DEF 14A 1 deere_def14a.htm DEFINITIVE PROXY STATEMENT

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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.            )
 
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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)
 

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Notice of 2016 Annual Meeting
and Proxy Statement
 





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Notice of 2016 Annual Meeting of Stockholders

Date: Wednesday, February 24, 2016
Time: 10 a.m. Central Standard Time
Place:  Deere & Company World Headquarters
One John Deere Place, Moline, Illinois 61265

At the 2016 Annual Meeting of Stockholders (the “Annual Meeting”), stockholders will be asked to:

1. Elect the eleven director nominees named in the Proxy Statement (see page 4)
     
2. Approve the compensation of the Company’s named executives on an advisory basis (“say-on-pay”) (see page 21)
 
3. Ratify the appointment of Deloitte & Touche LLP as Deere’s independent registered public accounting firm for fiscal 2016 (see page 61)
 
4. Vote on three stockholder proposals, if properly presented at the meeting (see pages 63 to 68)
 
5. 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, 2015.

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 2015 financial statements. Most stockholders 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 13, 2016

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

VIA THE INTERNET
Visit the website listed on your proxy card

     

BY MAIL
Sign, date, and return your proxy card in the enclosed envelope

BY TELEPHONE
Call the telephone number on your proxy card

IN PERSON
Attend the Annual Meeting and vote in person




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Proxy Statement Summary

This summary highlights selected information contained in this Proxy Statement. It does not contain all the information you should consider. Therefore, we urge you to carefully read the Proxy Statement in its entirety prior to voting. For additional information, please review the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015.

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 – Advisory Vote on Executive Compensation Majority of votes present in person or by proxy FOR 21
3 – Ratification of Independent Registered
Public Accounting Firm
Majority of votes present in person or by proxy FOR 61
4 – Stockholder Proposals Majority of votes present in person or by proxy AGAINST
each proposal
63 to 68

Director Nominees

You are being asked to vote on the election of these 11 directors. Each member of our Board of Directors is elected annually by majority vote. All directors other than Mr. Allen are independent. The committee memberships described below reflect the new committee structure and composition approved by the Board of Directors in January 2016, which will become effective in February 2016 (see page 12).

Committee Memberships*
Name Age Director Since Primary Occupation Independent?

E

ARC

CC CG FIN
Samuel R. Allen 62 2009 Chairman and CEO, Deere & Company No C
Crandall C. Bowles 68 1990-1994;
since 1999
Director, The Springs Company Yes X X C
Vance D. Coffman 71 2004 Retired Chairman, Lockheed Martin Yes X C X
Dipak C. Jain 58 2002 Director, Sasin Graduate Institute
of Business Administration
Yes X X
Michael O. Johanns 65 2015 Retired United States
Senator from Nebraska
Yes X   X
Clayton M. Jones 66 2007 Retired Chairman, Rockwell Collins Yes X X
Brian M. Krzanich 55 2016 CEO, Intel Yes     X X
Gregory R. Page 64 2013 Executive Director, Cargill Yes X X C
Sherry M. Smith 54 2011 Former Executive VP and CFO, Supervalu Yes X C   X
Dmitri L. Stockton 51 2015 Chairman, President, and CEO, GE
Asset Management, and Senior VP, GE
Yes X X
Sheila G. Talton 63 2015 President and CEO, Gray Matter
Analytics
Yes X     X

*E = Executive; ARC = Audit Review; CC = Compensation; CG = Corporate Governance; FIN = Finance
X = Member; C = Chair



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Governance and Compensation Changes

One thing we have learned in our 175+ years of existence is the importance of change, which is why we strive to assess everything we do to see how we can do it better. What is true for manufacturing processes and product innovation is also true for corporate governance and compensation plans. Below is a summary of changes in these areas we have made since our last annual meeting:

CORPORATE GOVERNANCE
We elected three new directors in anticipation of the scheduled retirements of four current directors who will be leaving the Board effective with the Annual Meeting
 
Our Board approved changes to its committee structure by dissolving the Pension Plan Oversight Committee and creating a new Finance Committee; these changes will become effective in February 2016
 
As approved by stockholders at our 2015 annual meeting, we amended our Bylaws to permit holders of 25% or more of our common stock to call special meetings of stockholders

COMPENSATION
We significantly raised the performance goals for our short-term incentive plan for 2016 to reflect enduring structural changes in the operating capabilities of our equipment businesses
 
We changed the investment options under our Defined Contribution Restoration Plan, effectively eliminating the ability of participants to achieve above-market returns on new deferrals
 
We enhanced the disclosure in the Proxy Statement relating to the Company’s short-term and mid-term incentive plans to, among other things, further highlight the connection between the performance metrics used in these plans and the Company’s business strategy

Corporate Governance Highlights

At Deere, we recognize corporate governance as a vital component of creating long-term stockholder value. That is why we are committed to sound governance practices, including the following:

INDEPENDENCE BEST PRACTICES
10 of our 11 director nominees are independent
 
Independent Presiding Director has strong role with significant governance responsibilities
 
All Board committees that meet regularly are composed 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 Board approval under rare circumstances
 
Recoupment policy for executive incentive compensation
 
Stock ownership requirements for directors and executives that are reviewed annually
 
Anti-hedging and anti-pledging policies
   

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 structure
 
Committee oversight of certain risks related to each committee’s areas of responsibility
 
Robust Company risk management processes



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Fiscal 2015 Performance Highlights

Despite sales and revenues volumes that were 20% lower in fiscal 2015 than in the previous year, Deere was able to generate net income of $1.940 billion. The Company’s lower sales reflect further weakness in the global agricultural sector and a slowdown in construction-equipment markets. This was partially offset by record performance for the Company’s Financial Services operation and continued strong contributions from after-market parts sales. Through the adept execution of business plans and disciplined cost management, Deere will remain well positioned to serve its customers and make investments in quality and innovation in fiscal 2016.

Net Sales and Revenues (Millions) Net Income (Millions) Earnings Per Share (Diluted) Deere Share Price (at Oct. 31)
 
 

Worldwide net sales and revenues decreased 20% in 2015 vs. 2014, mainly due to lower shipment volumes for agricultural and construction equipment. Financial Services revenues held steady at $2.6 billion. 2015 net sales and revenues represents the fifth-highest in Company history.

  

Net income* was down 39% to $1.940 billion – due primarily to lower shipment volumes and unfavorable product mix and foreign-currency exchange – but still represented the sixth- highest total in Company history.
*Net income attributable to Deere & Company

  

Net income* per share decreased $2.86 in 2015 compared with 2014. Dividends declared per share were $1.99 in 2013, $2.22 in 2014, and $2.40 in 2015.
*Net income attributable to Deere & Company

  

Deere & Company stock is traded on the New York Stock Exchange under the ticker symbol DE. Average number of common shares outstanding (basic) was 385.3 million in 2013, 363.0 million in 2014, and 333.6 million in 2015.


Cash Flow from Operating Activities (Millions)

  Cash Flow

  Dividends

  Share Repurchases

The current quarterly dividend is $0.60 per share, a rate Deere has boosted 12 times since 2004. Over that period, the Company returned about 65% of its operating cash flow from Equipment Operations to investors through dividends and share repurchases (net of issuances).


Performance in Recent Downturns

     
  Deere Net Sales Decline
  Decline in Net Income Attributable
  to Deere & Company
Deere’s decrease in net income relative to the decrease in sales from 2013 to 2015 is less severe than we have experienced in other cyclical downturns since 1980.



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Fiscal 2015 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 points in the business cycle:

– Operating Return on Operating Assets and Return on Equity ➔ Exceptional Operating Performance

– Shareholder Value Added and Revenue Growth ➔ Disciplined Growth

– Total Shareholder Return ➔ Stockholder Experience

The table below highlights the 2015 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 what 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
$1,500,000
8%
$2,796,863
15%
$2,722,500
15%
$3,712,241
20%
$4,560,569
24%
$3,409,157
18%
$18,701,330
100%

Cash vs. Equity

Total Cash 38% Total Equity 44% Other 18% 100%
Short-Term vs. Long-Term

Short-Term 23%

Long-Term 77%

100%

Fixed vs.
Performance Based

Fixed 8%

Performance Based 74%

Other 18%

100%

 
Average NEO
% of Total
$627,266
12%
$1,060,456
20%
$1,020,204
19%
$762,866
15%
$937,287
18%
$826,225
16%
$5,234,304
100%

Cash vs. Equity

   
   

Total Cash 51%

 

Total Equity 33%

Other 16%

100%

Short-Term vs.
Long-Term

Short-Term 32%

Long-Term 68%

100%

Fixed vs.
Performance Based

Fixed 12%

Performance Based 72%

Other 16%

100%


COMPENSATION ELEMENT:       DESCRIPTION:
 
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



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Proxy Statement

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Page
61 Item 3 - Ratification of Independent Registered Public Accounting Firm
62 Audit Review Committee Report

STOCKHOLDER PROPOSALS
 
Page
63 Item 4 - Stockholder Proposals


Voting and Meeting Information 1
Annual Report 3
Householding Information 3
Electronic Delivery of Proxy Statement and Annual Report 3
Information not Incorporated into this Proxy Statement 3
Other Matters 69
2017 Stockholder Proposals and Nominations 69
Cost of Solicitation 70
Appendix A—Director Independence Categorical Standards of Deere & Company Corporate Governance Policies A-1
Appendix B—Deere & Company Reconciliation of Non-GAAP Measures B-1



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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, 2015 (“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”) 2016 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, 2015, which entitles you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the 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 13, 2016.

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 so we will know as soon as possible whether enough votes will be present to constitute a quorum for holding the meeting. If you attend the meeting in person, you may vote at the meeting and your proxy vote 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 stockholders.

Stockholders voting by proxy may use one of the following three options:

fill out the enclosed voter instruction form or proxy card, sign it, and mail it in the enclosed postage-paid envelope;
 
vote by internet (if available; instructions are on the voter instruction form, proxy card, or Notice); or
 
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 the holder of record. Please refer to the information forwarded by your holder of record to learn about 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 holder of record to do so.

The telephone and internet voting facilities for stockholders will close at 11:59 p.m. Eastern Standard Time on February 23, 2016. If you vote over the internet, you may incur costs, such as telephone or 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 votes 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 19, 2016, 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:

revoking it by written notice to Todd E. Davies, our Corporate Secretary, at the address on the cover of this Proxy Statement;
 
delivering a later-dated proxy (including a telephone or internet vote); or
 
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, 2015.



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Voting and Meeting Information

 

How many shares are entitled to vote?
There are 316,224,054 shares of Deere common stock outstanding as of December 31, 2015 and entitled to vote at the meeting. Each share entitles its holder to one vote. There is no cumulative voting.

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 constitute a quorum for holding 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?

Election of directors (see page 4)
 
Advisory resolution to approve the compensation of the Company’s named executives (“say-on-pay”) as disclosed in this Proxy Statement (see page 21)
 
Ratification of the appointment of the independent registered public accounting firm (see page 61)
 
Stockholder proposal to adopt a “proxy access” Bylaw amendment (see page 63)
 
Stockholder proposal regarding greenhouse gas emissions (see page 65)
 
Stockholder proposal regarding political spending (see page 67)

How many votes are needed for the proposals to pass?

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 recommend to the Board 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.
 
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 constitute a quorum for holding 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 don’t return my proxy card and don’t 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 may vote your shares on the ratification of the independent registered public accounting firm. However, your record holder may not vote your shares without your specific instructions on the election of directors, the advisory vote on executive compensation, or the stockholder proposals.

For the aforementioned proposals on which a broker may not 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 constitute a quorum for holding 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:

as required by law;
 
to the inspectors of voting; or
 
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.



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Annual Report

Will I receive a copy of Deere’s 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, 2015. We urge you to read it carefully.

How can I receive a copy of Deere’s 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, 2015 (the “Form 10-K”) by:

accessing our internet site at www.deere.com/stock; or
 
writing to:
 

Deere & Company
Stockholder Relations Department
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 SEC’s EDGAR database at www.sec.gov.

Householding Information

What is “householding”?
Single copies of either 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 he or she wishes to receive individual copies. This procedure reduces our printing costs. 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 and you desire to receive separate copies, copies will be sent to you upon written or verbal request to Deere & Company Stockholder Relations Department, One John Deere Place, Moline, Illinois 61265-8098, (309) 765-4491.

How do I revoke my consent to the householding program?
To revoke your consent to the householding program, you must contact Broadridge Investor Communication 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 Broadridge’s receipt of the revocation of your consent.

Electronic Delivery of Proxy Statement and Annual Report

Can I access Deere’s 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:

following the instructions provided on your proxy card, voter instruction form, or Notice; or
 
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 24, 2016: 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.



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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 “2017 Stockholder Proposals and Nominations” section of this Proxy Statement. 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 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.

A director of Deere must tender his or her resignation from the Board upon any material change in his or her occupation, career, or principal business activity, including retirement. A director must retire from the Board upon the first annual meeting of stockholders following his or her 72nd birthday, except as approved by the Board under rare circumstances.

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,

Dipak C. Jain, Michael O. Johanns, Clayton M. Jones, Brian M. Krzanich, Gregory R. Page, Sherry M. Smith, Dmitri L. Stockton, and Sheila G. Talton to be elected for terms expiring at the annual meeting in 2017. As required by the Company’s Certificate of Incorporation, all members of the Board are elected annually.

Dmitri L. Stockton and Sheila G. Talton were elected to the Board effective May 27, 2015 and Brian M. Krzanich was elected to the Board effective January 6, 2016 for terms expiring at the 2016 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 as approved by the Board under rare circumstances. In accordance with this policy, Joachim Milberg, Richard B. Myers, and Thomas H. Patrick will be leaving the Board effective with the 2016 annual meeting. In addition, Charles O. Holliday, Jr. has chosen to retire from the Board effective with the 2016 annual meeting and will not stand for reelection. The size of the Board will be reduced in accordance with these retirements.

The biographies provided below for each nominee include the nominee’s:

Age as of December 31, 2015;
 
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 him or her to serve on the Board.
 

Each nominee’s biography also includes the nominee’s Board committee memberships under the new committee structure and composition approved by the Board in January 2016, which will become effective in February 2016.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL ELEVEN NOMINEES.


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Item 1 – Election of Directors:
Director Nominees



Samuel R. Allen

Current and Past Positions:

Chairman and Chief Executive
Officer of Deere

Age: 62

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 Deere’s 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 Deere’s major global operations, and his subject matter knowledge in the areas of engineering, manufacturing, and industrial management.

 

Crandall C. Bowles

Current and Past Positions:

Director of The Springs Company

Age: 68

Director from: 1990 to 1994
and since 1999

Committees:
Corporate Governance (Chair)
Compensation
Executive

Director of The Springs Company (asset management) since 1978

Chairman of The Springs Company - August 2007 to March 2015

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 Deere’s 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.

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Table of Contents

Item 1 – Election of Directors:
Director Nominees



Vance D. Coffman

Current and Past Positions:

Retired Chairman of Lockheed
Martin Corporation

Age: 71

Director since: 2004

Committees:
Compensation (Chair)
Corporate Governance
Executive

Presiding Director-Elect
for 2016

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 Deere’s 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.

 

Dipak C. Jain

Current and Past Positions:

Director, Sasin Graduate
Institute of Business
Administration

Age: 58

Director since: 2002

Committees:
Audit Review
Finance

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 - 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 Deere’s 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 advisor 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.

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Table of Contents

Item 1 – Election of Directors:
Director Nominees



Michael O. Johanns

Current and Past Positions:

Retired United States
Senator from Nebraska

Age: 65

Director since: 2015

Committees:
Audit Review
Corporate Governance

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

Other Current Directorships:

Burlington Capital Group, LLC

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. Johanns should serve on Deere’s 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.

 

Clayton M. Jones

Current and Past Positions:

Retired Chairman of
Rockwell Collins, Inc.

Age: 66

Director since: 2007

Committees:
Compensation
Corporate Governance

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.

Motorola Solutions, Inc.

Other Previous Directorships:

Rockwell Collins, 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. Jones should serve on Deere’s 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.

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Table of Contents

Item 1 – Election of Directors:
Director Nominees



Brian M. Krzanich

Current and Past Positions:

Chief Executive Officer of
Intel Corporation

Age: 55

Director since: 2016

Committees:
Compensation
Corporate Governance

Chief Executive Officer of Intel Corporation (advanced integrated digital technology platforms) since May 2013

Executive Vice President and Chief Operating Officer of Intel Corporation – 2012 to May 2013

Senior Vice President and General Manager of Manufacturing and Supply Chain of Intel Corporation – 2010 to 2012

Vice President and General Manager of Worldwide Manufacturing and Systems of Intel Corporation – 2007 to 2010

Other Current Directorships:

Intel Corporation

Key Qualifications, Experiences, and Attributes:
In addition to his professional background, the following qualifications led the Board to conclude that Mr. Krzanich should serve on Deere’s Board of Directors: his leadership qualities developed from his service as Chief Executive Officer and Chief Operating Officer of Intel Corporation, the breadth of his experiences in corporate governance, strategy, and other areas of oversight while serving as a member of the boards of directors of Intel and the Semiconductor Industry Association, and his subject matter knowledge in the areas of manufacturing, operations, information technology, human resources, and supply chain management.

 

Gregory R. Page

Current and Past Positions:

Executive Director of
Cargill, Incorporated

Age: 64

Director since: 2013

Committees:
Finance (Chair)
Audit Review
Executive

Executive Director of Cargill, Incorporated (agricultural, food, financial, and industrial products and services) since September 2015

Executive Chairman of Cargill, Incorporated - December 2013 to September 2015

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:

Eaton Corporation plc

Other Previous Directorships:

Carlson

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 Deere’s 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

Item 1 – Election of Directors:
Director Nominees



Sherry M. Smith

Current and Past Positions:

Former Executive Vice President
and Chief Financial Officer of
Supervalu Inc.

Age: 54

Director since: 2011

Committees:
Audit Review (Chair)
Finance
Executive

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

Realogy Holdings Corp.

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 Deere’s 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 while serving as a member of the boards of directors of other public corporations, her family farming background, and her subject matter knowledge in the areas of finance, accounting, and food and supply chain management.

 

Dmitri L. Stockton

Current and Past Positions:

Chairman, President, and Chief
Executive Officer of GE Asset
Management Incorporated and
Senior Vice President of General
Electric Company

Age: 51

Director since: 2015

Committees:
Compensation
Finance

Chairman, President, and Chief Executive Officer of GE Asset Management Incorporated (global investments) and Senior Vice President of General Electric Company (power and water, aviation, oil and gas, healthcare, appliances and lighting, energy management, transportation, and financial services) since 2011

President and Chief Executive Officer of GE Capital Global Banking and Senior Vice President of GE London - 2008 to 2011

President and Chief Executive Officer of GE Consumer Finance, Central & Eastern Europe - 2005 to 2008

Other Current Directorships:

GE Asset Management Incorporated

General Electric RSP U.S. Equity Fund and General Electric RSP Income Fund

Elfun Funds (six directorships)

Other Previous Directorships:

Synchrony Financial

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. Stockton should serve on Deere’s Board of Directors: his leadership qualities developed from his service as Chairman, President, and Chief Executive Officer of GE Asset Management Incorporated and as a senior officer of other global operations, the breadth of his experiences in risk management, governance, regulatory compliance, and other areas of oversight while serving as a member of the boards of directors and trustees of global asset management, investment, and employee benefit entities, and his subject matter knowledge in the areas of finance, banking, and asset management.

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Table of Contents

Item 1 – Election of Directors:
Director Nominees



Sheila G. Talton

Current and Past Positions:

President and Chief Executive
Officer of Gray Matter Analytics

Age: 63

Director since: 2015

Committees:
Audit Review
Finance

President and Chief Executive Officer of Gray Matter Analytics (data analytics consulting services for financial services and healthcare industries) since 2013

President and Chief Executive Officer of SGT Ltd. (strategy and technology consulting services) - 2011 to 2013

Vice President of Cisco Systems, Inc. (information technology and solutions) - 2008 to 2011

Other Current Directorships:

OGE Energy Corporation

Wintrust Financial Corporation

Other Previous Directorships:

Acco Brands 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. Talton should serve on Deere’s Board of Directors: her leadership qualities developed from her service as President and Chief Executive Officer of Gray Matter Analytics and as an officer of other global technology and consulting firms, the breadth of her experiences in compensation, governance, risk management, and other areas of oversight while serving as a member of the boards of directors of other public corporations, and her subject matter knowledge in the areas of technology, data analytics, and global strategies.

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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 creating long-term 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 Board’s 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 Charters for our Board
Governance Policies Committees
Our Code of Ethics Our Code of Business Conduct
Our Guiding Principles Our Supplier Code of Conduct
Our Global Conflict
Minerals Policy

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 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 short of which such relationships are deemed not to 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 director’s independence is evaluated under our Related Person Transactions Approval Policy, as discussed in the “Review and Approval of Related Person Transactions” section below. The independence standards set forth in our Corporate Governance Policies meet or exceed the independence requirements of the NYSE.





In November 2015, we reviewed the independence of each then-sitting director and in January 2016, we reviewed the independence of Brian M. Krzanich, in each case applying the independence standards set forth in our Corporate Governance Policies. The reviews considered relationships and transactions between each director (and his or her immediate family and affiliates) and each of the following: Deere, Deere’s management, and Deere’s independent registered public accounting firm.

Based on this review, at the December 2015 regular Board meeting (and, in the case of Brian M. Krzanich, at a January 5, 2016 special meeting of the Board), the Board affirmatively determined that no director other than Mr. Allen has 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: (1) this structure has a longstanding history of serving our stockholders well, through many economic cycles, business challenges, and leadership successions; (2) its governance processes, as described 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 Company’s governance structure such that separation of the Chairman and Chief Executive Officer roles is unnecessary.

Presiding Director
Charles O. Holliday, Jr., an independent director, currently serves as our Presiding Director. Mr. Holliday is currently serving his seventh term as our Presiding Director.

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. In accordance with this process, Vance D. Coffman has been elected to serve as Presiding Director following Mr. Holliday’s retirement from the Board effective with the 2016 annual meeting.




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Corporate Governance:
Board Meetings



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 Deere’s stockholders.

The Board believes that the role of the Presiding Director exemplifies the Company’s continuing commitment to strong corporate governance and Board independence.

Board Meetings
Under the Company’s 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 World Headquarters in order to provide our directors with first-hand perspectives on different aspects of our business. The Board met five times during fiscal 2015.

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 2015, all directors attended 75% or more of the meetings of the Board and committees on which they served except for Joachim Milberg, who attended less than 75% of the Board and committee meetings at which his attendance was required (four total absences due to illness). Overall attendance at such meetings was approximately 96%. All directors then in office attended the Annual Meeting of Stockholders in February 2015.

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 Finance Committee. The Finance Committee, a new committee created by resolution of the Board at its December 2015 meeting, replaces the Pension Plan Oversight Committee, whose dissolution was approved by the Board at the same meeting. These changes, which will become effective in February 2016, are intended to focus and enhance the Board’s oversight of the Company’s financial affairs. The Finance Committee will exercise primary business oversight of our Financial Services segment as well as many global finance and treasury functions, in addition to the pension plan oversight function formerly exercised by the Pension Plan Oversight Committee. The Pension Plan Oversight Committee, which was chaired by Thomas H. Patrick and included Dipak C. Jain, Clayton M. Jones, Richard B. Myers, and Sherry M. Smith as its members, met twice in fiscal 2015.

In addition to the structural changes described above, the Board also approved at a special meeting held on January 5, 2016 the rotation of certain directors’ committee memberships effective February 2016. These committee rotations are consistent with the Board’s view, as stated in the Corporate Governance Policies, that committee rotation is generally desirable as a practice.

Each of our Board committees 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 composed solely of independent directors.



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Table of Contents

Corporate Governance:
Board Committees



The committee structure and memberships described below reflect the changes approved by the Board in January 2016, which will become effective in February 2016.

Executive Committee

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

2015 Meetings: 0

Members:

Samuel R. Allen (Chair)
Crandall C. Bowles
Vance D. Coffman
Gregory R. Page
Sherry M. Smith

 

Audit Review
Committee

Oversees the independent registered public accounting firm’s 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

With the assistance of Company management, approves the selection of the lead engagement partner of 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 Ms. Smith and Mr. Page 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

2015 Meetings: 5

Members:

Sherry M. Smith (Chair)
Dipak C. Jain
Michael O. Johanns
Gregory R. Page
Sheila G. Talton








 

 

Compensation
Committee

Makes recommendations to the Board regarding incentive and equity-based compensation plans

Evaluates and approves the compensation of our executive officers (except for the compensation of our CEO, which is approved by the full Board), 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 Company’s 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

2015 Meetings: 6

Members:

Vance D. Coffman (Chair)
Crandall C. Bowles
Clayton M. Jones
Brian M. Krzanich
Dmitri L. Stockton







 


 

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Table of Contents

Corporate Governance:
Board Oversight of Risk Management



Corporate Governance
Committee

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

2015 Meetings: 4

Members:

Crandall C. Bowles (Chair)
Vance D. Coffman
Michael O. Johanns
Clayton M. Jones
Brian M. Krzanich




  

   
Finance Committee

Reviews the policies, practices, strategies, and risks relating to the financial affairs of the Company

Exercises oversight of the business of the Company’s Financial Services segment

Formulates Company pension funding policies

Oversees our pension plans

Reports its activities to the full Board

All members have been determined to be independent under current NYSE listing standards

2015 Meetings: 0 (created in December 2015; first meeting will take place in February 2016)

Members:

Gregory R. Page (Chair)
Dipak C. Jain
Sherry M. Smith
Dmitri L. Stockton
Sheila G. Talton


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 that may affect 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 needed within a well-defined internal risk management structure, which is administered at the management level by a Management Risk Committee consisting of the CEO and his direct reports. In turn, the Management Risk Committee is responsible for providing periodic reports to the Board regarding the Company’s risk management processes and reviewing with the Board high-priority areas of enterprise risk.

Dedicated risk management sessions typically take place at regularly-scheduled Board meetings each February and August, and risk management topics are also discussed as needed 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 committee’s specific function, while the full Board exercises ultimate responsibility for overseeing the risk management function as a whole. The Board approved several changes to its allocation of risk oversight responsibilities in 2015. Most significantly, as discussed above under “Board Committees,” with the formation of the Finance Committee the Board has centralized its oversight of risks relating to the Company’s financial affairs.



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Table of Contents

 
Compensation of Directors



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 function and regularly receives and evaluates reports and presentations from the Chairs of the Audit Review, Compensation, Corporate Governance, and Finance Committees on risk-related matters falling within each respective committee’s oversight responsibilities
Audit Review Committee  ● Oversees operational, strategic, and legal and regulatory 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 Company’s Code of Business Conduct, 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 that do not encourage unnecessary and excessive risk-taking by our executive officers or other employees
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 and other compliance matters
Finance Committee  ● Oversees operational and strategic risks related to the financial affairs of the Company, including capital structure and liquidity risks, and reviews the Company’s policies and strategies for managing financial exposure and contingent liabilities
   ● 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

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 also 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.

Political Contributions
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.

Compensation of Directors

We have structured the compensation of our nonemployee directors with the following objectives in mind:

Recognize the substantial investment of time and expertise necessary for the directors to discharge their duties to oversee the global affairs of the Company
 
Align the directors’ interests with the long-term interests of our stockholders
 
Ensure that the compensation is easy to understand and is regarded positively by our stockholders and employees

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




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Compensation of 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 2015. 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
Finance Committee Chair Fee* $ 15,000

* The Finance Committee chair fee was approved by the Corporate Governance Committee and the full Board in December 2015 in connection with the formation of the Finance Committee and will be paid to the chair of the Finance Committee in fiscal 2016. The chair fee for the Pension Plan Oversight Committee, the dissolution of which will become effective in February 2016, was $10,000 per year.

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 their equity awards in the form of restricted shares. Since fiscal 2008, directors have received their equity awards 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 director’s 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 the Board in January 2015, Mr. Stockton and Ms. Talton, who were first elected to the Board in May 2015, and Mr. Krzanich, who was

first elected to the Board in January 2016, 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, total and permanent 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 the occurrence of 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 2015, we provided the following compensation to our nonemployee directors:

Nonqualified
Fees Earned Deferred
or Paid in Stock Compensation
Name* Cash (1)       Awards (2)       Earnings (3)       Total
Crandall C. Bowles $ 135,000 $ 119,966 $ $ 254,966
Vance D. Coffman $ 140,000 $ 119,966 $ $ 259,966
Charles O. Holliday, Jr. $ 160,000 $ 119,966 $ $ 279,966
Dipak C. Jain $ 120,000 $ 119,966   $ 20,610 $ 260,576
Michael O. Johanns (4)      $ 100,000   $ 135,637 $ $ 235,637
Clayton M. Jones $ 120,000 $ 119,966 $ $ 239,966
Joachim Milberg $ 120,000 $ 119,966 $ $ 239,966
Richard B. Myers $ 120,000 $ 119,966 $   $ 239,966
Gregory R. Page $ 120,000 $ 119,966 $ 843 $ 240,809
Thomas H. Patrick (5) $ 130,000 $ 119,966 $ $ 249,966
Sherry M. Smith $ 120,000 $ 119,966 $ 2,122 $ 242,088
Dmitri L. Stockton (6) $ 50,000 $ 93,441 $ $ 143,441
Sheila G. Talton (6) $ 50,000 $ 93,441 $ $ 143,441

* Brian M. Krzanich did not receive any compensation in fiscal 2015 and as such is not included in this table.

(1) All fees earned in fiscal 2015 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 2015, the grant date was March 4, 2015, and the grant price was $90.54.




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Security Ownership of Certain Beneficial Owners and Management



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, 2015. The following table lists the cumulative restricted shares and RSUs held by the nonemployee directors as of October 31, 2015:

Restricted
Director Name* Stock       RSUs
Crandall C. Bowles 19,916 13,245
Vance D. Coffman 6,532 13,245
Charles O. Holliday, Jr. 1,160 13,245
Dipak C. Jain 13,234 13,245
Michael O. Johanns 1,507
Clayton M. Jones 824 13,245
Joachim Milberg 10,708 13,245
Richard B. Myers 3,176 13,245
Gregory R. Page 3,697
Thomas H. Patrick 19,252   13,245
Sherry M. Smith 5,847
Dmitri L. Stockton 991
Sheila G. Talton 991

* Brian M. Krzanich did not hold any restricted shares or RSUs as of October 31, 2015 and as such is not 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 that pays interest at the end of each calendar quarter (i) for amounts deferred during or after fiscal 2010 at a rate based on the Moody’s “A”-rated Corporate Bond Rate and (ii) for amounts deferred prior to fiscal 2010 at a rate 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 that 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) Mr. Johanns was elected to the Board effective January 8, 2015. His compensation amounts reflect a partial year award for the retainer fees for the period from January 2015 through October 2015, a pro-rated RSU award for the period from January 8, 2015 through the February 2015 annual meeting, and a full RSU award granted in March 2015.

(5) The amount set forth in the “Fees Earned or Paid in Cash” column for Mr. Patrick includes the $10,000 fee Mr. Patrick received in fiscal 2015 for his services as Chair of the Pension Plan Oversight Committee, which will be dissolved effective February 2016.

(6) Mr. Stockton and Ms. Talton were elected to the Board effective May 27, 2015. Their compensation amounts reflect a partial year award for the retainer fees for the period from June 2015 through October 2015 and a pro-rated RSU award for the period from May 27, 2015 through the February 2016 annual meeting.

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, 2015 (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, 2015;
 

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, 2015, 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, 2015 at the discretion of an individual identified in the table (for example, upon retirement) (represented in column (c) below).




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Security Ownership of Certain Beneficial Owners and Management


 

All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted. As of December 31, 2015, 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 30,508,573 30,508,573     9.6 %
The Vanguard Group, Inc. (2)
100 Vanguard Blvd.
Malvern, PA 19355 20,955,862 20,955,862 6.6 %
 
Non-Employee Directors (3)
Crandall C. Bowles 2,800 33,161 35,961 *
Vance D. Coffman 19,777 19,777 *
Charles O. Holliday, Jr. 14,405 14,405   *
Dipak C. Jain   26,479     26,479 *
Michael O. Johanns   1,507 1,507 *
Clayton M. Jones   14,069 14,069 *
Joachim Milberg 23,953 23,953 *
Richard B. Myers   16,421 16,421 *
Gregory R. Page 3,750 3,697   7,447 *
Thomas H. Patrick 32,497 32,497 *
Sherry M. Smith 5,847 5,847 *
Dmitri L. Stockton 991 991 *
Sheila G. Talton 991 991 *
  
Named Executive Officers (4)
Samuel R. Allen 141,174 868,737 130,073 1,139,984 *
James M. Field 26,657 121,786 148,443 *
Jean H. Gilles 26,633 148,840 25,905 201,378 *
Rajesh Kalathur 9,085 95,986 105,071 *
Michael J. Mack, Jr. 45,744 116,425 27,507 189,676 *
  
All directors and executive officers as a group (22 persons) (5) 308,323 1,663,008 402,739 2,374,070 *

* Less than 1% of the outstanding shares of Deere common stock.

(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 June 1, 2015. 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 30,508,573 shares owned.

(2) The ownership information for The Vanguard Group, Inc. (“Vanguard”) is based on information supplied by Vanguard in a statement on Schedule 13G filed with the SEC on February 10, 2015. 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 Deere’s shares. Vanguard has sole voting power over 613,320 shares owned and sole dispositive power over 20,370,403 shares owned.



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Review and Approval of Related Person Transactions


 

(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 2015 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       38,890      
Vance D. Coffman 23,559
Dipak C. Jain 6,867
Michael O. Johanns     1,464  
Gregory R. Page 2,174
Thomas H. Patrick 14,195
Dmitri L. Stockton 906

(4) See the Outstanding Equity Awards at Fiscal 2015 Year-End table for additional information regarding equity ownership for NEOs as of October 31, 2015.

(5) The number of shares shown for all directors and executive officers as a group includes 124,982 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/or 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 Deere’s voting securities; and

(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 questionnaires designed to elicit information about potential related person transactions. In addition, the 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 be 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 Chairperson’s 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, formerly an employee in the Company’s Financial Services division, is the brother of Michael J. Mack, Jr., the Group President of that division. Patrick E. Mack retired in fiscal 2015. Prior to retirement, Patrick E. Mack received $637,577 in direct cash compensation in fiscal 2015, along with stock options valued at $275,065 at the time of grant (33% of which were forfeited based on the timing of Mr. Mack’s retirement — see footnote (5) to Fiscal 2015 Potential Payments upon Termination of Employment Other than Following a Change in Control for further information regarding forfeiture of stock options in the event of retirement). Patrick E. Mack’s fiscal 2015 compensation was consistent with that of other employees at the same grade level. Because Patrick E. Mack was no longer an active employee at the end of the fiscal year and because his employment relationship had previously been approved by the Corporate Governance Committee, this transaction was not required to be submitted to the Corporate Governance Committee for approval pursuant to the Related Person Policy.



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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 all Section 16(a) filing requirements applicable to our insiders were complied with during 2015.



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Item 2 – 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 Company’s 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
Deere’s compensation philosophy is to pay for performance, support Deere’s 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 Company’s stock price with linkage to revenue growth and total shareholder return (“TSR”). See the “Pay for Performance for Three Years Ended October 31, 2014” graph in the Executive Summary of the CD&A, which highlights our success in aligning executive compensation with the Company’s 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 Company’s 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 Company’s 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.



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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 2015. 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, 2015, 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 Deere’s performance and actual compensation delivered.
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 Company’s 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. We do not provide excise tax gross ups upon a change in control to any employees.
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 does not perform other significant 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 Company’s stock or trading in instruments designed to hedge against price declines by the Company’s 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.

In addition to the practices described above, we have raised the primary performance goals under our Short-Term Incentive (“STI”) plan starting in fiscal 2016. We have also modified the investment options available under our Defined Contribution Restoration Plan (which allows



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Compensation Discussion & Analysis:
Executive Summary



certain executives to defer 401(k) contributions that would otherwise be limited by the U.S. Internal Revenue Code (“IRC”)), effectively eliminating the ability of participants to achieve above-market returns on new deferrals. These actions exemplify the commitment of the Company and the Committee to continually review and modify our compensation programs to enhance the relationship between pay and performance and ensure alignment with our business strategy.

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 Company’s 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 is grounded in the following core success factors:

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 STI plan. These metrics are designed to incentivize the efficient use of assets and capital. STI goals are adjusted based on the Company’s position within 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.

2015 OROA Performance


To align compensation with disciplined growth, we use SVA as the metric for our Mid-Term Incentive (“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 Company’s 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 10/31/15



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Compensation Discussion & Analysis:
Executive Summary



The following chart describes 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 Company’s stock price, with linkage to revenue growth and TSR Perquisites; Retirement Benefits; Deferred Compensation Benefits; 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 2015 Total Direct Compensation components at target for our CEO and for our other NEOs as a group. This chart highlights the Company’s emphasis on long-term and at-risk compensation.



2015 Target Direct Compensation Mix for Named Executive Officers


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Compensation Discussion & Analysis:
Executive Summary



The Committee believes that the Company’s 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. Even though financial results may not always align with relative TSR results in the short run, the Committee believes that the stockholders’ interests are best served over time by a balanced compensation program that takes a long-term, holistic view of the Company’s business strategy and recognizes the cyclicality of the industries in which the Company operates while also tying certain elements of compensation directly to relative TSR results.

In addition, in light of recent stock price performance as well as in recognition of current challenging business conditions in the agriculture and construction industries, and in spite of strong financial performance against performance goals previously established under the STI and MTI programs, Mr. Allen has requested that the Board reduce his cash incentive plan compensation for fiscal 2015. The Board considered Mr. Allen’s 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 2015 Summary Compensation Table).

Consultant Review of Pay for Performance Relative to Peer Group
In the course of reviewing our overall executive compensation program, the Committee’s consultant, Pearl Meyer, LLC (“Pearl Meyer”), reviewed the relationship between total realizable compensation and our performance for the three fiscal years ended October 31, 2014. 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. The 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 Deere’s 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, 2014 of any stock options granted over the three-year period;

4. The value as of October 31, 2014 of RSUs granted over the three-year period;

5. The value as of October 31, 2014 of PSUs reflecting actual performance for (i) the 2012-2014 performance cycle and (ii) the in-process 2013-2015 and 2014-2016 performance cycles; and

6. The value of actual MTI payouts made over the three-year period.

For peer company long-term incentives, realizable pay includes cash- and equity-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 Meyer’s analysis, as shown in the graph below, reveals that realizable pay for our CEO and the other NEOs was reasonably aligned with Deere’s relative TSR over the relevant time period. Deere had the second lowest TSR in the peer group over that period while realizable pay levels were between the 25th and 50th percentiles for our CEO and well below the 25th percentile for our other NEOs. 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.

Pay for Performance for Three Years Ended
October 31, 2014

Relative Total Shareholder
Return vs. Peers

The Company works closely with the Committee and the Committee’s outside consultant to continually review its compensation programs to ensure that they meet the objectives of the Company’s compensation philosophy.



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Compensation Discussion & Analysis:
2015 Compensation Overview



2015 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.

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 our annual report every year since 2002 in the section following the Chairman’s 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 of the 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 Fiscal 2015 Actions and Results

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

Mr. Allen did not receive an increase to base salary for 2015, while the other NEOs received increases of 3-5%

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 2015 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

Due to continued strong OROA and ROE results, the STI payout was 199% of target, resulting in an STI award of $2.8 million* for the CEO and awards ranging from $0.9 million to $1.1 million for the other NEOs

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

Due to strong SVA results in the first two years of the performance period, the MTI payout was 200% of target, resulting in an MTI award of $2.7 million* for the CEO and awards of approximately $1 million each for the other NEOs


* Reflects voluntary 25% reduction to CEO cash incentive awards, as discussed elsewhere in this Proxy Statement

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Compensation Discussion & Analysis:
Compensation Methodology and Process



Component Purpose Characteristics Fiscal 2015 Actions and Results

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 and can be increased (up to 20%) or decreased (down to $0) at the Committee’s discretion; Award is delivered through a combination of PSUs, RSUs, and stock options; Ultimate value of award depends on our stock price and operating performance

In December 2014 the CEO received a base-level LTI award valued at $7.6 million while the other NEOs’ LTI awards were increased an average of 10% over base-level and ranged from $1.4-$1.7 million

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

There were no changes to perquisites in fiscal 2015 that affected our NEOs

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

There were no changes to retirement benefits in fiscal 2015 that affected our NEOs

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

We modified the investment options available under the Defined Contribution Restoration Plan, effectively eliminating the ability of participants to achieve above-market returns on new deferrals

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 an NEO’s employment is terminated as specified under various plans

There were no changes in fiscal 2015 that affected our NEOs

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 an NEO’s employment is terminated as specified under the arrangements of various plans

There were no changes in fiscal 2015 that affected our NEOs


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.



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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 Company’s 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 CEO’s performance. The Committee considers the Board’s evaluation when providing recommendations to the Board for the CEO’s compensation. The Committee’s recommendations for the CEO’s 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 NEO’s 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 CEO’s 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 Company’s 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 2014 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, among other things, in determining to apply the same effective principles and philosophy in structuring our executive compensation program for fiscal 2015.

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 Meyer’s 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 Committee’s decisions reflect many factors and considerations. Management works with Pearl Meyer at the Committee’s direction to develop materials and analysis essential to the Committee’s compensation evaluations and determinations. Such materials include competitive market assessments and summaries of current legal and regulatory developments.

During fiscal 2015, Pearl Meyer performed the following specific services:

Provided information throughout the fiscal year on executive compensation trends and external developments, including regulatory changes
 

Provided an annual competitive evaluation of total compensation for the NEOs, as well as overall compensation program share usage, dilution, and fair value expense
 

Reviewed the competitiveness of actual pay delivered in relation to performance as compared against the peer group
 

Provided recommendations on CEO total compensation to the Committee at its December meeting, without prior review by our CEO
 

Reviewed our CEO’s compensation recommendations with respect to the other NEOs
 

Reviewed Committee agendas and supporting materials in advance of each meeting, and raised questions/issues with management and the Committee Chair, as appropriate
 

Provided guidance and recommendations on incentive plan design, including rigor of metrics and goals
 

Reviewed drafts and commented on the CD&A and related compensation tables in the proxy statement
 

Reviewed the peer group used for market analyses and recommended no changes for fiscal 2015

Pearl Meyer periodically meets independently with the Chair of the Committee to discuss compensation matters. In addition, Pearl Meyer regularly participates in executive sessions with the Committee (without any of the Company’s 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 Committee’s charter as being relevant to compensation consultant independence, the Committee has concluded that Pearl Meyer is independent of the Company’s management.




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Fiscal 2015 Executive Compensation Peer Group



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 2015 market analysis process, listed in the chart below, are similar to Deere in terms of sales volume, products, services, market capitalization, and/or global presence.



Fiscal 2015 Executive Compensation Peer Group

                        Revenues *         Market Value 10/31/2015
Company Fiscal Year Employees * ($MM) ($MM)
3M Company     Dec 14         89,800     $31,821             $96,796            
Alcoa Inc. Dec 14 59,000 $23,906 $11,699
The Boeing Company Dec 14 165,500 $90,762 $99,205
Caterpillar Inc. Dec 14 114,233 $55,184 $42,497
Cummins Inc. Dec 14 54,600 $19,255 $18,386
E.I. du Pont de Nemours and Company Dec 14 63,000 $34,906 $55,564
Eaton Corp. Plc Dec 14 102,000 $22,552 $25,875
Emerson Electric Co. Sep 15 110,800 $22,304 $31,037
General Dynamics Corporation Dec 14 99,500 $30,852 $46,970
Honeywell International Inc. Dec 14 127,000 $40,306 $79,597
Illinois Tool Works Inc. Dec 14 49,000 $14,484 $33,419
Johnson Controls, Inc. Sep 15 139,000 $37,179 $29,250
Lockheed Martin Corporation Dec 14 112,000 $45,600 $67,553
Northrop Grumman Corporation Dec 14 64,300 $23,904 $34,242
PACCAR Inc Dec 14 23,300 $18,997 $18,691
Raytheon Company Dec 14 61,000 $22,826 $35,349
United Technologies Corporation Dec 14 211,500 $64,270 $87,292
Whirlpool Corporation Dec 14 100,000 $19,872 $12,522
Xerox Corporation Dec 14 147,500 $19,540 $ 9,506
 
75th Percentile 117,425 $37,961 $58,561
Median 99,750 $26,385 $33,831
25th Percentile 60,500 $21,696 $23,870
 
Deere & Company Oct 15 57,200 $28,863 $25,597
Deere Percentile 16th 53rd 26th

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. 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 the NEO, experience, time in position, internal equity, and potential. The Committee also considers each NEO’s current salary as compared to the salary range and the median salary practices of our peer group.

After considering the aforementioned factors, the Board determined that the CEO’s base salary for fiscal 2015 should remain unchanged, while the Committee approved increases ranging from 3-5% 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.



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Short-Term Incentive (“STI”)
Performance Metrics for STI
The Committee believes that efficient deployment of the Company’s assets (both fixed and working capital) is a key driver in creating long-term stockholder value. For this reason, the Committee has designed the STI program to incentivize Deere’s executives and most other salaried employees to optimize asset efficiency throughout the business cycle.

There are two metrics used in the calculation of STI:

OROA (Operating Return on Operating Assets) for the Equipment Operations (consisting of our worldwide Agriculture and Turf Operations and Construction and Forestry Operations)
 

ROE (Return on Equity) for our Financial Services segment


The Committee’s rationale for using these metrics and setting the performance goals for each metric are described in more detail below.

OROA
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. Over the past decades, Deere has experienced varying degrees of cyclicality in its Equipment Operations, which are primarily tied to economic factors such as commodity prices (for example, the price of corn and other crops) as well as the health of the housing and infrastructure sectors. In 2004, Deere adopted a new strategy designed to enable Deere’s management to respond quickly and strategically to changing business conditions and in turn drive sustained operational results across these volatile cycles. A focus on OROA performance was and continues to be a key component of this strategy. Because of this strategic alignment and because the Committee believes OROA effectively measures the efficient use of the Equipment Operations’ assets under varying business conditions, the Committee has selected OROA as the STI performance metric for the Equipment Operations.

OROA goals are determined based on actual sales volumes for a fiscal year measured relative to mid-volume sales. Mid-volume sales is calculated prior to the beginning of each fiscal year using historical sales volumes, industry growth rates, and market share data, among other considerations, and represents our view of the midpoint of a business cycle. The mid-volume sales calculation is used not only for STI purposes, but has also for more than 30 years served as a basis for measuring our achievement of long-term business strategies, making decisions regarding manufacturing capacity, and determining standard costs.

At the beginning of each fiscal year, the Committee establishes OROA goals for minimum, target, and maximum STI payouts at low volume, mid-volume, and high volume sales levels. These goals are interpolated for sales volumes between low and mid-volume and between mid-volume and high volume. By adjusting OROA goals to reflect operating leverage as sales volumes change, the Committee believes the level of difficulty in attaining targeted performance will be comparable for a range of sales volumes and capacity utilization levels:

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 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 goals are higher.

Using OROA as an STI performance metric 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.



For fiscal 2015, the Committee approved the following OROA goals for the Equipment Operations:

2015 OROA Goals

% of Mid-Volume = Actual Sales / Mid-Volume Sales

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The Committee originally established OROA goals for STI purposes for fiscal 2004 by comparing Deere’s OROA performance to that of the executive compensation peer group. The median OROA for the peer group at that time was in the range of 10-15%. As such, Deere’s target OROA at mid-volume was set at 12%, which provides a reasonable approximation of Deere’s cost of capital and aligns with Deere’s compensation strategy of median pay for median levels of performance. OROA goals for minimum and maximum STI payouts were set correspondingly to approximate 25th and 75th percentile performance, respectively, relative to the peer group. Because peer group OROA performance has essentially remained unchanged since 2004, the OROA goals for the Equipment Operations described in the chart above have (except for minor adjustments) been in place since that time.

ROE
ROE was selected as the STI performance metric for Financial Services because the Committee believes it effectively measures the efficient use of the segment’s equity. ROE is a standard metric used in the financial services industry to measure levels of profitability relative to equity, and reflects the fact that our Financial Services segment experiences different cash flow risk characteristics and operates with significantly different debt-to-equity leverage than the Equipment Operations. There are two distinct business models within Financial Services, and we use different ROE goals for each:

Under the “subsidized business” model, the Equipment Operations provide subsidies to Financial Services to reduce the interest rates that would otherwise be paid by our customers and dealers on financial products. The objective of this business is to facilitate sales by the Equipment Operations, not to maximize Financial Services’ profitability. For this reason, the ROE goal of 10% for the subsidized business is based on the implied after-tax cost of equity for Financial Services, and is the same for minimum, target, and maximum payout. We call this an “SVA-neutral” return, as ROE at this level neither detracts from nor adds to aggregate enterprise SVA (which, as discussed below in the “Mid-Term Incentive (“MTI”)” section, is a key measure of our economic performance).
 

The term “non-subsidized business” describes all Financial Services offerings that are not subsidized by the Equipment Operations. The objective of this model is to efficiently utilize equity in order to earn a profitable return. Consequently, the ROE goals for this business become progressively more challenging to achieve minimum, target, and maximum payout levels, respectively. The Committee establishes goal levels based on financial services industry benchmarking with similar financial services businesses’ ROEs at similar debt-to-equity leverages and by evaluating cost of equity financial models. The minimum goal equals the implied after-tax cost of equity for

Financial Services (which, as discussed above, represents an SVA-neutral return), while the target and maximum ROE goals are set at progressively higher levels to encourage management and employees to efficiently utilize equity relative to industry standards and market conditions while facilitating sales by the Equipment Operations.

ROE goals are adjusted based on the actual mix of subsidized versus non-subsidized business in a fiscal year. Historically, approximately 65-70% of Financial Services’ business is subsidized.

The Committee approved the following ROE goals at the beginning of fiscal 2015:

Fiscal 2015 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 B, “Deere & Company Reconciliation of Non-GAAP Measures,” for additional information regarding the calculation of OROA and ROE for fiscal 2015.

Revised Performance Metrics for Fiscal 2016
Since the adoption of OROA as an enterprise-wide performance metric in 2004, Deere has significantly restructured its Equipment Operations to enable more rapid responses to changing business conditions. Business plans are rigorously reviewed and OROA is measured at the enterprise and product-line levels to drive day-to-day decisions while also maintaining focus on long-term business growth. As a result, over the past ten years plus, Deere’s OROA results have risen dramatically and been sustained at above-upper quartile levels (relative to the peer group), even in trough conditions, as depicted in the following graph (peer group data for 2015 is not yet available):

OROA Deere vs. Peers 1997–2015





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Because of Deere’s sustained success in delivering OROA performance under varying business conditions, and in recognition of the fact that this performance has resulted in maximum or near-maximum STI payouts in several recent fiscal years, the Committee has concluded that it is appropriate to raise OROA goals for STI purposes. In reaching this conclusion, the Committee has determined that relative peer group performance (which, as

described in the graph above, has remained essentially unchanged over time) should no longer be the primary benchmark for setting Deere’s OROA goals but rather that Deere should be measured relative to its own capabilities and aspirations. With this in mind, the Committee has approved the following significant increases to the OROA goals starting in fiscal 2016 to reflect Deere’s sustained business transformation:



2016 OROA Goal Increases

% of Mid-Volume = Actual Sales / Mid-Volume Sales

Performance Weighting
For fiscal 2015, 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%

Awards under the STI plan are capped at 200% of target rates. Payouts at this level can only be achieved when the maximum performance goal for each component of the weighted STI performance formula is met or exceeded.

The emphasis on the OROA performance of the Equipment Operations and its constituent divisions in calculating STI reflects the critical position these operations have as drivers of Deere’s business, with Equipment Operations’ net sales accounting for 89% of Deere’s net sales and revenues in fiscal 2015.

Approval of STI Rates
At the beginning of the fiscal year, after review and consideration of Deere’s peer group data for target cash bonuses, the Committee approves target STI rates as a percentage of the NEO’s 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 2014, the Committee approved STI rates for fiscal 2015 as follows:

Target STI Rates:    
CEO 125 %
Other NEOs 85 %

Fiscal 2015 Performance Results for STI

The charts below detail:

The OROA performances of the Agriculture and Turf Operations, the Construction and Forestry Operations, and the overall Equipment Operations based on actual sales volumes; and
 

Actual OROA and ROE performance results in the context of the weighted STI calculation.




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Fiscal 2015 Performance Results for STI

% of Mid-Volume = Actual Sales/ Mid-Cycle Sales

           
   

A&T
OROA: 16.2%
Percent of Mid-Volume: 76%
Result: Maximum (200% of Target)

 

C&F
OROA: 14.4%
Percent of Mid-Volume: 87%
Result: Between Target and Maximum
(193% of Target)

 

Equipment Operations
OROA: 15.7%
Percent of Mid-Volume: 78%
Result: Maximum (200% of Target)

 
           

Fiscal 2015 Performance Fiscal 2015 Award
Fiscal 2015 Performance Results for STI Performance Results         as % of Target         Weighting         Weighted Award Results
Equipment Operations OROA 15.7% 200% 50%                100%               
Agriculture and Turf Operations OROA 16.2% 200% 25% 50%
Construction and Forestry Operations OROA 14.4% 193% 15% 29%
Financial Services ROE (1) 13.6% 200% 10% 20%

Actual Performance as % of Target 199% (2)


(1) Based on the actual ROE mix for the subsidized (65%) versus non-subsidized (35%) business

(2) Had the higher OROA goals recently approved for fiscal 2016 been in place for fiscal 2015, the final payout percentage for fiscal 2015 would have been 191% of target

The amount of the STI award paid to an NEO is calculated as follows:

Base salary for the fiscal year
x Target STI rate (as described above)
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 2015 Summary Compensation Table under footnote (4). At the request of the CEO, the Board agreed to exercise its discretion to reduce the CEO’s STI compensation by 25% below the amount he would have otherwise earned for fiscal 2015 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 2015 described above are also used to determine the STI awards paid to most other salaried employees worldwide. For fiscal 2015, STI awards paid to the NEOs consisted of approximately 1.4% of the total amount of STI awards paid to all eligible employees. 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 2015.



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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 2015.

Mid-Term Incentive (“MTI”)
Performance Metrics for MTI
The MTI plan is designed to incentivize executives and other salaried employees to create value over a multi-year time period. The Committee believes that SVA (which essentially represents pretax profit remaining after subtracting an implied cost of capital) measures Deere’s success in delivering sustained profitable growth. The Committee selected SVA as the MTI performance metric because the Committee believes that Deere should:

earn, at a minimum, its weighted average cost of capital each year;
 

ensure that investments in capital and research and development earn their cost of capital; and
 

ensure that acquisitions do not dissipate stockholder value.

SVA is fundamental to how Deere operates its business at the corporate and business unit level, and has served as the MTI performance metric since the plan’s inception in 2003. 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 SVA. To illustrate this point, 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 $17.8 billion in the ten most recent fiscal years. 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 Deere’s long-term success. For fiscal 2015, the MTI payout for all employees amounted to about 8% of average annual SVA over the three-year performance period. See Appendix B, “Deere & Company Reconciliation of Non-GAAP Measures,” for an explanation regarding the calculation of SVA.

The Committee has approved three-year performance periods for MTI to emphasize and reward consistent, sustained operating performance. The Committee conducts annual reviews of target and maximum SVA goals. The accumulated maximum SVA goal for a three-year performance period is (1) set at a level that reflects upper quartile return on invested capital performance relative to our executive compensation peer group and (2) calculated based on enterprise SVA at mid-volume sales levels for the first year of that performance period plus compounded 7% annual growth for the remaining two years. As explained in the “Short-Term Incentive (“STI”)” section above, the calculation of mid-volume sales levels is reviewed and adjusted annually using historical sales volumes, industry growth rates, and market share data, among other considerations. The target SVA goal is set at half of the maximum SVA goal. A minimum MTI award will not be paid unless accumulated SVA for a performance period is positive, reflecting the Committee’s belief that employees should not receive compensation under the MTI program unless Company performance is contributing to positive stockholder value. Deere’s businesses are cyclical and our mid-volume sales calculations reflect long-range trends over periods of time. The SVA goals for MTI reflect this long-range planning cycle.

The chart below details the minimum, target, and maximum accumulated SVA goals for each performance period that includes fiscal 2015. The SVA goals have grown significantly more challenging for the performance periods ending in 2016 and 2017. This primarily reflects a substantial increase in our calculation of mid-volume sales largely driven by an increase in sales volumes for agricultural equipment in recent years.



Fiscal 2013 Fiscal 2014 Fiscal 2015
through through through
SVA Goals for MTI Fiscal 2015 Fiscal 2016 Fiscal 2017
SVA Goal for Minimum Payout $1 million $1 million $5 million
SVA Goal for Target Payout $2,755 million $3,605 million $4,495 million
SVA Goal for Maximum Payout $5,510 million $7,210 million $8,990 million
Payable in Dec 2015 Dec 2016 Dec 2017
Approved by Committee Dec 2012 Dec 2013 Dec 2014

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,



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will be lower than the financial results that the strong-performance year alone would justify. The opposite is also true: MTI plan payouts 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 (the fiscal 2015 payout is an example of this scenario). Employees are motivated to achieve strong 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 Deere’s 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 graph:

Approval of MTI Rates
At the beginning of each performance period, 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 NEO’s 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 2012, the Committee approved the following target MTI rates for the performance period ended October 31, 2015. When maximum SVA goals are met or exceeded, 200% of target rates are paid.

Target MTI Rates:
CEO 121%
Other NEOs 93%

Fiscal 2015 Performance Results for MTI
Deere’s accumulated SVA, calculated in accordance with the MTI performance metrics as described in Appendix B, is reported in the following table for the three-year performance period ended October 31, 2015:

Accumulated SVA for 3-Year Performance Period Ended 10/31/15

Fiscal Year SVA (in millions)
2013       $ 3,390      
2014 $ 2,694
2015 $ 774
Accumulated SVA $ 6,858
 
SVA Goal for Target Payout: $ 2,755
SVA Goal for Maximum Payout: $ 5,510
Actual Performance as % of Target   200%  

A maximum payout for this performance period is consistent with the MTI performance metric design philosophy that a maximum SVA goal should reflect upper quartile return on invested capital performance relative to our executive compensation peer group over a multi-year period. As depicted in the following graph, Deere’s return on invested capital results have consistently exceeded 75th percentile performance relative to the peer group over the last 10 plus years, including in the first two years contained in the performance period ended October 31, 2015 (peer group data for 2015 is not yet available):



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The amount of the MTI award paid to an NEO is calculated as follows:

Median of actual salaries for the relevant salary grade

Target MTI rate (as described above)

x

Actual performance as a percent of target (up to a maximum of 200%)

=

MTI award amount

MTI awards paid to NEOs are detailed in the Fiscal 2015 Summary Compensation Table under footnote (4). At the request of the CEO, the Board agreed to exercise its discretion to reduce the CEO’s MTI compensation by 25% below the amount he would have otherwise earned for fiscal 2015 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 2015 described above are also used to determine the MTI awards paid to other eligible employees worldwide. MTI awards paid to the NEOs for fiscal 2015 consisted of approximately 3.6% of the MTI payout to all eligible employees. 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.

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 2015.

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 year’s LTI award, and potential accumulated wealth is not viewed as being relevant.

The following table summarizes the mix, performance measurements, general terms, and objectives of each form of equity awarded to the NEOs for fiscal year 2015:

Fiscal Year 2015 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

Conversion/
Expiration

Converted to Deere common stock upon vesting

Converted to Deere common stock upon vesting

Expire ten years from the grant date

Objective

Directly link pay to performance (in terms of relative TSR and revenue growth) over a three-year period

Encourage ownership and retention while providing immediate alignment with stockholders

Reward for stock price appreciation


* Based on the Company’s compound annual growth rate

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 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 individual’s level of performance, deliver a particular LTI value, or reflect other adjustments as the Committee deems necessary. For fiscal 2015, adjustments to base-level award



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values ranging up to 20% were approved in recognition of the individual performances of the NEOs. LTI awards were approved for the NEOs as follows:

Adjusted Award Values*:
Samuel R. Allen $ 7,600,000
Rajesh Kalathur $ 1,562,000
James M. Field $ 1,420,000
Jean H. Gilles $ 1,562,000
Michael J. Mack, Jr. $ 1,704,000

* Amounts differ from the value of equity awards shown in the Fiscal Year 2015 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 2015.

See the Fiscal 2015 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 2015, the number of RSUs and PSUs granted to the NEOs represented 50% of all RSUs and PSUs granted to eligible salaried employees, while the number of stock options granted to the NEOs represented approximately 8% of all stock options granted to eligible salaried employees. 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 2015
For PSUs granted in fiscal 2015, the actual number of shares to be issued upon conversion will be based equally on Deere’s revenue growth and TSR for the three-year performance period ending in 2017. The Company’s 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 2017)

(

Revenue Growth Payout %
× 50% of
PSUs Awarded

)

+

(

TSR Payout %
× 50% 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 Company’s relative performance during the performance period as illustrated in the following table:

% of Target Shares
Deere’s 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 Committee’s belief that median levels of relative performance should lead to median levels of compensation.

2013-2015 PSU Program (Payable in Fiscal 2016)
The performance period for PSUs granted in fiscal year 2013 ended on October 31, 2015. The final number of shares earned was based on Deere’s 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 2015 following a review of the relative performances of the Company and the S&P Industrial Sector. Revenue growth and TSR were comparable to the 3rd and 8th percentiles, respectively, of the S&P Industrial Sector. As a result, no payouts of Company common stock were made under these PSUs, as described in the following calculation:

Performance
Results for
Performance
Period Relative % of Target
to S&P Industrial    Shares    Award    Weighted
Metric Sector   Earned   Weighting Payout %
Revenue Growth   3rd percentile 0% 50%   0%
TSR 8th percentile 0% 50% 0%
Final Payout as % of Target 0%

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 2013 through 2015 are included in the Outstanding Equity Awards at Fiscal 2015 Year-End table.



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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 LTI awards granted prior to February 25, 2015 is the average of the high and low common stock price on the grant date as reported on the NYSE. For awards made after February 25, 2015, the grant price is 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 an NEO achieves the appropriate ownership level, 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 Company’s stock or trading in instruments designed to hedge against or offset price declines by any securities issued by the Company. 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 NEO’s

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 NEO’s 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 the other NEOs due to the CEO’s 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 CEO’s compensation and that of the other NEOs is influenced by our organizational structure, which does not currently include a chief operating officer. The ratio of Mr. Allen’s Total Direct Compensation relative to that of the other NEOs is generally comparable to that of the companies in our peer group.

In light of recent stock price performance as well as in recognition of current challenging business conditions in the agriculture and construction industries, and in spite of strong financial performance against performance goals previously established under the STI and MTI programs, Mr. Allen has requested that the Board reduce his cash incentive plan compensation for fiscal 2015. The Board considered Mr. Allen’s 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 2015 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 company’s CEO or any of its three next-highest-paid executive officers (other than its 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 Deere’s other compensation objectives. The Committee



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believes, however, that stockholder interests are best served by not restricting the Committee’s discretion and flexibility in structuring compensation programs, even though such programs may result in certain non-deductible compensation expenses.

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 Deere’s 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 executive’s incentive compensation would have been less had the misconduct not occurred.

The Committee is closely monitoring the proposed rules and rule amendments issued by the SEC to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to recoupment of incentive-based compensation and will review and, if necessary, amend the Recoupment Policy as appropriate following the adoption of final rules.

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 2015 Summary Compensation Table. In addition to the items listed in the aforementioned footnote, NEOs, as well as other selected employees, are 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 Company’s 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 Deere’s 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 family members, must be approved by the CEO. The Committee has limited the CEO’s 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 Pension 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. In addition, the fact that the Supplementary and Supplemental Plans are unfunded (with benefit payments under these plans being made out of the general assets of Deere) and therefore at-risk in the event of the Company’s bankruptcy creates a strong incentive for the NEOs to minimize risks that could jeopardize Deere’s long-term financial health. For additional information, see the Fiscal 2015 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 employee’s pay to participant SIP accounts. The STI results for the previous fiscal year (see the “Fiscal 2015 Performance Results 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 2015 Pension



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Risk Assessment of Compensation Policies and Practices



Benefits Table. The following table illustrates the Company’s match for calendar 2015, which is reported for our NEOs under the “All Other Compensation” column of the Fiscal 2015 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. Similar deferred compensation benefits are commonly offered by companies with whom we compete for talent. See the “Nonqualified Deferred Compensation” section below for additional details.

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 Deere’s value by retaining key talent in the face of corporate changes;
 

Protects Deere’s 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 2015 Potential Payments upon Change in Control” and the corresponding tables.

Other Potential Post Employment Payments
The Company’s 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 2015 Potential Payments upon Termination of Employment Other than Following a Change in Control.

Risk Assessment of Compensation Policies and Practices
During fiscal 2015, Deere’s management conducted a comprehensive risk assessment of the Company’s compensation policies and practices, as we have done each year since 2010. 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 Company’s compensation programs globally for both executive and non-executive employees; and

(3) Updated our existing detailed risk assessment questionnaire to take account of any relevant changes in our compensation structure or philosophy 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 Company’s 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 Company’s 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 Team’s conclusion. Specifically, the Committee believes the following key factors support the Management Team’s 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 Company’s long-term, sustainable growth. Finally, Deere has a Recoupment Policy (described above) designed to prevent misconduct relating to financial reporting.



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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. In addition, these reports include the names of the members of the Compensation Committee and Audit Review Committee, respectively, at the time of the reports’ adoptions and do not reflect the new committee memberships approved by the Board in January 2016, which will become effective in February 2016.

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 Deere’s management. Based on the Compensation Committee’s review and discussions with management, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in Deere’s Proxy Statement.

Vance D. Coffman, Chair
Crandall C. Bowles
Clayton M. Jones
Richard B. Myers
Dmitri L. Stockton



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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, 2015.

Fiscal 2015 Summary Compensation Table

 
Change in
Pension Value
and Nonqualified
Non-Equity Deferred
Incentive Plan Compensation All Other
     Fiscal      Salary      Stock Awards      Option Awards      Compensation      Earnings      Compensation     
Name & Position Year (1) (2) (3) (4) (5) (6) Total
Samuel R. Allen   2015   $ 1,500,000   $ 5,612,187      $ 2,660,623         $ 5,519,363          $ 2,931,274           $ 477,883       $ 18,701,330
Chairman and   2014   $ 1,495,204   $ 6,606,197   $ 3,058,680   $ 5,397,891   $ 3,137,079   $ 578,245   $ 20,273,296
Chief Executive Officer   2013   $ 1,435,644   $ 6,241,025   $ 3,058,773   $ 6,705,518   $ 1,187,712   $ 520,067     $ 19,148,739
Rajesh Kalathur 2015 $ 552,128 $ 1,153,349 $ 546,826 $ 1,953,632 $ 284,820 $ 146,875 $ 4,637,630
Senior Vice President and 2014 $ 525,437 $ 1,073,209 $ 496,928 $ 1,879,751 $ 190,760 $ 131,124 $ 4,297,209
Chief Financial Officer 2013 $ 465,552 $ 1,165,925 $ 571,490 $ 1,718,594 $ 9,061 $ 330,621 $ 4,261,243
James M. Field   2015   $ 666,274   $ 1,048,459   $ 497,120   $ 2,146,607   $ 506,345   $ 180,826   $ 5,045,631
President, Agricultural   2014   $ 646,353   $ 1,180,392   $ 546,630   $ 2,083,579   $ 459,197   $ 167,586   $ 5,083,737
Equipment Operations   2013   $ 620,543   $ 1,115,269   $ 546,644   $ 1,969,106   $ 28,796   $ 159,379   $ 4,439,737
Jean H. Gilles 2015 $ 614,823 $ 1,153,349 $ 546,826 $ 2,059,624 $ 992,519 $ 162,684 $ 5,529,825
Senior Vice President 2014 $ 590,722 $ 1,223,406 $ 566,521 $ 1,989,802 $ 942,341 $ 154,290 $ 5,467,082
JDPS/Adv Tech & Eng 2013 $ 561,341 $ 1,165,925 $ 571,490 $ 1,873,417 $ 27,622 $ 152,991 $ 4,352,786
Michael J. Mack, Jr.   2015   $ 675,839   $ 1,258,151   $ 596,532   $ 2,162,777   $ 848,211   $ 182,619   $ 5,724,129
Group President, JD Financial,   2014   $ 656,147   $ 1,212,742   $ 561,549   $ 2,100,089   $ 822,000   $ 185,218   $ 5,537,745
Global HR & Public Affairs   2013   $ 637,536   $ 1,064,500   $ 521,799   $ 1,996,571   $ 85,771   $ 171,229   $ 4,477,406

(1) Includes amounts deferred by the NEO under the John Deere Voluntary Deferred Compensation Plan. Salary amounts deferred in fiscal 2015 are included in the first column of the Fiscal 2015 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, 2015. 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: $7,424,000 (Allen); $1,526,000 (Kalathur); $1,387,000 (Field); $1,526,000 (Gilles); and $1,664,000 (Mack). RSUs will vest three years after the grant date, at which time they may be settled in Deere common stock. Refer to the Fiscal 2015 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, 2015. Refer to the Fiscal 2015 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 2015 were paid to NEOs on December 15, 2015 unless deferred under the Voluntary Deferred Compensation Plan. Deferred STI and MTI amounts are included in the first column of the Fiscal 2015 Nonqualified Deferred Compensation Table corresponding with “Deferred Plan.”

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Fiscal 2015 Summary Compensation Table



The following table shows the awards earned under the STI and MTI plans:

STI (a) MTI (b)
Target
Target   Actual Award as % Actual Total Non-Equity
Award as % Performance Award of Median Performance Award Incentive Plan
Name     of Salary     as % of Target     Amount         Salary     as % of Target     Amount         Compensation
Samuel R. Allen (c)   125 %   199% $ 2,796,863     121 %     200% $ 2,722,500   $ 5,519,363    
Rajesh Kalathur 85 % 199% $ 933,428 93 % 200% $ 1,020,204 $ 1,953,632  
James M. Field 85 % 199% $ 1,126,403 93 % 200% $ 1,020,204 $ 2,146,607
Jean H. Gilles 85 % 199% $ 1,039,420 93 % 200% $ 1,020,204 $ 2,059,624
Michael J. Mack, Jr. 85 % 199% $ 1,142,573 93 % 200% $ 1,020,204 $ 2,162,777  

(a) Based on actual performance, as discussed in the CD&A under “Fiscal 2015 Performance Results for STI,” the NEOs earned an STI award equal to 199% of the target opportunity.

(b) Based on actual performance, as discussed in the CD&A under “Fiscal 2015 Performance Results for MTI,” the NEOs earned an MTI award equal to 200% of the target opportunity.

(c) At Mr. Allen’s 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 2015 based on previously-approved plan metrics and goals and actual performance results. The amounts included for Mr. Allen in the table above reflect these reductions. 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 2015:

Change in Nonqualified Deferred
Name Pension Value (a)       Compensation Earnings (b)       Total
Samuel R. Allen             $ 2,815,953                 $ 115,321                  $ 2,931,274      
Rajesh Kalathur   $ 272,718     $ 12,102 $ 284,820
James M. Field $ 468,053 $ 38,292 $ 506,345
Jean H. Gilles $ 947,810 $ 44,709 $ 992,519
Michael J. Mack, Jr. $ 789,691 $ 58,520 $ 848,211

(a) Represents the change in the actuarial present value of each NEO’s accumulated benefit under all defined benefit plans from October 31, 2014 to October 31, 2015. 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 2015 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 2015 Nonqualified Deferred Compensation Table for additional information.

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Fiscal 2015 Summary Compensation Table



(6) The following table provides details about each component of the “All Other Compensation” column in the Fiscal 2015 Summary Compensation Table:

Company
Personal Contributions
Use of to Defined
Company Financial Medical Misc Contribution Total All
      Aircraft       Planning       Exams       Perquisites       Plans       Other
Name (a) (b) (c) (d) (e) Compensation
Samuel R. Allen    $ 43,482        $       $ 3,742        $ 2,674       $ 427,985      $ 477,883  
Rajesh Kalathur $ $ $ 2,545 $ 544 $ 143,786 $ 146,875
James M. Field $ $ 2,715 $ $ 2,528 $ 175,583 $ 180,826
Jean H. Gilles $ $ $ 1,020 $ 604 $ 161,060 $ 162,684
Michael J. Mack, Jr. $ $ $ 3,095 $ 1,333 $ 178,191 $ 182,619

(a) Per Internal Revenue Service (“IRS”) regulations, the NEOs recognize imputed income on the personal use of Deere’s aircraft at rates established by the IRS. For SEC disclosure purposes, the cost of personal use of Deere’s 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. Allen’s personal usage of Company aircraft in fiscal 2015 amounted to approximately 25 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 our tax-qualified pension plan whose earnings exceed relevant IRS limits. All of our current NEOs are covered by the Contemporary Option.

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Fiscal 2015 Grants of Plan-Based Awards



Fiscal 2015 Grants of Plan-Based Awards
The following table provides additional information regarding fiscal 2015 grants of RSU, PSU, and stock option awards under the Omnibus Plan, and the potential range of awards that were approved in fiscal 2015 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 12/2/2014-STI $— $1,875,000 $3,750,000              
  12/2/2014-MTI $1,100 $1,815,000 $3,630,000              
  12/10/2014             21,545     $1,899,946
  12/10/2014       8,618 34,472 68,944       $3,712,241
  12/10/2014               135,263 $88.19 $2,660,623
    $1,100 $3,690,000 $7,380,000 8,618 34,472 68,944 21,545 135,263   $8,272,810
Rajesh Kalathur 12/2/2014-STI $— $469,309 $938,618
12/2/2014-MTI $400 $521,675 $1,043,350
12/10/2014 4,428 $390,483
12/10/2014 1,771 7,084 14,168 $762,866
12/10/2014 27,800 $88.19 $546,826
$400 $990,984 $1,981,968 1,771 7,084 14,168 4,428 27,800 $1,700,175
James M. Field 12/2/2014-STI $— $566,333 $1,132,666
12/2/2014-MTI $400 $521,675 $1,043,350
12/10/2014   4,025   $354,945
12/10/2014 1,610 6,440 12,880 $693,514
12/10/2014     25,273 $88.19 $497,120
$400 $1,088,008 $2,176,016 1,610 6,440 12,880 4,025 25,273 $1,545,579
Jean H. Gilles 12/2/2014-STI $— $522,600 $1,045,200  
12/2/2014-MTI $400 $521,675 $1,043,350
12/10/2014 4,428 $390,483
12/10/2014 1,771 7,084 14,168 $762,866
12/10/2014 27,800 $88.19 $546,826
$400 $1,044,275 $2,088,550 1,771 7,084 14,168 4,428 27,800 $1,700,175
Michael J. Mack, Jr. 12/2/2014-STI $— $574,463 $1,148,926
12/2/2014-MTI $400 $521,675 $1,043,350
12/10/2014 4,830 $425,934
12/10/2014 1,932 7,728 15,456 $832,217
12/10/2014 30,327 $88.19 $596,532
$400 $1,096,138 $2,192,276 1,932 7,728 15,456 4,830 30,327 $1,854,683

(1) For the non-equity incentive plan awards, the grant date is the date the Committee approved the range of 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, 2014 through October 31, 2015. For actual performance between threshold, target, and maximum, the earned STI award is prorated.

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Outstanding Equity Awards at Fiscal 2015 Year-End



The range of the MTI award covers the three-year performance period beginning in fiscal 2015 and ending in fiscal 2017. Awards will not be paid unless Deere generates at least $5 million of SVA for the performance period. The target MTI award will be earned if $4,495 million of SVA is accumulated and the maximum MTI award will be earned if $8,990 million or more is accumulated during the performance period. The MTI award will be reduced (i) by 25% if Deere’s TSR for the performance period is at or below the 25th percentile relative to the companies in the S&P Industrial Sector and (ii) between 0-25% (on a linear basis) if TSR falls between the 25th and 50th percentiles. The amounts shown in the table represent potential MTI awards based on the median salary of the NEOs’ salary grades as of September 30, 2015. The actual MTI awards will depend upon Deere’s actual SVA performance, Deere’s relative TSR performance, and the median salaries of the NEOs’ salary grades as of September 30, 2016.

(3) Represents the potential payout range of PSUs granted in fiscal 2015 (in December 2014). 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 2015 (in December 2014). 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 Deere’s common stock.

(5) Represents the number of options granted during fiscal 2015 (in December 2014). These options vest in three approximately 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 2015 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 $19.67, which was calculated using the binomial lattice option pricing model. The grant date fair value of the PSUs subject to the TSR metric was $113.97 based on a lattice valuation model excluding dividends. The grant date fair value of the PSUs subject to the revenue growth metric was $81.78 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 Deere’s consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended October 31, 2015.

Outstanding Equity Awards at Fiscal 2015 Year-End
The following table itemizes outstanding options, RSUs, and PSUs held by the NEOs as of October 31, 2015:

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 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 $   2,403,758   12/17/2018
269,353 $ 52.25   $ 6,935,840 12/9/2019
114,253   $ 80.61 $ 12/8/2020    
  135,897   $ 74.24 $ 510,973 12/14/2021
86,362   42,537 $ 86.36 $ 12/12/2022 25,301 $  1,973,478
42,035 81,598 $ 87.46 $    12/11/2023    24,982 $ 1,948,596     7,994   $ 623,532
135,263 $ 88.19 $ 12/10/2024   21,545 $ 1,680,510 9,479 $ 739,362  
739,412 259,398 $ 9,850,571 71,828 $ 5,602,584 17,473 $  1,362,894

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Executive Compensation Tables:
Outstanding Equity Awards at Fiscal 2015 Year-End



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 Unearned
Shares, Units or
Other Rights That
Have Not Vested
(7)
Rajesh Kalathur     4,366                 $ 34.44      $ 190,183       12/7/2015                                                   
5,816 $ 48.38 $ 172,299 12/6/2016
4,519 $ 88.82 $ 12/5/2017
11,133 $ 39.67 $ 426,784 12/17/2018
12,151 $ 52.25 $ 312,888 12/9/2019
7,379 $ 80.61 $ 12/8/2020
7,996 $ 74.24 $ 30,065 12/14/2021
16,135 7,948 $ 86.36 $ 12/12/2022 4,727 $ 368,706
6,829 13,257 $ 87.46 $ 12/11/2023 4,058 $ 316,524 1,298 $ 101,244
27,800 $ 88.19 $ 12/10/2024 4,428 $ 345,384 1,948 $ 151,944
76,324 49,005 $   1,132,219 13,213 $  1,030,614 3,246 $ 253,188
James M. Field 28,229 $ 52.25 $ 726,897 12/9/2019
21,735 $ 80.61 $ 12/8/2020
25,391 $ 74.24 $ 95,470 12/14/2021
15,434 7,602 $ 86.36 $ 12/12/2022 4,521 $ 352,638
7,512 14,583 $ 87.46 $ 12/11/2023 4,464 $ 348,192 1,428 $ 111,384
25,273 $ 88.19 $ 12/10/2024 4,025 $ 313,950 1,771 $ 138,138
98,301 47,458   $ 822,367   13,010 $ 1,014,780 3,199 $ 249,522
Jean H. Gilles 10,704   $ 88.82 $ 12/5/2017  
45,700     $ 52.25 $ 1,176,775 12/9/2019    
20,376 $ 80.61 $ 12/8/2020      
23,183 $ 74.24   $ 87,168 12/14/2021      
  16,135 7,948 $ 86.36 $   12/12/2022   4,727 $ 368,706  
7,785 15,114 $ 87.46 $ 12/11/2023 4,627 $ 360,906 1,480 $ 115,440
27,800 $ 88.19 $ 12/10/2024 4,428 $ 345,384 1,948 $ 151,944
123,883 50,862 $ 1,263,943 13,782 $ 1,074,996 3,428 $ 267,384
Michael J. Mack, Jr. 24,388 $ 88.82 $ 12/5/2017
21,347 $ 80.61 $ 12/8/2020
23,183 $ 74.24 $ 87,168 12/14/2021
14,732 7,257 $ 86.36 $ 12/12/2022 4,316 $ 336,648
7,717 14,981 $ 87.46 $ 12/11/2023 4,586 $ 357,708 1,467 $ 114,426
30,327 $ 88.19 $ 12/10/2024 4,830 $ 376,740 2,125 $ 165,750
91,367 52,565 $ 87,168 13,732 $ 1,071,096 3,592 $ 280,176

(1) Options become vested and exercisable in three approximately equal annual installments on the first, second, and third anniversaries of the grant date.

(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, 2015, which was $78.00, 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 after the grant date, at which time they are settled in Deere common stock.

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Executive Compensation Tables:
Fiscal 2015 Option Exercises and Stock Vested



The three-year performance period for PSUs granted in fiscal 2013 ended on October 31, 2015. The final payout determination was made by the Committee in December 2015. As discussed in the CD&A under “2013-2015 PSU Program (Payable in Fiscal 2016),” because the minimum revenue growth and TSR performance goals were not achieved, no payouts of Company common stock were made under these awards.

(5) The amount shown represents the number of RSUs that have not vested multiplied by the closing price for Deere common stock on the NYSE on October 31, 2015, which was $78.00.

(6) The amount shown represents actual achievement of the PSUs granted in fiscal years 2014 and 2015 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 11, 2013       December 10, 2014
Truncated performance period 11/1/2013 - 10/31/2015 11/1/2014 - 10/31/2015
Actual performance period ending date 10/31/2016 10/31/2017
Payout of shares (as a % of target) based on revenue growth 0% 0%
Payout of shares (as a % of target) based on TSR 40% 55%
Combined payout of shares (as a % of target) 20%   27.5%

(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, 2015, which was $78.00.

Fiscal 2015 Option Exercises and Stock Vested
The following table provides information regarding option exercises and vesting of RSUs and PSUs during fiscal 2015. These options and stock awards were granted in prior fiscal years and are not related to performance in fiscal 2015.

Option Awards Stock Awards
Number of Shares Value Realized Number of Shares Value Realized
Acquired on Exercise on Exercise Acquired on Vesting on Vesting
Name (1) (2) (3) (4)
Samuel R. Allen                        $              52,269             $ 4,516,564    
Rajesh Kalathur $ $
James M. Field 88,086   $ 3,505,971 9,766   $ 843,880
Jean H. Gilles   4,463 $ 205,099   8,915 $ 770,345
Michael J. Mack, Jr. $   8,915 $ 770,345

(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 2015. The RSUs were granted on December 14, 2011 and vested on December 14, 2014. Although they are vested, these RSUs will not be settled in Deere common stock until five years after the grant date (in December 2016).

The three-year performance period for PSUs granted in fiscal 2012 ended on October 31, 2014. The final number of shares earned was based on Deere’s 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 2014 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 14, 2014 (the third anniversary of the grant date). The final payout under the award was equal to 48.5% of the target opportunity, as disclosed in the CD&A in last year’s proxy statement.

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Executive Compensation Tables:
Pension Benefits



The following table shows the number of RSUs and PSUs that vested during fiscal 2015:

Name RSUs       PSUs
Samuel R. Allen 29,431 22,838
James M. Field 5,499 4,267
Jean H. Gilles 5,020   3,895
Michael J. Mack, Jr. 5,020 3,895

(4) Represents the number of RSUs and PSUs vested multiplied by the closing price ($86.41) 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 participant’s 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 participant’s highest earnings. In that case, Final Average Pay would be calculated using the participant’s 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 participant’s 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. None of our current 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 hired prior to January 1, 1997, the transition to Career Average Pay includes salary and STI awards from 1992 until retirement. Deere makes enhanced contributions to the 401(k) retirement savings accounts of salaried employees participating in this option.

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%




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Executive Compensation Tables:
Fiscal 2015 Pension Benefits Table




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 participants 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 participating employees hired before January 1, 1997 who were not eligible to retire on January 1, 1997, and for participants 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 and are at-risk in the event of the Company’s bankruptcy.

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 and are at-risk in the event of the Company’s bankruptcy. 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
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 2015 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             40.4                    $ 1,707,954       
Contemporary Option   Supplementary Plan 63 40.4   $ 11,748,787
Supplemental Plan 63   18.8 $ 2,016,567  
Total   $ 15,473,308
 
Rajesh Kalathur Salaried Plan 65 18.4 $ 306,463
Contemporary Option Supplementary Plan 65   18.4   $ 385,029
Supplemental Plan 65 9.8 $ 135,719
Total $ 827,211
 
James M. Field Salaried Plan 65 21.5 $ 457,145
Contemporary Option Supplementary Plan 65 21.5 $ 1,234,970
Supplemental Plan 65 16.7 $ 461,807
Total $ 2,153,922

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Executive Compensation Tables:
Fiscal 2015 Pension Benefits Table




Assumed Number of Years Present Value of
Name       Plan Name (1)       Retirement Age (2)       of Credited Service (3)       Accumulated Benefit (4)
Jean H. Gilles Salaried Plan 64 27.6        $ 1,018,796       
Contemporary Option Supplementary Plan   64   27.6 $ 3,437,271
  Supplemental Plan 64 18.8   $ 1,026,125  
Total $ 5,482,192
 
Michael J. Mack, Jr. Salaried Plan 65 29.3 $ 895,598
Contemporary Option Supplementary Plan 65 29.3 $ 2,783,755
Supplemental Plan 65 18.8   $ 792,672
Total $ 4,472,025

(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 Deere’s 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, 2015. 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, 2015, 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 financial accounting discount rates equal to 4.42% for the Salaried Plan, 3.89% for the Supplementary Plan, and 3.74% for the Supplemental Plan;

Benefits subject to a lump sum distribution were determined using an interest rate of 2.95%;

The mortality table used for the Salaried Plan was the RP2015WC table (with mortality projection scale MP2015, as published by the Society of Actuaries), while the mortality table used for the Supplementary and Supplemental Plans was the RP 2022 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.

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Executive Compensation Tables:
Nonqualified Deferred Compensation




Nonqualified Deferred Compensation
The Fiscal 2015 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 earn interest based on the Moody’s “A” rated Corporate Bond Rate. During fiscal 2015, 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 Moody’s “A” Corporate
      Prime plus 2%       Bond Rate
November-14 5.25% 4.18%
February-15 5.25% 3.81%
May-15 5.25% 4.24%
August-15 5.25% 4.32%

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 Company’s bankruptcy.

German Deferral Plan
Mr. Gilles participated in the German Deferral Plan during his period of employment at Deere’s 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 Company’s bankruptcy.

Two investment options were available under the DCRP during fiscal 2015: 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 could choose either investment option for any portion of their account, and could change investment options between the 1st and 10th day of any month. During fiscal 2015, the annualized rates of return under the two options were as follows:

Earnings For DCRP
      Prime plus 2%       S&P 500 Index
November-14 5.25%     -33.69 %    
December-14 5.25% 66.46 %
January-15 5.25% 5.69 %
February-15 5.25% -15.24 %
March-15 5.25% 31.96 %
April-15 5.25% -1.27 %
May-15 5.25% 8.58 %
June-15 5.25% 9.78 %
July-15 5.25% -7.19 %
August-15 5.25% -2.94 %
September-15 5.25% -31.10 %
October-15 5.25% -56.16 %



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Executive Compensation Tables:
Fiscal 2015 Nonqualified Deferred Compensation Table




As of November 1, 2015, the investment options described above are no longer available for new deferrals under the DCRP. Instead, the investment options under the DCRP now parallel the investment options offered under our 401(k) plan (with certain limited exceptions). Funds deferred prior to November 1, 2015 may remain invested under the previous options, although participants may also move these funds into the new options. Additionally, as of November 1, 2015 participants are permitted to change investment options at any time. These changes effectively eliminate the ability of DCRP participants to earn above-market interest on new deferrals.

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 2015 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)
December 2011 December 2014 5 years (until December 2016)

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 2015 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    $ 241,191       $ 401,985       $ 272,158         $ 5,504,538     
  Deferred RSUs $ $ 2,543,133 $ (992,060 ) $ 9,997,806
Total $ 241,191 $ 2,945,117 $ (719,902 ) $ 15,502,344
Rajesh Kalathur DCRP $ 70,671 $ 117,786 $ 28,469 $ 604,591
Total $ 70,671 $ 117,786 $ 28,469 $ 604,591
James M. Field DCRP $ 89,750 $ 149,583 $ 90,308 $ 1,831,920
Deferred RSUs $ $ 475,169 $ (276,609 ) $ 2,811,978
Total $ 89,750 $ 624,752 $ (186,301 ) $ 4,643,898
Jean H. Gilles German Deferral Plan $ $ $ 17,794 $ 279,748
DCRP $ 81,036 $ 135,060 $ 82,562 $ 1,673,270
Deferred RSUs $ $ 433,778 $ (198,884 ) $ 2,012,244
Total $ 81,036 $ 568,839 $ (98,529 ) $ 3,965,262
Michael J. Mack, Jr. Deferred Plan $ $ $ 98,424 $ 1,936,661
DCRP $ 91,314 $ 152,191 $ (13,445 ) $ 2,585,724
Deferred RSUs $ $ 433,778 $ (318,793 ) $ 3,252,678
Total $ 91,314 $ 585,969 $ (233,814 ) $ 7,775,063

(1) The amounts in this column represent employee compensation deferrals that are included in the Fiscal 2015 Summary Compensation Table under the “Salary” and “Non-Equity Incentive Plan Compensation” columns.

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(2) The amounts in this column associated with the DCRP represent Deere’s contributions during the fiscal year as included in the Fiscal 2015 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 2015 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 6.79%. 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 2015 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: $9,663,424 (Allen); $191,656 (Kalathur); $2,315,076 (Field); $790,281 (Gilles); and $4,836,562 (Mack).

Fiscal 2015 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:

Deere’s termination of an executive’s employment within the six months preceding or within 24 months following a change in control for reasons other than death, disability, or “cause” (defined as an executive’s willful and continued nonperformance of duties after written demand; willful conduct that is demonstrably and materially injurious to Deere; or illegal activity); or

An executive’s termination of his or her own employment for “good reason” (defined as material reductions or alterations in an executive’s authorities, duties, or responsibilities; change in office location of at least 50 miles from current residence; material reductions in an executive’s 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 Deere’s voting securities;

a majority of Deere’s 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 Deere’s 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 executive’s 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 Deere’s 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 or not the employee is terminated, 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.




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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, 2015. 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, 2015 (reported in the Fiscal 2015 Summary Compensation Table);

the exercise of outstanding vested options (reported in the Outstanding Equity Awards at Fiscal 2015 Year-End table); and

distribution of nonqualified deferred compensation (reported in the Fiscal 2015 Nonqualified Deferred Compensation Table).



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 $ $ $ 2,058,472 $ $— $ $ $ 2,058,472
     ~Change in Control and
       Qualifying Termination $ 4,500,000 $ 5,625,000 $ 2,058,472 $ 8,964,072 $— $ 36,342 $ 1,283,955 $ 22,467,841
Rajesh Kalathur
     ~Change in Control only $ $ $ 591,655 $ $— $ $ $ 591,655
     ~Change in Control and
       Qualifying Termination $ 1,662,984 $ 1,407,926 $ 591,655 $ 2,679,534 $— $ 41,411 $ 431,358 $ 6,814,868
James M. Field
     ~Change in Control only $ $ $ 591,655 $ $— $ $ $ 591,655
     ~Change in Control and
       Qualifying Termination $ 2,003,688 $ 1,698,999 $ 591,655 $ 2,638,428 $— $ 42,179 $ 526,749 $ 7,501,698
Jean H. Gilles
     ~Change in Control only $ $ $ 591,655 $ $— $ $ $ 591,655
     ~Change in Control and
       Qualifying Termination $ 1,850,400 $ 1,567,799 $ 591,655 $ 1,719,744 $— $ 40,859 $ 545,458 $ 6,315,915
Michael J. Mack, Jr.
     ~Change in Control only $  — $ $ 591,655 $ $— $ $ $ 591,655
     ~Change in Control and
       Qualifying Termination $ 2,032,452 $ 1,723,389 $ 591,655 $ 1,713,660 $— $ 42,244 $ 534,573 $ 6,637,973

(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 2015 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation” and is not duplicated in this table.

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(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, 2015 is reported in the Fiscal 2015 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, 2015, which was $78.00. 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 2015 Nonqualified Deferred Compensation Table. Unvested PSUs and RSUs are included in the Outstanding Equity Awards at Fiscal 2015 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.

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, 2015, which was $78.00, and the option exercise prices. These amounts are included in the Outstanding Equity Awards at Fiscal 2015 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 Deere’s 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 2015 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, 2015.



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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 $ $ 2,796,863 $ 2,722,500 $ 16,963,284 $ 9,850,571 $ 5,504,538 $ 9,635,220 $ 47,472,976
     Disability $ 13,076,110 $ 2,796,863 $ 2,722,500 $ 16,963,284 $ 9,850,571 $ 5,504,538 $ 17,033,597 $ 67,947,463
     Retirement $ $ 2,796,863 $ 2,722,500 $ 16,963,284 $ 9,850,571 $ 5,504,538 $ 17,493,608 $ 55,331,364
     Termination Without Cause $ 1,500,000 $ 2,796,863 $ 2,722,500 $ 9,997,806 $ $ 5,504,538 $ 17,493,608 $ 40,015,315
     Termination For Cause $ $ 2,796,863 $ 2,722,500 $ 9,997,806 $ $ 5,504,538 $ 17,493,608 $ 38,515,315
     Voluntary Separation (8)
Rajesh Kalathur
     Death $ $ 933,428 $ 1,020,204 $ 1,283,802 $ 1,132,219 $ 604,591 $ 535,292 $ 5,509,536
     Disability $ 12,158,185 $ 933,428 $ 1,020,204 $ 1,283,802 $ 1,132,219 $ 604,591 $ 2,286,353 $ 19,418,782
     Retirement (9)
     Termination Without Cause $ 415,746 $ 933,428 $ 1,020,204 $ $ $ 604,591 $ 982,602 $ 3,956,571
     Termination For Cause $ $ 933,428 $ 1,020,204 $ $ $ 604,591 $ 982,602 $ 3,540,825
     Voluntary Separation $ $ 933,428 $ 1,020,204 $ $ $ 604,591 $ 982,602 $ 3,540,825
James M. Field
     Death $ $ 1,126,403 $ 1,020,204 $ 4,076,280 $ 822,367 $ 1,831,920 $ 1,287,246 $ 10,164,420
     Disability $ 13,435,349 $ 1,126,403 $ 1,020,204 $ 4,076,280 $ 822,367 $ 1,831,920 $ 4,174,065 $ 26,486,588
     Retirement (9)
     Termination Without Cause $ 584,409 $ 1,126,403 $ 1,020,204 $ 2,811,978 $ $ 1,831,920 $ 2,353,847 $ 9,728,761
     Termination For Cause $ $ 1,126,403 $ 1,020,204 $ 2,811,978 $ $ 1,831,920 $ 2,353,847 $ 9,144,352
     Voluntary Separation $ $ 1,126,403 $ 1,020,204 $ 2,811,978 $ $ 1,831,920 $ 2,353,847 $ 9,144,352
Jean H. Gilles
     Death $ $ 1,039,420 $ 1,020,204 $ 3,354,624 $ 1,263,943 $ 2,003,857 $ 3,614,279 $ 12,296,327
     Disability $ 7,536,919 $ 1,039,420 $ 1,020,204 $ 3,354,624 $ 1,263,943 $ 1,953,018 $ 7,405,739 $ 23,573,867
     Retirement $ $ 1,039,420 $ 1,020,204 $ 3,354,624 $ 1,263,943 $ 1,953,018 $ 6,582,190 $ 15,213,399
     Termination Without Cause $ 616,800 $ 1,039,420 $ 1,020,204 $ 2,012,244 $ $ 1,953,018 $ 6,582,190 $ 13,223,876
     Termination For Cause $ $ 1,039,420 $ 1,020,204 $ 2,012,244 $ $ 1,953,018 $ 6,582,190 $ 12,607,076
     Voluntary Separation (8)
Michael J. Mack, Jr.
     Death $ $ 1,142,573 $ 1,020,204 $ 4,603,950 $ 87,168 $ 4,522,385 $ 2,951,488 $ 14,327,768
     Disability $ 7,636,888 $ 1,142,573 $ 1,020,204 $ 4,603,950 $ 87,168 $ 4,522,385 $ 6,102,515 $ 25,115,683
     Retirement $ $ 1,142,573 $ 1,020,204 $ 4,603,950 $ 87,168 $ 4,522,385 $ 5,373,453 $ 16,749,733
     Termination Without Cause $ 677,484 $ 1,142,573 $ 1,020,204 $ 3,252,678 $ $ 4,522,385 $ 5,373,453 $ 15,988,777
     Termination For Cause $ $ 1,142,573 $ 1,020,204 $ 3,252,678 $ $ 4,522,385 $ 5,373,453 $ 15,311,293
     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 year’s 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, 2015, until the time the NEO attains age 65.

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(2) Under all termination events, the amount of STI earned for the fiscal year ended October 31, 2015 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 2015 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, 2015 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 2015 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
After 2012 Third anniversary of grant date
Disability or Retirement   2012 and prior First business day in the later of January or July following separation from service
After 2012 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).

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 2014 and 2015, truncated performance measurement periods. The performance period for PSUs granted in fiscal year 2013 ended on October 31, 2015. 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 2015 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, 2015, which was $78.00.

(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, 2015, which was $78.00, and the option exercise prices. These outstanding stock options are reported in the Outstanding Equity Awards at Fiscal 2015 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 2015 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 2015 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 4.42% for the Salaried Plan, 3.89% for the Supplementary Plan, and 3.74% for the Supplemental Plan;

   

lump sum distribution amounts were determined using an interest rate of 2.95% for the Supplementary and Supplemental Plans;

   

the mortality table used for the Salaried Plan was RP2015WC with mortality projection scale MP2015;

the mortality table used for the Supplementary and Supplemental Plans was RP2022; and

   

pensionable earnings earned were based on actual base salary and forecasted STI for fiscal 2015.





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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, 2015.

   

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, 2015.