DEF 14A 1 deereandco_def14a.htm DEFINITIVE PROXY STATEMENT

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SCHEDULE 14A
 
(Rule 14a-101)
 
INFORMATION REQUIRED IN PROXY STATEMENT
 
SCHEDULE 14A INFORMATION
 
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
 
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Check the appropriate box:         
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[   ]   Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
   
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  Deere & 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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Table of Contents

Notice of 2015 Annual Meeting
and Proxy Statement
 


 



Table of Contents


Notice of Annual Meeting of Stockholders

Date:

Wednesday, February 25, 2015

Time:

10:00 a.m. Central Standard Time

Place

Deere & Company World Headquarters

One John Deere Place, Moline, Illinois 61265


At the Annual Meeting, stockholders will be asked to:

1. Elect the twelve director nominees named in the Proxy Statement (see page 4)
     
2. Approve an amendment to Deere’s Bylaws to permit stockholders to call special meetings (see page 20)
     
3. Approve the Company’s executive compensation on an advisory basis (“say-on-pay”) (see page 21)
     
4. Amend the John Deere Omnibus Equity and Incentive Plan (see page 57)
     
5. Re-approve the John Deere Short-Term Incentive Bonus Plan (see page 62)
     
6. Ratify the appointment of Deloitte & Touche LLP as Deere’s independent registered public accounting firm for fiscal 2015 (see page 65)
     
7. Consider any other business properly brought before the meeting

You may vote at the Annual Meeting if you were a Deere stockholder of record at the close of business on December 31, 2014.

YOUR VOTE IS VERY IMPORTANT. We urge all stockholders to vote on the matters described in the accompanying Proxy Statement as soon as possible, whether or not they attend the Annual Meeting. Please refer to the section beginning on page 1 of the Proxy Statement entitled “Voting and Meeting Information” for information about voting by mail, telephone, internet, or in person at the Annual Meeting.

Along with the accompanying Proxy Statement, we are also sending you our Annual Report, which includes our fiscal 2014 financial statements. Most of you can elect to view future proxy statements and annual reports via the internet instead of receiving paper copies in the mail. Please refer to your proxy card and the section entitled “Electronic Delivery of Proxy Statement and Annual Report” on page 3 of the Proxy Statement for further information.

For the Board of Directors,


Todd E. Davies
Secretary

Moline, Illinois
January 14, 2015


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

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 and as such 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, 2014.


Meeting Agenda and Voting Recommendations

Item Voting Standard Vote Recommendation Page Reference
1 – Annual Election of Directors Majority of votes cast FOR each nominee 4
2 – Approval of Special Meeting Rights Bylaw Amendment Majority of votes present in person or by proxy FOR 20
3 – Advisory Vote on Executive Compensation Majority of votes present in person or by proxy FOR 21
4 – Amendment of John Deere Omnibus Equity and Incentive Plan Majority of votes present in person or by proxy FOR 57
5 – Re-Approval of John Deere Short-Term Incentive Bonus Plan Majority of votes present in person or by proxy FOR 62
6 – Ratification of Independent Registered Public Accounting Firm Majority of votes present in person or by proxy FOR 65



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Director Nominees

You are being asked to vote on the election of these 12 directors. Each member of our Board of Directors is elected annually by majority voting. All directors other than Mr. Allen are independent.

Committee Memberships*
Name Age Director Since Primary Occupation Independent?

E

ARC

CC CG PPOC
Samuel R. Allen 61 2009 Chairman & CEO, Deere & Company No C
Crandall C. Bowles 67 1990-1994;
since 1999
Chairman, The Springs Company Yes X X C
Vance D. Coffman 70 2004 Retired Chairman, Lockheed Martin Yes X C X
Charles O. Holliday, Jr. 66 2007 Chairman, National Academy
of Engineering
Yes

X

C

X
Dipak C. Jain 57 2002 Director, Sasin Graduate Institute
of Business Administration
Yes X   X
Michael O. Johanns 64 2015 Retired United States
Senator from Nebraska
Yes X X
Clayton M. Jones 65 2007 Retired Chairman, Rockwell Collins Yes     X   X
Joachim Milberg 71 2003 Chairman of the Supervisory
Board, BMW
Yes X X
Richard B. Myers 72 2006 Retired Chairman, Joint
Chiefs of Staff and
Retired General, United
States Air Force
Yes     X   X
Gregory R. Page 63 2013 Executive Chairman, Cargill Yes X X
Thomas H. Patrick 71 2000 Chairman, New Vernon Capital Yes

X

X

    C
Sherry M. Smith 53 2011 Former Executive VP and CFO, Supervalu Yes X X
*E = Executive; ARC = Audit Review; CC = Compensation; CG = Corporate Governance; PPOC = Pension Plan Oversight
X = Member; C = Chair

Corporate Governance Highlights

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

INDEPENDENCE BEST PRACTICES
11 of our 12 director nominees are independent
 
Independent Presiding Director has strong role with significant governance responsibilities
 
All Board committees that meet regularly are comprised wholly of independent directors
 
Independent directors meet regularly in executive session without management present
Directors may not stand for reelection after their 72nd birthdays absent rare circumstances approved by the Board
 
Recoupment policy for executive incentive compensation
 
Stock ownership requirements for directors and executives that are reviewed annually
 
Anti-hedging and anti-pledging policies
   

ACCOUNTABILITY

RISK OVERSIGHT

Annual election of all directors
 
Majority voting in uncontested elections
 
Annual performance self-evaluations by Board and committees
Board oversight of overall Company risk management infrastructure
 
Committee oversight of certain risks related to each committee’s areas of responsibility



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Fiscal 2014 Performance Highlights

Fiscal 2014 was a year of continued solid performance representing the second highest year of earnings in Deere’s history, exceeded only by fiscal 2013. The Company’s performance reflects weaker conditions in the agricultural equipment market, partially offset by improvements in the results for the Construction & Forestry and Financial Services operations. Overall, the Company continued executing on the business strategy and is positioned to earn solid returns for our stockholders throughout the business cycle.

Net Sales and Revenues (Millions)     
 

Worldwide net sales and revenues decreased 5% in 2014 compared with 2013 due to lower agriculture and turf equipment sales, partially offset by higher construction and forestry equipment sales and financial services revenues.

Net Income* (Millions)

    
 

Net income* declined 11% in 2014 due to lower shipment and production volumes, a less favorable product mix, the unfavorable effects of foreign exchange rates, and higher production costs mainly related to engine emissions programs, partially offset by price realization.

*Net income attributable to Deere & Company



Earnings Per Share (Diluted)

    
 

Net income* per share decreased by $.46 for 2014 compared with 2013. Dividends declared per share were $1.79 in 2012; $1.99 in 2013; and $2.22 in 2014.

*Net income attributable to Deere & Company

Deere Share Price (at October 31)

    
 

Deere & Company stock is traded on the New York Stock Exchange under the ticker symbol DE. Average number of common shares outstanding (basic) was 397.1 million in 2012; 385.3 million in 2013; and 363.0 million in 2014.



Cash Flow from Operating Activities (Millions)

Cash Flow
Dividends
Share Repurchases

In 2014, Deere repurchased 31.5 million shares, reducing average diluted shares outstanding by 6%, and, in May, increased the quarterly dividend on common stock by 18%, to $.60 a share. It was the 12th dividend increase since 2004.




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Fiscal 2014 Executive Compensation Highlights

Our compensation programs and practices are designed to create incentive opportunities that align with our stockholders’ long-term interests. We use consistent metrics that align with our business strategy and motivate our employees to create value for stockholders at all levels of the business cycle:

                       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 2014 compensation for the CEO and average named executive officer (NEO) as disclosed in the Summary Compensation Table of the Proxy Statement. It also shows the delivery of cash versus equity and the significant portion of compensation that is performance-based. The STI and MTI amounts for the CEO reflect a reduction of 25% below the amount the CEO would have otherwise earned based on previously-approved plan metrics and goals and actual performance results. See further explanation under “Pay for Performance Review and Analysis” in the Executive Summary of the Compensation Discussion & Analysis on page 25 of the Proxy Statement.

Summary
Compensation
Table Elements
Salary STI MTI Performance
Stock Units
Restricted Stock
Units and
Stock Options
Retirement and
Other
Compensation
Total
CEO
% of Total

$1,495,204
7%

$2,779,846
14%

$2,618,045
13%

$4,421,271
22%

$5,243,606
26%

$3,715,324
18%

$20,273,296
100%

Cash vs. Equity

   
   

Total Cash 34%

 

Total equity 48%

Other 18%

100%

Short-Term vs.
Long-Term

Short-Term 21%

Long-Term 79%

100%

Fixed vs.
Performance Based

Fixed 7%

Performance Based 75%

Other 18%

100%

 
Average NEO
% of Total

$604,665
12%

$1,019,283
20%

$994,022
20%

$784,662
15%

$930,683
18%

$763,129
15%

$5,096,444
100%

Cash vs. Equity

   
   

Total Cash 52%

 

Total equity 33%

Other 15%

100%

Short-Term vs.
Long-Term

Short-Term 32%

Long-Term 68%

100%

Fixed vs.
Performance Based

Fixed 12%

Performance Based 73%

Other 15%

100%


COMPENSATION ELEMENT: DESCRIPTION:

Salary

Annual base pay

STI

Short-term incentive; annual performance-based bonus

MTI

Mid-term incentive; performance-based bonus using 3-year results

Performance Stock Units

Performance-based equity using 3-year results

Restricted Stock Units and Stock Options

Other equity whose value increases with stock price

Retirement and Other Compensation

Retirement plan values, benefits, and miscellaneous compensation




Table of Contents

Proxy Statement

Table of Contents
Voting and Meeting Information 1
Annual Report 3
Householding Information 3
Electronic Delivery of Proxy Statement and Annual Report 3
Information not Incorporated into this Proxy Statement 3
Item 1 -
Election of Directors
4
Corporate Governance 11
Compensation of Directors 15
Security Ownership of Certain Beneficial Owners and Management 17
Review and Approval of Related Person Transactions 18
Section 16(a) Beneficial Ownership Reporting Compliance 19
Item 2 -
Approval of Bylaw Amendment to Permit Stockholders to Call Special Meetings
20
Item 3 -
Advisory Vote on Executive Compensation
21
Compensation Discussion & Analysis 22
Executive Summary 22
2014 Compensation Overview 25
Compensation Methodology and Process 28
Total Direct Compensation Elements 29
Total Indirect Compensation Elements 36
Risk Assessment of Compensation Policies and Practices 37
Compensation Committee Report 38
Executive Compensation Tables 39
Equity Compensation Plan Information 56
Item 4 -
Amendment of the John Deere Omnibus Equity and Incentive Plan
57
Item 5 -
Re-approval of the John Deere Short-Term Incentive Bonus Plan
62
Item 6 -
Ratification of Independent Registered Public Accounting Firm
65
Audit Review Committee Report 66
Other Matters 67
2016 Stockholder Proposals and Nominations 67
Cost of Solicitation 68




Table of Contents

Voting and Meeting Information

Why am I receiving this proxy statement?
The Deere & Company Board of Directors (the “Board”) has made available to you the Notice of Annual Meeting of Stockholders, this proxy statement (“Proxy Statement”), our annual report for the fiscal year ended October 31, 2014 (“Annual Report”), a proxy card, and a voter instruction card (collectively, “Proxy Solicitation Materials”) either on the internet or by mail in connection with the Deere & Company (“Deere,” the “Company,” “we,” or “us”) 2015 Annual Meeting of Stockholders (the “meeting” or “Annual Meeting”). You are receiving this Proxy Statement because you owned shares of Deere common stock at the close of business on December 31, 2014, which entitles you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This Proxy Statement describes the matters on which you are asked to vote and provides information about those matters so that you can make an informed decision.

The Proxy Solicitation Materials are being mailed to, or can be accessed online by, stockholders on or about January 14, 2015.

What is Notice and Access and why did Deere elect to use it?
We make the Proxy Solicitation Materials available to stockholders electronically via the internet under the Notice and Access regulations of the U.S. Securities and Exchange Commission (the “SEC”).

Most of our stockholders have received a Notice of Electronic Availability (“Notice”) in lieu of receiving a full set of Proxy Solicitation Materials in the mail. The Notice includes information on how to access and review the Proxy Solicitation Materials, and how to vote, via the internet. We believe this method of delivery will expedite distribution of Proxy Solicitation Materials to you while allowing us to conserve natural resources and reduce the costs of printing and distributing these materials.

Stockholders who received a Notice but would like to receive printed copies of the Proxy Solicitation Materials in the mail should follow the instructions in the Notice for requesting such materials.

How do I vote?
You can vote either in person at the Annual Meeting or by proxy without attending the meeting. We urge you to vote by proxy even if you plan on attending the Annual Meeting so that we will know as soon as possible whether enough votes will be present for us to hold the meeting. If you attend the meeting in person, you may vote at the meeting and your proxy will not be counted.

To vote your shares, follow the instructions in the Notice, voter instruction form, or proxy card. Telephone and internet voting is available to all registered and most beneficial holders.

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

– 

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 them. Please refer to the information forwarded by your holder of record to see the options available to you. If your shares are held in “street name” and you wish to vote them in person at the meeting, you must obtain a legal proxy from your record holder to do so.

The telephone and internet voting facilities for stockholders will close at 11:59 p.m. Eastern Standard Time on February 24, 2015. If you vote over the internet, you may incur costs, such as telephone and internet access charges, for which you will be responsible. The telephone and internet voting procedures are designed to authenticate stockholders and to allow you to confirm that your instructions have been properly recorded.

If you hold shares through one of our employee savings plans, your vote must be received by the plan administrator by February 20, 2015, or the shares represented by the card will not be voted.

Can I change my proxy vote?
Yes. At any time before your shares are voted by proxy at the meeting, you may change your vote by:

– 

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, 2014.

How many shares are entitled to vote?
There are 342,432,982 shares of Deere common stock outstanding as of December 31, 2014 and entitled to vote at the meeting. Each share is entitled to one vote. There is no cumulative voting.



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How many votes must be present to hold the meeting?
Under our Bylaws, a majority of the votes that can be cast must be present in person or by proxy to hold the Annual Meeting. Abstentions and shares represented by “broker non-votes,” as described below, will be counted as present and entitled to vote for purposes of determining a quorum.

What will I be voting on?

Election of directors (see page 4)
 
Approval of an amendment to Deere’s Bylaws to permit stockholders to call special meetings (see page 20)
 
Advisory resolution to approve executive compensation (“say-on-pay”) as disclosed in this Proxy Statement (see page 21)
 
Amendment of the John Deere Omnibus Equity and Incentive Plan (see page 57)
 
Re-approval of the John Deere Short-Term Incentive Bonus Plan (see page 62)
 
Ratification of the independent registered public accounting firm (see page 65)

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 make a recommendation to the Board on whether to accept or reject the resignation. The Board will act on the tendered resignation, taking this recommendation into account, and publicly disclose its decision and the rationale behind it within 90 days of the date the election results are certified. In the event the number of nominees exceeds the number of directors to be elected, the nominees who receive the most votes will be elected as directors.
 
For each of the other proposals to be voted on, the affirmative vote of a majority of the shares present in person or by proxy must be cast in favor of the proposal for it to pass.

What if I vote “abstain?”
If you vote to “abstain,” your shares will be counted as present for purposes of determining whether enough votes are present to hold the Annual Meeting. A vote to “abstain” on the election of directors will have no effect on the outcome. A vote to “abstain” on the other proposals will have the effect of a vote against the proposal.

What if I 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 can vote your shares on the ratification of the independent registered public accounting firm. However, your record holder cannot vote your shares without your specific instructions on the election of directors, the approval of the Company’s proposal to amend its Bylaws to permit stockholders to call special meetings, the advisory vote on executive compensation, the amendment of the John Deere Omnibus Equity and Incentive Plan, or the re-approval of the John Deere Short-Term Incentive Bonus Plan.

For the aforementioned proposals on which a broker cannot vote without your instruction, if you do not provide voting instructions to your broker, the votes will be considered “broker non-votes” and will not be counted in determining the outcome of the vote. “Broker non-votes” will be counted as present for purposes of determining whether enough votes are present to hold the Annual Meeting.

What happens if a nominee for director declines or is unable to accept election?
If you vote by proxy, and if unforeseen circumstances make it necessary for the Board to substitute another person for a nominee, we will vote your shares for that other person.

Is my vote confidential?
Yes. Your voting records will not be disclosed to us except:

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, 2014. 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, 2014 (the “Form 10-K”), by:

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

Deere & Company
Stockholder Relations
One John Deere Place
Moline, Illinois 61265-8098

You can also obtain a copy of our Form 10-K and other filings with the SEC from the SEC’s EDGAR database at www.sec.gov.

Householding Information

What is “householding?”
Either a single copy of the Proxy Solicitation Materials or the Notice, as applicable, will be sent to households at which two or more stockholders reside if they appear to be members of the same family unless one of the stockholders at that address notifies us that they wish to receive individual copies. This procedure reduces our printing costs and fees. Householding will not affect dividend check mailings in any way.

A number of brokerage firms have instituted householding. If you hold your shares in “street name,” please contact your bank, broker, or other holder of record to request information about householding.

If Proxy Solicitation Materials were delivered to an address that you share with another stockholder, we will promptly deliver a separate copy if you make a written or verbal request to Deere & Company Stockholder Relations, One John Deere Place, Moline, Illinois 61265-8098, (309) 765-4539.

How do I revoke my consent to the householding program?
You must revoke your consent to the householding program by contacting Broadridge Financial Solutions, Inc. (“Broadridge”), either by calling toll free at (800) 542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding program within 30 days of 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 25, 2015: The Proxy Statement and Annual Report are available on our website at www.deere.com/stock.

Information not Incorporated into this Proxy Statement

The information on our website (www.deere.com) is not, and shall not be deemed to be, a part of this Proxy Statement nor, by reference or otherwise (except to the extent we specifically incorporate it by reference), incorporated into any other filings we make with the SEC.



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Table of Contents

Item 1 – Election of Directors

Identification and Evaluation of Director Nominees
The Corporate Governance Committee of the Board is responsible for screening candidates and recommending director nominees to the full Board, which nominates the slate of directors for election at each annual meeting of stockholders and also elects directors to fill vacancies or newly-created seats on the Board. The Corporate Governance Committee considers candidates as recommended by stockholders, directors, officers, and third party search firms. Recommendations from stockholders are considered by the Corporate Governance Committee in accordance with the procedures described under the section of this Proxy Statement entitled “2016 Stockholder Proposals and Nominations.” The Corporate Governance Committee reviews all candidates in the same manner, regardless of the source of the recommendation.

The general criteria and framework for assessing director candidates are provided by our Corporate Governance Policies, which are described below in the “Corporate Governance” section of this Proxy Statement. In accordance with our Corporate Governance Policies, when screening candidates for nomination to the Board, the Corporate Governance Committee considers skills, experience, international versus domestic background, diversity, age, and legal and regulatory requirements in the context of an assessment of the perceived needs of the Board. The Corporate Governance Committee seeks to ensure that the Board is composed of members whose particular skills, qualifications, experiences, and attributes, when taken together, allow the Board to satisfy its oversight responsibilities effectively.

At a minimum, the Board assesses the diversity of its members and nominees on an annual basis during its performance evaluation by considering, among other factors, diversity in expertise, experience, background, ethnicity, and gender.

Directors of Deere must tender their resignation from the Board upon any material change in their occupation, career, or principal business activity, including retirement. Directors must retire from

the Board upon the first annual meeting of stockholders following their 72nd birthday, except in rare circumstances approved by the Board.

Director Nominees
Following the process described above, the Corporate Governance Committee has recommended, and the Board has nominated, each of Samuel R. Allen, Crandall C. Bowles, Vance D. Coffman, Charles O. Holliday, Jr., Dipak C. Jain, Michael O. Johanns, Clayton M. Jones, Joachim Milberg, Richard B. Myers, Gregory R. Page, Thomas H. Patrick, and Sherry M. Smith to be elected for terms expiring at the annual meeting in 2016. As required by the Company’s Certificate of Incorporation, all members of the Board are elected annually.

Michael O. Johanns was elected to the Board effective January 8, 2015 for a term expiring at the 2015 annual meeting.

As discussed above, a Deere director is expected to retire from the Board effective with the first annual meeting of stockholders following his or her 72nd birthday, except in rare circumstances approved by the Board. In nominating Richard B. Myers, the Board has determined that, in light of General Myers’ unique experiences and qualifications, it is in the Company’s best interests to waive the normal retirement policy and thus has exercised its discretion to allow him to stand for election at the 2015 annual meeting.

Each nominee’s age as of December 31, 2014, present and past professional positions (including positions with Deere, if applicable), current directorships at other companies, previous directorships at public companies and registered investment companies held during the past five or more years, and key qualifications, experiences, and attributes qualifying them to serve on the Company’s Board appear below.

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



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Table of Contents

Samuel R. Allen

Current and Past Positions:

Chairman and Chief Executive
Officer of Deere

Age: 61

Director since: 2009

Committees:
Executive (Chair)

– Chairman and Chief Executive Officer of Deere since February 2010

– President and Chief Executive Officer of Deere - August 2009 to February 2010

– President and Chief Operating Officer of Deere - June 2009 to August 2009

– President, Worldwide Construction & Forestry Division and John Deere Power Systems of Deere - March 2005 to June 2009

– President, Global Financial Services, John Deere Power Systems, and Corporate Human Resources of Deere - November 2003 to March 2005

Other Current Directorships:

– Whirlpool Corporation

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Allen should serve on 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:

Chairman of The Springs
Company

Age: 67

Director from: 1990 to 1994
and since 1999

Committees:
Corporate Governance (Chair)
Compensation
Executive

– Chairman of The Springs Company (asset management company) since August 2007

– Chairman of Springs Industries, Inc. (Springs Window Fashions) - January 2006 to June 2013

– Co-Chairman and Co-Chief Executive Officer of Springs Global US, Inc. and Springs Global Participacoes S.A. - January 2006 to June 2007

– Chairman and Chief Executive Officer of Springs Industries, Inc. - April 1998 to January 2006

Other Current Directorships:

– JPMorgan Chase & Co.

Other Previous Directorships:

– Sara Lee Corporation

Key Qualifications, Experiences, and Attributes:
In addition to her professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Ms. Bowles should serve on 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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Vance D. Coffman

Current and Past Positions:

Retired Chairman of
Lockheed Martin Corporation

Age: 70

Director since: 2004

Committees:
Compensation (Chair)
Corporate Governance
Executive

– Retired Chairman of Lockheed Martin Corporation (aerospace, defense, and information technology) since April 2005

– Chairman of Lockheed Martin Corporation - April 1998 to April 2005

– Chief Executive Officer of Lockheed Martin Corporation - August 1997 to August 2004

Other Current Directorships:

– 3M Company

– Amgen Inc.

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Coffman should serve on 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

   
Charles O. Holliday, Jr.

Current and Past Positions:

Chairman of the National
Academy of Engineering

Age: 66

Director since: 2007

Committees:
Audit Review (Chair)
Corporate Governance
Executive

Presiding Director
since 2009

– Chairman of the National Academy of Engineering (nonprofit engineering institution) since July 2012

– Chairman of Bank of America Corporation (banking, investing, and asset management) - April 2010 to October 2014

– Chairman from January 1999 to December 2009 and Chief Executive Officer from 1998 through 2008 of DuPont (agricultural, electronics, materials science, safety and security, and biotechnology)

Other Current Directorships:

– Bank of America Corporation

– CH2M HILL Companies, Ltd.

– Royal Dutch Shell plc

Other Previous Directorships:

– E.I. du Pont de Nemours and Company

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Holliday should serve on Deere’s Board of Directors: his leadership qualities developed from his experiences while serving as Chairman of the National Academy of Engineering, Chairman of Bank of America Corporation, and Chairman and Chief Executive Officer of DuPont, the breadth of his experiences in auditing, compensation, and other areas of oversight while serving as a member of the boards of directors of other global corporations, and his subject matter knowledge in the areas of engineering, finance, business development, and corporate responsibility

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Dipak C. Jain

Current and Past Positions:

Director, Sasin Graduate
Institute of Business
Administration

Age: 57

Director since: 2002

Committees:
Audit Review
Pension Plan Oversight

– Director, Sasin Graduate Institute of Business Administration (international graduate business school) since August 2014

– Chaired Professor of Marketing, INSEAD - March 2013 to August 2014

– Dean, INSEAD - May 2011 to March 2013

– Dean, Kellogg School of Management, Northwestern University, Evanston, Illinois - July 2001 to September 2009

– Associate Dean for Academic Affairs, Kellogg School of Management, Northwestern University - 1996 to 2001

– Sandy and Morton Goldman Professor of Entrepreneurial Studies and Professor of Marketing, Kellogg School of Management, Northwestern University - 1994 to 2001 and since 2009

Other Current Directorships:

– Northern Trust Corporation

– Reliance Industries Limited, India

– Global Logistics Properties Limited, Singapore

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Jain should serve on 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 adviser for the Prime Minister of Thailand, the breadth of his experiences in compensation, corporate governance, and other areas of oversight while serving as a member of the boards of directors of other global corporations, and his subject matter knowledge in the areas of marketing, global product diffusion, and new product forecasting and development


Michael O. Johanns

Current and Past Positions:

Retired United States
Senator from Nebraska

Age: 64

Director since: 2015

Committees:
Corporate Governance
Pension Plan Oversight

– Retired United States Senator since January 2015

– United States Senator from Nebraska - January 2009 to January 2015

– United States Secretary of Agriculture - January 2005 to September 2007

Key Qualifications, Experiences, and Attributes:
In addition to his professional background, the following qualifications led the Board to conclude that Mr. Johanns should serve on 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

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Clayton M. Jones

Current and Past Positions:

Retired Chairman of
Rockwell Collins, Inc.

Age: 65

Director since: 2007

Committees:
Compensation
Pension Plan Oversight

– Retired Chairman of Rockwell Collins, Inc. (aviation electronics and communications) since July 2014

– Chairman of Rockwell Collins, Inc. - July 2013 to July 2014

– Chairman and Chief Executive Officer of Rockwell Collins, Inc. - September 2012 to July 2013

– Chairman, President, and Chief Executive Officer of Rockwell Collins, Inc. - June 2002 to September 2012

Other Current Directorships:

– Cardinal Health, Inc.

Other Previous Directorships:

– Rockwell Collins, Inc.

– Unisys Corporation

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Jones should serve on 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

   
Joachim Milberg

Current and Past Positions:

Chairman of the Supervisory
Board of Bayerische Motoren
Werke (BMW) AG

Age: 71

Director since: 2003

Committees:
Audit Review
Corporate Governance

– Chairman of the Supervisory Board of Bayerische Motoren Werke (BMW) AG (motor vehicles) since May 2004

– Retired Chief Executive Officer of BMW AG since May 2002

– Chairman of the Board of Management and Chief Executive Officer of BMW AG - February 1999 to May 2002

Other Current Directorships:

– Bertelsmann AG

– BMW AG

Other Previous Directorships:

– Festo AG

– SAP AG

– ZF Friedrichshafen AG

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Milberg should serve on Deere’s Board of Directors: his leadership qualities developed from his experiences while serving as Chief Executive Officer of BMW AG and Chairman of BMW AG’s Board of Management and Supervisory Board, the breadth of his global experiences from his service as a member of the boards of directors of non-U.S.-based corporations, and his subject matter knowledge in the areas of engineering, production automation, and robotic technology

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Richard B. Myers

Current and Past Positions:

Retired Chairman of the
Joint Chiefs of Staff and
Retired General of the
United States Air Force

Age: 72

Director since: 2006

Committees:
Compensation
Pension Plan Oversight

– Retired Chairman of the Joint Chiefs of Staff (principal military advisor to the President, the Secretary of Defense, and the National Security Council) and Retired General of the United States Air Force since September 2005

– Colin L. Powell Chair for National Security Leadership, Character, and Ethics at the National Defense University since March 2006

– Foundation Professor of Military History and Leadership at Kansas State University since February 2006

– Chairman of the Joint Chiefs of Staff and General of the United States Air Force - October 2001 to September 2005

Other Current Directorships:

– Aon plc

– Northrop Grumman Corporation

– United Technologies Corporation

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that General Myers should serve on Deere’s Board of Directors: his leadership qualities developed from his service as the 15th Chairman of the Joint Chiefs of Staff, the breadth of his experiences in compliance, finance, and other areas of oversight while serving as a member of the boards of directors of other global corporations, and his subject matter knowledge in the areas of crisis management, national security, and international geopolitics

   
Gregory R. Page

Current and Past Positions:

Executive Chairman of Cargill,
Incorporated

Age: 63

Director since: 2013

Committees:
Audit Review
Corporate Governance

– Executive Chairman of Cargill, Incorporated (agricultural, food, financial, and industrial products and services) since December 2013

– Chairman and Chief Executive Officer of Cargill, Incorporated – 2011 to December 2013

– Chairman, Chief Executive Officer, and President of Cargill, Incorporated - 2007 to 2011

– President and Chief Operating Officer of Cargill, Incorporated - 2000 to 2007

Other Current Directorships:

– Carlson

– Eaton Corporation plc

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Page should serve on 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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Thomas H. Patrick

Current and Past Positions:

Chairman of New Vernon
Capital, LLC

Age: 71

Director since: 2000

Committees:
Pension Plan Oversight (Chair)
Audit Review
Executive

– Chairman of New Vernon Capital, LLC (private equity fund) since 2003

– Executive Vice Chairman of Merrill Lynch & Co., Inc. - November 2002 to July 2003

– Executive Vice President and Chief Financial Officer of Merrill Lynch & Co., Inc. - February 2000 to November 2002

Other Current Directorships:

– Baldwin & Lyons, Inc.

Other Previous Directorships:

– Computer Sciences Corporation

Key Qualifications, Experiences, and Attributes:
In addition to his professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Mr. Patrick should serve on Deere’s Board of Directors: his leadership qualities developed from his service as an executive officer of Merrill Lynch & Co., Inc., the breadth of his experiences in auditing, corporate governance, and other areas of oversight while serving as a member of the boards of directors of other global corporations, and his subject matter knowledge in the areas of finance, economics, and asset management


Sherry M. Smith

Current and Past Positions:

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

Age: 53

Director since: 2011

Committees:
Audit Review
Pension Plan Oversight

– Executive Vice President and Chief Financial Officer of Supervalu Inc. (retail and wholesale grocery and retail general merchandise products) - December 2010 to August 2013

– Senior Vice President, Finance of Supervalu Inc. - 2005 to 2010

– Senior Vice President, Finance and Treasurer of Supervalu Inc. - 2002 to 2005

Other Current Directorships:

– Tuesday Morning Corporation

Key Qualifications, Experiences, and Attributes:
In addition to her professional background and prior Deere Board experience, the following qualifications led the Board to conclude that Ms. Smith should serve on 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, her family farming background, and her subject matter knowledge in the areas of finance, accounting, and food and supply chain management

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Corporate Governance

Our Values
At Deere, our actions are guided by our core values of integrity, quality, commitment, and innovation. We strive to live up to these values in everything we do, not just because it is good business, but because it is the right thing to do. We are committed to strong corporate governance as a means of upholding these values and ensuring that we are accountable to our stockholders.

In recognition of the importance of corporate governance as a component of providing stockholder value, our Board of Directors has adopted Corporate Governance Policies for the Company. Our Corporate Governance Policies are periodically reviewed and revised as appropriate by the Board to ensure that the policies reflect the 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 Governance Policies
 
Our Code of Business Conduct
 
Our Guiding Principles  
Charters for our Board Committees
 
Our Code of Ethics
 
Our Supplier Code of Conduct 

Director Independence
As part of our Corporate Governance Policies, the Board has adopted categorical standards to assist the Board in evaluating the independence of each director. The categorical standards are intended to assist the Board in determining whether or not certain relationships between our directors and Deere or its affiliates (either directly or indirectly as a partner, stockholder, officer, director, trustee, or employee of an organization that has a relationship with Deere) are “material relationships” for purposes of the New York Stock Exchange (“NYSE”) independence standards. The categorical standards establish thresholds at which such relationships are deemed to not be material. The categorical standards are attached as Appendix A to this Proxy Statement and are included as part of the Corporate Governance Policies referenced above. A copy may also be obtained upon request to the Deere & Company Stockholder Relations Department. In addition, each director’s independence is evaluated under our Related Person Transactions Approval Policy, as discussed in the “Review

and Approval of Related Persons Transactions” section below. The independence standards set forth in our Corporate Governance Policies meet or exceed the independence requirements of the NYSE.

In November 2014, we reviewed the independence of each then-sitting director and in December 2014 we reviewed the independence of Mr. Johanns, in each case applying the independence standards set forth in our Corporate Governance Policies. The review considered relationships and transactions between each subject (and his or her immediate family and affiliates) and each of the following: Deere, Deere’s management, and Deere’s independent registered public accounting firm.

Based on this review, at the December 2014 regular Board meeting (and, in the case of Mr. Johanns, at a January 7, 2015 special meeting of the Board), the Board affirmatively determined that no director other than Mr. Allen had a material relationship with Deere and its affiliates and that each director other than Mr. Allen is independent as defined in our Corporate Governance Policies and the listing standards of the NYSE. Mr. Allen is not considered to be an independent director because of his employment relationship with Deere.

Board Leadership Structure
The Chairman of the Board also serves as our Chief Executive Officer. The Board believes that combining the Chairman and Chief Executive Officer roles is the most appropriate structure for the Company at this time because the Board believes that: (1) this structure has a longstanding history of serving our stockholders well, through many economic cycles, business challenges, and the succession of multiple leaders; (2) its governance processes, as reflected in the Corporate Governance Policies and Board committee charters, preserve Board independence by ensuring independent discussion among directors and independent evaluation of, and communication with, members of senior management; and (3) the enhanced role of the independent Presiding Director strengthens the Company’s governance structure such that separation of the Chairman and Chief Executive Officer roles is unnecessary at this time.

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


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The Presiding Director is elected by a majority of the independent directors upon a recommendation from the Corporate Governance Committee. The Presiding Director is appointed for a one-year term beginning upon election and expiring upon the selection of a successor Presiding Director.

The Board has determined that the Presiding Director should have the following duties and responsibilities:

Preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
 
Serve as liaison between the Chairman and the independent directors;
 
In consultation with the Chairman, review and approve the schedule of meetings of the Board, the proposed agendas, and the materials to be sent to the Board;
 
Call meetings of the independent directors when necessary and appropriate; and
 
Remain available for consultation and direct communication with Deere’s stockholders.

The Board believes that the role of the Presiding Director furthers 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 worldwide headquarters in order to provide our directors with first-hand perspectives on different aspects of our business. The Board met five times during fiscal 2014.

Directors are expected to attend Board meetings, meetings of committees on which they serve, and stockholder meetings. Directors are expected to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. During fiscal 2014, all directors attended 75% or more of the meetings of the Board and committees on which they served. Overall attendance at such meetings was approximately 96%. All directors then in office attended the Annual Meeting of Stockholders in February 2014.

Each Board meeting normally begins or ends with a session between the CEO and the independent directors. This provides a platform for discussions outside the presence of the non-Board management attendees, as well as an opportunity for the independent directors to go into executive session (without the CEO) if requested by any director. The independent directors may meet in executive session, without the CEO, at any time, and such non-management executive sessions are scheduled (and in practice typically occur) at each regularly scheduled Board meeting. The Presiding Director presides over these executive sessions.

Board Committees
The Board has delegated some of its authority to the following five committees of the Board: the Executive Committee, the Audit Review Committee, the Compensation Committee, the Corporate Governance Committee, and the Pension Plan Oversight Committee. Each such committee has adopted a charter that complies with current NYSE rules relating to corporate governance matters. Copies of the committee charters are available at www.deere.com/corpgov, and may also be obtained upon request to the Deere & Company Stockholder Relations Department. Each committee (other than the Executive Committee, of which Mr. Allen serves as chair) is comprised solely of independent directors.



Executive Committee

2014 Meetings: 0

Members:
                                             
Samuel R. Allen (Chair)
Crandall C. Bowles
Vance D. Coffman
Charles O. Holliday, Jr.
Thomas H. Patrick

Acts on behalf of the Board on matters requiring Board action between meetings of the full Board
 
Authority to act on certain significant matters limited by our Bylaws and applicable law
 
All members, other than Mr. Allen, are independent

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Audit Review
Committee

2014 Meetings: 5

Members:
                                             
Charles O. Holliday, Jr. (Chair)
Dipak C. Jain
Joachim Milberg
Gregory R. Page
Thomas H. Patrick
Sherry M. Smith

Oversees the independent registered public accounting 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
 
Reports its activities to the full Board
 
All members have been determined to be independent and financially literate under current NYSE listing standards
 
The Board has also determined that Mr. Holliday, Mr. Page, Mr. Patrick, and Ms. Smith are “audit committee financial experts” as defined by the SEC and that each has accounting or related financial management expertise as required by NYSE listing standards

Compensation
Committee

2014 Meetings: 5

Members:
                                             
Vance D. Coffman (Chair)
Crandall C. Bowles
Clayton M. Jones
Richard B. Myers

Makes recommendations to the Board regarding incentive and equity-based compensation plans
 
Evaluates and (except for the CEO) approves the compensation of our executive officers, including reviewing and approving corporate performance goals and objectives related to the compensation of our executive officers
 
Evaluates and approves compensation granted pursuant to the 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

Corporate Governance
Committee

2014 Meetings: 4

Members:
                                             
Crandall C. Bowles (Chair)
Vance D. Coffman
Charles O. Holliday, Jr.
Michael O. Johanns
Joachim Milberg
Gregory R. Page

Monitors corporate governance policies and oversees our Center for Global Business Conduct
 
Reviews senior management succession plans and identifies and recommends to the Board individuals to be nominated as directors
 
Makes recommendations concerning the size, composition, committee structure, and fees for the Board
 
Reviews and reports to the Board on the performance and effectiveness of the Board and the Corporate Governance Committee 
 
Oversees the evaluation of our management
 
Reports its activities to the full Board 
 
All members have been determined to be independent under current NYSE listing standards

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Pension Plan Oversight
Committee
Oversees our pension plans
 
Establishes corporate policy with respect to pension plans
 
Formulates Company pension funding policies
 
Is authorized to make substantive amendments and modifications to the pension plans
 
Reports its activities to the full Board
 
All members have been determined to be independent under current NYSE listing standards

2014 Meetings: 4

Members:
                                             
Thomas H. Patrick (Chair)
Dipak C. Jain
Michael O. Johanns
Clayton M. Jones
Richard B. Myers
Sherry M. Smith


Board Oversight of Risk Management
The Board believes that strong and effective internal controls and risk management processes are essential elements in achieving long-term stockholder value. The Board, directly and through its committees, is responsible for overseeing risks potentially affecting the Company.

Risk Management Approach
The Company maintains a structured risk management approach to enable the achievement of its strategic business objectives. Under this approach, risks are identified and classified into specified categories and escalated as necessary within a well-defined internal risk management structure, which is administered at a management level by a Management Risk Committee consisting of the CEO and his direct reports. The Management Risk Committee,

in turn, is responsible for providing periodic reports to the Board regarding the Company’s risk management processes and reviewing with the Board high-priority areas of enterprise risk. Dedicated risk management sessions typically take place at the regularly-scheduled Board meetings each February and August, and risk management topics are also discussed as necessary at other Board and committee meetings.

Board and Committee Risk Oversight Responsibilities
Each Board committee is responsible for oversight of risk categories related to the committee’s specific function, while the full Board exercises ultimate responsibility for overseeing the risk management function as a whole. The respective areas of risk oversight exercised by the Board and its committees are as follows:



Board/Committee Primary Areas of Risk Oversight
Full Board
Oversees overall Company risk management procedures and regularly receives and evaluates reports and presentations from the Chairs of the Audit Review, Compensation, Corporate Governance, and Pension Plan Oversight Committees on risk-related matters falling within each respective committee’s oversight responsibilities
 
Audit Review Committee
Oversees financial, operational, strategic, and hazard-related risks by regularly reviewing reports and presentations given by management, including our Senior Vice President and General Counsel, Senior Vice President and Chief Financial Officer, and Vice President, Internal Audit, as well as other operational Company personnel
 
Regularly reviews our risk management practices and risk-related policies (for example, the Company’s Code of Business Conduct, information security policies, risk management and insurance portfolio, and legal and regulatory reviews) and evaluates potential risks related to internal control over financial reporting
 
Compensation Committee
Oversees potential risks related to the design and administration of our compensation plans, policies, and programs, including our performance-based compensation programs, to promote appropriate incentives which do not encourage unnecessary and excessive risk-taking by our executive officers or other employees

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Board/Committee Primary Areas of Risk Oversight
Corporate Governance Committee
Oversees potential risks related to our governance practices by, among other things, reviewing succession plans and performance evaluations of the Board and CEO, monitoring legal developments and trends regarding corporate governance practices, and evaluating potential related person transactions
 
Monitors risks relating to environmental factors as well as product safety/compliance
 
Pension Plan Oversight Committee
Oversees potential risks related to funding our U.S. qualified pension plans (other than the defined contribution savings and investment plans) and monitoring compliance with applicable laws and Company policies and objectives

Political Contributions
In order to promote transparency and good corporate citizenship, we have since 2012 provided voluntary disclosure relating to the political contribution activities of the Company and its political action committee. This information is publicly available at www.deere.com/politicalcontributions.

Communication with the Board
If you wish to communicate with the Board you may send correspondence to: Corporate Secretary, Deere & Company, One John Deere Place, Moline, Illinois 61265-8098.

The Corporate Secretary will submit your correspondence to the Board or the appropriate committee, as applicable.

You may communicate directly with the Presiding Director of the Board by sending correspondence to: Presiding Director, Board of Directors, Deere & Company, Department A, One John Deere Place, Moline, Illinois 61265-8098.

Compensation of Directors

We pay nonemployee directors an annual retainer along with additional fees to committee chairpersons and the Presiding Director as described below. We do not pay any other committee retainers or meeting fees. In addition, nonemployee directors are awarded restricted stock units (“RSUs”) after each annual meeting during their service as directors. A person who becomes a nonemployee director between annual meetings, or who serves a partial term, receives a prorated retainer and a prorated RSU award. We also reimburse directors for expenses related to meeting attendance. Directors who are employees receive no additional compensation for serving on the Board or its committees. Compensation for nonemployee directors is reviewed annually by

the Corporate Governance Committee. No changes to nonemployee director compensation were approved in fiscal 2014. The following chart describes amounts we pay and the value of awards we grant to nonemployee directors:

Date Approved by Corporate
Governance Committee: August 2013
Effective Date of Annual Amounts:       January 2014
Retainer   $120,000
Equity Award $120,000
Presiding Director Fee   $20,000
Audit Review Committee Chair Fee   $20,000
Compensation Committee Chair Fee   $20,000
Corporate Governance Committee Chair Fee $15,000
Pension Plan Oversight Committee Chair Fee   $10,000

Under our Nonemployee Director Deferred Compensation Plan, directors may choose to defer some or all of their annual retainers until their retirement as a director. A director may elect to have these deferrals invested in either an interest-bearing account or an account with a return equivalent to an investment in Deere common stock.

Prior to fiscal 2008, nonemployee directors received the equity award in the form of restricted shares. Beginning in fiscal 2008, directors receive the equity award in the form of RSUs. In fiscal 2012, the Board adopted stock ownership guidelines requiring each nonemployee director to own Company common stock equivalent in value to at least three times the 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



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the Board in January 2015, each nonemployee director has achieved stockholdings in excess of the applicable multiple as of the date of this Proxy Statement. Additionally, we require nonemployee directors to hold all equity awards until the occurrence of one of the following triggering events: retirement from the Board, permanent and total disability, death, or a change in control of Deere combined with a qualifying termination of the director. The directors are prohibited from selling, gifting, or otherwise disposing of their equity awards prior to a triggering event. While the restrictions are in effect, the nonemployee directors may vote the restricted shares (but not shares underlying RSUs) and receive dividends on the restricted shares and dividend equivalents on the RSUs.

In fiscal 2014, we provided the following compensation to our nonemployee directors:

Fiscal 2014 Director Compensation Table
  
Nonqualified
Fees Earned Deferred
or Paid in Stock Compensation
Name*    Cash (1)    Awards (2)    Earnings (3)    Total
Crandall C. Bowles   $ 130,000   $ 119,972    $    $ 249,972
Vance D. Coffman $ 135,000 $ 119,972 $ $ 254,972
Charles O. Holliday, Jr. $ 155,000 $ 119,972 $ $ 274,972
Dipak C. Jain $ 115,000 $ 119,972 $ 12,697 $ 247,669
Clayton M. Jones   $ 115,000   $ 119,972   $ $ 234,972
Joachim Milberg $ 115,000 $ 119,972 $   $ 234,972
Richard B. Myers   $ 115,000   $ 119,972 $   $ 234,972
Gregory R. Page $ 115,000 $ 119,972   $ 571 $ 235,543
Thomas H. Patrick $ 125,000 $ 119,972 $ $ 244,972
Aulana L. Peters (4) $ 25,000 $ $ $ 25,000
Sherry M. Smith $ 115,000 $ 119,972 $ 1,441 $ 236,413

* Michael O. Johanns did not receive any compensation in fiscal 2014 and as such is not included in this table.

(1) All fees earned in fiscal 2014 for services as a director, including Committee Chairperson and Presiding Director fees, whether paid in cash or deferred under the Nonemployee Director Deferred Compensation Plan, are included in this column.

(2) Represents the aggregate grant date fair value of RSUs computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation, and does not correspond to the actual value that will be realized by the nonemployee directors. The values in this column exclude the effect of estimated forfeitures. All grants are fully expensed in the fiscal year granted based on the grant price (the average of the high and low price for Deere common stock on the grant date). For fiscal

2014, the grant date was March 5, 2014, and the grant price was $86.56. The nonemployee director grant date is seven calendar days after the Annual Meeting. The assumptions made in valuing the RSUs reported in this column are discussed in Note 24, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended October 31, 2014. The following table lists the cumulative restricted shares and RSUs held by the nonemployee directors as of October 31, 2014:

  Restricted
Name*     Stock     RSUs
Crandall C. Bowles 19,916 11,920
Vance D. Coffman 6,532 11,920
Charles O. Holliday, Jr.   1,160 11,920
Dipak C. Jain 13,234   11,920
Clayton M. Jones 824 11,920
Joachim Milberg 10,708 11,920
Richard B. Myers 3,176 11,920
Gregory R. Page 2,372
Thomas H. Patrick 19,252 11,920
Sherry M. Smith 4,522

* Neither Michael O. Johanns nor Aulana L. Peters held any restricted shares or RSUs as of October 31, 2014 and as such neither is included in this table.

(3) Directors are eligible to participate in the Nonemployee Director Deferred Compensation Plan. Under this plan, participants may defer part or all of their annual cash compensation. For these deferrals, two investment choices are available:

–  an interest-bearing alternative which pays interest at the end of each calendar quarter based on the Moody’s “A” rated Corporate Bond Rate for amounts deferred during or after fiscal 2010. For amounts deferred prior to fiscal 2010, the interest rate is based on the prime rate as determined by the Federal Reserve Statistical Release plus 2%; or
 
an equity alternative denominated in units of Deere common stock which earns additional shares each quarter at the quarterly dividend rate on Deere common stock.

Amounts included in this column represent the above-market earnings on any amounts deferred under the Nonemployee Director Deferred Compensation Plan. Above-market earnings represent the difference between the interest rate used to calculate earnings under the applicable investment choice and 120% of the applicable federal long-term rate.

(4) Ms. Peters retired from the Board effective as of the 2014 annual meeting (February 26, 2014). Her compensation amounts reflect a prorated retainer fee covering the portion of fiscal 2014 during which she served as a director.




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Security Ownership of Certain
Beneficial Owners and Management

The following table shows the number of shares of Deere common stock beneficially owned as of December 31, 2014 (unless otherwise indicated) by:

–  each person, who, to our knowledge, beneficially owns more than 5% of our common stock;
 
each individual who was serving as a nonemployee director as of December 31, 2014;
 
each of the named executive officers listed in the Summary Compensation Table of this Proxy Statement; and
 
all individuals who served as directors or executive officers on December 31, 2014, as a group.

A beneficial owner of stock is a person who has sole or shared voting power, meaning the power to control voting decisions, or sole or shared investment power, meaning the power to cause

the sale or other disposition of the stock (represented in column (a) below). A person is also considered the beneficial owner of shares to which that person has the right to acquire beneficial ownership (within the meaning of the preceding sentence) within 60 days. For this reason, the following table includes exercisable stock options (represented in column (b) below) and options, restricted shares, and RSUs that would become exercisable or be settled within 60 days of December 31, 2014 at the discretion of an individual identified in the table (for example, upon retirement) (represented in column (c) below).

All individuals listed in the table have sole voting and investment power over the shares unless otherwise noted. As of December 31, 2014, Deere had no preferred stock issued or outstanding.



Shares Options, Restricted
Beneficially Shares, and RSUs
Owned Exercisable Available Percent of
And Held Options Within 60 Days Shares
      (a)       (b)       (c)       Total       Outstanding
Greater Than 5% Owners
Cascade Investment, L.L.C. (1)
2365 Carillon Point
Kirkland, WA 98033 30,008,573 30,008,573 8.8%
Vanguard Group, Inc. (2)
P.O. Box 2600 V26
Valley Forge, PA 19482 20,488,439 20,488,439 6.0%
 
Non-Employee Directors (3)
Crandall C. Bowles 2,800 31,836 34,636 *
Vance D. Coffman   18,452 18,452 *
Charles O. Holliday, Jr.   13,080 13,080   *
Dipak C. Jain 25,154   25,154   *
Clayton M. Jones 12,744 12,744 *
Joachim Milberg   22,628 22,628 *
Richard B. Myers 15,096 15,096 *
Gregory R. Page 3,750 2,372 6,122 *
Thomas H. Patrick 31,172 31,172 *
Sherry M. Smith 4,522 4,522 *
 
Named Executive Officers (4)
Samuel R. Allen 113,579 739,412 124,135 977,126 *
James M. Field 21,735 186,387 208,122 *
Jean H. Gilles 21,090 128,346 23,062 172,498 *
Rajesh Kalathur 4,358 76,324 80,682 *
Michael J. Mack, Jr. 36,584 91,367 22,238 150,189 *
 
All directors and executive officers as a group (19 persons) (5)   247,880    1,516,102    368,597 2,132,579 *

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

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(1) The ownership information for Cascade Investment, L.L.C. (“Cascade”) is based on information supplied by Cascade in a statement on Schedule 13D filed with the SEC on December 18, 2013. All shares of common stock held by Cascade may be deemed beneficially owned by William H. Gates III as the sole member of Cascade. Cascade has sole voting power and sole dispositive power over 30,008,573 shares owned.

(2) The ownership information for Vanguard Group, Inc. (“Vanguard”) is based on information supplied by Vanguard in a statement on Form 13F filed with the SEC for the period ended September 30, 2014. Vanguard holds the shares in its capacity as a registered investment advisor on behalf of numerous investment advisory clients, none of which is known to own more than five percent of Deere’s shares. Vanguard has sole voting power over 589,541 shares owned and sole dispositive power over 19,925,659 shares owned.

(3) The table includes restricted shares and RSUs awarded to directors under the Deere & Company Nonemployee Director Stock Ownership Plan (see footnote (2) to the Fiscal 2014 Director Compensation Table). Restricted shares and RSUs may not be transferred prior to retirement as a director. RSUs are payable only in Deere common stock following retirement and have no voting rights until they are settled in shares of stock. In addition, directors own the following number of deferred stock units, which are payable solely in cash under the terms of the Nonemployee Director Deferred Compensation Plan:

Director       Deferred Units
Crandall C. Bowles 36,240
Vance D. Coffman 21,262
Dipak C. Jain 5,257
Gregory R. Page   690
Thomas H. Patrick 13,916

(4) See the Outstanding Equity Awards at Fiscal 2014 Year-End table for additional information regarding equity ownership for NEOs as of October 31, 2014.

(5) The number of shares shown for all directors and executive officers as a group includes 121,839 shares owned jointly with family members over which the directors and executive officers share voting and investment power.

Review and Approval of Related
Person Transactions

The Board has adopted a Related Person Transactions Approval Policy (the “Related Person Policy”). Under the Related Person Policy, our Corporate Governance Committee is responsible for reviewing, approving, and ratifying all related person transactions.

The following are considered to be related persons under the Related Person Policy:

(1) executive officers and directors of Deere;

(2) any holder of 5% or more of Deere’s voting securities; or

(3) immediate family members of anyone in categories (1) or (2).

A related person transaction is a transaction, relationship, or arrangement between a related person and Deere where:

–  the amount involved exceeds $120,000; and
  
any related person (as defined above) has or will have a direct or indirect material interest in the transaction.

Each year, our directors and executive officers complete annual questionnaires designed to elicit information about potential related person transactions. Deere’s directors and officers must promptly advise our Corporate Secretary if there are any changes to the information they previously provided. After consultation with our General Counsel, management, and outside counsel, as appropriate, our Corporate Secretary determines whether the transaction is reasonably likely to be a related person transaction. Transactions deemed reasonably likely to constitute related person transactions are submitted to the Corporate Governance Committee for consideration at its next meeting. If action is required prior to the next meeting, the transaction is submitted to the Chairperson of the Corporate Governance Committee (the “Chairperson”) and the 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 is an employee in the Company’s Financial Services division and is the brother of Michael J. Mack, Jr., the Group President of that division. Patrick E. Mack does not directly report to Michael J. Mack, Jr. During fiscal 2014, Patrick E. Mack received $770,245 in direct cash compensation, along with stock options valued at $198,000 at the time of grant. Patrick E. Mack’s compensation is consistent with that of other employees at his grade level. Pursuant to the Related Person Policy, this transaction was approved by the Corporate Governance Committee after determining that it is not inconsistent with our Code of Ethics or Code of Business Conduct.



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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 during 2014 all Section 16(a) filing requirements applicable to our insiders were complied with except for the following: due to a miscommunication, a statement of change in beneficial ownership on Form 4 for Gregory R. Page was not timely filed for his purchase of Deere common stock on the open market on August 22, 2014. The Form 4 for Mr. Page was filed on November 4, 2014.



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Item 2 – Approval of Bylaw
Amendment to Permit Stockholders
to Call Special Meetings

Summary of the Proposal
The Board unanimously recommends that the Company’s stockholders approve an amendment to the Company’s Bylaws (the “Special Meeting Bylaw Amendment”) that would add a right permitting holders of record of at least twenty-five percent (25%) of the voting power of the Company’s outstanding capital stock who have held such shares in a net long position continuously for at least one year to call a special meeting of stockholders by written request filed with the Corporate Secretary and otherwise in accordance with the Bylaws. Shares subject to hedging transactions will not be included toward satisfying the 25% threshold. Currently, the Company’s Bylaws provide that only the Chairman of the Board or the Board may call a special meeting of stockholders.

The presentation of this proposal reflects the Board’s belief that granting such a right to stockholders is good corporate governance. In establishing an ownership threshold of at least 25% in order for stockholders to request a special meeting, the Board believes it is striking an appropriate balance between enhancing the rights of stockholders and avoiding the costs and distractions associated with the calling of special meetings, unless a significant group of stockholders believes that the calling of a special meeting of stockholders is warranted. Organizing and preparing for a special meeting involves a significant commitment of time and focus by management, and imposes substantial legal, administrative, and distribution costs. Accordingly, the Board believes that special meetings should be held only to cover special or extraordinary events, when fiduciary, strategic, or other similar considerations dictate that the matter be addressed on an expeditious basis, rather than waiting until the next annual meeting. A 25% threshold also minimizes the risk of frequent meeting requests, potentially covering agenda items relevant to particular constituencies as opposed to stockholders generally. In addition, the net long position and one year holding requirements are intended to protect against a special meeting being called by stockholders whose interests are transitory or otherwise not aligned with the interests of other stockholders in the long-term success of the Company. We therefore believe that a threshold of 25% based on net long ownership with a one year holding period is appropriate and reflects the best interests of stockholders.

The Special Meeting Bylaw Amendment contains procedural and informational requirements that are intended to facilitate the Company and stockholders receiving basic information about the meeting and to ensure, among other things, that the special meeting is not duplicative of matters that were or, in the near term, could be covered at an annual meeting. In particular, the Special Meeting Bylaw Amendment provides, among other things, that: no business may be conducted at the special meeting except as set

forth in the Company’s notice of meeting; no stockholder special meeting request may be made during the period commencing 120 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the earlier of the date of the next annual meeting or 30 days after the first anniversary of the previous annual meeting; a special meeting request cannot cover business substantially similar to what was covered at an annual or special meeting held not more than 12 months, or in the case of director elections 120 days, before the special meeting request was received by the Secretary; a special meeting will not be held if similar business is to be covered at an annual or special meeting called by the Board to be held within 120 days after the special meeting request is received by the Corporate Secretary; any shares beneficially owned or held of record as of the date of the request and sold by the requesting holder prior to the meeting will be treated as a revocation of the request to the extent of the shares sold; and the requesting stockholder’s notice must include information (as specified in the Special Meeting Bylaw Amendment) as to the business proposed to be conducted and as to each director nominee (if applicable). Only those stockholders soliciting requests for a special meeting and their affiliates must provide the additional information that would otherwise be required to be provided by stockholders seeking to propose business or nominate directors at an annual or special meeting of stockholders, including information with respect to any material interest of such stockholder in the proposed business and any information required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies with respect to the proposed business (or the election of directors, if applicable).

This description of the Special Meeting Bylaw Amendment is a summary and is qualified by the complete text of Article II, Section 4 of the Bylaws, as proposed to be amended, which is set forth in Appendix B to this Proxy Statement.

Upon approval of the Company’s stockholders, the Special Meeting Bylaw Amendment will become effective.

Vote Required
The affirmative vote of a majority of the shares present in person or by proxy is needed to approve the Special Meeting Bylaw Amendment.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE SPECIAL MEETING BYLAW AMENDMENT.



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Item 3 – Advisory Vote on
Executive Compensation

In accordance with Section 14A of the Exchange Act, we are asking our stockholders to approve, on an advisory basis, the compensation of the executives named in the Summary Compensation Table of this Proxy Statement (the “Named Executive Officers” or “NEOs”) as disclosed in the Compensation Discussion & Analysis (“CD&A”) and tabular and narrative executive compensation disclosures of this Proxy Statement. The 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. See the “Pay for Performance for 3 Years Ended October 31, 2013” graph in the Executive Summary of the CD&A, which highlights our success in aligning executive compensation with the 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 2014. The discussion in this CD&A focuses on the compensation of our CEO, CFO, and the next three most highly compensated executive officers (the “NEOs”) for the fiscal year ended October 31, 2014, who were:

Name       Title
Samuel R. Allen Chairman and Chief Executive Officer
Rajesh Kalathur Senior Vice President and Chief Financial Officer
James M. Field President, Agricultural Equipment Operations
Jean H. Gilles Senior Vice President, John Deere Power Systems, Worldwide Parts Services, Advanced Technology and Engineering, and Global Supply Management and Logistics
Michael J. Mack, Jr. Group President, John Deere Financial Services, Global Human Resources, and Public Affairs

Executive Summary
Our compensation strategy is designed to motivate our NEOs and salaried employees to execute our business strategy and strive for higher Company performance while maintaining our core values of quality, innovation, integrity, and commitment. In order to ensure that our compensation strategy aligns with our core values and drives performance across the Company, we regularly compare our compensation practices and governance against market best practices. Here are some of the best practices we have incorporated into our compensation programs:

We use a combination of short-term and long-term incentives to ensure a strong connection between Deere’s performance and actual compensation.
 
We do not enter into employment agreements with our executives except where legally required.
 
Burn rate and dilution associated with our equity incentive program are reviewed annually by the Committee and have historically been competitive within our peer group.
 
Our equity incentive plan prohibits us from: (i) granting stock options with an exercise price less than the fair market value of the 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 and we do not provide excise tax gross ups upon a change in control.
 
We include a “double-trigger” change in control provision in our executive Change in Control Severance Program as well as our current equity plan, under which participants will receive severance benefits only if both a change in control and qualifying termination occur.
 
Executive perquisites are limited and reviewed annually by the Committee.
 
The Committee and Company management regularly evaluate our peer group and pay positioning under a range of performance scenarios.
 
The Committee is advised by an independent compensation consultant that performs no other services for the Company.
 
We have adopted an Executive Incentive Compensation Recoupment Policy to ensure accountability in the presentation of our financial statements.
 
We have established stock ownership requirements to ensure the retention of stock by our directors and executives and strengthen the relationship between compensation and performance.
 
We prohibit all directors and employees, including our executive officers, and their related persons from engaging in short sales of the 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.


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In addition to the practices described above, in order to strengthen the relationship between compensation and the experience of our stockholders, we added a total shareholder return (“TSR”) modifier for payouts to executive officers under our Mid-Term Incentive (“MTI”) plan for the three-year performance period starting in November 2014. This action is an example of the commitment of the Company and the Committee to continually review and modify our compensation programs to enhance the relationship between pay and performance.

Pay for Performance Review and Analysis
Pay for performance is an essential component of our longstanding compensation philosophy. Our compensation approach is designed to motivate our executives, including our NEOs, to substantially contribute individually and collaboratively to the 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 includes:

Exceptional operating performance;
 
Disciplined growth of shareholder value added (“SVA”); and
 
Aligned high-performance teamwork.

We continue to demonstrate our commitment to stockholders through our performance-based compensation programs using metrics that align with our business strategy:

To align compensation with exceptional operating performance, we use Operating Return on Operating Assets (“OROA”) and Return on Equity (“ROE”) as the metrics for our Short-Term Incentive (“STI”) plan. These metrics are designed to incentivize the efficient use of assets and capital. STI goals are adjusted based on the business cycle to ensure the level of difficulty of earning STI awards will be comparable for a range of sales volumes and capacity utilization levels.

2014 OROA Performance

To align compensation with disciplined growth, we use SVA as the metric for our MTI plan. SVA measures our success in delivering sustained growth in economic profitability.

Deere Enterprise SVA

To align compensation with stockholder experience, our Long-Term Incentive (“LTI”) plan utilizes stock options and restricted stock units (“RSUs”), whose ultimate values are tied to the 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 10/31/14



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The following chart shows the direct and indirect components of our compensation strategy:

COMPENSATION STRATEGY

TOTAL DIRECT COMPENSATION TOTAL INDIRECT COMPENSATION
Short-Term Compensation Long-Term Compensation
Other Compensation
and Benefits
Base Salary STI MTI LTI
Fixed cash
component
Annual cash award for profitability and efficient operations during the fiscal year Cash award for sustained profitable growth during a multi-year period Equity award for creation of stockholder value, as reflected by the Company’s stock price, with linkage to revenue growth and TSR Perquisites; Retirement Benefits; Deferred Compensation Benefits; and Additional Benefits Payable upon a Change-in-Control Event

As our NEOs assume greater responsibility, our pay for performance approach provides that: (1) a larger portion of their total compensation should be “at-risk” in the form of short-term, mid-term, and long-term incentive awards; and (2) a larger proportion of their incentive awards should be in the form of long-term awards

in order to drive sustainable growth of stockholder value. The following chart illustrates the allocation of all fiscal 2014 Total Direct Compensation components at target for our CEO and for our other NEOs as a group. This chart highlights the Company’s emphasis on long-term and at-risk compensation.



2014 Target Direct Compensation Mix for Named Executive Officers

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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. Nevertheless, there are times when financial results do not align with relative TSR results. In order to further refine the pay-for-performance relationship, the Committee has approved a modification to future MTI plan cycles that increases the influence of relative TSR performance (see the “Mid-Term Incentive (“MTI”)” section below).

In addition, in light of recent stock price performance as well as in recognition of more recent, challenging business conditions, and in spite of strong financial performance against established goals, Mr. Allen has requested that the Board reduce his cash incentive plan compensation for fiscal 2014. The Board considered Mr. 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 2014 Summary Compensation Table).

Consultant Review of Pay for Performance Relative to Peer Group
In the course of reviewing our overall executive compensation program, the Committee’s consultant, Pearl Meyer & Partners (“Pearl Meyer”), reviewed the relationship between total realizable compensation and our performance for the three fiscal years ended October 31, 2013. This approach was selected because this is the most recent time period coinciding with our fiscal year-end for which corresponding compensation information is available for our peer companies. This review was conducted to understand the degree of alignment between total compensation delivered to our NEOs during the period and our performance relative to our peer group as identified in the “Market Analysis” section below. For purposes of this review, “company performance” is defined as TSR. “Total realizable compensation” for 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, 2013 of any stock options granted over the three-year period;

4. The value as of October 31, 2013 of RSUs granted over the three-year period;

5. The value as of October 31, 2013 of PSUs reflecting actual performance for (i) the 2011-2013 performance cycle and (ii) the in-process 2012-2014 and 2013-2015 performance cycles; and

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

For peer companies, realizable pay includes cash-based long-term incentive plan and performance share plan payouts for performance cycles fully contained within the 3-year period with award values multiplied by a factor that reflects grant frequency and long-term incentive vehicle mix.

Pearl Meyer’s analysis, as shown in the chart below, reveals that TSR was aligned with realizable pay, for our CEO and other NEOs, near the 25th percentile of our peer group. Based on these results, combined with the results of past comparisons of pay and performance alignment as discussed in our proxy statements for previous years, we believe that our pay programs are effective at ensuring that pay levels for our executives are aligned with performance.

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

2014 Compensation Overview
At Deere, we remain committed to our longstanding compensation philosophy, which incorporates the principles of paying for performance, supporting business strategies, and paying competitively. The Committee believes this philosophy continues to drive our NEOs and salaried employees to produce sustainable, positive results for the Company and our stockholders.



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Compensation Strategy and Objectives
Our compensation strategy includes Total Direct Compensation (base salary, short-term, mid-term, and long-term incentive compensation) and Total Indirect Compensation (other compensation and benefits). The award ranges and values for each of the incentive compensation components are tied to our performance through association with operating metrics or as a function of our stock price. As discussed above, we have chosen financial metrics that align compensation with our business strategy and our stockholders’ interests. This alignment is further accomplished by keeping our metrics simple, transparent, and consistently communicated from year to year. SVA, for example, has been published in the annual report every year since 2002 in the section following the 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 in the U.S. Internal Revenue Code (“IRC”) where practicable
 
Structure compensation programs to be regarded positively by our stockholders and employees


Compensation Elements
The elements of our compensation program are summarized in the table below:

Component Purpose Characteristics Where Reported in
Accompanying Tables

Base Salary

Reward for level of responsibility, experience, and sustained individual performance

Fixed cash component targeted at our peer group median; Base salary can vary from the market due to individual performance, experience, time in position, and internal equity considerations

Fiscal 2014 Summary Compensation Table under the column “Salary”

Discretionary
Bonus
Awards

To recognize outstanding individual achievement

A cash award that may not exceed 20% of base salary, except in unusual circumstances

No discretionary bonuses were awarded in fiscal 2014 to our NEOs

Short-Term
Incentive
(“STI”)

Reward for the achievement of higher profitability through operating efficiencies and asset management during the fiscal year

A target STI award is designed to provide median annual cash compensation compared with our peer group when combined with base salary and median overall compensation compared with our peer group when combined with base salary, a target MTI award, and a base-level LTI award

Fiscal 2014 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation” and Fiscal 2014 Grants of Plan-Based Awards under the column “Estimated Future Payouts Under Non-Equity Incentive Plan Awards”

Mid-Term
Incentive
(“MTI”)

Reward for the achievement of sustained profitable growth over a multi-year performance period

Cash portion of long-term compensation; A target MTI award is designed to provide median compensation compared with our peer group in combination with base salary, a target STI award, and a base-level LTI award

Fiscal 2014 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation” and Fiscal 2014 Grants of Plan-Based Awards under the column “Estimated Future Payouts Under Non-Equity Incentive Plan Awards”


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Component Purpose Characteristics Where Reported in
Accompanying Tables

Long-Term
Incentive
(“LTI”)

Reward for the creation of stockholder value as reflected by our stock price with linkage to revenue growth and TSR

Equity-based portion of long-term compensation; A base-level LTI award is designed to provide median compensation compared with our peer group when combined with base salary and target STI and MTI awards; Award is delivered through a combination of PSUs, RSUs, and stock options; Ultimate value of award depends on our stock price and operating performance

Fiscal 2014 Summary Compensation Table under the columns “Stock Awards” and “Option Awards;” Fiscal 2014 Grants of Plan-Based Awards under the columns referencing stock and option awards; Outstanding Equity Awards at Fiscal 2014 Year-End; Fiscal 2014 Option Exercises and Stock Vested; Fiscal 2014 Nonqualified Deferred Compensation Table in the row “Deferred RSUs”

Perquisites

Provide our executives with selected benefits commensurate with those provided to executives at our peer group companies

Types of compensation that personally benefit an employee, are not related to job performance, and are available to a select group of employees

Fiscal 2014 Summary Compensation Table under the column “All Other Compensation”

Retirement
Benefits

Provide income upon retirement

Defined benefit pension plans plus a 401(k) plan; Our matches to the 401(k) plan are based on the applicable pension option and Company performance

Fiscal 2014 Summary Compensation Table under the columns “Change in Pension Value and Nonqualified Deferred Compensation Earnings” and “All Other Compensation;” Fiscal 2014 Pension Benefits Table

Deferred
Compensation
Benefits

Allow executives to defer compensation on a tax-efficient basis

Executives can elect to defer base salary, STI, or MTI into the Voluntary Deferred Compensation Plan; Executives participating in the Contemporary pension option can defer employee contributions and receive matching employer contributions under the Defined Contribution Restoration Plan; RSUs may also be deferred

Accumulated amounts deferred are reported in the Fiscal 2014 Nonqualified Deferred Compensation Table; Above-market earnings on these amounts are reported in the Fiscal 2014 Summary Compensation Table under the column “Change in Pension Value and Nonqualified Deferred Compensation Earnings”

Potential
Payments
upon Change in
Control

Encourage executives to operate in the best interests of stockholders both before and after a Change in Control event

Contingent in nature; Most elements are payable only if a NEO’s employment is terminated as specified under various plans

Fiscal 2014 Potential Payments upon Change in Control

Other Potential
Post-
Employment
Payments

Provide potential payments under the scenarios of death, disability, retirement, termination without cause or for cause, and voluntary separation

Contingent in nature; Amounts are payable only if a NEO’s employment is terminated as specified under the arrangements of various plans

Fiscal 2014 Potential Payments upon Termination of Employment Other than Following a Change in Control


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Compensation Methodology and Process
Independent Review and Approval of Executive Compensation
The Committee, all the members of which are independent under current NYSE listing standards, is responsible for reviewing and approving goals and objectives related to incentive compensation for the majority of salaried employees. The Committee evaluates the NEOs’ performances in relation to established goals and ultimately approves the compensation for the NEOs (except for the CEO). See the “Board Committees” section of this Proxy Statement for a detailed listing of Committee responsibilities and members.

The Committee does not delegate any substantive responsibilities related to the compensation of NEOs and exercises its independent judgment when approving executive compensation. No member of the Committee is a former or current officer of Deere or any of its subsidiaries.

The Committee periodically reviews compensation delivery to ensure its alignment with our business strategy, the 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 2013 proxy statement approved our executive compensation as described in the CD&A and tabular and narrative disclosures. The Committee took account of this strong

level of stockholder support in determining to apply the same effective principles and philosophy in structuring our executive compensation program for fiscal 2014.

The Role of the Compensation Consultant
The Committee has retained Pearl Meyer as its compensation consultant. Pearl Meyer reviews our executive compensation program design and assesses our compensation approach relative to our performance and the market. The Committee has sole responsibility for setting and modifying Pearl 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.

Pearl Meyer periodically meets independently with the Chairman of the Committee to discuss compensation matters. In addition, Pearl Meyer regularly participates in executive sessions with the Committee (without any of the 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.

Market Analysis
To ensure that total compensation for our NEOs aligns with the market, we compared our compensation and performance against the companies in our executive compensation peer group. This comparison includes an evaluation of the mix of cash versus equity and short-term versus long-term components. The companies in the peer group that we used in our fiscal 2014 market analysis process, listed in the chart below, are similar to Deere in sales volume, products, services, market capitalization, and/or global presence.



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Fiscal 2014 Executive Compensation Peer Group

                  Revenues *       Market Value 10/31/2014
Company Fiscal Year Employees * ($MM) ($MM)
3M Company          Dec 13                   88,667                   $ 30,871                           $ 98,539              
Alcoa Inc. Dec 13 60,000 $ 23,032 $ 19,757
The Boeing Company Dec 13 168,400 $ 86,623 $ 89,052
Caterpillar Inc. Dec 13 118,501 $ 55,656 $ 61,394
Cummins Inc. Dec 13 47,900 $ 17,321 $ 26,706
E.I. du Pont de Nemours and Company Dec 13 64,000 $ 35,935 $ 62,646
Eaton Corp. Plc Dec 13 102,000 $ 22,046 $ 32,547
Emerson Electric Co. Sep 14 115,100 $ 24,537 $ 44,434
General Dynamics Corporation Dec 13 96,000 $ 31,218 $ 46,315
Honeywell International Inc. Dec 13 131,000 $ 39,055 $ 75,244
Illinois Tool Works Inc. Dec 13 51,000 $ 14,135 $ 35,595
Johnson Controls, Inc. Sep 14 168,000 $ 42,828 $ 31,445
Lockheed Martin Corporation Dec 13 115,000 $ 45,358 $ 60,206
Northrop Grumman Corporation Dec 13 65,300 $ 24,661 $ 27,868
PACCAR Inc Dec 13 21,800 $ 17,124 $ 23,176
Raytheon Company Dec 13 63,000 $ 23,706 $ 32,033
United Technologies Corporation Dec 13 212,400 $ 62,626 $ 97,547
Whirlpool Corporation Dec 13 69,000 $ 18,769 $ 13,398
Xerox Corporation Dec 13 143,100 $ 21,435 $ 15,160
 
75th Percentile 121,626 $ 39,998 $ 61,707
Median 92,334 $ 27,766 $ 34,071
25th Percentile 62,250 $ 21,893 $ 27,577
 
Deere & Company Oct 14 58,210 $ 36,067 $ 30,659
Deere Percentile 16th 68th 32nd

Source: Factset Research Systems, Inc.
* Reflects employees and revenues for last reported fiscal year

Compensation paid by our peer group is representative of the compensation we believe is required to attract, retain, and motivate executive talent. The Committee, in consultation with Pearl Meyer, periodically reviews the peer group list to confirm that it continues to be an appropriate point of reference for NEO compensation. The Boeing Company and E.I. du Pont de Nemours and Company were added to the executive compensation peer group for fiscal 2014 while Ingersoll-Rand Plc, Parker-Hannifin Corp, and Textron Inc. were dropped, reflecting the Committee’s desire to bring the peer group into closer alignment with Deere in terms of revenue levels. No changes were made to the peer group for fiscal 2015.

Total Direct Compensation Elements
The following information describes each direct compensation element, including discussion of performance metrics where applicable.


Base Salary
In determining salary levels for each of our NEOs, the Committee takes into consideration factors such as fulfillment of job responsibilities, the financial and operational performance of the activities directed by each NEO, experience, time in position, internal equity, and potential. The Committee also considers each NEO’s current salary as compared to the salary range and the median salary practices of our peer group.

In fiscal 2014, after considering the aforementioned factors, the Board approved a base salary increase of 4% for the CEO and the Committee approved increases ranging from 3-6% for the other NEOs. The resulting salary levels align with the market median for similar positions except for Mr. Kalathur, whose base salary is below the market median due to his relatively short time in the CFO position.


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Short-Term Incentive (“STI”)
The following factors are used to calculate the amount of the STI award paid to our NEOs:

Salary;
 
Target STI rate as described below under “Approval of STI Rates;” and
 
Deere’s actual Operating Return on Operating Assets (“OROA”) and Return on Equity (“ROE”) performance as defined below under “Performance Metrics for STI.”

Individual awards under the STI plan are capped at $5 million per performance period. The STI plan is periodically approved by our stockholders and was last approved at the annual meeting in February 2010. The STI plan will be considered for re-approval at the February 2015 annual meeting.

Performance Metrics for STI
There are two metrics used in the calculation of STI:

OROA for the Equipment Operations (consisting of our worldwide Agriculture and Turf Operations and Construction and Forestry Operations)
 
ROE for our Financial Services segment

Deere is primarily a manufacturing company with high investment in fixed assets, such as buildings and machinery, and significant expenses with longer term payoffs, such as research and development. OROA was selected as the STI performance metric for the Equipment Operations because the Committee believes it effectively measures the efficient use of the Equipment Operations’ assets.

Targeted OROA performance for each Equipment Operations business segment varies based on the segment’s sales volume. The actual sales volume is measured in relationship to mid-volume sales. Mid-volume sales is determined at the beginning of the fiscal year using historical sales volumes, industry growth rates, and market share data, among other considerations, and represents the midpoint of a business cycle.


The preceding graph represents how Deere’s operating leverage functions in a given business. For Deere, operating leverage means:

When sales volumes and capacity utilization are low compared to mid-volume, it is more difficult to cover fixed costs and achieve high asset turnover; therefore, OROA performance goals are lower; and
 
When sales volumes and capacity utilization are high compared to mid-volume, it is easier to cover fixed costs and achieve high asset turnover; therefore, OROA performance goals are higher.

By adjusting OROA performance goals as sales volumes change, Deere believes the level of difficulty in attaining targeted performance will be comparable for a range of sales volumes and capacity utilization levels. Using OROA aligns employee decisions with our strategic approach to sound investment of capital and asset utilization. This model encourages our management team to make necessary structural changes, such as those related to capacity, margin enhancements, and asset turnover for a given volume level.

At the beginning of fiscal 2014, the Committee approved the following OROA goals at different sales volume levels for the Equipment Operations:

Fiscal 2014 OROA Goals Minimum Target Maximum
OROA Goals at Low Volume        4%               8%               12%       
OROA Goals at Mid-Volume 8% 12% 20%
OROA Goals at High Volume 12% 20% 28%

These OROA goals have not changed since fiscal 2007. Minimum, target, and maximum OROA goals are interpolated for sales volumes between low and mid-volume and between mid-volume and high volume.

ROE is the performance metric for Financial Services. Financial Services experiences different cash flow risk characteristics and operates with significantly different debt-to-equity leverage than the Equipment Operations. ROE goals are adjusted for the actual mix of business subsidized by the Equipment Operations versus the business that is not subsidized. The Committee approved the following ROE goals at the beginning of fiscal 2014:

Fiscal 2014 ROE Goals Minimum Target Maximum
Subsidized Business        10%               10%               10%       
Non-Subsidized Business 10% 13% 16%

These ROE goals have not changed since fiscal 2011. See Appendix C, “Deere & Company Reconciliation of Non-GAAP Measures,” for additional information regarding the calculation of OROA and ROE for fiscal 2014.



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For fiscal 2014, the various business results were weighted to calculate STI as follows (which weighting has not changed since fiscal 2011):

Equipment Operations OROA      50%
Agriculture and Turf Operations OROA 25%
Construction and Forestry Operations OROA 15%
Financial Services ROE 10%

Approval of STI Rates
At the beginning of the fiscal year, after review and consideration of 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 2013, the Committee approved STI rates for fiscal 2014 as follows:

Target STI Rates:
CEO       125%
Other NEOs 85%

Fiscal 2014 Performance Results for STI
The chart below details:

the goals that were necessary to achieve STI payout based on the actual sales volumes (OROA) and the actual mix of subsidized and non-subsidized business (ROE); and
 
the actual OROA and ROE performance results.


Fiscal 2014 Performance Results for STI Goal to Achieve
Payout
Fiscal 2014
Performance Results
Performance
as % of Target
Fiscal 2014 Award
Weighting
Weighted Award Results
Equipment Operations OROA 19.2% for maximum    27.7%      200%     50%     100%
Agriculture and Turf Operations OROA       19.2% for maximum 30.9% 200% 25% 50%
Construction and Forestry Operations OROA 18.4% for maximum 17.6% 189% 15% 28%
Financial Services ROE 12.1% for maximum 13.6% 200% 10% 20%
Actual Performance as % of Target 198%

To further explain this chart and the fiscal 2014 OROA goals, actual sales volumes for the combined Equipment Operations were slightly below mid-volume levels for fiscal 2014. Therefore, the combined Equipment Operations needed to achieve 19.2% OROA to earn maximum payout. Since an OROA of 27.7% was achieved, a maximum payout for that component of STI was earned.

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

Base salary for the fiscal year 
x Target STI rate
x Actual performance as a percent of target (up to a maximum of 200%)
= STI award amount

STI awards paid to NEOs are detailed in the Fiscal 2014 Summary Compensation Table under footnote (4). At the request of the CEO, the Board agreed to exercise its discretion to reduce the CEO’s STI compensation by 25% below the amount he would have otherwise earned for fiscal 2014 based on previously-approved plan metrics and goals and actual performance results. The Committee did not exercise its authority to decrease or eliminate the STI awards for the other NEOs.

The STI plan and the results for fiscal 2014 described above are also used to determine the STI awards paid to most other executive, administrative, and professional employees worldwide. For fiscal

2014, STI awards paid to the NEOs consisted of approximately 1.3% of the total amount of STI awards paid to all eligible employees.

Long-Term Compensation
Long-term compensation includes a combination of MTI and LTI. MTI is paid in cash and is considered part of long-term compensation because multiple fiscal years are included in the performance period. LTI, the equity-based portion of long-term compensation, consisted of RSUs, PSUs, and stock options in fiscal 2014.

Mid-Term Incentive (“MTI”)
The following factors are used to calculate the amount of the MTI award paid to our NEOs:

Median of actual salaries for the salary grade;
 
Target MTI rate as described below under “Approval of MTI Rates;” and
 
SVA results as defined below under “Performance Metrics for MTI.”

Individual awards under the MTI plan are capped at $4.5 million per performance period. The MTI plan is periodically approved by our stockholders and was last approved at the annual meeting in February 2013.




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Performance Metrics for MTI
In 2003, the Committee established SVA as the MTI performance metric. SVA measures Deere’s success in delivering sustained growth in economic profitability. SVA was selected as the MTI performance metric because the Committee believes that Deere should:

(a) earn, at a minimum, its weighted average cost of capital each year;
      
(b) ensure that investments in capital and research and development earn their cost of capital; and
 
(c) ensure that acquisitions do not dissipate stockholder value.

SVA is fundamental to how Deere operates its business at the corporate and business unit level. We believe that sustained growth for Deere can be accomplished through a combination of revenue growth and high returns on invested capital, both of which are reflected in the SVA metric. Since it is based on enterprise-wide SVA, MTI encourages teamwork across all units of our business. In addition, providing Deere employees the opportunity to share in a

portion of SVA fosters and reinforces a culture of ownership and alignment with stockholders, which has been critical to Deere’s long-term success. For fiscal 2014, the MTI payout for all employees amounted to about 7% of our average annual SVA over the three-year performance period. See Appendix C, “Deere & Company Reconciliation of Non-GAAP Measures,” for an explanation regarding the calculation of SVA.

The Committee has approved three-year performance periods to emphasize and reward consistent, sustained operating performance. The Committee conducts annual reviews of the target and maximum SVA goals. The accumulated maximum SVA goal for a three-year performance period is set at a level that reflects market upper quartile return on invested capital performance and matches enterprise SVA goals set by the business for the first year of that performance period plus compounded 7% annual growth for the remaining two years. The target SVA is set at half of the maximum SVA goal. The chart below details the target and maximum SVA goals for each performance period that includes fiscal 2014:



Fiscal 2012 Fiscal 2013 Fiscal 2014
through through through
SVA Goals for MTI Fiscal 2014 Fiscal 2015 Fiscal 2016
SVA Goal for Target Payout $2.5 billion $2.755 billion $3.605 billion
SVA Goal for Maximum Payout $5 billion $5.51 billion $7.21 billion
Payable in Dec 2014 Dec 2015 Dec 2016
Approved by Committee Dec 2011 Dec 2012 Dec 2013

Inherent in the MTI plan is a lagging, three-year impact of SVA. Whether positive or negative, SVA results for a given year become part of the MTI award calculation for that year and the subsequent two years. Negative SVA in a given year can offset positive SVA earned in a prior or future year. Thus, MTI plan payouts in a strong-performance year, following a number of weak-performance years, will be lower than the financial results that the strong-performance year alone would justify. The opposite is also true: MTI plan payouts made in a weak-performance year, following several strong-performance years, will be higher than the financial results that the weak-performance year alone would justify. Employees are motivated to achieve optimal SVA performance each year because each year is included in three separate rolling performance periods.

In an effort to further align executive compensation with stockholder interests, in August 2014 the Committee approved the addition of a relative TSR modifier to potential MTI payouts for our executive officers (including each of the NEOs). Starting with the performance period that ends in fiscal 2017, the TSR modifier is triggered if 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 chart:



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Approval of MTI Rates
After review and consideration of compensation data for our peer group, the Committee approves target MTI rates as a percentage of the median salary of the 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 2011, the Committee approved the following target MTI rates for the performance period ended October 31, 2014. When maximum SVA goals are met or exceeded, 200% of target rates are paid.

Target MTI Rates*:
CEO 121%
Other NEOs 93%

* A minimum MTI award ($1,100 for the CEO and $400 for the other NEOs) will not be paid unless accumulated SVA exceeds $1 million for the performance period.

Fiscal 2014 Performance Results for MTI
Deere’s accumulated SVA, calculated in accordance with the MTI performance metrics as described in Appendix C, is reported in the following table for the three-year performance period ended October 31, 2014:

Deere Enterprise SVA

For the three-year performance period ended October 31, 2014, the accumulated SVA exceeded the maximum payout goal of $5 billion, resulting in a maximum MTI award. MTI awards paid to NEOs are detailed in the Fiscal 2014 Summary Compensation Table under footnote (4). At the request of the CEO, the Board agreed to exercise its discretion to reduce the CEO’s MTI compensation by 25% below the amount he would have otherwise earned for fiscal 2014 based on previously-approved plan metrics and goals and actual performance results. The Committee did not exercise its authority to decrease or eliminate the MTI awards for the other NEOs.

The MTI plan and the results for the performance period ended in fiscal 2014 described above are also used to determine the MTI awards paid to other eligible employees worldwide. MTI awards paid to the NEOs for fiscal 2014 consisted of approximately 3.5% of the MTI payout to all eligible employees.

In the ten years preceding the implementation of MTI, fiscal years 1994 through 2003, accumulated SVA, as reported, was negative $1.4 billion as compared to accumulated positive SVA of $17.9 billion in the ten most recent fiscal years. The Committee believes that Deere’s adoption of the SVA model is an important factor driving the Company’s performance.

Long-Term Incentive (“LTI”)
The purpose of LTI is to reward the NEOs for the creation of sustained stockholder value, encourage ownership of Deere stock, foster teamwork, and retain and motivate high-caliber executives while aligning their interests with those of our stockholders. Historically, LTI awards consisted of annual grants of restricted stock or RSUs, along with market-priced stock options, under the John Deere Omnibus Equity and Incentive Plan (“Omnibus Plan”). In fiscal 2011, the Committee introduced PSUs as an element of the annual award mix in order to strengthen the incentive features of LTI awards and create stronger alignment between ultimate payouts and Company performance. The Omnibus Plan is periodically approved by our stockholders and was last approved at the annual meeting in February 2010. The Omnibus Plan will be considered for re-approval at the February 2015 annual meeting.

The Committee established LTI grants to the NEOs based on the following criteria: level of responsibility, individual performance, current market practice, peer group data, and the number of shares available under the Omnibus Plan. Awards granted in previous years are not a factor in determining the current year’s LTI award, nor is potential accumulated wealth viewed as being relevant. The following table summarizes the mix, performance measurements, and general terms for each form of equity awarded to the NEOs for fiscal year 2014:

Fiscal Year 2014 LTI Award Overview for NEOs

PSUs RSUs Stock Options
LTI Mix    40%    25%    35%

Performance
Measurements

 

50% revenue growth* and 50% TSR relative to the S&P Industrial Sector over a three-year performance period

 

Stock price appreciation

 

Stock price appreciation

Vesting Period

Cliff vest on the third anniversary of the grant date

Cliff vest on the third anniversary of the grant date

Vest in approximately equal annual installments over three years

Restrictions/
Expiration

Converted to Deere common stock upon vesting

Converted to Deere common stock upon vesting

Expire ten years from the grant date


* Based on the Company’s compound annual growth rate




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Approval of LTI Award Values
At the beginning of the fiscal year, after review and consideration of peer group data on target long-term incentives, the Committee approves a dollar value for a base-level LTI award and the mix of awards (options, RSUs, and PSUs) to be delivered. A base-level LTI award is designed to provide median compensation compared with our peer group when combined with base salary and target STI and MTI awards. The Committee determines LTI awards at the first Committee meeting at the beginning of the fiscal year. The Committee has the ability to increase (up to 20%) or decrease (down to $0) the base-level award to distinguish an individual’s level of performance, deliver a particular LTI value, or reflect other adjustments as the Committee deems necessary. For fiscal 2014, adjustments to base-level award values ranging up to 15% were approved in recognition of the individual performance of the NEOs. LTI awards were approved for the NEOs as follows:

Adjusted Award Values*:
Samuel R. Allen $8,740,000
Rajesh Kalathur $1,420,000
James M. Field $1,562,000
Jean H. Gilles $1,618,800
Michael J. Mack, Jr. $1,604,600

* Amounts differ from the value of equity awards shown in the Fiscal Year 2014 Summary Compensation Table and Grants of Plan-Based Awards table because those tables reflect the probable outcome of the performance metrics for PSUs. The amounts shown here include PSUs valued at the grant price on the date of grant, reflecting the value the Committee considered when granting the LTI awards for fiscal 2014.

See the Fiscal 2014 Grants of Plan-Based Awards table and footnotes for more information on LTI awards delivered as well as the terms of the awards.

For fiscal 2014, the number of RSUs and PSUs granted to the NEOs represented 51% of all RSUs and PSUs granted to eligible salaried employees. The number of stock options granted to the NEOs represented 9% of all stock options granted to eligible salaried employees in fiscal 2014. These proportions are consistent with our philosophy that as NEOs assume greater responsibility, a larger portion of their incentive compensation should be focused on long-term awards.

PSUs Granted in Fiscal Year 2014
For PSUs granted in fiscal 2014, the actual number of shares to be issued upon conversion will be based equally on Deere’s revenue growth and TSR for the three-year performance period ending in 2016. 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 2016)
 
Revenue Growth Payout %
× Weighted Portion of
PSUs Awarded
  

+

  
TSR Payout %
× Weighted Portion of
PSUs Awarded
  

Final
Award


The number of PSUs that vest and convert to shares can range from 0% to 200% of the number of PSUs awarded depending on the 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.

2012-2014 PSU Program (Payable in Fiscal 2015)
The performance period for PSUs granted in fiscal year 2012 ended on October 31, 2014. The final number of shares earned was based on 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 2014 following a review of the relative performances of the Company and the S&P Industrial Sector. Revenue growth and TSR were comparable to the 49th and 8th percentiles, respectively, of the S&P Industrial Sector. This resulted in an overall payout of 48.5% of target.

Performance
Results for
Performance
    Period Relative     % of Target        
to S&P Industrial Shares Award Weighted
Metric Sector Earned Weighting Payout %
Revenue Growth 49th percentile 97% 50% 48.5%
TSR 8th percentile 0% 50% 0%
Final Payout as % of Target 48.5%

The number of units that are or would be payable based on actual achievement relative to the S&P Industrial Sector and year-end values for PSUs granted in fiscal years 2012 through 2014 are included in the Outstanding Equity Awards at Fiscal 2014 Year-End table.




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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 currently-outstanding LTI awards is the average of the high and low common stock price on the grant date as reported on the NYSE, although for awards made after February 25, 2015 the grant price will be the closing price of Deere common stock on the NYSE on the grant date. The grant price is also used to determine the number of PSUs, RSUs, and stock options to be awarded.

Stock Ownership Requirements
Stock ownership requirements apply to NEOs to ensure the retention of stock acquired through our equity incentive plan. The required levels of ownership are five times base salary for the CEO and 3.5 times base salary for the other NEOs, to be achieved within five years of the date the NEO is first appointed as CEO or as an executive officer, as applicable. Only vested RSUs and any common stock held personally by the NEOs are included in determining whether the applicable ownership requirement has been met. Once the appropriate ownership level is achieved by the NEO, the number of shares held at that time becomes the fixed stock ownership requirement for the NEO for three years, even if base salary increases or stock price decreases. Other than Mr. Kalathur, who was first appointed Senior Vice President and Chief Financial Officer on September 1, 2012, each NEO has achieved stockholdings in excess of the applicable multiple as of the date of this Proxy Statement.

Our Insider Trading Policy precludes all directors and employees, including our NEOs, and their related persons from engaging in short sales of the Company’s stock or trading in instruments designed to hedge against price declines by the Company’s stock. Our Insider Trading Policy also prohibits our directors and officers (including NEOs) from holding Company stock in margin accounts or pledging Company stock as collateral for loans or other obligations.

Summary of Total Direct Compensation
The Committee believes each pay element included in Total Direct Compensation is consistent with our compensation philosophy. The Committee reviews Total Direct Compensation in the aggregate for the NEOs (excluding the CEO) as well as for each NEO individually and compares this compensation to the market position data of our peer group. This market position data takes into account the level of responsibility (including the level of sales volume) for each 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 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 include a chief operating officer. For Mr. Allen, Total Direct Compensation as compared to the other NEOs’ Total Direct Compensation is generally comparable to that of our peer group.

In light of recent stock price performance as well as in recognition of more recent, challenging business conditions, and in spite of strong financial performance against established goals, Mr. Allen has requested that the Board reduce his cash incentive plan compensation for fiscal 2014. The Board considered Mr. 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 2014 Summary Compensation Table).

Limitations on Deductibility of Compensation
Section 162(m) of the IRC generally limits to $1 million the U.S. federal income tax deductibility of compensation paid in one year to a company’s CEO or any of its three next-highest-paid executive officers (other than the Chief Financial Officer). Performance-based compensation is not subject to the limits on deductibility of Section 162(m), provided such compensation meets certain requirements, including stockholder approval of material terms of compensation. The Committee strives to provide NEOs with incentive compensation programs that will preserve the tax deductibility of compensation paid by Deere, to the extent reasonably practicable and consistent with Deere’s other compensation objectives. The Committee 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.



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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.

Total Indirect Compensation Elements
The following sections describe each Total Indirect Compensation element:

Perquisites
We offer our NEOs various perquisites that the Committee believes are reasonable in order to remain competitive. These perquisites constitute a small percentage of the NEOs’ total compensation. The Committee conducts an annual review of the perquisites offered to the NEOs. For more information on the perquisites provided and to whom they apply, see footnote (6) to the Fiscal 2014 Summary Compensation Table. In addition to the items listed in the aforementioned footnote, NEOs, as well as other selected employees, are also provided indoor parking and access to Deere-sponsored skyboxes at local venues for personal use when not occupied for business purposes, both at no incremental cost to the Company. All security services provided by the Company are reimbursed by the NEOs.

In August 2006, the Board voted to require the CEO to use the 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 their 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 Benefit Plan (the “Supplemental Plan”).

The defined benefit pension plans have compensation limits imposed by the IRC. The Supplementary Plan provides participants with the same benefit they would have received without these limits. This avoids the relative disadvantage that participants would experience compared to other qualified plan participants. The Supplemental Plan is designed to reward career service at Deere above a specified grade level by utilizing a formula that takes into account only years of service above that grade level. We believe that the defined benefit plans serve as important retention tools, provide a level of competitive income upon retirement, and reward long-term employment and service as an officer of Deere. For additional information, see the Fiscal 2014 Pension Benefits Table, along with the accompanying narrative and footnotes.

We also maintain a tax-qualified defined contribution plan, the John Deere Savings and Investment Plan (“SIP”), which is available to the majority of U.S. employees, including the NEOs. We make matching contributions on up to six percent of an employee’s pay to participant SIP accounts. The STI results for the previous fiscal year (see the “Performance Metrics for STI” section above) are used to determine the level of actual Company match for the following calendar year. The level of Company match also depends on the pension option in which the employee participates, as explained in the narrative preceding the Fiscal 2014 Pension Benefits Table. The following table illustrates the Company’s match for calendar 2014, which is reported for our NEOs under the “All Other Compensation” column of the Fiscal 2014 Summary Compensation Table:

Traditional Option match on 1-6% of eligible earnings 100%
Contemporary Option match on first 2% of eligible earnings 300%
Contemporary Option match on next 4% of eligible earnings 100%

Deferred Compensation Benefits
We also maintain certain deferred compensation plans that provide the NEOs with longer-term savings opportunities on a tax-efficient basis. All deferred compensation benefits are designed to attract, retain, and motivate employees. Such deferred compensation benefits are commonly offered by companies with whom we compete for talent. See the “Nonqualified Deferred Compensation” section below for additional details.



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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 2014 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 2014 Potential Payments upon Termination of Employment Other than Following a Change in Control.”

Risk Assessment of Compensation Policies and Practices
During fiscal 2014, management conducted a comprehensive risk assessment of the Company’s compensation policies and practices. The risk assessment process included the following:

(1) Convened a Compensation Risk Assessment Team (“Management Team”) comprised of management personnel representing relevant areas of oversight;

(2) Completed an inventory of the Company’s compensation programs globally for both executive and non-executive employees; and

(3) Established a detailed risk assessment questionnaire and applied it to the compensation programs that, due to their size, potential payout, and/or structure, could potentially have a material adverse effect on the Company.

The inquiries in the risk assessment questionnaire focused on the following issues: (a) pay-for-performance comparison against the 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.

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



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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, 2014.

Fiscal 2014 Summary Compensation Table

Name & Position    Fiscal
Year
   Salary
(1)
   Stock Awards
(2)
   Option Awards
(3)
   Non-Equity
Incentive Plan
Compensation
(4)
  
 Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
(5)
   All Other
Compensation
(6)
   Total
                       
Samuel R. Allen   2014   $ 1,495,204   $ 6,606,197     $ 3,058,680       $ 5,397,891       $ 3,137,079       $ 578,245     $ 20,273,296
Chairman and   2013   $ 1,435,644   $ 6,241,025     $ 3,058,773       $ 6,705,518       $ 1,187,712       $ 520,067     $ 19,148,739
Chief Executive Officer   2012   $ 1,352,400   $ 6,022,556     $ 3,059,041       $ 6,274,944       $ 1,884,238       $ 438,972     $ 19,032,151
Rajesh Kalathur 2014 $ 525,437 $ 1,073,209 $ 496,928 $ 1,879,751 $ 190,760 $ 131,124 $ 4,297,209
Senior Vice President and 2013 $ 465,552 $ 1,165,925 $ 571,490 $ 1,718,594 $ 9,061 $ 330,621 $ 4,261,243
Chief Financial Officer 2012 $ 347,565 $ $ 179,990 $ 485,945 $ 94,515 $ 156,421 $ 1,264,436
James M. Field   2014   $ 646,353   $ 1,180,392     $ 546,630       $ 2,083,579       $ 459,197       $ 167,586     $ 5,083,737
President, Agricultural   2013   $ 620,543   $ 1,115,269     $ 546,644       $ 1,969,106       $ 28,796       $ 159,379     $ 4,439,737
Equipment Operations   2012   $ 586,306   $ 1,125,239     $ 571,551       $ 2,002,226       $ 348,156       $ 145,988     $ 4,779,466
Jean H. Gilles 2014 $ 590,722 $ 1,223,406 $ 566,521 $ 1,989,802 $ 942,341 $ 154,290 $ 5,467,082
Senior Vice President 2013 $ 561,341 $ 1,165,925 $ 571,490 $ 1,873,417 $ 27,622 $ 152,991 $ 4,352,786
JDPS/Adv Tech & Eng 2012 $ 520,517 $ 1,027,253 $ 521,849 $ 1,895,523 $ 688,417 $ 134,138 $ 4,787,697
Michael J. Mack, Jr.   2014   $ 656,147   $ 1,212,742     $ 561,549       $ 2,100,089       $ 822,000       $ 185,218     $ 5,537,745
Group President,   2013   $ 637,536   $ 1,064,500     $ 521,799       $ 1,996,571       $ 85,771       $ 171,229     $ 4,477,406
John Deere Financial Services   2012   $ 624,532   $ 1,027,253     $ 521,849       $ 2,064,224       $ 621,724       $ 158,140     $ 5,017,722

(1) Includes amounts deferred by the NEO under the John Deere Voluntary Deferred Compensation Plan. Salary amounts deferred in fiscal 2014 are included in the first column of the Fiscal 2014 Nonqualified Deferred Compensation Table corresponding with “Deferred Plan.”

(2) Represents the aggregate grant date fair value of PSUs and RSUs computed in accordance with FASB ASC Topic 718. The values in this column exclude the effect of estimated forfeitures. Assumptions made in the calculation of these amounts are included in Note 24, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended October 31, 2014. For PSUs, the value at the grant date is based upon the probable outcome of the performance metrics over the three-year performance period. If the highest level of payout was achieved, the value of the award as of the grant date for PSUs would be as follows: $8,842,500 (Allen); $1,436,600 (Kalathur); $1,579,900 (Field); $1,637,500 (Gilles); and $1,623,300 (Mack). RSUs granted in fiscal years 2013 and 2014 will vest three years after the grant date, at which time they may be settled in Deere common stock. RSUs granted in fiscal year 2012 must be held until five years after the grant date. Refer to the Fiscal 2014 Grants of Plan-Based Awards table and footnote (7) thereto for a detailed description of the grant date fair value of stock awards.

(3) Represents the aggregate grant date fair value of stock options computed in accordance with FASB ASC Topic 718. The values in this column exclude the effect of estimated forfeitures. The assumptions made in valuing option awards reported in this column and a more detailed discussion of the binomial lattice option pricing model are described in Note 24, “Stock Option and Restricted Stock Awards,” of our consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended October 31, 2014. Refer to the Fiscal 2014 Grants of Plan-Based Awards table and footnote (7) thereto for a detailed description of the grant date fair value of option awards.

(4) Non-equity incentive plan compensation includes cash awards under the STI and MTI plans. Cash awards earned under the STI and MTI plans for the performance period ended in fiscal 2014 were paid to NEOs on December 15, 2014 unless deferred under the Voluntary Deferred Compensation Plan. Deferred STI and MTI amounts are included in the first column of the Fiscal 2014 Nonqualified Deferred Compensation Table corresponding with “Deferred Plan.”

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

STI (a) MTI (b)
Name    Target
Award as %
of Salary
      Actual
Performance
as % of Target
      Award
Amount
      Target
Award as %
of Median
Salary
      Actual
Performance
as % of Target
      Award
Amount
      Total Non-Equity
Incentive Plan
Compensation
  
Samuel R. Allen (c) 125% 198% $ 2,779,846 121% 200% $ 2,618,045    $ 5,397,891   
Rajesh Kalathur 85% 198% $ 885,729 93% 200% $ 994,022 $ 1,879,751
James M. Field 85% 198% $ 1,089,557 93% 200% $ 994,022 $ 2,083,579
Jean H. Gilles 85% 198% $ 995,780 93% 200% $ 994,022 $ 1,989,802
Michael J. Mack, Jr. 85% 198% $ 1,106,067 93% 200% $ 994,022 $ 2,100,089

(a) Based on actual performance, as discussed in the CD&A under “Fiscal 2014 Performance Results for STI,” the NEOs earned an STI award equal to 198% of the target opportunity.

(b) Based on actual performance, as discussed in the CD&A under “Fiscal 2014 Performance Results for MTI,” the NEOs earned an MTI award equal to 200% of the target opportunity.

(c) At Mr. 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 2014 based on previously-approved plan metrics and goals and actual performance results. See “Pay for Performance Review and Analysis” in the Executive Summary of the CD&A.

(5) The following table shows the change in pension value and above-market earnings on nonqualified deferred compensation during fiscal 2014:

Name       Change in
Pension Value (a)
                Nonqualified Deferred
Compensation Earnings (b)
                Total      
Samuel R. Allen $ 3,074,776             $ 62,303             $ 3,137,079
Rajesh Kalathur $ 185,859 $ 4,901 $ 190,760
James M. Field $ 438,774 $ 20,423 $ 459,197
Jean H. Gilles $ 914,028 $ 28,313 $ 942,341
Michael J. Mack, Jr. $ 786,903 $ 35,097 $ 822,000

(a) Represents the change in the actuarial present value of each NEO’s accumulated benefit under all defined benefit plans from October 31, 2013 to October 31, 2014. The pension value calculations include the same assumptions as used in the pension plan valuations for financial reporting purposes. For more information on the assumptions, see footnote (4) under the Fiscal 2014 Pension Benefits Table.

(b) Represents above-market earnings on compensation that is deferred by the NEOs under our nonqualified deferred compensation plans. Above-market earnings represent the difference between the interest rate used to calculate earnings under the applicable plan and 120% of the applicable federal long-term rate prescribed by the IRC. See the Fiscal 2014 Nonqualified Deferred Compensation Table for additional information.

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(6) The following table provides details about each component of the “All Other Compensation” column in the Fiscal 2014 Summary Compensation Table:

Name       Personal
Use of
Company
Aircraft
(a)
      Financial
Planning
(b)
      Medical
Exams
(c)
      Misc
Perquisites
(d)
      Company
Contributions
to Defined
Contribution
Plans
(e)
      Total All
Other
Compensation
Samuel R. Allen $ 80,051 $ $ 3,191 $ 4,244 $ 490,759 $ 578,245
Rajesh Kalathur $ $ $ 2,140 $ 1,193 $ 127,791 $ 131,124
James M. Field $ $ 1,810 $ $ 842 $ 164,934 $ 167,586
Jean H. Gilles $ $ $ 3,614 $ 874 $ 149,802 $ 154,290
Michael J. Mack, Jr. $ $ $ 15,346 $ 1,212 $ 168,660 $ 185,218

(a) Per Internal Revenue Service (“IRS”) regulations, the NEOs recognize imputed income on the personal use of 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 2014 amounted to approximately 30 hours of travel, which represents less than 1% of the total hours flown by Company aircraft.

(b) This column contains amounts Deere paid for financial planning assistance on behalf of the NEOs. The CEO may annually receive up to $15,000 of assistance and the other NEOs may receive up to $10,000 annually.

(c) This column contains the amounts Deere paid for annual medical exams for NEOs.

(d) Miscellaneous perquisites include spousal attendance at company events.

(e) Deere makes contributions to the John Deere Savings and Investment Plan (“SIP”) for all eligible employees. Deere also credits contributions to the John Deere Defined Contribution Restoration Plan for all employees covered by the Contemporary Option under the tax-qualified pension plan. All of our current NEOs are covered by the Contemporary Option.

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Fiscal 2014 Grants of Plan-Based Awards
The following table provides additional information regarding fiscal 2014 grants of RSU, PSU, and stock option awards under the Omnibus Plan, and the potential range of awards that were approved in fiscal 2014 under the STI and MTI plans for payout in future years. These awards are further described in the CD&A under “Total Direct Compensation Elements.”

All Other All Other
Stock Option Exercise
Awards: Awards: or Base Grant Date
Estimated Future Payouts Estimated Future Payouts Number of Number of Price of Fair Value
Under Non-Equity Incentive Plan Under Equity Incentive Plan Shares of Securities Option of Stock
Awards Awards Stock or Underlying Awards and Option
Grant Date (2) (3) Units Options ($ / Sh) Awards
Name (1) Threshold Target Maximum Threshold Target Maximum (4) (5) (6) (7)
Samuel R. Allen 12/3/2013-STI $— $1,869,005 $3,738,010
12/3/2013-MTI $1,100 $1,815,000 $3,630,000
12/11/2013 24,982   $2,184,926  
12/11/2013 9,993 39,972 79,944 $4,421,271  
12/11/2013 123,633 $87.46 $3,058,680  
$1,100 $3,684,005 $7,368,010 9,993 39,972 79,944 24,982 123,633 $9,664,877  
Rajesh Kalathur 12/3/2013-STI $— $446,621 $893,242
12/3/2013-MTI $400 $510,102 $1,020,204
12/11/2013 4,058 $354,913  
12/11/2013 1,623 6,494 12,988 $718,296  
12/11/2013 20,086 $87.46 $496,928  
$400 $956,723 $1,913,446 1,623 6,494 12,988 4,058 20,086 $1,570,137  
James M. Field 12/3/2013-STI $— $549,400 $1,098,800
12/3/2013-MTI $400 $510,102 $1,020,204
12/11/2013 4,464 $390,421  
12/11/2013 1,785 7,142 14,284 $789,971  
12/11/2013 22,095 $87.46 $546,630  
$400 $1,059,502 $2,119,004 1,785 7,142 14,284 4,464 22,095 $1,727,022  
Jean H. Gilles 12/3/2013-STI $— $502,114 $1,004,228
12/3/2013-MTI $400 $510,102 $1,020,204
12/11/2013 4,627 $404,677  
12/11/2013 1,850 7,402 14,804 $818,729  
12/11/2013 22,899 $87.46 $566,521  
$400 $1,012,216 $2,024,432 1,850 7,402 14,804 4,627 22,899 $1,789,927  
Michael J. Mack, Jr. 12/3/2013-STI $— $557,725 $1,115,450
12/3/2013-MTI $400 $510,102 $1,020,204
12/11/2013 4,586 $401,092  
12/11/2013 1,834 7,338 14,676 $811,650  
12/11/2013 22,698 $87.46 $561,549  
$400 $1,067,827 $2,135,654 1,834 7,338 14,676 4,586 22,698 $1,774,291  

(1) For the non-equity incentive plan awards, the grant date is the date the Committee approved the range of the estimated potential future payouts for the performance periods noted under footnote (2) below. For equity awards, the grant date is seven calendar days after the first regularly scheduled Board meeting of the fiscal year.

(2) These columns show the range of potential payouts under the STI and MTI plans. The performance period for STI in this table covers November 1, 2013 through October 31, 2014. For actual performance between threshold, target, and maximum, the earned STI award is prorated.

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The range of the MTI award covers the three-year performance period beginning in fiscal 2014 and ending in fiscal 2016. Awards are not paid unless Deere generates at least $1 million of SVA for the performance period. The target MTI award will be earned if $3.605 billion of SVA is accumulated and the maximum MTI award will be earned if $7.21 billion or more is accumulated during the performance period. The amounts shown in the table represent potential MTI awards based on the median salary of the NEOs’ salary grades as of September 30, 2014. The actual MTI awards will depend upon Deere’s actual SVA performance and the median salary of the NEOs’ salary grades as of September 30, 2015.

(3) Represents the potential payout range of PSUs granted in fiscal 2014 (in December 2013). The number of shares that vest is equally based on TSR and revenue growth, both relative to companies in the S&P Industrial Sector. Performance and payouts are determined independently for each metric. At the end of the three-year performance period, the actual award, delivered as Deere common stock, can range from 0% to 200% of the original grant.

(4) Represents the number of RSUs granted during fiscal 2014 (in December 2013). RSUs will vest three years after the grant date, at which time they may be settled in Deere common stock. Prior to settlement, each RSU entitles the individual to receive dividend equivalents in cash at the same time as dividends are paid on Deere’s common stock.

(5) Represents the number of options granted during fiscal 2014 (in December 2013). These options vest in approximately three equal annual installments on the first, second, and third anniversaries of the grant date.

(6) The exercise price is the average of the high and low price of Deere common stock on the NYSE on the grant date.

(7) Amounts shown represent the grant date fair value of equity awards granted to the NEOs in fiscal 2014 calculated in accordance with FASB ASC Topic 718. The values in this column exclude the effect of estimated forfeitures. For RSUs, fair value is the market value of the underlying stock on the grant date (which is the same as the exercise price in column (6) for stock options). For options, the fair value on the grant date was $24.74, which was calculated using the binomial lattice option pricing model. The grant date fair value of the PSUs subject to the TSR metric was $116.86 based on a lattice valuation model excluding dividends. The grant date fair value of the PSUs subject to the revenue growth metric was $81.53 based on the market price of a share of underlying common stock excluding dividends.

For additional information on the valuation assumptions, refer to Note 24, “Stock Option and Restricted Stock Awards,” of Deere’s consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended October 31, 2014.

Outstanding Equity Awards at Fiscal 2014 Year-End
The following table itemizes outstanding options, RSUs, and PSUs held by the NEOs as of October 31, 2014:

Option Awards Stock Awards
Name     Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(1)
    Option
Exercise
Price
  Intrinsic Value
of Unexercised
Options
(2)
    Option
Expiration
Date
(3)
    Number
of Shares
or Units
of Stock
That
Have Not
Vested
(4)
    Market
Value of
Shares or
Units of Stock
That Have
Not Vested
(5)
    Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(6)
    Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
(7)
Samuel R. Allen 28,808 $ 88.82   $ 12/5/2017 $
62,704 $ 39.67 $ 2,876,546 12/17/2018 $
269,353 $ 52.25 $ 8,966,761 12/9/2019 $
114,253 $ 80.61 $ 563,267 12/8/2020 $
91,050 44,847 $ 74.24 $ 1,535,636 12/14/2021 52,269 $ 4,471,090
43,825 85,074 $ 86.36 $ 12/12/2022 25,301 $ 2,164,248 $
123,633 $ 87.46 $ 12/11/2023 24,982 $ 2,136,960 9,193 $ 786,369
609,993 253,554 $ 13,942,210 102,552 $ 8,772,298 9,193 $ 786,369

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Option Awards Stock Awards
Name Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(1)
Option
Exercise
Price
Intrinsic Value
of Unexercised
Options
(2)
Option
Expiration
Date
(3)
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(4)
Market
Value of
Shares or
Units of Stock
That Have
Not Vested
(5)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(6)
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
(7)
Rajesh Kalathur     4,366         $ 34.44     $ 223,103     12/7/2015         $            
5,816 $ 48.38 $ 216,152 12/6/2016 $
4,519 $ 88.82 $ 12/5/2017 $
11,133 $ 39.67 $ 510,726 12/17/2018 $
12,151 $ 52.25 $ 404,507 12/9/2019 $
7,379 $ 80.61 $ 36,378 12/8/2020 $
5,357 2,639 $ 74.24 $ 90,355 12/14/2021 $
8,188 15,895 $ 86.36 $ 12/12/2022 4,727 $ 404,348 $
20,086 $ 87.46 $ 12/11/2023 4,058 $ 347,121 1,493 $ 127,711
58,909 38,620 $ 1,481,221 8,785 $ 751,469 1,493 $ 127,711
James M. Field 17,680 $ 88.82 $ 12/5/2017 $
42,178 $ 39.67 $ 1,934,916 12/17/2018 $
56,457 $ 52.25 $ 1,879,454 12/9/2019 $
21,735 $ 80.61 $ 107,154 12/8/2020 $
17,011 8,380 $ 74.24 $ 286,918 12/14/2021 9,766 $ 835,384
7,832 15,204 $ 86.36 $ 12/12/2022 4,521 $ 386,726 $
22,095 $ 87.46 $ 12/11/2023 4,464 $ 381,851 1,642 $ 140,457
162,893 45,679 $ 4,208,442 18,751 $ 1,603,961 1,642 $ 140,457
Jean H. Gilles 10,704 $ 88.82 $ 12/5/2017 $
50,163 $ 52.25 $ 1,669,926 12/9/2019 $
20,376 $ 80.61 $ 100,454 12/8/2020 $
15,532 7,651 $ 74.24 $ 261,968 12/14/2021 8,915 $ 762,589
8,188 15,895 $ 86.36 $ 12/12/2022 4,727 $ 404,348 $
22,899 $ 87.46 $ 12/11/2023 4,627 $ 395,794 1,702 $ 145,589
104,963 46,445 $ 2,032,348 18,269 $ 1,562,731 1,702 $ 145,589
Michael J. Mack, Jr. 24,388 $ 88.82 $ 12/5/2017 $
21,347 $ 80.61 $ 105,241 12/8/2020 $
15,532 7,651 $ 74.24 $ 261,968 12/14/2021 8,915 $ 762,589
7,476 14,513 $ 86.36 $ 12/12/2022 4,316 $ 369,191 $
22,698 $ 87.46 $ 12/11/2023 4,586 $ 392,286 1,687 $ 144,306
68,743 44,862 $ 367,209 17,817 $ 1,524,066 1,687 $ 144,306

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

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(2) The amount shown represents the number of options that have not been exercised (vested and unvested) multiplied by the difference between the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54, and the option exercise price. No value is shown for “underwater” options.

(3) Options expire ten years from the grant date.

(4) RSUs vest three years from the grant date. RSUs granted in fiscal years 2013 and 2014 must be held until three years after the grant date before they are settled in Deere common stock. RSUs granted in fiscal year 2012 must be held for five years. RSUs that have vested, but have not been settled in Deere common stock, are included in the Fiscal 2014 Nonqualified Deferred Compensation Table.

The three-year performance period for PSUs granted in fiscal 2012 ended on October 31, 2014. The final payout determination was made by the Committee in December 2014 and the award vested and was settled in Deere common stock on December 14, 2014 (the third anniversary of the grant date). As discussed in the CD&A under “2012-2014 PSU Program (Payable in Fiscal 2015),” the final payout under the award was equal to 48.5% of the target opportunity. The numbers of shares earned by the applicable NEOs were as follows: 22,838 (Allen); 4,267 (Field); 3,895 (Gilles); and 3,895 (Mack).

(5) The amount shown represents the number of RSUs that have not vested and PSUs described in footnote (4) to this table multiplied by the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54.

(6) The amount shown represents actual achievement of the PSUs granted in fiscal years 2013 and 2014 relative to the S&P Industrial Sector assuming truncated performance measurement periods. The final number of shares earned, if any, will be based upon performance as determined by revenue growth and TSR relative to the S&P Industrial Sector at the end of the applicable performance period.

PSU Grant Date       December 12, 2012       December 11, 2013
Truncated performance period 11/1/2012 - 10/31/2014 11/1/2013 - 10/31/2014
Actual performance period ending date 10/31/2015 10/31/2016
Payout of target number of shares based on revenue growth 0% 0%
Payout of target number of shares based on TSR 0% 46%

(7) The amount shown represents the number of PSUs described in footnote (6) to this table multiplied by the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54.

Fiscal 2014 Option Exercises and Stock Vested
The following table provides information regarding option exercises and vesting of RSUs and PSUs during fiscal 2014. These options and stock awards were granted in prior fiscal years and are not related to performance in fiscal 2014.

Option Awards Stock Awards
Name         Number of Shares
Acquired on Exercise
(1)
        Value Realized
on Exercise
(2)
        Number of Shares
Acquired on Vesting
(3)
        Value Realized
on Vesting
(4)
Samuel R. Allen 32,371 $ 1,412,834 67,409 $ 5,751,336
Rajesh Kalathur 4,860 $ 273,505 $
James M. Field 13,380 $ 591,144 12,822 $ 1,093,973
Jean H. Gilles 22,650 $ 1,201,905 12,022 $ 1,025,717
Michael J. Mack, Jr. $ 12,594 $ 1,074,520

(1) Represents the total number of shares that were exercised before any withholding of shares to pay the exercise price and taxes.

(2) Value realized on exercise is based on the market price upon exercise minus the exercise price (the grant price).

(3) Represents the number of RSUs and PSUs that vested during fiscal 2014. The RSUs were granted on December 8, 2010 and vested on December 8, 2013. Although they are vested, these RSUs will not be settled in Deere common stock until five years after the grant date (in December 2015).

The three-year performance period for PSUs granted in fiscal 2011 ended on October 31, 2013. The final number of shares earned was based on 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 2013 following a review of the relative performances of the Company and the S&P Industrial Sector, and the award was settled in Deere common stock on December 8, 2013 (the third anniversary of the grant date). The final payout under the award was equal to 100% of the target opportunity, as disclosed in the CD&A in last year’s proxy statement.

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The following table shows the number of RSUs and PSUs that vested during fiscal 2014:

Name       RSUs       PSUs
Samuel R. Allen 25,927 41,482
James M. Field 4,932 7,890
Jean H. Gilles   4,624 7,398
Michael J. Mack, Jr. 4,844   7,750

(4) Represents the number of RSUs and PSUs vested multiplied by the closing price ($85.32) of Deere common stock on the NYSE as of the vesting date.

Pension Benefits
The NEOs are eligible to participate in pension plans that provide benefits based on years of service and pay. Pension benefits are provided under a qualified defined benefit pension plan called the John Deere Pension Plan for Salaried Employees (the “Salaried Plan”) and two nonqualified pension plans called the Senior Supplementary Pension Benefit Plan (the “Supplementary Plan”) and the John Deere Supplemental Pension Benefit Plan (the “Supplemental Plan”).

In 1996, we introduced a new pension option under the Salaried Plan known as the “Contemporary Option.” At that time, participants were given the choice between remaining in the existing Salaried Plan option, known as the “Traditional Option,” or choosing the new Contemporary Option. New employees hired between January 1, 1997 and October 31, 2014 automatically participated in the Contemporary Option. For new employees hired on or after November 1, 2014, pension benefits under the Salaried Plan are calculated based on a cash balance methodology instead of the Traditional or Contemporary Option formulas discussed below. None of the NEOs participate in the cash balance plan.

Salaried Plan
The Salaried Plan is a qualified plan subject to certain IRC limitations on benefits and is subject to the Employee Retirement Income Security Act of 1974. Deere makes contributions to, and benefits are paid from, a tax-exempt pension trust. Pension benefits provided by the Salaried Plan under the Traditional and Contemporary Options are summarized as follows:

Traditional Option
The Traditional Option pension benefit is based on a formula that calculates a retirement benefit using service credit, “Final Average Pay” as defined below, and a multiplier. Generally, Final Average Pay is the 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. At this time, none of our NEOs participate in the Traditional Option.

Contemporary Option
Under the Contemporary Option, “Career Average Pay” replaces Final Average Pay in computing retirement benefits. Career Average Pay is calculated using salary plus STI (up to IRC limits). For participants electing the Contemporary Option, the transition to Career Average Pay includes salary and STI awards from 1992 until retirement. For salaried employees participating in this option, Deere makes enhanced contributions to the employee’s 401(k) retirement savings account.

The formula for calculating benefits under the qualified Contemporary Option is:

Career Average Pay (up to IRC limits)
x Years of Service
x 1.5%



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Eligibility to retire with unreduced benefits under the Contemporary Option occurs at age 67 for all participating employees that were hired on or after January 1, 1997. For employees hired before this date, the eligibility age for retiring with unreduced benefits is based on years of service as of January 1, 1997 and ranges from ages 60 to 67. None of our NEOs are currently eligible to retire with unreduced benefits under the Contemporary Option.

For employees hired before January 1, 1997 who were not eligible to retire on January 1, 1997, and for employees participating in the Contemporary Option that were hired on or after January 1, 1997, early retirement eligibility under the Contemporary Option is the earlier of:

(1) age 55 with ten or more years of service; or
(2) age 65 with five or more years of service.

Pension payments are reduced 4% for each year the employee is under the unreduced benefits age upon retirement. Messrs. Allen, Gilles, and Mack are the only NEOs currently eligible to retire early with reduced benefits under the Contemporary Option.

Supplementary Plan
The Supplementary Plan is an unfunded, nonqualified excess defined benefit plan that provides additional pension benefits in a comparable amount to those benefits the participant would have received under the Salaried Plan in the absence of IRC limitations. Benefit payments for the Supplementary Plan are made from the assets of Deere.

The Supplementary Plan uses the same formula as the Salaried Plan to calculate the benefit payable, except that eligible earnings include only amounts above IRC qualified plan limits.

Supplemental Plan
The Supplemental Plan is an unfunded, nonqualified supplemental retirement plan for certain employees, including all the NEOs. Benefit payments for the Supplemental Plan are made from the assets of Deere. The Supplemental Plan was closed to new participants effective November 1, 2014, although benefits will continue to accrue for employees who were already participating in the plan as of such date.

The formulas for calculating benefits under the Supplemental Plan for the Contemporary and Traditional Options can be summarized as follows:

Contemporary Option

Career Average Pay
x Years of Service at grade 13 and above beginning January 1, 1997
x 0.5%

Traditional Option
The Supplemental Plan benefit under the Traditional Option is derived by subtracting the value of the Traditional Option (Salaried Plan plus Supplementary Plan) from the value of the Contemporary Option (Salaried Plan, Supplementary Plan, plus Supplemental Plan) had it been chosen. If this amount is positive, the NEO will receive this additional amount as a Supplemental Plan benefit.



Fiscal 2014 Pension Benefits Table

Assumed Number of Years Present Value of
Name       Plan Name (1)       Retirement Age (2)       of Credited Service (3)       Accumulated Benefit (4)
Samuel R. Allen Salaried Plan 63 39.4        $ 1,522,594       
Contemporary Option Supplementary Plan 63 39.4 $ 9,529,325
Supplemental Plan 63 17.8 $ 1,605,436
Total $ 12,657,355
  
Rajesh Kalathur   Salaried Plan 65 17.4 $ 270,355
Contemporary Option Supplementary Plan 65 17.4   $ 200,792
Supplemental Plan 65   8.8 $ 83,346
Total $ 554,493  
 
James M. Field Salaried Plan 65 20.5 $ 403,967
Contemporary Option Supplementary Plan   65   20.5 $ 932,990
Supplemental Plan 65 15.7 $ 348,912
Total $ 1,685,869
 
Jean H. Gilles Salaried Plan 64 26.6 $ 906,259
Contemporary Option Supplementary Plan 64 26.6   $ 2,800,721
Supplemental Plan 64 17.8 $ 827,402
Total $ 4,534,382

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Assumed Number of Years Present Value of
Name       Plan Name (1)       Retirement Age (2)       of Credited Service (3)       Accumulated Benefit (4)
Michael J. Mack, Jr. Salaried Plan 65 28.3        $ 792,051       
Contemporary Option   Supplementary Plan 65   28.3   $ 2,255,345
Supplemental Plan   65 17.8 $ 634,938  
Total $  3,682,334

(1) Benefits are provided under the Salaried Plan, the Supplementary Plan, and the Supplemental Plan as described in the narrative preceding the table. A portion of Mr. Gilles’ benefits will be provided by certain German pension plans in which he participated during his period of employment at 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, 2014. The years of credited service are equal to years of eligible service with Deere for the Salaried and Supplementary Plan. Service credit under the Supplemental Plan is based on service at grade 13 or above, beginning January 1, 1997.

(4) The actuarial present value of the accumulated benefit is shown as of October 31, 2014, and is provided as a straight-life annuity for the qualified pension plan and a lump sum for nonqualified pension plan benefits. Pension benefits are not reduced for any social security benefits or other offset amounts that the NEO may receive. A portion of the benefit for Mr. Gilles will be provided under certain German pension plans as described in footnote (1) above.

The actuarial present value is calculated by estimating expected future payments starting at an assumed retirement age, weighting the estimated payments by the estimated probability of surviving to each post-retirement age, and discounting the weighted payments at an assumed discount rate to reflect the time value of money. The actuarial present value represents an estimate of the amount which, if invested today at the discount rate, would be sufficient on an average basis to provide estimated future payments based on the current accumulated benefit. Actual benefit present values will vary from these estimates depending on many factors, including actual retirement age.

The following assumptions were used to calculate the present value of the accumulated benefit:

–  Each of the NEOs continues as an executive until the earliest age at which he could retire without any benefit reduction due to age or normal retirement age, whichever is earlier, as defined in the Salaried Plan;
 
–  Present value amounts were determined based on the financial accounting discount rate for U.S. pension plans of 4.20%;
 
–  Benefits subject to a lump sum distribution were determined using an interest rate of 3.26%;
 
–  The mortality table used for the Salaried Plan was the RP2000 table (with mortality projection scale BB, as published by the Society of Actuaries), while the mortality table used for the Supplementary and Supplemental Plans was the RP 2021 table, each table as published by the IRS; and
 
–  Pensionable earnings are calculated for the most recently completed fiscal year using base pay as an estimate (assuming one base pay increase of 3.5% - 4.5% depending on age) with no future increase and the STI bonus at target. Pensionable earnings for prior years are calculated based on actual base pay and actual STI earned for prior years.

Nonqualified Deferred Compensation
The Fiscal 2014 Nonqualified Deferred Compensation Table below shows information about four programs:

(1) the John Deere Voluntary Deferred Compensation Plan (“Deferred Plan”), a nonqualified deferred compensation plan;

(2) the Deere & Company European Office Vorsorgeplan 2001 (“German Deferral Plan”), a voluntary deferral plan;

(3) the John Deere Defined Contribution Restoration Plan (“DCRP”), a nonqualified savings plan; and

(4) deferred RSUs.

Deferred Plan
Under the Deferred Plan, through fiscal 2008, NEOs could defer their base salary, STI, and/or MTI in 5% increments up to 95%. For deferrals elected after 2008, up to 70% of base salary can be deferred while STI and MTI awards can be deferred up to 95%. On the first day of each calendar quarter, the balance in each account under the Deferred Plan is credited with interest. For deferrals made through calendar 2009, interest is credited at the prime rate (as determined by the Federal Reserve Statistical Release for the prior month) plus 2% as of the last day of the preceding quarter. For deferrals made after December 31, 2009, the deferred amounts



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earn interest based on the Moody’s “A” rated Corporate Bond Rate. During fiscal 2014, amounts deferred under the Deferred Plan were credited with interest at the following rates:

Earnings Under Deferred Plan
      Deferrals through       Deferrals after 2009
calendar 2009 Moody’s “A” Corporate
Prime plus 2% Bond Rate
November-13   5.25% 4.82%
February-14 5.25% 4.60%
May-14 5.25% 4.31%
August-14 5.25%   4.20%

An election to defer salary must be made prior to the beginning of the calendar year in which deferral occurs. An election to defer STI must be made prior to the beginning of the fiscal year upon which the award is based. An election to defer MTI must be made prior to the close of the fiscal year preceding the calendar year of payment. Participants may elect to receive the deferred funds in a lump sum or in equal annual installments not to exceed ten years. Distribution must be completed within ten years following retirement. All deferral elections and associated distribution schedules are irrevocable. This plan is unfunded and participant accounts are at-risk in the event of the 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 are available under the DCRP: the prime rate (as determined by the Federal Reserve Statistical Release for the prior month) plus 2%; or a rate of return based on the S&P 500 Index for the prior month. Participants may choose either investment option for any portion of their account. Participants can change investment options between the 1st and 10th day of any month. During fiscal 2014, the annualized rates of return under the two options were as follows:

Earnings For DCRP
      Prime plus 2%       S&P 500 Index
November-13 5.25%     23.37%    
December-13 5.25% 44.31%
January-14 5.25% 16.31%
February-14 5.25% 9.68%  
March-14 5.25% -3.51%
April-14 5.25% 30.70%
May-14   5.25%     0.48%
June-14 5.25% 16.42%
July-14 5.25% 36.40%
August-14 5.25% 16.03%
September-14 5.25% -7.04%
October-14 5.25% 19.39%

Distribution options under the DCRP consist of a lump sum distribution one year following the date of separation, or, in the case of retirement, five annual installments beginning one year following the retirement date.

Deferred RSUs
There are two scenarios under which deferred RSUs can appear in the Fiscal 2014 Nonqualified Deferred Compensation Table:

–  Certain RSUs are required to be held for a defined period of time after they vest three years from the grant date. The following tranches of RSUs have vested but remain subject to mandatory restriction as described in the following chart: 

Grant Date     Date Vested     Restriction Period
December 2002 December 2005 Until retirement or no longer
active employee
December 2007 December 2010 Until retirement or no longer
active employee
December 2008   December 2011   Until retirement or no longer
active employee
December 2009   December 2012 Until retirement or no longer
active employee
December 2010 December 2013 5 years (until December 2015)


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–  For RSUs granted starting in December 2003, NEOs may elect deferral of settlement for a minimum of five years. If a deferral election is made, the RSUs will be settled in shares of Deere common stock five or more years after the originally scheduled conversion date. 

Deferred RSUs will not be settled in Deere common stock until either the election period or the restriction period expires.



Fiscal 2014 Nonqualified Deferred Compensation Table

Executive Registrant Aggregate
Contributions Contributions Earnings in Last Aggregate Balance at
in Last FY in Last FY Fiscal Year Last FYE
Name       Plan       (1)       (2)       (3)       (4)
Samuel R. Allen DCRP   $ 279,155     $ 465,259       $ 224,791          $ 4,589,204     
Deferred RSUs $ $ 2,212,092 $ 275,134 $ 8,446,733
Total $ 279,155 $ 2,677,350 $ 499,925 $ 13,035,937
Rajesh Kalathur DCRP $ 61,375 $ 102,291 $ 17,648 $ 387,666
Total $ 61,375 $ 102,291   $ 17,648 $ 387,666
James M. Field DCRP   $ 83,660 $ 139,434 $ 73,649   $ 1,502,279
Deferred RSUs $ $ 420,798 $ 95,879 $ 2,613,418
Total $ 83,660   $ 560,232 $ 169,528 $ 4,115,697
Jean H. Gilles German Deferral Plan $ $ $ 19,718 $ 310,958
DCRP   $ 74,581   $ 124,302 $ 67,509 $ 1,374,612
  Deferred RSUs $ $ 394,520     $ 60,787   $ 1,777,350
Total $ 74,581 $ 518,821 $ 148,014   $ 3,462,920
Michael J. Mack, Jr. Deferred Plan $   $ $ 93,422 $ 1,838,237
DCRP $ 85,896 $ 143,160 $ 284,742 $ 2,355,665
Deferred RSUs $ $ 413,290 $ 118,863 $ 3,137,693
Total $ 85,896 $ 556,450 $ 497,027 $ 7,331,595

(1) The amounts in this column represent employee compensation deferrals that are included in the Fiscal 2014 Summary Compensation Table under the “Salary” and “Non-Equity Incentive Plan Compensation” columns.

(2) The amounts in this column associated with the DCRP represent Deere’s contributions during the fiscal year as included in the Fiscal 2014 Summary Compensation Table under the “All Other Compensation” column. The amounts in this column associated with deferred RSUs represent RSUs that vested in the current fiscal year but have not been converted into Deere common stock, and are included in the Fiscal 2014 Option Exercises and Stock Vested table under the column “Value Realized on Vesting.”

(3) For rates of return on account balances under the Deferred Plan and DCRP, see the applicable earnings charts in the narrative preceding this table. The notional rate of return on amounts deferred by Mr. Gilles under the German Deferral Plan was 6.77%. For the deferred RSU accounts, the earnings represent the change in the intrinsic value of the RSUs. The above-market portions of the amounts shown in this column are reported in the Fiscal 2014 Summary Compensation Table under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column and are quantified in footnote (5) to that table.

(4) Of the aggregate balance, the following amounts were reported as compensation to each respective NEO in the Summary Compensation Table in prior years: $6,950,905 (Allen); $84,464 (Kalathur); $1,746,973 (Field); $264,981 (Gilles); and $4,285,620 (Mack).

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Fiscal 2014 Potential Payments upon Change in Control
The CIC Program includes a “double trigger” approach, under which participants will receive severance benefits only if both a change in control and qualifying termination occur. A “qualifying termination” is either:

–  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 termination for 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 the employee was terminated or not, all then-outstanding equity awards that were granted before February 24, 2010 would vest and restriction periods would end upon a change in control. All outstanding RSUs would be cashed out as of the date of the change in control and the employee would have the right to exercise all outstanding options. Such potential payments are disclosed in the table below adjacent to “Change in Control only.” For awards made under the Omnibus Plan on and after February 24, 2010, the foregoing provisions will apply only if there is both a change in control and the employee experiences a qualifying termination. The MTI plan provides for payment upon a change in control based on actual performance results to date for all performance periods then in progress. Under the Deferred Plan, in the event of certain changes in control, the Committee may elect to terminate the plan within 12 months following the change in control and distribute all account balances, or the Committee may decide to keep the Deferred Plan in effect and modify it to reflect the impact of the change in control.

The following table includes estimated potential payments that would have been due to each NEO if a change in control event had occurred and, if applicable, the NEO experienced a qualifying termination as of October 31, 2014. Although the calculations are intended to provide reasonable estimates of the potential payments, they are based on numerous assumptions, as described in the footnotes, and may not represent the actual amount each NEO would receive if a change in control occurred. As explained in the footnotes, the payments listed represent the incremental amounts due to NEOs beyond what the NEOs would have received without the change in control. Not included in this table are the following payments to which the NEOs are already entitled and which are reported in previous sections of this Proxy Statement:

–  amounts already earned under the STI and MTI plans as of October 31, 2014 (reported in the Fiscal 2014 Summary Compensation Table);
 
–  the exercise of outstanding vested options (reported in the Outstanding Equity Awards at Fiscal 2014 Year-End table); and
 
–  distribution of nonqualified deferred compensation (reported in the Fiscal 2014 Nonqualified Deferred Compensation Table).


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Stock Stock Welfare Defined
Awards Options Benefits     Contribution Total
Name     Salary (1)     STI (2)     MTI (3)     (4)     (5)     (6)     Plans (7)     Payments
Samuel R. Allen
     –Change in Control only $ $ $ 4,986,261 $ $ $ $ $ 4,986,261
     –Change in Control and
       Qualifying Termination $ 4,500,000 $ 5,607,015 $ 4,986,261 $ 10,909,943 $ $ 34,386 $ 1,472,277 $ 27,509,882
Rajesh Kalathur
     –Change in Control only $ $ $ 1,401,378 $ $ $ $ $ 1,401,378
     –Change in Control and  
       Qualifying Termination $ 1,583,784 $ 1,339,864 $ 1,401,378 $ 1,953,819 $ 29,821 $ 38,418 $ 383,373 $ 6,730,457
James M. Field
     –Change in Control only   $   $ $ 1,401,378 $ $ $ $ $ 1,401,378
     –Change in Control and
       Qualifying Termination $ 1,945,296 $ 1,648,200 $ 1,401,378 $ 3,221,265 $ 94,694 $ 39,234 $ 494,802 $ 8,844,869
Jean H. Gilles    
     –Change in Control only $ $ $ 1,401,378 $ $ $ $ $ 1,401,378
     –Change in Control and      
       Qualifying Termination $ 1,779,228 $ 1,506,341 $ 1,401,378 $ 1,967,078 $ $ 38,859   $ 517,872   $ 7,210,756
Michael J. Mack, Jr.  
     –Change in Control only $ $ $ 1,401,378 $   $ $ $ $ 1,401,378
     –Change in Control and      
       Qualifying Termination $ 1,973,232 $ 1,673,175 $ 1,401,378 $ 1,905,318 $ $ 39,297 $ 505,980 $ 7,498,380

(1) In the event of a change in control and qualifying termination, the CIC Program provides for a lump sum payment of three times the annual base salary.

(2) In the event of a change in control and qualifying termination, the CIC Program provides for a lump sum payment of three times the target STI bonus amount for the fiscal year in which the termination occurs. In addition, the NEO is entitled to a prorated STI award for the current year. Since the change in control calculations in this table are made as of the end of the fiscal year, the prorated award for the current year is equal to the STI earned for the current fiscal year as reported in the Fiscal 2014 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation” and is not duplicated in this table.

(3) The MTI plan contains a change in control provision that entitles participants, as of the date of a change in control, to a lump sum MTI payment based on actual performance results to date for all performance periods then in progress. The payout for the three-year performance period ended October 31, 2014 is reported in the Fiscal 2014 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation” and is not duplicated in this table. For each of the NEOs, the amount shown in this table represents the payout for the two remaining performance periods.

(4) Vesting of unvested RSUs and PSUs does not accelerate in the event of a change in control only. In the event of a change in control and qualifying termination:

–  For unvested RSUs, the vesting and restriction requirements no longer apply and the awards are cashed out; and
 
For unvested PSUs, the vesting and restriction requirements no longer apply and the awards are cashed out at a target award level.

For purposes of the table, all unvested PSUs and RSUs are valued based on the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54. Since Messrs. Allen, Gilles, and Mack are eligible for retirement and all currently unvested RSUs would vest immediately on the date of such event, there is no incremental benefit of the accelerated vesting for these individuals. Vested RSUs are not included since they have been earned and are included on the Fiscal 2014 Nonqualified Deferred Compensation Table. Unvested PSUs and RSUs are included in the Outstanding Equity Awards at Fiscal 2014 Year-End table.

(5) Vesting of outstanding stock options does not accelerate in the event of a change in control only. Instead, outstanding stock options will continue to vest over the three-year vesting period, subject to continued employment conditions.

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In the event of a change in control and qualifying termination, all outstanding stock options vest and can be exercised immediately. Since Messrs. Allen, Gilles, and Mack are eligible for retirement and all currently unvested stock options would vest immediately on the date of such event, there is no incremental benefit of the accelerated vesting for these individuals. For Messrs. Kalathur and Field, who are not eligible for retirement, the amount represents the number of outstanding, unexercisable options multiplied by the difference between the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54, and the option exercise prices. These amounts are included in the Outstanding Equity Awards at Fiscal 2014 Year-End table.

(6) In the event of a change in control and qualifying termination, the CIC Program provides for continuation of health care, life, accidental death and dismemberment, and disability insurance for three full years at the same premium cost and coverage. This benefit will be discontinued if the NEO receives similar benefits from a subsequent employer during this three-year period.

(7) In the event of a change in control and qualifying termination, the CIC Program includes cash payment equal to three times 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 2014 Potential Payments upon Termination of Employment Other than Following a Change in Control

The following table summarizes the estimated payments to be made to the NEOs under our plans or established practices in the event of termination of employment for death, disability, retirement, termination without cause, termination for cause, and voluntary separation. Although the calculations are intended to provide reasonable estimates of the potential payments, they are

based on numerous assumptions, as described in the footnotes, and may not represent the actual amounts the NEOs would receive in the event of an eligible termination.

The amounts shown assume the termination event occurred on, and the NEO was actively employed until, October 31, 2014.



Present
Value of
Accumulated
Deferred Pension
Salary STI MTI Stock Awards Stock Options   Compensation Benefit Total
Name    (1)    (2)    (3)    (4)    (5)    (6)    (7)    Payments
Samuel R. Allen
     Death $ $ 2,779,846 $ 2,618,045 $ 18,005,400 $ 13,942,210 $ 4,589,204 $ 8,243,294 $ 50,177,999
     Disability $ 14,050,508 $ 2,779,846 $ 2,618,045 $ 18,005,400   $ 13,942,210 $ 4,589,204 $ 14,824,294 $ 70,809,507
     Retirement $ $ 2,779,846   $ 2,618,045 $ 18,005,400 $ 13,942,210 $ 4,589,204 $ 14,924,084 $ 56,858,789
     Termination Without Cause $ 1,500,000   $ 2,779,846 $ 2,618,045   $ 8,446,733 $ $ 4,589,204 $ 14,924,084 $ 34,857,912
     Termination For Cause $ $ 2,779,846 $ 2,618,045 $ 8,446,733 $ $ 4,589,204 $ 14,924,084 $ 33,357,912
     Voluntary Separation (8)  
Rajesh Kalathur
     Death $ $ 885,729 $ 994,022 $ 879,180 $ 1,481,221 $ 387,666 $ 397,021 $ 5,024,839
     Disability $ 9,721,838 $ 885,729 $ 994,022 $ 879,180 $ 1,481,221 $ 387,666 $ 1,782,554 $ 16,132,210
     Retirement (9)  
     Termination Without Cause $ 373,949 $ 885,729 $ 994,022 $ $ $ 387,666 $ 724,919 $ 3,366,285
     Termination For Cause   $ $ 885,729 $ 994,022 $ $ $ 387,666 $ 724,919 $ 2,992,336
     Voluntary Separation $ $ 885,729 $ 994,022 $ $ $ 387,666 $ 724,919 $ 2,992,336
James M. Field
     Death $ $ 1,089,557 $ 994,022 $ 4,357,835 $ 4,208,442 $ 1,502,279 $ 1,032,119 $ 13,184,254
     Disability $ 13,819,121 $ 1,089,557 $ 994,022 $ 4,357,835 $ 4,208,442 $ 1,502,279 $ 3,507,530   $ 29,478,786
     Retirement (9)
     Termination Without Cause $ 540,360 $ 1,089,557 $ 994,022 $ 2,613,418 $ $ 1,502,279   $ 1,880,495 $ 8,620,131
     Termination For Cause $ $ 1,089,557 $ 994,022 $ 2,613,418 $   $ 1,502,279 $ 1,880,495 $ 8,079,771
     Voluntary Separation $ $ 1,089,557 $ 994,022 $ 2,613,418 $ $ 1,502,279 $ 1,880,495 $ 8,079,771

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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
Jean H. Gilles
     Death $ $ 995,780 $ 994,022 $ 3,485,669 $ 2,032,348 $ 1,752,891 $ 3,101,546 $ 12,362,256
     Disability $ 8,068,240 $ 995,780 $ 994,022 $ 3,485,669 $ 2,032,348 $ 1,685,570 $ 6,488,817 $ 23,750,446
     Retirement $ $ 995,780 $ 994,022 $ 3,485,669 $ 2,032,348 $ 1,685,570 $ 5,628,783 $ 14,822,172
     Termination Without Cause $ 593,076 $ 995,780 $ 994,022 $ 1,777,350 $ $ 1,685,570 $ 5,628,783 $ 11,674,581
     Termination For Cause $ $ 995,780 $ 994,022 $ 1,777,350 $ $ 1,685,570 $ 5,628,783 $ 11,081,505
     Voluntary Separation (8)
Michael J. Mack, Jr.
     Death $ $ 1,106,067 $ 994,022 $ 4,806,065 $ 367,209 $ 4,193,902 $ 2,509,302 $ 13,976,567
     Disability $ 8,566,269 $ 1,106,067   $ 994,022 $ 4,806,065   $ 367,209 $ 4,193,902 $ 5,287,994   $ 25,321,528
     Retirement   $ $ 1,106,067 $ 994,022   $ 4,806,065 $ 367,209   $ 4,193,902   $ 4,549,959 $ 16,017,224
     Termination Without Cause $ 657,744   $ 1,106,067 $ 994,022 $ 3,137,693 $ $ 4,193,902 $ 4,549,959 $ 14,639,387
     Termination For Cause $ $ 1,106,067 $  994,022 $ 3,137,693 $ $ 4,193,902 $  4,549,959 $ 13,981,643
     Voluntary Separation (8)

(1) Our NEOs do not have employment agreements. However, we have severance guidelines that provide compensation if termination is initiated by Deere for reasons other than cause. Our severance guidelines provide for payment of one-half month of salary for each complete year of employment, up to a maximum of one 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, 2014, until the time the NEO attains age 65.

(2) Under all termination events, the amount of STI earned for the fiscal year ended October 31, 2014 would be payable in a lump sum generally within two months after the end of the fiscal year, but in no event later than March 15th of the calendar year following the end of the fiscal year. This amount is also reported in the Fiscal 2014 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation.”

(3) Under all termination events, the amount of MTI earned for the performance period ended October 31, 2014 would be payable in a lump sum generally within two months after the end of the fiscal year, but in no event later than March 15th of the calendar year following the end of the fiscal year. This amount is also reported in the Fiscal 2014 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation.”

(4) In the event of death, disability, or retirement, the most recent RSU and PSU awards are prorated based on the number of months the NEOs remain active in the year of grant, meaning that the NEOs retain 1/12th of the RSUs and PSUs awarded during the year for each month of active employment. The remaining units are forfeited. All unvested and non-forfeited RSUs will vest on the date of separation from service, while PSUs that are not forfeited will continue to convert to shares at the end of the three-year performance period based on the performance metrics. Upon lapse of the applicable restrictions, vested RSUs will be converted to shares of common stock. Restrictions on vested RSUs will lapse as provided in the following table:

Type of Separation from Service    Fiscal Year of RSU Award    Lapse of Restrictions
Death 2010 and prior First business day of January following death
2011 and 2012 First business day in the later of January or July following death
  2013 and 2014 Third anniversary of grant date
Disability or Retirement 2012 and prior
After 2012
  First business day in the later of January or July following separation from service
Third anniversary of grant date

In the event of termination with or without cause or voluntary separation, any vested RSUs will be cashed out. All unvested PSUs and RSUs will be forfeited. The amounts shown in the table correspond to vested RSUs (including RSUs that vest as a result of the termination of employment).

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The value of PSUs for each outstanding tranche represents actual achievement relative to the S&P Industrial Sector assuming, in the case of PSUs granted in fiscal years 2013 and 2014, truncated performance measurement periods. The performance period for PSUs granted in fiscal year 2012 ended on October 31, 2014. The final number of shares earned, if any, will be based upon performance as determined by revenue growth and TSR relative to the S&P Industrial Sector at the end of the applicable performance period. See footnotes (4) and (6) to the Outstanding Equity Awards at Fiscal 2014 Year-End table for performance information relating to each outstanding tranche of PSUs.

All amounts shown in the table are based on the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54.

(5) In the event of death, all outstanding stock options vest immediately. In the event of disability or retirement, vesting accelerates for all outstanding stock options but occurs no sooner than six months following the grant date. In the case of death, the heirs have one year to exercise options. In the case of disability or retirement, options expire within five years. In the event of retirement, the most recent stock option awards granted to the NEOs are prorated based on the number of months the NEOs remain active in the year of grant, meaning that the NEOs retain 1/12th of the options awarded during the year for each month of active employment. The remaining options are forfeited. The amount shown in this table represents the number of stock options multiplied by the difference between the closing price for Deere common stock on the NYSE on October 31, 2014, which was $85.54, and the option exercise prices. These outstanding stock options are reported in the Outstanding Equity Awards at Fiscal 2014 Year-End table. In the event of a termination other than for death, disability, or retirement, all outstanding stock options are forfeited.

(6) In all cases, balances held in the U.S. nonqualified deferred compensation plans and the German Deferral Plan are payable to the employee. These amounts are reported in the Fiscal 2014 Nonqualified Deferred Compensation Table under Deferred Plan, German Deferral Plan, and DCRP. Under the German Deferral Plan, the amount payable in the event of death differs from the amount payable under the other scenarios based on the application of the “transforming factors” specified in the plan documentation. The deferred RSUs reported in the Fiscal 2014 Nonqualified Deferred Compensation Table are reported in this table under the column “Stock Awards.”

(7) The present value of the accumulated pension benefit was calculated using the following assumptions:

–  present value amounts were determined based on a discount rate of 4.20%;
 

lump sum distribution amounts were determined using an interest rate of 3.26% for the Supplementary and Supplemental Plans;

 

the mortality table used for the Salaried Plan was RP2000 with mortality projection scale BB;

– 

the mortality table used for the Supplementary and Supplemental Plans was RP2021; and

 

pensionable earnings earned were based on actual base salary and forecasted STI for fiscal 2014.



Following are additional explanations related to the various scenarios:

– 

Death: This amount represents the present value of the accrued survivor benefit as of October 31, 2014.

 

Disability: This amount assumes service through age 65 and includes service credit for time on long-term disability.

 

Retirement: For the NEOs eligible to retire, this amount represents the present value of the accrued benefits if they were to retire as of October 31, 2014.

Termination Without Cause, Termination For Cause, and Voluntary Separation: This amount represents the present value of the accrued benefit as of October 31, 2014.



(8) Since Messrs. Allen, Gilles, and Mack are eligible for early retirement, the scenario for Voluntary Separation is not applicable. Under this scenario, these NEOs would retire.

(9) Since Messrs. Kalathur and Field are not eligible for normal or early retirement, this scenario is not applicable.

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Equity Compensation Plan Information

The following table shows the total number of outstanding options and shares available for future issuances under our equity compensation plans as of October 31, 2014:

Number of         Weighted-         Number of Securities
Securities
to be Issued Upon
Average Remaining Available
Exercise Price of for Future Issuance
Exercise of Outstanding Under Equity
Outstanding Options, Compensation Plans
Options, Warrants, Warrants, and   (excluding securities
and Rights Rights reflected in column (a))
Plan Category    (a)    (b)       (c)      
Equity Compensation Plans Approved by Security Holders    16,069,393  (1)           $ 71.64              7,211,684  (2)      
Equity Compensation Plans Not Approved by Security Holders   (3)
Total 16,069,393 $ 71.64 7,211,684

(1) This amount includes 1,073,937 PSUs and RSUs awarded under the Omnibus Plan and 102,254 RSUs awarded under the Nonemployee Director Stock Ownership Plan. Under the Omnibus Plan, the PSUs are payable only in stock after the three-year performance period is ended and the RSUs are payable only in stock three to five years after the award is granted or upon retirement. Under the Nonemployee Director Stock Ownership Plan, RSUs are payable only in stock upon retirement. The weighted-average exercise price information in column (b) does not include these units.

(2) This amount includes 455,203 shares available under the Nonemployee Director Stock Ownership Plan for future awards of restricted stock or RSUs and 6,756,481 shares available under the Omnibus Plan. Under the Omnibus Plan, Deere may award shares in connection with stock options and stock appreciation rights, performance awards, restricted stock or restricted stock equivalents, or other awards consistent with the purposes of such plan as determined by the Committee. In addition, shares covered by outstanding awards become available for new awards if the award is forfeited or expires before delivery of the shares.

(3) Deere currently has no equity compensation plans that have not been approved by stockholders.

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Item 4 – Amendment of the John Deere Omnibus Equity and Incentive Plan



Summary of the Proposal
The Board has amended the John Deere Omnibus Equity and Incentive Plan (referred to in this section of the Proxy Statement as the “Plan”). The amendments were recommended to the Board by the Compensation Committee and are subject to the approval of our stockholders. We are asking our stockholders to approve the following amendments to the Plan:

Increase by 13,000,000 the number of shares authorized for making awards under the Plan; and
   

Extend the period during which we may make grants to eligible employees to December 31, 2020.


Stockholder approval of these amendments is required under the Plan which, both currently and as amended, in alignment with NYSE rules, requires stockholder approval (to the extent required by law, agreement, or stock exchange rules) of any amendments that:

materially increase the number of shares authorized for Plan awards;
 

expand the types of awards available;

 

materially expand the class of employees eligible to participate;

 

materially extend the term of the Plan;

 

materially change the method of determining the strike price of options; or

 

delete or limit provisions prohibiting repricing of stock options.


In addition to the amendments described above, the Board has also amended the Plan to modify various other provisions to conform to regulatory changes and current market practices as well as other matters related to the administration and interpretation of the Plan.

A copy of the Plan as amended is attached as Appendix D to this Proxy Statement. The description that follows is qualified in its entirety by reference to the full text of the Plan as set forth in Appendix D.

The purpose of the Plan, as discussed in the “Long-Term Incentive (“LTI”)” portion of the CD&A section of this Proxy Statement, is to foster and promote the long-term financial success of the Company and materially increase stockholder value by: (a) strengthening the Company’s capability to develop, maintain, and direct an outstanding employee team; (b) motivating superior performance by means of long-term performance related incentives; (c) encouraging and providing the means for employees to obtain an ownership interest in the Company; (d) attracting and retaining outstanding talent by providing incentive compensation

opportunities competitive with other major companies; and (e) enabling eligible employees to participate in the long-term growth and financial success of the Company.

Our stockholders originally approved the Plan in 2000 and approved amendments to the Plan in 2003, 2006, and 2010. The Plan allows us to grant our salaried employees a range of compensation awards based on or related to Deere common stock, including stock options, stock appreciation rights, restricted stock and stock units, performance awards, and substitute awards. The amount of compensation realized by employees with respect to certain awards may be reduced or eliminated unless certain performance goals are met or restrictions are removed. We may use previously unissued common stock or common stock held in treasury for awards under the Plan.

At its inception in 2000, the Plan reserved 19,000,000 shares of common stock plus approximately 9,800,000 unused shares authorized under prior plans. The amendment approved in 2003 authorized an additional 18,000,000 shares for grants of options and stock appreciation rights, while the 2006 and 2010 amendments authorized an additional 29,500,000 shares in total for the grant of awards of all types. As of December 31, 2014, approximately 3,233,728 of these previously-approved shares remained available for new awards under the Plan. The market closing price for Deere common stock on December 31, 2014 was $88.47.

The amendments authorize an additional 13,000,000 shares for awards under the Plan (representing approximately 3.6% of all currently outstanding shares of Deere common stock). In setting and recommending to stockholders the number of additional shares to authorize, the Compensation Committee and the Board considered the historical number of equity awards granted under the Plan, as well as the Company’s three-year average burn rate (2012-2014) of approximately 0.72% (which is significantly below the median of the Company’s peer group). Based on historical granting practices and the recent trading price of the Company’s common stock, the Company currently expects future awards under the amended Plan to utilize annually approximately 0.93% of fully diluted shares outstanding. Based on the same assumptions, the additional shares (if approved and remaining available for grant), in combination with the remaining authorized and unused shares, should be sufficient to provide for approximately 4 to 5 years of awards under the Plan. Consistent with existing Plan provisions, the number of shares authorized for the Plan will be reduced by one share for each stock option or stock appreciation right granted, and by 2.5 shares for each share awarded in connection with full value awards, such as restricted stock, restricted stock units, and performance awards (generally, full value awards are any awards other than stock options and stock appreciation rights). The



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number of authorized shares is reduced by a greater amount for full value awards in recognition of the greater initial value of these types of awards.

The Plan is currently scheduled to expire on December 31, 2015. The amendments extend the term of the Plan by five years, until December 31, 2020.

The amendments will enable us to continue an equity-based long-term incentive program that has been in effect since 1960. The Board believes that the program and the Plan have helped Deere compete for, motivate, and retain high caliber executive, administrative, and professional employees. The Board believes that it is in the best interests of Deere and its stockholders to amend the Plan as proposed. Consistent with our compensation objectives, rewards under the Plan primarily depend on factors that directly benefit our stockholders: dividends paid and appreciation in the market value of our common stock.

The affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting is required to approve the proposed amendments to the Plan. If our stockholders fail to approve these amendments, they will not be given effect, and the Plan will continue as in effect prior to amendment. Stockholder approval of the Plan as amended will also constitute approval of the material terms of the performance goals contained in the Plan for purposes of enabling Deere to meet the requirements under Section 162(m) of the IRC (“Section 162(m)”) for amounts paid under the Plan to certain of our executive officers to be tax deductible to the Company.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE AMENDMENTS TO THE JOHN DEERE OMNIBUS EQUITY AND INCENTIVE PLAN.

Principal Features of the Plan
We describe below the other principal terms of the Plan.

Administration
The Plan is administered by the Compensation Committee or a subcommittee thereof (the “Committee”), which Committee, for purposes of the Plan, is required to be composed of at least two members of the Board who qualify as “outside directors” within the meaning of Section 162(m) and as “non-employee” directors within the meaning of Rule 16b-3 under the Exchange Act. The Committee is responsible for interpreting and administering the Plan and for selecting those salaried employees (including executive officers) who will receive awards. The Committee may delegate any of its authority under the Plan to other persons, including officers of the

Company, except for its authority to amend, suspend, or terminate the Plan or as may otherwise be prohibited by law, regulation, or stock exchange rule.

Eligibility and Participation
Salaried employees, including executive officers, of Deere and its subsidiaries are eligible to receive awards under the Plan. The Committee, in its discretion, selects those eligible employees who will receive awards. Deere is not obligated to make awards under the Plan at any time or to any person. During the fiscal year ended October 31, 2014, we granted stock options under the Plan covering 2,453,941 shares to 998 employees and restricted stock units equivalent to 84,176 shares and performance stock units equivalent to 134,678 shares to 24 executives. In December 2014, we granted for fiscal 2015 compensation purposes stock options under the Plan covering 3,069,030 shares to 983 employees and restricted stock units equivalent to 78,587 shares and performance stock units equivalent to 125,732 shares to 23 executives.

We cannot at this time identify the class of persons to whom we will grant awards in the future, nor can we state the form or value of any future awards.

Individual Limits
During any fiscal year, no participant may receive awards of stock options and stock appreciation rights covering more than 1,000,000 shares of Deere common stock. In addition, no participant may receive more than the equivalent of 400,000 shares of our common stock in any fiscal year pursuant to performance awards, restricted stock awards, restricted stock equivalent awards, other awards, and/or substitute awards.

Options and Stock Appreciation Rights
The per share exercise price of options granted under the Plan may not be less than the fair market value of a share of Deere common stock on the date of grant, and may not be modified once it is established except pursuant to anti-dilution adjustments (see “Amendment and Adjustment” below). For purposes of the Plan, the fair market value of a share on any date is the closing price on the NYSE at the conclusion of regular trading hours on that date (or the last date on which this information was reported). With certain exceptions, option holders may pay the exercise price of options in cash, in Deere common stock, in a combination of cash and stock, through a “cashless exercise” program, or through a “net share settlement” procedure established by the Committee.



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The Committee may designate options awarded under the Plan as incentive stock options (“ISOs”), a type of option authorized under the IRC. Options not designated as ISOs are referred to as “nonqualified” options. In recent years, Deere has issued only nonqualified options.

The Plan also authorizes the Committee to grant stock appreciation rights. A stock appreciation right entitles the grantee to receive, upon exercise of the right, an amount equal to the excess of (a) the fair market value on the exercise date of a specified number of shares of Deere common stock over (b) the exercise price of the right. The exercise price may not be less than the fair market value of Deere common stock on the date the right is granted. We may pay the amount due to the holder of a stock appreciation right in Deere common stock, cash, or a combination of cash and stock. Stock appreciation rights may be unrelated to a stock option or may be granted alternative to (“in tandem with”) an option.

Generally, the date when stock options and stock appreciation rights first become exercisable must be at least six months after the date of grant. Options and stock appreciation rights may have a term of up to ten years. Dividends and dividend equivalents may not be paid or accrued on unexercised options or stock appreciation rights.

Options and stock appreciation rights generally remain exercisable for a limited time following termination of employment due to death, disability, retirement, or otherwise with the consent of the Committee. Upon any other kind of termination, options and stock appreciation rights immediately expire.

Except in connection with certain corporate transactions, the exercise and base prices of options and stock appreciation rights may not be lowered and out-of-the-money options and rights may not be repurchased or exchanged without stockholder approval.

Performance Awards
The Committee may grant performance awards either as performance shares (with each performance share representing one share of Deere common stock) or performance units (representing a value established by the Committee at the time of the award). Performance awards are earned over a performance period of at least one year. There may be more than one performance award in existence at any one time, and the performance periods may differ or overlap.

The Committee establishes minimum, target, and maximum performance goals when it grants performance awards, and determines the portion of the performance award to be earned by the participant based on the degree to which the performance

goals are achieved over the relevant performance period. A participant will not earn any portion of a performance award unless the minimum performance goals are met. When earned, performance awards may be paid in cash, Deere common stock, or a combination of cash and stock, and in lump sums or installments. The Committee determines the form and manner of payment. Dividends may be accrued but not paid on performance shares while they are subject to performance targets.

The Committee, as it deems appropriate, may establish performance goals for each performance period from among any of the following factors, or any combination of the following:

total stockholder return;
 

growth in revenues, sales, settlements, market share, customer conversion, net income, operating income, cash flow, stock price, and/or earnings per share;

 

return on assets, net assets, and/or capital;

 

return on stockholders’ equity;

 

economic or shareholder value added;

 

improvements in costs and/or expenses; or

 

except with respect to executives subject to Section 162(m), any other performance measure established by the Committee.


Performance goals may be measured on an absolute basis or relative to selected peer companies or market indices. The Plan also authorizes the Committee, subject to the restrictions of Section 162(m), to reduce grants or adjust performance goals if Deere acquires or disposes of certain assets or securities.

Restricted Stock and Restricted Stock Equivalents
Restricted stock and restricted stock equivalents have restriction periods and/or price goals that the Committee designates at the time of the award. Restriction periods must be at least three years for time-based restrictions and at least one year for performance-based restrictions. A maximum of 5% of the aggregate shares authorized for the Plan may be awarded in the form of restricted stock or stock equivalents with no minimum vesting periods.

Each restricted stock equivalent represents the right to receive either shares or an amount determined by the Committee at the time of the award. The value of a restricted stock equivalent may be equal to the full monetary value of one share of our common stock. Any award of restricted stock or stock equivalents to an executive officer intended to qualify as performance-based compensation must include a stock price goal during the restriction period.



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Other Awards
The Committee may grant other forms of equity-based awards consistent with the purposes of the Plan. The Committee may base other awards on the value of Deere common stock or other criteria. Other awards with a performance goal may not vest in less than one year while those without a performance goal may not vest in less than three years. Other awards include the restricted stock units and performance stock units we have awarded in the past to certain executives (as described below under the heading “Plan Benefits” that follows Item 5, “Re-Approval of the John Deere Short-Term Incentive Bonus Plan”).

The Plan also authorizes the Committee to grant awards in substitution for awards granted by an entity that Deere acquires or that combines with Deere. Substitute awards are not subject to the minimum holding period and minimum exercise price provisions of the Plan, and do not count towards the Plan’s authorized share limits.

Stockholder Rights
During the performance or restriction periods applicable to restricted stock or performance share awards, participants generally have the right to receive dividends on and vote the shares of common stock that they have been awarded, provided that in the case of performance share awards, dividends may be accrued but not paid while these awards are subject to performance targets. Holders of stock options do not have rights as a stockholder prior to exercise. Holders of restricted stock units, restricted stock equivalents, and performance stock units also generally do not have rights as a stockholder prior to vesting and payment in shares, although holders of restricted stock equivalents and restricted stock units may receive dividend equivalents in cash at the same time as dividends are paid on Deere’s common stock (which has been the Company’s practice with respect to restricted stock units awarded in the past). With limited exceptions, participants may not transfer, assign, pledge, or encumber awards under the Plan.

Cash Equivalents and Deferral
The Committee may permit participants to elect to receive performance awards and restricted stock in cash instead of shares. The Committee may also award cash equivalent awards or other alternative forms of awards to employees of non-U.S. subsidiaries or branches. Payments of cash equivalent awards are applied against the Plan’s authorized share limits based on the number of shares that would have been paid had the award been settled in stock. The Committee may also permit participants eligible for our voluntary deferred compensation plan to elect within certain time limits to defer the payment or settlement of performance and restricted awards.

Obligations to Deere
Participants who leave Deere may lose their unexercised stock options and stock appreciation rights, unearned performance awards, and restricted stock and stock equivalent awards if they fail to honor certain consulting or noncompetition obligations to Deere or otherwise fail to satisfy the terms specified in the awards.

Change in Control
Awards granted under the Plan on or after February 24, 2010 do not vest solely as a result of a change in control of Deere. Instead, if there is a change in control of Deere, the restrictions and vesting requirements of awards may, subject to certain regulatory restrictions, lapse and the value of other awards may be paid to the participants in cash (at the “change in control price” defined in the Plan) only if the participant also experiences a qualifying termination of employment. For awards granted prior to February 24, 2010 that remain outstanding, these provisions may apply if there is a change in control or potential change in control of Deere without the need for a qualifying termination of employment.

For purposes of the Plan, “change in control” and “qualifying termination” have the same meanings as in the CIC Program, as described above under “Fiscal 2014 Potential Payments upon Change in Control.”

A “potential change in control” is defined generally to include the entering into of an agreement the consummation of which would result in a change in control, or the acquisition by a third party of securities representing 15% or more of the combined voting power of the Company accompanied by a determination by the Board that a potential change in control has occurred for purposes of the Plan. Awards made on or after February 24, 2010 do not contain any provisions triggered by a potential change in control.

The “double trigger” provisions of the Plan will not preclude participants from participating at the discretion of the Committee or the Board on the same terms as stockholders generally in a change in control transaction in which Deere shares are cancelled in exchange for other consideration (such as cash).

The lapse of limitations and payment of the value of equity incentive compensation in the event of a change in control or potential change in control may increase the net cost of the change in control and thus theoretically could render more difficult or discourage a change in control, even if the change in control would benefit Deere stockholders generally.



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Repayment of Awards
Awards paid under the Plan to certain executives may be recovered by the Company pursuant to the terms of the Recoupment Policy or otherwise as required by law.

Amendment and Adjustment
The Committee may suspend or terminate the Plan or any portion thereof at any time, but, as described under “Summary of the Proposal” above, stockholder approval is required for certain amendments that materially revise the Plan.

No amendment, suspension, or termination of the Plan may materially and adversely affect the rights of any participant under any outstanding awards without the consent of the participant.

If there is a stock dividend or stock split, a combination, or another kind of increase or reduction in the number of issued shares of Deere common stock, the Board or the Committee will adjust the number and type of shares authorized under the Plan and covered by outstanding awards and the exercise price of outstanding awards, as appropriate, to prevent the dilution or enlargement of rights under Plan awards.

Federal Income Tax Consequences of Stock Options
The following summarizes the consequences under existing U.S. federal income tax rules of the award and exercise of stock options under the Plan.

ISOs
ISOs are intended to qualify as “incentive stock options” under Section 422 of the IRC. We understand that under current federal income tax law: