommitteeconsiderscandidatesrecommendedbystockholders,directors,officers,andthird-partysearchfirms.Ifyouwishtonominateadirector,pleasereviewtheproceduresdescribedunder“2018StockholderProposalsandNominations”onpage86ofthisProxyStatement.TheCorporateGovernanceCommitteeevaluatesallcandidatesinthesamemanner,regardlessofthesourceoftherecommendation.
Deere’sCorporateGovernancePolicies,whicharedescribedinthe“CorporateGovernance”sectionofthisProxyStatement,establishthegeneralcriteriaandframeworkforassessingdirectorcandidates.Inparticular,theCorporateGovernanceCommitteeconsiderseachnominee’sskills,experience,internationalversusdomesticbackground,andage,aswellaslegalandregulatoryrequirementsandtheparticularneedsoftheBoardatthetime.Inaddition,theBoardassessesthediversityofitsmembersandnomineesaspartofanannualperformanceevaluationbyconsidering,amongotherfactors,diversityinexpertise,experience,background,ethnicity,andgender.WebelieveaBoardcomposedofmemberswithcomplementaryskills,qualifications,experiences,andattributesisbestequippedtosatisfyitsresponsibilitieseffectively.
Anydirectorwhoexperiencesamaterialchangeinoccupation,career,orprincipalbusinessactivity,includingretirement,musttenderaresignationfromtheBoard.UponrecommendationfromtheCorporateGovernanceCommittee,theBoardmaydeclinetoacceptanysuchresignation.DirectorsmustretirefromtheBoarduponthefirstannualmeetingofstockholdersafterreachingtheageof75,exceptasapprovedbytheBoardunderrarecircumstances.
Director Nominees TheCorporateGovernanceCommitteehasrecommended,andtheBoardhasnominated,eachofSamuelR.Allen,CrandallC.Bowles,VanceD.Coffman,AlanC.Heuberger,DipakC.Jain,MichaelO.Johanns,ClaytonM.Jones,BrianM.Krzanich,GregoryR.Page,SherryM.Smith,DmitriL.Stockton,andSheilaG.Taltontobeelectedfortermsexpiringattheannualmeetingin2018.AllofthenomineesarecurrentmembersoftheBoard,butDeere’sCertificateofIncorporationandgoodgovernancepracticesrequireallmembersoftheBoardtobeelectedannually.
WehaveconfidencethatthistalentedslateofnomineeswillleadDeerecapablyintheyearahead.Wediscussthenominees’professionalbackgroundsandqualificationsintheshortbiographiesthatfollow.
Theboardofdirectorsrecommendsthatyouvote“FOR” alltwelvenominees.
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Election of Directors Item1 – Election of Directors
Board Diversity TheCorporateGovernanceCommitteerecognizesthatourBoardismosteffectivewhenitembodiesadiversesetofviewpointsandpracticalexperiences.Tothatend,theCorporateGovernanceCommitteeconsidershoweachnominee’sparticularbackground,experience,qualifications,attributes,andskillswillcontributetoDeere’ssuccess.Asshownbelow,themembersofourBoardhavearangeofviewpoints,backgrounds,andexpertise.
GENDER
TENURE
BOARD MEMBER SKILLS
Executive Manufacturing International Academic Government Law FinanceRisk
ManagementCorporate Governance
Samuel R. Allen ■ ■ ■Crandall C. Bowles ■ ■ ■ Vance D. Coffman ■ ■ ■ ■Alan C. Heuberger ■ ■ ■Dipak C. Jain ■ ■ ■Michael O. Johanns ■ ■ ■ ■Clayton M. Jones ■ ■ ■ ■Brian M. Krzanich ■ ■ ■Gregory R. Page ■ ■ ■ ■ ■Sherry M. Smith ■ ■Dmitri L. Stockton ■ ■ ■ ■ ■Sheila G. Talton ■ ■ ■ ■
■
AuditcommitteefinancialexpertunderSecuritiesandExchangeCommission(“SEC”)rules
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Election of Directors Item 1 – Election of Directors
Samuel R. Allen Chairman and Chief Executive Officer of Deere
AGE:
63
DIRECTORSINCE:
2009
COMMITTEES:
Executive(Chair)
Current and Past Positions
Positions at Deere:
— ChairmanandChiefExecutiveOfficersinceFebruary2010 — PresidentandChiefExecutiveOfficer—August2009toFebruary2010 — PresidentandChiefOperatingOfficer—June2009toAugust2009 — President,WorldwideConstruction&ForestryDivisionandJohnDeere
PowerSystems—March2005toJune2009 — President,GlobalFinancialServices,JohnDeerePowerSystems,and
CorporateHumanResources—November2003toMarch2005
Other Current Directorships
— WhirlpoolCorporation(since2010)
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.AllenshouldserveonDeere’sBoardofDirectors:hisleadershipexperienceasanofficerofDeeresince2001;thebreadthofhismanagementexperienceswithin,andknowledgeof,eachofDeere’smajorglobaloperations;andhissubjectmatterknowledgeintheareasofengineering,manufacturing,andindustrialmanagement.
Crandall C. Bowles Chairman Emeritus of The Springs Company
AGE:
69
DIRECTORFROM:
1990 to 1994and since 1999
COMMITTEES:
CorporateGovernance(Chair),
Compensation,Executive
Current and Past Positions
— ChairmanEmeritusofTheSpringsCompany(assetmanagement)sinceApril2015
— ChairmanofTheSpringsCompany—August2007toApril2015 — ChairmanofSpringsIndustries,Inc.(SpringsWindowFashions)—
January2006toJune2013 — Co-ChairmanandCo-ChiefExecutiveOfficerofSpringsGlobalUS,Inc.
andSpringsGlobalParticipacoesS.A.—January2006toJune2007 — ChairmanandChiefExecutiveOfficerofSpringsIndustries,Inc.—April
1998toJanuary2006
Other Current Directorships
— JPMorganChase&Co.(since2006)
Previous Directorships
— SaraLeeCorporation
Key Qualifications, Experiences, and Attributes
InadditiontoherprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMs.BowlesshouldserveonDeere’sBoardofDirectors:herleadershipqualitiesdevelopedfromherserviceasChairmanandChiefExecutiveOfficerofSpringsIndustries;thebreadthofherexperiencesinriskmanagementandotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherglobalcorporations;andhersubjectmatterknowledgeintheareasofeconomicsandsalesandmarketingofconsumerproducts.
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Election of Directors Item 1 – Election of Directors
Vance D. Coffman Retired Chairman of Lockheed Martin Corporation
AGE:
72
DIRECTORSINCE:
2004
COMMITTEES:
Compensation(Chair),
CorporateGovernance,Executive
PRESIDINGDIRECTORSINCE2016
Current and Past Positions
Positions at Lockheed Martin Corporation (aerospace, defense, andinformation technology):
— Chairman—April1998toApril2005 — ChiefExecutiveOfficer—August1997toAugust2004
Other Current Directorships
— 3MCompany(since2002) — AmgenInc.(since2007)
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.CoffmanshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisserviceasChairmanandChiefExecutiveOfficerofLockheedMartin;thebreadthofhisexperiencesincorporategovernanceandotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherglobalcorporations;andhissubjectmatterknowledgeintheareasofengineering,manufacturing,andfinance.
Alan C. Heuberger Senior Manager, BMGI
AGE:
43
DIRECTORSINCE:
2016
COMMITTEES:
Audit Review,Finance
Current and Past Positions
Positions at BMGI (private investment management):
— SeniorManagersince2004 — InvestmentAnalyst—1996to2004
Previous Directorships
— GAMCOInvestors,Inc.
Key Qualifications, Experiences, and Attributes
Inadditiontohisprofessionalbackground,thefollowingqualificationsledtheBoardtoconcludethatMr.HeubergershouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisserviceasSeniorManagerofBMGI,thebreadthofhisexperienceingovernance,strategyandotherareasofoversightwhileservingasamemberoftheboardsofdirectorsandadvisorsofvariousassetmanagemententitiesandprivately-heldcorporationsandhissubjectmatterknowledgeintheareasofagricultureindustryinvestments,assetmanagement,finance,andeconomics.
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Table of Contents
Election of Directors Item 1 – Election of Directors
Dipak C. Jain Director, Sasin Graduate Institute of Business Administration
AGE:
59
DIRECTORSINCE:
2002
COMMITTEES:
Audit Review,Finance
Current and Past Positions
— Director,SasinGraduateInstituteofBusinessAdministration(internationalgraduatebusinessschool)sinceAugust2014
— ChairedProfessorofMarketing,INSEAD(internationalgraduate
businessschool)—March2013toAugust2014 — Dean,INSEAD—May2011toMarch2013 — Dean,KelloggSchoolofManagement,NorthwesternUniversity—July
2001toSeptember2009 — AssociateDeanforAcademicAffairs,KelloggSchoolofManagement,
NorthwesternUniversity—1996to2001 — SandyandMortonGoldmanProfessorofEntrepreneurialStudiesand
ProfessorofMarketing,KelloggSchoolofManagement,NorthwesternUniversity—1994to2001andsince2009
OtherCurrentDirectorships
— NorthernTrustCorporation(since2004) — RelianceIndustriesLimited,India(since2005) — GlobalLogisticsPropertiesLimited,Singapore(since2010)
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.JainshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisexperienceswhileservingasDirectororDeanatseveralprominentgraduatebusinessschoolsandasaforeignaffairsadvisorforthePrimeMinisterofThailand;thebreadthofhisexperiencesincompensation,corporategovernance,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherglobalcorporations;andhissubjectmatterknowledgeintheareasofmarketing,globalproductdiffusion,andnewproductforecastinganddevelopment.
Michael O. Johanns Retired United States Senator from Nebraska
AGE:
66
DIRECTORSINCE:
2015
COMMITTEES:
Audit Review,CorporateGovernance
Current and Past Positions
— UnitedStatesSenatorfromNebraska—January2009toJanuary2015 — UnitedStatesSecretaryofAgriculture—January2005toSeptember
2007 — GovernorofNebraska—1999to2005
Other Current Directorships
— BurlingtonCapitalGroup,LLC.(since2016)
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.JohannsshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisserviceinstateandfederalgovernment,includingservingasGovernorofNebraska;thebreadthofhisexperiencesinlaw,governance,andotherareasofoversightwhileservingasapartnerofalawfirmandamemberoftheU.S.SenateandvariousSenatecommittees;andhissubjectmatterknowledgeintheareasofagriculture,banking,commerce,andforeigntrade.
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Clayton M. Jones Retired Chairman of Rockwell Collins, Inc.
AGE:
67
DIRECTORSINCE:
2007
COMMITTEES:
Compensation,CorporateGovernance
Current and Past Positions
Positions at Rockwell Collins, Inc. (aviation electronics andcommunications):
— Chairman-July2013toJuly2014 — ChairmanandChiefExecutiveOfficer—September2012toJuly2013 — Chairman,President,andChiefExecutiveOfficer—June2002to
September2012
Other Current Directorships
— CardinalHealth,Inc.(since2012) — MotorolaSolutions,Inc.(since2015)
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.JonesshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisserviceasChairmanandChiefExecutiveOfficerofRockwellCollins;thebreadthofhisexperiencesinfinance,compensation,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherglobalcorporations;andhissubjectmatterknowledgeintheareasofgovernmentaffairsandmarketing.
Brian M. Krzanich Chief Executive Officer of Intel Corporation
AGE:
56
DIRECTORSINCE:
2016
COMMITTEES:
Compensation,CorporateGovernance
Current and Past Positions
Positions at Intel Corporation (advanced integrated digital technologyplatforms):
— ChiefExecutiveOfficersinceMay2013 — ExecutiveVicePresidentandChiefOperatingOfficer—2012toMay
2013 — SeniorVicePresidentandGeneralManagerofManufacturingand
SupplyChain—2010to2012 — VicePresidentandGeneralManagerofWorldwideManufacturingand
Systems—2007to2010
Other Current Directorships
— IntelCorporation(since2013)
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.KrzanichshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisserviceasChiefExecutiveOfficerandChiefOperatingOfficerofIntel;thebreadthofhisexperiencesincorporategovernance,strategy,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofIntelandtheSemiconductorIndustryAssociation;andhissubjectmatterknowledgeintheareasofmanufacturing,operations,informationtechnology,humanresources,andsupplychainmanagement.
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Gregory R. Page Retired Executive Director of Cargill, Incorporated
AGE:
65
DIRECTORSINCE:
2013
COMMITTEES:
Finance (Chair),Audit Review,Executive
Current and Past Positions
Positions at Cargill, Incorporated (agricultural, food, financial, andindustrial products and services):
— ExecutiveDirector—September2015toAugust2016 — ExecutiveChairman—December2013toSeptember2015 — ChairmanandChiefExecutiveOfficer—2011toDecember2013 — Chairman,ChiefExecutiveOfficer,andPresident—2007to2011 — PresidentandChiefOperatingOfficer—2000to2007
Other Current Directorships
— EatonCorporationplc(since2003) — 3MCompany(since2016)
Previous Directorships
— Carlson,Inc.
— Cargill,Incorporated
Key Qualifications, Experiences, andAttributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.PageshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisexperienceswhileservingasChairmanandChiefExecutiveOfficerofCargill;thebreadthofhisexperiencesinauditing,corporategovernance,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherglobalcorporations;andhissubjectmatterknowledgeintheareasofcommodities,agriculture,operatingprocesses,finance,andeconomics.
Sherry M. Smith Former Executive Vice President and Chief Financial Officer of Supervalu Inc.
AGE:
55
DIRECTORSINCE:
2011
COMMITTEES:
Audit Review(Chair),Finance,Executive
Current and Past Positions
Positions at Supervalu Inc. (retail and wholesale grocery and retailgeneral merchandise products):
— ExecutiveVicePresidentandChiefFinancialOfficer—December2010toAugust2013
— SeniorVicePresident,Finance—2005to2010 — SeniorVicePresident,FinanceandTreasurer—2002to2005
Other Current Directorships
— PiperJaffrayCompanies(since2016) — RealogyHoldingsCorp.(since2014) — TuesdayMorningCorporation(since2014)
Key Qualifications, Experiences, and Attributes
InadditiontoherprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMs.SmithshouldserveonDeere’sBoardofDirectors:herleadershipqualitiesdevelopedfromherexperiencewhileservingasaseniorexecutiveandasChiefFinancialOfficerofSupervalu;thebreadthofherexperiencesinauditing,finance,accounting,compensation,strategicplanning,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherpubliccorporations;herfamilyfarmingbackground;andhersubjectmatterknowledgeintheareasoffinance,accounting,andfoodandsupplychainmanagement.
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Dmitri L. Stockton Special Advisor to Chairman and Senior Vice President of General Electric Company andChairman, President, and Chief Executive Officer of GE Asset Management Incorporated
AGE:
52
DIRECTORSINCE:
2015
COMMITTEES:
Compensation,Finance
Current and Past Positions
— SpecialAdvisortotheChairmanandSeniorVicePresidentofGeneralElectricCompany(powerandwater,aviation,oilandgas,healthcare,appliancesandlighting,energymanagement,transportationandfinancialservices)sinceJuly2016
— Chairman,President,andChiefExecutiveOfficerofGEAsset
ManagementIncorporated(globalinvestments)andSeniorVicePresidentofGeneralElectricCompanysince2011
— PresidentandChiefExecutiveOfficerofGECapitalGlobalBankingand
SeniorVicePresidentofGELondon-2008to2011 — PresidentandChiefExecutiveOfficerofGEConsumerFinance,
Central&EasternEurope-2005to2008
Previous Directorships
— GEAssetManagementIncorporated — GeneralElectricRSPU.S.EquityFundandGeneralElectricRSP
IncomeFund — ElfunFunds(sixdirectorships) — SynchronyFinancial
Key Qualifications, Experiences, and Attributes
InadditiontohisprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMr.StocktonshouldserveonDeere’sBoardofDirectors:hisleadershipqualitiesdevelopedfromhisserviceasChairman,President,andChiefExecutiveOfficerofGEAssetManagementandasaseniorofficerofotherglobaloperations;thebreadthofhisexperiencesinriskmanagement,governance,regulatorycompliance,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsandtrusteesofglobalassetmanagement,investment,andemployeebenefitentities;andhissubjectmatterknowledgeintheareasoffinance,banking,andassetmanagement.
Sheila G. Talton President and Chief Executive Officer of Gray Matter Analytics
AGE:
64
DIRECTORSINCE:
2015
COMMITTEES:
Audit Review,Finance
Current and Past Positions
— PresidentandChiefExecutiveOfficerofGrayMatterAnalytics(dataanalyticsconsultingservicesforfinancialservicesandhealthcareindustries)since2013
— PresidentandChiefExecutiveOfficerofSGTLtd.(strategyand
technologyconsultingservices)—2011to2013 — VicePresidentofCiscoSystems,Inc.(informationtechnologyand
solutions)—2008to2011
Other Current Directorships
— OGEEnergyCorporation(since2013) — WintrustFinancialCorporation(since2012)
Previous Directorships
— AccoBrandsCorporation
Key Qualifications, Experiences, andAttributes
InadditiontoherprofessionalbackgroundandpriorDeereBoardexperience,thefollowingqualificationsledtheBoardtoconcludethatMs.TaltonshouldserveonDeere’sBoardofDirectors:herleadershipqualitiesdevelopedfromherserviceasPresidentandChiefExecutiveOfficerofGrayMatterAnalyticsandasanofficerofotherglobaltechnologyandconsultingfirms;thebreadthofherexperiencesincompensation,governance,riskmanagement,andotherareasofoversightwhileservingasamemberoftheboardsofdirectorsofotherpubliccorporations;andhersubjectmatterknowledgeintheareasoftechnology,dataanalytics,andglobalstrategies.
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Election of Directors Corporate Governance
CorporateGovernanceCorporate Governance Highlights At Deere, we recognize that good corporate governance contributes to long-term stockholder value. We are committed to soundgovernance practices, including those shown below:
INDEPENDENCE BEST PRACTICES— AllofourdirectornomineesareindependentexceptforourCEO — TheindependentPresidingDirectorhasastrongrolewith
significantgovernanceresponsibilities — AllstandingBoardcommitteesotherthantheExecutive
Committeearecomposedwhollyofindependentdirectors — Independentdirectorsmeetregularlyinexecutivesessionwithout
managementpresent
— Directorsmaynotstandforreelectionaftertheir75thbirthdays,absentBoardapprovalunderrarecircumstances
— Ourrecoupmentpolicyrequiresanexecutivetoreturnany
incentivecompensationfoundtohavebeenawardederroneouslyduetotheaccountingmisconduct
— Directorsandexecutivesaresubjecttostockownership
requirements — Directorsandexecutivesareprohibitedfromhedgingorpledging
theirDeerestock
ACCOUNTABILITY RISK OVERSIGHT— Alldirectorsareelectedannually — Inuncontestedelections,directorsareelectedbymajorityvote — TheBoardandeachBoardcommitteeconductsanannual
performanceself-evaluation — Stockholdershavetheabilitytoincludenomineesinourproxy
statement(so-calledproxyaccessrights)
— TheBoardoverseesDeere’soverallriskmanagementstructure — IndividualBoardcommitteesoverseecertainrisksrelatedtotheir
specificareasofresponsibility — Wehaverobustriskmanagementprocessesacrossthecompany
Our Values AtDeere,ouractionsareguidedbyourcorevaluesofintegrity,quality,commitment,andinnovation.Westrivetoliveuptothesevaluesineverythingwedo—notjustbecauseitisgoodbusiness,butbecauseitistherightthingtodo.Wearecommittedtostrongcorporategovernanceasameansofupholdingthesevaluesandensuringthatweareaccountabletoourstockholders.
Director Independence aTheBoardhasadoptedcategoricalstandards(attachedasAppendixAtothisProxyStatement)thathelpusevaluateeachdirector’sindependence.Specifically,thesestandardsareintendedtoassisttheBoardindeterminingwhethercertainrelationshipsbetweenourdirectorsandDeereoritsaffiliatesare“materialrelationships”forpurposesoftheNewYorkStockExchange(“NYSE”)independencestandards.Thecategoricalstandardsestablishthresholds,shortofwhichanysuchrelationshipsaredeemednottobematerial.Inaddition,eachdirector’sindependenceisevaluatedunderourRelatedPersonTransactionsApprovalPolicy,asdiscussedinthe“ReviewandApprovalofRelatedPersonTransactions”sectionbelow.Deere’sindependencestandardsmeetorexceedtheNYSE’sindependencerequirements.
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InNovember2016,wereviewedtheindependenceofeachthen-sittingdirectorapplyingtheindependencestandardssetforthinourCorporateGovernancePolicies.Thereviewsconsideredrelationshipsandtransactionsbetweeneachdirector(andthedirector’simmediatefamilyandaffiliates)andeachofDeere,Deere’smanagement,andDeere’sindependentregisteredpublicaccountingfirm.Basedonthisreview,theBoardaffirmativelydeterminedatitsregularDecember2016meetingthatnodirectorotherthanMr.AllenhasamaterialrelationshipwithDeereanditsaffiliatesandthateachdirectorotherthanMr.AllenisindependentasdefinedinourCorporateGovernancePoliciesandtheNYSE’slistingstandards.Mr.AllenisnotanindependentdirectorbecauseofhisemploymentrelationshipwithDeere.
Board Leadership Structure TheChairmanoftheBoardalsoservesasDeere’sChiefExecutiveOfficer.TheBoardbelievesthatcombiningtheChairmanandChiefExecutiveOfficerrolesisthemostappropriatestructureforDeereatthistimeforthreereasons:
1.
Thisstructurehasservedourstockholderswellthroughmanyeconomiccycles,businesschallenges,andleadershipsuccessions. 2. TheBoard’sgovernanceprocessespreserveBoardindependencebyensuringdiscussionamongindependentdirectorsandindependent
evaluationofandcommunicationwithmembersofseniormanagement. 3. TheenhancedroleoftheindependentPresidingDirectorprovidesastrongcounterbalancetothecombinedChairmanandChiefExecutive
Officerroles.
Presiding Director VanceD.CoffmanhasservedasourindependentPresidingDirectorsincethe2016annualmeeting.
ThePresidingDirectoriselectedbyamajorityoftheindependentdirectorsuponarecommendationfromtheCorporateGovernanceCommittee.ThePresidingDirectorisappointedforaone-yeartermbeginninguponelectionandexpiringupontheselectionofasuccessor.
TheBoardhasassignedthePresidingDirectorthefollowingdutiesandresponsibilities:
—
PresideatallmeetingsoftheBoardatwhichtheChairmanisnotpresent,includingexecutivesessionsoftheindependentdirectors; — ServeasliaisonbetweentheChairmanandtheindependentdirectors; — InconsultationwiththeChairman,reviewandapprovethescheduleofmeetingsoftheBoard,theproposedagendas,andthematerialstobe
senttotheBoard; — Callmeetingsoftheindependentdirectorswhennecessary;and — RemainavailableforconsultationanddirectcommunicationwithDeere’sstockholders.
TheBoardbelievestheroleofthePresidingDirectorexemplifiesDeere’scontinuingcommitmenttostrongcorporategovernanceandBoardindependence.
Board Meetings UnderDeere’sby-laws,regularmeetingsoftheBoardareheldatleastquarterly.OurtypicalpracticeistoscheduleatleastoneBoardmeetingperyearatacompanylocationotherthanourWorldHeadquarterssodirectorshaveanopportunitytoobservedifferentaspectsofourbusinessfirst-hand.TheBoardmetfivetimesduringfiscal2016.
DirectorsareexpectedtoattendBoardmeetings,meetingsofcommitteesonwhichtheyserve,andstockholdermeetings.Moretothepoint,directorsareexpectedtospendthetimeneededandmeetasfrequentlyasnecessarytoproperlydischargetheirresponsibilities.Duringfiscal2016,allincumbentdirectorsattended75%ormoreofthemeetingsoftheBoardandcommitteesonwhichtheyserved.OverallattendanceatBoardandcommitteemeetingswas100%.AlldirectorstheninofficeattendedtheAnnualMeetingofStockholdersinFebruary2016.
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EachBoardmeetingnormallybeginsorendswithasessionbetweentheCEOandtheindependentdirectors.Thisprovidesaplatformfordiscussionsoutsidethepresenceofthenon-Boardmanagementattendees.Theindependentdirectorsmaymeetinexecutivesession,withouttheCEO,atanytime,butsuchnon-managementexecutivesessionsarescheduled(andtypicallyoccur)ateachregularBoardmeeting.ThePresidingDirectorpresidesovertheseexecutivesessions.
Board Committees TheBoardhasdelegatedsomeofitsauthoritytofivecommittees:theExecutiveCommittee,theAuditReviewCommittee,theCompensationCommittee,theCorporateGovernanceCommittee,andtheFinanceCommittee.TheFinanceCommittee,whichreplacedthePensionPlanOversightCommitteeinFebruary2016,focusesandenhancestheBoard’soversightofDeere’sfinancialaffairs.
Inadditiontocreatinganewcommittee,theBoardapprovedtherotationofcertaindirectors’committeemembershipseffectiveFebruary2016.TheBoardbelievesthatcommitteerotationisgenerallydesirabletoensurethatcommitteesregularlybenefitfromnewperspectives.
EachofourBoardcommitteeshasadoptedacharterthatcomplieswithcurrentNYSErulesrelatingtocorporategovernancematters.Copiesofthecommitteechartersareavailableatwww.deere.com/corpgovandmayalsobeobtaineduponrequesttotheDeere&CompanyStockholderRelationsDepartment.Eachcommittee(otherthantheExecutiveCommittee,whichdidnotmeetin2016andofwhichMr.Allenservesaschair)iscomposedsolelyofindependentdirectors.
ThecommitteestructureandmembershipsdescribedbelowreflectthechangesthatbecameeffectiveinFebruary2016.EverycommitteeotherthantheExecutiveCommitteeregularlyreportsonitsactivitiestothefullBoard.
EXECUTIVE COMMITTEE
2016 meetings: 0 Members: SamuelR.Allen(Chair)
CrandallC.Bowles
VanceD.Coffman
GregoryR.Page
SherryM.Smith
—ActsonmattersrequiringBoardactionbetweenmeetingsofthefullBoard —Hasauthoritytoactoncertainsignificantmatters,limitedbyourby-lawsandapplicablela
w —Allmembers,otherthanMr.Allen,areindependent
AUDIT REVIEW COMMITTEE
2016 meetings: 5 Members: SherryM.Smith(Chair)
AlanC.Heuberger
DipakC.Jain
MichaelO.Johanns
GregoryR.Page
SheilaG.Talton
—Overseestheindependentregisteredpublicaccountingfirm’squalifications,independence,andperformance
—AssiststheBoardinoverseeingtheintegrityofourfinancialstatements,compliancewith
legalrequirements,andtheperformanceofourinternalauditors —Pre-approvesallauditandallowablenon-auditservicesbytheindependentregistered
publicaccountingfirm —Withtheassistanceofmanagement,approvestheselectionoftheindependent
registeredpublicaccountingfirm’sleadengagementpartner —Allmembershavebeendeterminedtobeindependentandfinanciallyliterateunder
currentNYSElistingstandards —TheBoardhasdeterminedthatMs.Smith,Mr.HeubergerandMr.Pageare“audit
committeefinancialexperts”asdefinedbytheSECandthateachhasaccountingorrelatedfinancialmanagementexpertiseasrequiredbyNYSElistingstandards
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COMPENSATION COMMITTEE
2016 meetings: 6 Members: VanceD.Coffman(Chair)
CrandallC.Bowles
ClaytonM.Jones
BrianM.Krzanich
DmitriL.Stockton
—MakesrecommendationstotheBoardregardingincentiveandequity-basedcompensationplans
—Evaluatesandapprovesthecompensationofourexecutiveofficers(exceptforthecompensationofourCEO,whichisapprovedbythefullBoard),includingreviewingandapprovingtheperformancegoalsandobjectivesthatwillaffectthatcompensation
—EvaluatesandapprovescompensationgrantedpursuanttoDeere’sequity-basedandincentivecompensationplans,policies,andprograms
—Retains,oversees,andassessestheindependenceofcompensationconsultantsand
otheradvisors —Overseesourpoliciesonstructuringcompensationprogramsforexecutiveofficersto
preservetaxdeductibility —ReviewsanddiscussestheCD&Awithmanagementanddetermineswhetherto
recommendtotheBoardthattheCD&AbeincludedinourfilingswiththeSEC —AllmembershavebeendeterminedtobeindependentundercurrentNYSElisting
standards,includingthosestandardsapplicablespecificallytocompensationcommitteemembers
CORPORATE GOVERNANCE COMMITTEE
2016 meetings: 4 Members: CrandallC.Bowles(Chair)
VanceD.Coffman
MichaelO.Johanns
ClaytonM.Jones
BrianM.Krzanich
—MonitorscorporategovernancepoliciesandoverseesourCenterforGlobalBusinessConduct
—Reviewsseniormanagementsuccessionplansandidentifiesandrecommendstothe
Boardindividualstobenominatedasdirectors —Makesrecommendationsconcerningthesize,composition,committeestructure,andfees
fortheBoard —ReviewsandreportstotheBoardontheperformanceandeffectivenessoftheBoard —Overseestheevaluationofourmanagement —AllmembershavebeendeterminedtobeindependentundercurrentNYSElisting
standards
FINANCE COMMITTEE
2016 meetings: 3 Members: GregoryR.Page(Chair)
DipakC.Jain
SherryM.Smith
DmitriL.Stockton
SheilaG.Talton
—Reviewsthepolicies,practices,strategies,andrisksrelatingtoDeere’sfinancialaffairs —ExercisesoversightofthebusinessofDeere’sFinancialServicessegment —Formulatesourpensionfundingpolicies —Overseesourpensionplans —AllmembershavebeendeterminedtobeindependentundercurrentNYSElisting
standards
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Board Oversight of Risk Management TheBoardbelievesthatstrongandeffectiveinternalcontrolsandriskmanagementprocessesareessentialforachievinglong-termstockholdervalue.TheBoard,directlyandthroughitscommittees,isresponsibleforoverseeingrisksthatmayaffectDeere.
RISK MANAGEMENT APPROACH Wemaintainastructuredriskmanagementapproachtofacilitateourstrategicbusinessobjectives.Tothatend,weidentifyandcategorizerisks,andthenescalatethemasneeded.OurinternalriskmanagementstructureisadministeredbyaManagementRiskCommitteeconsistingoftheCEOandhisdirectreports.ThiscommitteeprovidesperiodicreportstotheBoardregardingDeere’sriskmanagementprocessesandreviewswiththeBoardhigh-priorityareasofenterpriserisk.
Dedicatedriskmanagementreportstypicallytakeplaceatregularly-scheduledBoardmeetingseachFebruaryandAugust,andriskmanagementtopicsarediscussedasneededatotherBoardandcommitteemeetings.
BOARD AND COMMITTEE RISK OVERSIGHT RESPONSIBILITIES EachBoardcommitteeisresponsibleforoversightofriskcategoriesrelatedtothecommittee’sspecificareaoffocus,whilethefullBoardexercisesultimateresponsibilityforoverseeingtheriskmanagementfunctionasawhole.
TheareasofriskoversightexercisedbytheBoardanditscommitteesareasfollows:
Who is responsible? Primary areas of risk oversightFull Board Overseesoverallriskmanagementfunction,andregularlyreceivesandevaluatesreportsand
presentationsfromthechairsoftheindividualBoardcommitteesonrisk-relatedmattersfallingwithineachcommittee’soversightresponsibilities.
Audit Review Committee Monitorsoperational,strategic,andlegalandregulatoryrisksbyregularlyreviewingreportsandpresentationsgivenbymanagement,includingourSeniorVicePresidentandGeneralCounsel,SeniorVicePresidentandChiefFinancialOfficer,andVicePresident,InternalAudit,aswellasotheroperationalpersonnel.
Regularlyreviewsourriskmanagementpracticesandrisk-relatedpolicies(forexample,Deere’sriskmanagementandinsuranceportfolio,andlegalandregulatoryreviews)andevaluatespotentialrisksrelatedtointernalcontroloverfinancialreporting.
Compensation Committee Monitorspotentialrisksrelatedtothedesignandadministrationofourcompensationplans,policies,andprograms,includingourperformance-basedcompensationprograms,topromoteappropriateincentivesthatdonotencourageexecutiveofficersoremployeestotakeunnecessaryandexcessiverisks.
Corporate Governance Committee Monitorspotentialrisksrelatedtoourgovernancepracticesby,amongotherthings,reviewingsuccessionplansandperformanceevaluationsoftheBoardandCEO,monitoringlegaldevelopmentsandtrendsregardingcorporategovernancepractices,theCodeofBusinessConductandevaluatingpotentialrelatedpersontransactions.
Monitorsrisksrelatingtoenvironmentalfactors,aswellasproductsafetyandothercompliancematters.Finance Committee MonitorsoperationalandstrategicrisksrelatedtoDeere’sfinancialaffairs,includingcapitalstructureand
liquidityrisks,andreviewsthepoliciesandstrategiesformanagingfinancialexposureandcontingentliabilities.
MonitorspotentialrisksrelatedtofundingourU.S.qualifiedpensionplans(otherthanthedefinedcontributionsavingsandinvestmentplans)andmonitorscompliancewithapplicablelawsandinternalpoliciesandobjectives.
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Stockholder Outreach Inordertoensurethecontinueddeliveryofsustainable,long-termvaluetoourstockholders,weengageinregulardialoguewithourstockholders.During2016,wediscussedgovernance,executivecompensation,andotherissueswithstockholdersrepresentingmorethan48%ofouroutstandingshares.TheBoardconsidersfeedbackfromtheseconversationsduringitsdeliberations,andweregularlyreviewandadjustourcorporategovernancestructureandexecutivecompensationpoliciesandpracticesinresponsetocommentsfromourstockholders.
Communication with the Board IfyouwishtocommunicatewiththeBoardyoumaysendcorrespondenceto:CorporateSecretary,Deere&Company,OneJohnDeerePlace,Moline,Illinois61265-8098.TheCorporateSecretarywillsubmityourcorrespondencetotheBoardortheappropriatecommittee,asapplicable.
YoumaycommunicatedirectlywiththePresidingDirectorbysendingcorrespondenceto:PresidingDirector,BoardofDirectors,Deere&Company,DepartmentA,OneJohnDeerePlace,Moline,Illinois61265-8098.
Corporate Governance Policies Becausewebelievecorporategovernanceisintegraltocreatinglong-termstockholdervalue,ourBoardofDirectorshasadoptedcompany-wideCorporateGovernancePolicies,whichareperiodicallyreviewedandrevisedasappropriatetoensurethattheyreflecttheBoard’scorporategovernanceobjectives.
PleasevisittheCorporateGovernanceportionofourwebsite(www.deere.com/corpgov)tolearnmoreaboutourcorporategovernancepracticesandtoaccessthefollowingmaterials:
—
CorporateGovernancePolicies — CodeofEthics — GuidingPrinciples — GlobalConflictMineralsPolicy — ChartersforourBoardCommittees — CodeofBusinessConduct — SupplierCodeofConduct
Political Contributions Topromotetransparencyandgoodcorporatecitizenship,since2012wehaveprovidedvoluntarydisclosurerelatingtothepoliticalcontributionactivitiesofDeereanditspoliticalactioncommittee.Thisinformationispubliclyavailableatwww.deere.com/politicalcontributions.
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Compensation of DirectorsWehavestructuredthecompensationofournonemployeedirectorswiththefollowingobjectivesinmind:
— RecognizethesubstantialinvestmentoftimeandexpertisenecessaryforthedirectorstodischargetheirdutiestooverseeDeere’sglobalaffairs — Alignthedirectors’interestswiththelong-terminterestsofourstockholders — Ensurethatcompensationiseasytounderstandandisregardedpositivelybyourstockholdersandemployees
Wepaynonemployeedirectorsanannualretainer.Inaddition,committeechairpersonsandthePresidingDirectorreceivefeesforassumingthoseresponsibilities.DirectorswhoareemployeesreceivenoadditionalcompensationforservingontheBoard.Wedonotpaycommitteememberretainersormeetingfees,butwedoreimbursedirectorsforexpensesrelatedtomeetingattendance.
Tosupplementtheircashcompensationandaligntheirinterestswiththoseofourstockholders,nonemployeedirectorsareawardedrestrictedstockunits(“RSUs”)aftereachannualmeeting.ApersonwhoservesapartialtermasanonemployeedirectorwillreceiveaproratedretainerandaproratedRSUaward.
CompensationfornonemployeedirectorsisreviewedannuallybytheCorporateGovernanceCommittee.AtitsDecember2016meeting,theBoardapprovedincreasesasnotedbelowfornonemployeedirectorsasrecommendedbytheCorporateGovernanceCommittee.ThecashcomponentsbecameeffectiveonJanuary1,2017andtheequitycomponentiseffectivefortheequityawardfollowingtheannualstockholdermeetinginFebruary2017.
Thefollowingchartdescribesamountswepayandthevalueofawardswegranttononemployeedirectors:
Date Approved by Corporate Governance Committee: Effective Date of Annual Amounts:
August 2013 January 2014
December 2016 January & March 2017
Retainer
$120,000 $ 125,000Equity Award $120,000 $ 145,000Presiding Director Fee $ 20,000 $ 25,000Audit Review Committee Chair Fee $ 20,000 $ 25,000Compensation Committee Chair Fee $ 20,000 $ 20,000Corporate Governance Committee Chair Fee $ 15,000 $ 15,000Finance Committee Chair Fee $ 15,000 $ 15,000
UnderourNonemployeeDirectorDeferredCompensationPlan,directorsmaychoosetodefersomeoralloftheirannualretainersuntiltheyretirefromtheBoard.FordeferralelectionsupthroughDecember2016,adirectorcouldelecttohavethesedeferralsinvestedineitheraninterest-bearingaccountoranaccountwithareturnequivalenttoaninvestmentinDeerecommonstock.FordeferralseffectiveinJanuary2017andlater,directorsmaychoosefromalistofinvestmentoptions,noneofwhichyieldanabove-marketearningsrate.
OurstockownershipguidelinesrequireeachnonemployeedirectortoownDeerecommonstockequivalentinvaluetoatleastthreetimesthedirector’sannualcashretainer.ThisownershiplevelmustbeachievedwithinfiveyearsofthedatethedirectorjoinstheBoard.Restrictedshares(regularlygrantedtononemployeedirectorspriorto2008),RSUs,andanycommonstockheldpersonallybythenonemployeedirectorareincludedindeterminingwhethertheapplicableownershipthresholdhasbeenreached.OtherthanMr.Johanns,Mr.Stockton,andMs.Talton,whowerefirstelectedtotheBoardin2015,andMr.KrzanichandMr.Heuberger,whowerefirstelectedtotheBoardinJanuaryandDecemberof2016,respectively,eachnonemployeedirectorhasachievedstockholdingsinexcessoftheapplicablemultipleasofthedateofthisProxyStatement.
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Werequirenonemployeedirectorstoholdallequityawardsuntiltheoccurrenceofoneofthefollowingtriggeringevents:retirementfromtheBoard,totalandpermanentdisability,death,orachangeincontrolofDeerecombinedwithaqualifyingterminationofthedirector.Directorsmaynotsell,gift,orotherwisedisposeoftheirequityawardsbeforetheoccurrenceofatriggeringevent.Whiletherestrictionsareineffect,nonemployeedirectorsmayvotetheirrestrictedshares(butnotsharesunderlyingRSUs)andreceivedividendsontherestrictedsharesanddividendequivalentsontheRSUs.
Infiscal2016,weprovidedthefollowingcompensationtoournonemployeedirectors:
Name * Fees Earned or
Paid in Cash (1)
Stock Awards
(2)
Non-Qualified Deferred Compensation
Earnings (3) Total
Crandall C. Bowles $ 135,000 $119,991 $ — $254,991Vance D. Coffman $ 155,000 $119,991 $ — $274,991Charles O. Holliday, Jr. (5) $ 53,333 $ — $ — $ 53,333Dipak C. Jain $ 120,000 $119,991 $ 26,292 $266,283Michael O. Johanns $ 120,000 $119,991 $ — $239,991Clayton M. Jones $ 120,000 $119,991 $ — $239,991Brian M. Krzanich (4) $ 100,000 $133,378 $ 607 $233,985Joachim Milberg (5) $ 40,000 $ — $ — $ 40,000Richard B. Myers (5) $ 40,000 $ — $ — $ 40,000Gregory R. Page $ 131,250 $119,991 $ 878 $252,119Thomas H. Patrick (5) $ 43,332 $ — $ — $ 43,332Sherry M. Smith $ 135,000 $119,991 $ 2,441 $257,433Dmitri L. Stockton $ 120,000 $119,991 $ — $239,991Sheila G. Talton $ 120,000 $119,991 $ — $239,991 * AlanC.HeubergerdidnotreceiveanycompensationinFiscal2016andisnotincludedinthistable.
(1) Allfeesearnedinfiscal2016forservicesasadirector,includingcommitteechairpersonandPresidingDirectorfees,whetherpaidincashordeferredundertheNonemployeeDirectorDeferredCompensationPlan,areincludedinthiscolumn.
(2) RepresentstheaggregategrantdatefairvalueofRSUscomputedinaccordancewithFinancialAccountingStandardsBoardAccountingStandardsCodificationTopic718,Compensation–StockCompensation,anddoesnotcorrespondtotheactualvaluethatwillberealizedbythenonemployeedirectors.Thevaluesinthiscolumnexcludetheeffectofestimatedforfeitures.Allgrantsarefullyexpensedinthefiscalyeargrantedbasedonthegrantprice(theaverageofthehighandlowpriceforDeerecommonstockonthegrantdate).Forfiscal2016,thegrantdatewasMarch2,2016,andthegrantpricewas$81.13.
ThenonemployeedirectorgrantdateissevencalendardaysaftertheAnnualMeeting.TheassumptionsmadeinvaluingtheRSUsreportedinthiscolumnarediscussedinNote24,“StockOptionandRestrictedStockAwards,”ofourconsolidatedfinancialstatementsfiledwiththeSECaspartofourAnnualReportonForm10-KforthefiscalyearendedOctober31,2016.ThefollowingtableliststhecumulativerestrictedsharesandRSUsheldbythenonemployeedirectorsasofOctober31,2016:
Director Name* Restricted Stock RSUs Director Name Restricted Stock RSUsCrandallC.Bowles 19,916 14,724 BrianM.Krzanich(4) — 1,656
VanceD.Coffman 6,532 14,724 GregoryR.Page — 5,176 DipakC.Jain 13,234 14,724 SherryM.Smith — 7,326
MichaelO.Johanns — 2,986 DmitriL.Stockton — 2,470
ClaytonM.Jones 824 14,724 SheilaG.Talton — 2,470
* AlanC.HeubergerwaselectedtotheBoardeffectiveDecember20,2016.HedidnotholdanyrestrictedsharesorRSUsasofOctober31,2016,andisnotincludedinthistable.
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(3) DirectorsareeligibletoparticipateintheNonemployeeDirectorDeferredCompensationPlan.Underthisplan,participantsmaydeferpartoralloftheirannualcashcompensation.Throughfiscal2016,twoinvestmentchoiceswereavailableforthesedeferrals:– aninterest-bearingalternativethatpaysinterestattheendofeachcalendarquarter(i)foramountsdeferredbetweenfiscal2010andfiscal2016,ataratebasedontheMoody’s“A”-ratedCorporateBondRate,and(ii)foramountsdeferredpriortofiscal2010,ataratebasedontheprimerateasdeterminedbytheFederalReserveStatisticalReleaseplus2%
– anequityalternativedenominatedinunitsofDeerecommonstockthatearnsadditionalshareseachquarteratthequarterlydividendrateonDeerecommonstockAmountsincludedinthiscolumnrepresenttheabove-marketearningsonanyamountsdeferredundertheNonemployeeDirectorDeferredCompensationPlan.Above-marketearningsrepresentthedifferencebetweentheinterestrateusedtocalculateearningsundertheapplicableinvestmentchoiceand120%oftheapplicablefederallong-termrate.
(4) Mr.KrzanichwaselectedtotheBoardeffectiveJanuary6,2016.Hiscompensationamountsreflectapro-ratedretainerfeefortheperiodfromJanuary2016throughOctober2016,apro-ratedRSUawardfortheperiodfromJanuary6,2016,throughtheFebruary2016annualmeeting,andafullRSUawardgrantedinMarch2016.
(5) Mr.Holliday,Mr.Milberg,Mr.Meyers,andMr.PatrickretiredfromtheBoardeffectivewiththe2016annualmeeting(February24,2016).Thecompensationamountsreflectapro-ratedretainerfeecoveringtheportionoffiscal2016duringwhichtheyservedasdirectors.
Security Ownership of Certain Beneficial Owners andManagementThefollowingtableshowsthenumberofsharesofDeerecommonstockbeneficiallyownedasofDecember31,2016(unlessotherwiseindicated)by:
– eachpersonwho,toourknowledge,beneficiallyownsmorethan5%ofourcommonstock– eachindividualwhowasservingasanonemployeedirectorasofDecember31,2016– eachofthenamedexecutiveofficerslistedintheSummaryCompensationTableofthisProxyStatement– allindividualswhoservedasdirectorsorexecutiveofficersonDecember31,2016,asagroup
Abeneficialownerofstock(representedincolumn(a))isapersonwhohassoleorsharedvotingpower(meaningthepowertocontrolvotingdecisions)orsoleorsharedinvestmentpower(meaningthepowertocausethesaleorotherdispositionofthestock).Apersonalsoisconsideredthebeneficialownerofsharestowhichthatpersonhastherighttoacquirebeneficialownership(withinthemeaningoftheprecedingsentence)within60days.Forthisreason,thefollowingtableincludesexercisablestockoptions(representedincolumn(b)),restrictedshares,andRSUsthatcouldbecomeexercisableorbesettledwithin60daysofDecember31,2016,atthediscretionofanindividualidentifiedinthetable(representedincolumn(c)).
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Allindividualslistedinthetablehavesolevotingandinvestmentpoweroverthesharesunlessotherwisenoted.
AsofDecember31,2016,Deerehadnopreferredstockissuedoroutstanding.
Shares Beneficially
Owned And Held (a)
Exercisable Options (b)
Options, Restricted Shares, and RSUs Available
Within 60 Days (c) Total
Percent of Shares Outstanding
Greater Than 5% Owners CascadeInvestment,L.L.C.(1)
2365CarillonPoint Kirkland,WA98033 31,423,573 — — 31,423,573
9.9% TheVanguardGroup,Inc.(2)
100VanguardBlvd.Malvern,PA19355 19,892,663 — — 19,892,663 6.2% Non-Employee Directors (3)CrandallC.Bowles 2,800 — 34,640 37,440 *VanceD.Coffman — — 21,256 21,256 *AlanC.Heuberger 100 — 259 359 *DipakC.Jain — — 27,958 27,958 *MichaelO.Johanns — — 2,986 2,986 *ClaytonM.Jones — — 15,548 15,548 *BrianM.Krzanich — — 1,656 1,656 *GregoryR.Page 1,100 — 5,176 6,276 *SherryM.Smith — — 7,326 7,326 *DmitriL.Stockton — — 2,470 2,470 *SheilaG.Talton — — 2,470 2,470 * Named Executive Officers (4)SamuelR.Allen 176,467 1,013,115 159,055 1,348,637 *JamesM.Field 33,090 98,466 0 131,556 *RajeshKalathur 18,147 116,985 0 135,132 *
MichaelJ.Mack,Jr.(5) 45,744 144,436 30,414 220,594 *JohnC.May 10,041 77,864 0 87,905 * All directors and executive officers as a group(22persons)(6) 378,568 1,939,728 374,708 2,693,004 *
*Lessthan1%oftheoutstandingsharesofDeerecommonstock.(1) TheownershipinformationforCascadeInvestment,L.L.C.isbasedoninformationsuppliedbyCascadeinastatementonForm4filedwiththeSEConAugust16,2016.Allsharesof
commonstockheldbyCascademaybedeemedbeneficiallyownedbyWilliamH.GatesIIIasthesolememberofCascade.Cascadehassolevotingpowerandsoledispositivepowerover31,423,573sharesowned.
(2) TheownershipinformationforTheVanguardGroup,Inc.isbasedoninformationsuppliedbyVanguardinastatementonSchedule13GfiledwiththeSEConFebruary10,2016.Vanguardholdsthesharesinitscapacityasaregisteredinvestmentadvisoronbehalfofnumerousinvestmentadvisoryclients,noneofwhichisknowntoownmorethanfivepercentofDeere’sshares.Vanguardhassolevotingpowerover581,732sharesownedandsoledispositivepowerover19,272,592sharesowned.
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(3) ThetableincludesrestrictedsharesandRSUsawardedtodirectorsundertheDeere&CompanyNonemployeeDirectorStockOwnershipPlan(seefootnote(2)totheFiscal2016DirectorCompensationTable).RestrictedsharesandRSUsmaynotbetransferredpriortoretirementasadirector.RSUsarepayableonlyinDeerecommonstockfollowingretirementandhavenovotingrightsuntiltheyaresettledinsharesofstock.Inaddition,directorsownthefollowingnumberofdeferredstockunits,whicharepayablesolelyincashunderthetermsoftheNonemployeeDirectorDeferredCompensationPlan:
Director Deferred UnitsCrandallC.Bowles 41,645
VanceD.Coffman 26,130
DipakC.Jain 8,490
MichaelO.Johanns 2,927
GregoryR.Page 3,818
DmitriL.Stockton 2,352
(4) SeetheOutstandingEquityAwardsatFiscal2016Year-EndtableforadditionalinformationregardingequityownershipforNEOsasofOctober31,2016.(5) Mr.MackretiredeffectiveNovember1,2016.FiguresshownareasofOctober31,2016.(6) Thenumberofsharesshownforalldirectorsandexecutiveofficersasagroupincludes130,292sharesownedjointlywithfamilymembersoverwhichthedirectorsandexecutiveofficers
sharevotingandinvestmentpower
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Review and Approval of Related Person Transactions
The Board has adopted a Related Person Transactions Approval Policy, which assigns our Corporate GovernanceCommittee the responsibility for reviewing, approving, or ratifying all related person transactions.
TheRelatedPersonTransactionsApprovalPolicyisconcernedwiththreetypesof“relatedpersons”:
(1)executiveofficersanddirectorsofDeere
(2)anyholderof5%ormoreofDeere’svotingsecurities
(3)immediatefamilymembersofanyoneincategory(1)or(2)
Eachyear,ourdirectorsandexecutiveofficerscompletequestionnairesdesignedtoelicitinformationaboutpotentialrelatedpersontransactions.Inaddition,thedirectorsandofficersmustpromptlyadviseourCorporateSecretaryifthereareanychangestotheinformationtheypreviouslyprovided.AfterconsultationwithourGeneralCounsel,management,andoutsidecounsel,asappropriate,ourCorporateSecretarydetermineswhetheranytransactionisreasonablylikelytobearelatedpersontransaction.TransactionsdeemedreasonablylikelytoberelatedpersontransactionsaresubmittedtotheCorporateGovernanceCommitteeforconsiderationatitsnextmeeting,unlessactionisrequiredsooner.Insuchacase,thetransactionwouldbesubmittedtotheChairpersonoftheCorporateGovernanceCommittee,whosedeterminationwouldbereportedtothefullcommitteeatitsnextmeeting.
Whenevaluatingpotentialrelatedpersontransactions,theCorporateGovernanceCommitteeoritsChairperson,asapplicable,considersallreasonablyavailablerelevantfactsandcircumstancesandapprovesonlythoserelatedpersontransactionsdeterminedingoodfaithtobeincompliancewithornotinconsistentwithourCodeofEthicsandCodeofBusinessConduct,andinthebestinterestsofourstockholders.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and related regulations require our directors,certain of our officers, and persons who own more than 10% of a registered class of our equity securities to file reportsof ownership and changes in ownership with the SEC and to provide copies of those reports to Deere.
Toassistwiththeserequiredreports,wehaveestablishedprocedureswherebydirectorsandofficersprovideuswiththerelevantinformationregardingtheirtransactionsinDeeresharesandweprepareandfiletheownershipreportsontheirbehalf.Inaddition,ourdirectorsandofficershaveprovidedwrittenstatementsregardingtheirDeerestockownershipandreports.Basedsolelyuponareviewofthesestatementsandreports,webelievethatallSection16(a)filingrequirementsapplicabletoourinsiderswerecompliedwithduringfiscal2016.
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AdvisoryVoteonExecutiveCompensation
Item 2 – Advisory Vote on ExecutiveCompensation
In accordance with Section 14A of the Exchange Act, we are asking our stockholders toapprove, on an advisory basis, the compensation of the executives named in theSummary Compensation Table of this Proxy Statement. Deere’s practice, which wasapproved by our stockholders at the 2011 annual meeting, is to conduct this non-bindingvote annually.
Supporting Statement PAY FOR PERFORMANCE Deere’scompensationphilosophyistopayforperformance,supportDeere’sbusinessstrategies,andoffercompetitivecompensation.Ourcompensationprogramsconsistofcomplementaryelementsthatrewardachievementofbothshort-termandlong-termobjectives.ThemetricsusedforourincentiveprogramsareeitherassociatedwithoperatingperformanceorarebaseduponafunctionofDeere’sstockpricewithlinkagetorevenuegrowthandtotalshareholderreturn(“TSR”).See“ReviewofPayforPerformanceRelativetoPeerGroup”(seepage37)intheCD&A,whichhighlightsoursuccessinaligningexecutivecompensationwithDeere’sfinancialperformance.
PROGRAM DESIGN TheCD&Aoffersadetaileddescriptionofourcompensationprogramsandphilosophy.Ourcompensationapproachissupportedbythefollowingprinciples,amongothers,asfullydescribedintheCD&A:
— Westrivetoattract,retain,andmotivatehigh-caliberexecutives— Asexecutivesassumemoreresponsibility,weincreasetheportionoftheirtotalcompensationthatis“at-
risk”andthatistiedtolong-termincentives— Werecognizethecyclicalnatureofourequipmentbusinessesandtheneedtomanagevaluethroughout
thebusinesscycle— WeprovideopportunitiesforNEOstobelong-termstockholdersofDeere— Westructureourcompensationprogramtoberegardedpositivelybyourstockholdersandemployees
Atour2016AnnualMeeting,weheldastockholderadvisoryvoteonexecutivecompensationinwhichstockholdersapprovedtheadvisoryvoteonthecompensationofourNEOs.However,inourevaluationofourexecutivecompensationprograminlightofthepercentagevotereceivedin2016andinresponsetoourstockholderfeedbackinitiativefollowingthe2016AnnualMeeting,theCompensationCommitteetookseveralactionstoenhancetheprogrambymakingthechangesdiscussedintheCD&A.
TheBoardbelievesthattheexecutivecompensationasdisclosedintheCD&A,theaccompanyingtables,andotherdisclosuresinthisProxyStatementisconsistentwithourcompensationphilosophyandalignswiththepaypracticesofourpeergroup.
FORTHEREASONSSTATED,THEBOARDOFDIRECTORSRECOMMENDSTHATYOUVOTE“FOR” THEFOLLOWINGNON-BINDINGRESOLUTION:
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“RESOLVED,thatthestockholdersapprovethecompensationoftheNEOsasdisclosedinthisProxyStatementpursuanttothecompensationdisclosurerulesoftheSEC,includingtheCD&A,tabulardisclosures,andothernarrativeexecutivecompensationdisclosures.”
Effect of Proposal Thesay-on-payresolutionisnon-binding,buttheBoardvaluesyouropinionasexpressedthroughyourvotesandothercommunications.Therefore,theBoardandtheCompensationCommitteewillcarefullyconsidertheoutcomeoftheadvisoryvoteandthoseopinionswhenmakingfuturecompensationdecisions.However,theBoardbelievesthattheCompensationCommitteeisinthebestpositiontoconsidertheextensiveinformationandfactorsnecessarytomakeindependent,objective,andcompetitivecompensationrecommendationsanddecisionsthatareinthebestinterestsofDeereanditsstockholders.Thus,thefinaldecisionregardingthecompensationandbenefitsofourexecutiveofficers,andwhetherandhowtoaddressstockholderconcerns,remainswiththeBoardandtheCompensationCommittee.
Compensation Discussion & Analysis
In this section, we provide a detailed description of our compensation programs, including the underlying philosophyand strategy, the individual elements, the methodology and processes used by the Board and the CompensationCommittee (the “Committee”) to make compensation decisions, and the relationship between Deere’s performance andcompensation delivered in fiscal 2016. The discussion in this CD&A focuses on the compensation of our CEO, CFO,and the next three most highly compensated executive officers for the fiscal year ended October 31, 2016. Theseindividuals, referred to as Deere’s named executive officers (or “NEOs”), were:
Name TitleSamuel R. Allen ChairmanandChiefExecutiveOfficerRajesh Kalathur SeniorVicePresidentandChiefFinancialOfficerJames M. Field President,AgriculturalEquipmentOperationsMichael J. Mack Jr.* GroupPresident,JohnDeereFinancialServices,GlobalHuman
Resources,andPublicAffairsJohn C. May President,AgriculturalSolutionsandChiefInformationOfficer*Mr.MackretiredeffectiveNovember1,2016.
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ExecutiveSummaryOur business strategy emphasizes superior financial performance: maintaining aggressive goals for operatingmargin and asset turns and realizing sustainable Shareholder Value Added growth through disciplined expansion.Deere’s compensation program is designed to motivate NEOs to execute this strategy. In 2016, despite a globalfarm recession and weak construction equipment markets, we achieved net sales & revenue ($26,644 million) andnet income ($1,524 million) that are among the 10 best in Deere & Company’s history.
Theseresultsreflectthesuccessofourstrategy.Employeescontrolledcosts(e.g.,reducingselling,administrative,andgeneralcostsbyalmost$100million)andincreasedtheproductivityofourassets,yetstillproducedaward-winningadvancedproductsandservicesandinvestedinfuturegrowth.Theresultsalsoreflectthebenefitsofourbroadbusinesslineup—includingsmallertractors,turfequipment,forestryproducts,andserviceparts,aswellasFinancialServices—whichpartiallyoffsetcontinuingweaknessintheagriculturalandconstructionmarkets.
Sincealigningthemetricsofourcompensationprogramwithourstrategyin2002,wehaveoperatedprofitablyateverypointinthebusinesscycle.
Snapshot of Compensation Elements Thecomponentsofour2016compensationprogramareasfollows:
Total Direct Compensation
Total Indirect Compensation
Short-Term Compensation Long-Term Compensation Other Compensation and BenefitsBase Salary STI MTI LTI
Fixedcashcomponent Annualcashawardforprofitabilityandefficientoperationsduringthefiscalyear
Cashawardforsustainedprofitablegrowthduringathree-yearperiod
EquityawardforcreatingstockholdervalueasreflectedbyDeere’sstockprice,revenuegrowth,andTSR
Perquisites;retirementbenefits;deferredcompensationbenefits;additionalbenefitspayableuponachangeincontrol
Metrics: Operating Return on OperatingAssets (“OROA”) & Return OnEquity (“ROE”)*
Metric: Shareholder Value Added (“SVA”)
Metrics: Revenue Growth & TotalShareholder Return
*TheEquipmentOperationsOROAcalculationexcludestheassetsfromourcaptivefinancialservices.ROEisbasedsolelyontheFinancialServicessegment.SeeappendixBfordetails.
Ourincentiveprogramdesignreflectsthelong-term,cyclicalnatureofourindustryandprovidesaframeworkforbothexecutiveandbroad-based,non-executiveprogramstoensurethatallemployeespursuethesamefinancialandoperationalgoals.TheSTIdrivesfocusonnear-termresults,whileatwo-tieredlong-termincentiveprogram—MTIandLTI—rewardgrowthandsustainableprofitabilityoveralongerperiod.Introducedin2004,thecash-basedMTIrewardssustainedprofitablegrowthandreplacedanequityprogramthatwascostlyanddilutivetostockholders.MTIdiffersfromLTIinthatitmotivatesactionablebehaviorforlong-termprofitabilityandassetmanagement.Giventhelong-term,cyclicalnatureofourindustry,theSTIandMTImetricscreatedifferent,yetcomplementary,incentives.IntheyearssincetheBoardadoptedthesetwoincentiveplans,wehavedemonstratedtheabilitytomanagethroughvariousbusinessandmarketconditionsmoreprofitablyandtoconsistentlygenerateoperatingcashflow,(especiallyascomparedtopeergroupcompanies;seetheOROAchartonpage42andtheReturnonInvestedCapital(“ROIC”)chartonpage51.)Thecurrentcombinationofcash-andequity-basedlong-termcompensationreflectsthecurrentpeergrouppracticewithabout50%maintainingasimilarmix.
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Toaligncompensationwithourbusinessstrategyofexceptional operating performance ,wehistoricallyhaveusedOROAandROEasthemetricsforourSTIplan.Thesemetricsaredesignedtoinspiretheefficientuseofassetsandcapital.STIgoalsaredeterminedeachyearbasedonwhereweareinthebusinesscycletoensurethatgoalsareuniformlychallenginginalleconomicconditions.Beginninginfiscal2017,wewillusetwoadditionalmetrics—netsales&revenueandnetincome—todetermineSTIawards.Thesenewmetricsreflecttheimportanceofnear-termfinancialexecution.
Toaligncompensationwithdisciplined growth ,weuseSVAasthemetricforourMTIplan.SVAmeasuresoursuccessindeliveringsustainedgrowthineconomicprofitabilityoverathree-yearperformanceperiod.
Toaligncompensationwithexceptional equity appreciation andtomotivateandrewardsustainedoutperformance,ourLong-TermIncentive(“LTI”)planusesstockoptionsandrestrictedstockunits(“RSUs”),whoseultimatevaluesaretiedtoDeere’sstockprice,andperformancestockunits(“PSUs”),whichareearned(ornot)basedonDeere’srelativerevenuegrowthandTSRascomparedtotheS&PIndustrialSector.
HerearesomeofthekeydriversthataffecttheSTI,MTIandLTImetricsonashortandlong-termbasis.
DRIVERS OF ONE-YEAR DRIVERS OF THREE-YEAR DRIVERS OF REVENUEOROA AND ROE (STI) SVA (MTI) GROWTH AND TSR (LTI)— Operatingcostmanagement— Disciplinedassetmanagement— Efficientuseofequity— Near-termbusinessexecution
—Costmanagementdecisionswithalong-termfocus
— Efficientuseoflong-termassets—Long-terminvestmentdecisionsfor
capitalandR&D— World-classdistributionsystems— Technologyinnovation
— Marketconditions— Marketshare— Successfulexecutionof
businessstrategy— Stockpriceappreciationoverthelong-
term
Financial Performance and Compensation Metrics Asoutlinedabove,themetricsDeereusestomeasuresuccessinitsbusinessstrategyarethesameusedinourcompensationprogramstoensurethatemployeesareworkingasahigh-performanceteam.Furtherdetailsbelowillustratehowthecompany’scompensationplansaresensitivetofluctuationsinbusinessconditions.Forexample,payoutsforSTIandMTIaresignificantlylowerfor2016thanfor2015,inlinewithlowermetricoutcomes.However,thepayoutsareabovetarget,reflectingthelevelofdifficultyinachievingtheresultsduringsevere,extendeddownturnsinglobalagriculturalandconstructionmarkets.Deere’sgoalsforOROAremainabovethoseofitsmajorcompetitors.
2015
2016
% Change OROA 15.7% 14.4% -9%STI ROE 13.6% 10.4% -24%
Payout 199% 137% -31%
MTI SVA $744 $338 -55%Payout 200% 106% -53%
LTI-Revenue NetSales&Revenue $28,863million $26,644million -8%Growth PSUPayout 0% 0% n/a
StockPriceasof31Oct $78.00 $88.30 13%LTI-TSR 3-YearTSRasof31Oct -0.5% 5.4% +5.9pts
PSUPayout 0% 67% +67pts
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Afterourfiscal2016earningsreleaseonNovember23,2016,ourinvestorsrecognizedthisperformanceandourstockpriceincreasedto$100.20asofNovember30,2016—a13%increasethatwassustainedthroughtheendofDecember2016.
Stockholder Outreach Priorto2016,weconsistentlyreceivedstrongstockholdersupportonthe“say-on-pay”advisoryvote,averagingmorethan90%approvalfrom2011through2015.In2016,approximately61%(71%excludingabstentio